Unjust Enrichment and Restitution

read time: 3 mins
31.07.23

The term ‘civil fraud’ covers many different types of claims (which have been set out in our guide to civil fraud). This note explains the basic principles of one of them, being unjust enrichment. 

What is unjust enrichment?

This is a common law cause of action which addresses the ‘unjust enrichment’ of a defendant at the expense of a claimant. The focus is on whether the defendant has been enriched at the claimant’s expense and not on whether the claimant has suffered a loss that might otherwise have been avoided.

For example:

Party A intends to make a bank transfer to Party B. However, unbeknown to Party A, the funds have been mistakenly paid into the bank account of Party C. Party C has refused to pay the funds back. In this scenario, Party C has been unjustly enriched at the expense of Party A. 

Elements of a claim for unjust enrichment

In broad terms, a claimant who asserts a claim for unjust enrichment must establish three elements:

  1. The defendant has been enriched or has received a benefit;
  2. The enrichment of the defendant is unjust; and
  3. The enrichment of the defendant was at the expense of the claimant. 

If the claimant can establish these three elements, the defendant must prove that they have a defence.

If there is no defence, the court must decide on the appropriate remedy (addressed below).

‘Unjust’ enrichment

It is not enough for the claimant to simply show that the defendant has been enriched. The claimant must also prove that the enrichment is ‘unjust’. The unjust factors recognised by the court include:

  1. Failure to provide consideration – for example, if the claimant took action to benefit the defendant in anticipation of the parties entering into a contract, but this does not later happen;
  2. Mistake – if the claimant made a payment to the defendant by accident and wants a refund;
  3. Duress – if the claimant transfers the benefit after receiving a threat or after being persuaded;
  4. Undue influence – if the defendant takes advantage of the claimant’s trust; and / or
  5. If the defendant has been enriched as a result of his or her own wrongdoing.

In Barton and others v Morris and another in place of Gwyn-Jones [2023] UKSC 3, the Supreme Court held that an enrichment was not unjust if it was the outcome which had been provided for by an agreement between the parties. It was made clear that “unjust enrichment mends no ones’ bargains”.

Remedies

Generally, the claimant is entitled to seek a personal remedy that requires the defendant to pay the claimant the value of the enrichment which the defendant has obtained at the claimant’s expense (otherwise known as ‘restitution’). A claimant may also be able to seek remedies such as tracing into the defendant’s assets or claiming a declaration that the defendant holds an identifiable asset on trust for the claimant, or asserting a lien (right to possession) over an asset.

Defences

A claim for unjust enrichment will generally be denied when the benefit to the claimant takes the form of a valid gift or is made pursuant to a legal, equitable or statutory obligation owed by the claimant to the defendant. Similarly, unjust enrichment will be refused where the claimant conferred the benefit on the defendant as part of a compromise or as settlement of an honest and genuine claim. 

For more information, please contact Cara White.

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