By Niall Whitty, Honorary Professor of Edinburgh Law School
1. 1961-1990. I must confess I have been fascinated by the Scots law of unjustified enrichment for over 60 years. My first contact with it occurred in autumn 1961 – in my first year at Edinburgh University Law Faculty.[1]
At that time, the English law of restitution, with its imputed contract theory of quasi-contract[2] and its Coronation cases,[3] (rejecting restitution after frustration of contract) was held up to students in the Civil Law class as evidence that the English law of obligations, while rich in detail, was poor in principle. By contrast, Scots enrichment law, with its obediential obligation theory and civilian Cantiere San Rocco case,[4] was said to be much superior as indeed in some respects it plainly was. In the next three decades, however, the condition and status of unjust enrichment in English law was completely transformed,[5] while the Scots law, starved of research and the stimulus of comparative law, tended to stagnate and sometimes took wrong turnings.[6] The reason was not so much complacency as the fact that the academic branch of the Scottish legal profession, though growing, was still relatively small and over-stretched.[7] Probably more has been written on our enrichment law in the past 30 years than in the previous 300 years.
2. The contributions of Peter Birks. In English law, unjust enrichment, as a new source of obligation, became, in Weinrib’s words, ‘the most dynamic of all areas of private law’.[8] Much of the credit for this is rightly attributed to the charismatic influence and intellectual brilliance of Peter Birks. In his two articles on Scots enrichment law in 1985[9] he made two extremely important contributions to its development.
3. The general principle. First Birks argued that there should be one general principle against unjustified enrichment which should apply throughout that branch of the law of obligations. He also defined its elements in a famous four-point test.[10] This teaching and test assisted the higher courts in three great cases in 1995-1998[11] (Morgan Guaranty, Dollar Land and Shilliday) to sweep away the novel divide (introduced by the Second Division in Royal Bank of Scotland v Watt 1991[12]) between restitution and repetition (supposedly based on equity) on the one hand and recompense (alone based on unjustified enrichment) on the other. The general principle did not amalgamate the obligations of restitution, repetition and recompense (the three Rs), which survive to this day as separate nominate obligations differentiated by their content; but the principle impliedly recognises and affirms their common legal purpose, namely, the redress of unjustified enrichment.
4. Classification by cause of action, not by benefit received. Secondly Birks convinced the Scottish courts that classification of unjustified enrichment should be by the causes of action (the reasons for reversing the enrichment) and not by the type of benefit received (or to be restored).[13] Only in that way could like cases be treated alike.
5. Rejection of ‘unjust factors’: However Birks’s original belief that the Scottish causes of action should be based on the English system of unjust factors[14] was not accepted by the Scottish courts or legal profession.[15] It simply did not fit the Scottish primary sources. As Lord Cullen said, our law had developed in a different way.[16] That was true not only of enrichment by transfer but also of all the other Scottish categories of unjustified enrichment.[17] Our rejection of unjust factors was matched by our acceptance of the civilian doctrine of absence of legal justification for retention of the enrichment (sine causa retinendi). The main task then became how to classify these legal justifications or, more precisely, the causes of action which show that no such legal justification exists?
6. Reception by Scottish writers of Wilburg-von Caemmerer typology. In the 1990s new channels of communication with continental European lawyers opened up[18] and old channels with South African lawyers, which had been largely closed because of apartheid from the 1960s to 1990, were re-opened. As a result a near-miracle happened – the revival and re-invigoration of our civilian tradition in the domain of unjustified enrichment. It resembled in important respects the neo-civilian revolution already taking place in Scottish property law. A study of Scottish advocates’ links with Germany in the 19th century found ‘few signs of any direct impact [of German law] on the actual practice of the law in the Scottish courts’.[19] The position for most of the twentieth century seems to have been similar.
In the early 1990s the position changed. At that time one of my tasks at the Scottish Law Commission was to research the rule preventing recovery for error of law with a view to its abolition. I found our law difficult to understand until I discovered a seminal article of 1985 by Reinhard Zimmermann suggesting the adoption in South African enrichment law of the Wilburg-von Caemmerer typology.[20] That hit the spot. I still remember the strong feeling of discovery and relief at finding the way forward for the Scots law. That typology (classifying the causes of action by the manner of defender’s enrichment) influenced the Scottish Law Commission’s publications[21] and its main features have been adopted mutatis mutandis by virtually all recent writers on Scots enrichment law.[22] Its impact was and is fortified in Scotland by a stream of scholarly articles by Robin Evans-Jones and his pupils and colleagues.[23] His pioneering and authoritative two-volume SULI monograph of 2003 and 2013 is paralleled in South Africa by the excellent monographs of Daniel Visser and Jacques du Plessis.[24]
The reception however is not complete until it receives judicial endorsement.
7. Lord Rodger’s scepticism about borrowing from civil law systems: why only the civil law? It may be instructive to consider whether the Scottish reception of the Wilburg-von Caemmerer typology is consistent with Lord Rodger’s ‘scepticism about what could be learned from civil law systems and comparative law scholarship’.[25] Roughly speaking he thought broad guidance was possible but of limited value because the devil is in the detail. The reception could certainly be regarded as ‘broad guidance’. Moreover it did not involve importing detailed rules of German law. Rather it involved classifying and organising civilian and other compatible rules and concepts which were already embedded in our law. By the same token, I think borrowing Birks’s system of autonomous unjust factors could not have worked well at any level – broad guidance or detail – in Scots law. In this area, with its civilian origins and character, surely scepticism should be directed against transplants from English enrichment law.
Alas, Lord Rodger in Shilliday[26] praised Birks’s articles of 1985 favouring unjust factors for Scots law and never retracted his views even after Birks’s conversion in 2003 to the civilian sine causa approach. This was inconsistent with the courts’ adoption of the condictiones in Morgan Guaranty and Shilliday itself. The mixed messages are a recipe for uncertainty and muddle.[27]
8. Relation between scope and content of unjustified enrichment. Writing of the choice between unjust factors and absence of legal justification/juristic reason, Professor Häcker has observed, ‘the required “fit” and explanatory reach of an approach depends, to a large extent, on the field it has to cover within a given system.’[28] In English law leading scholars have argued that the scope of unjust enrichment should be restricted to enrichment by transfer.[29] They write of the ‘over-generalisation’ and ‘normative inadequacy’ of the existing English law. Their desire for a ‘small’ enrichment law is consistent with the Supreme Court’s decision in 2017 restricting the English law on unjust enrichment to direct enrichment by transfer and confining recovery of indirect enrichment (at least in transaction chains) to a limited list of recognised regimes.[30]
While some of these criticisms no doubt apply to Scots law,[31] in Scotland, with few exceptions, there is no pressure to reduce the size of unjustified enrichment. Why the difference? One reason may be that, apart from some controversial recent growths,[32] its scope is largely determined by the scope of the three Rs as developed over three centuries. It is an old source of obligation. All of its main parts are needed and indispensable (with some exceptions[33]). There is no better home for them in our law of obligations. The Scots law, despite its defects and recent changes, is not a new, unduly expansionist and unsettling category, uncertain of its place. Moreover unjust(ified) enrichment covers a significantly larger area in Scots law than in English law. The latter lacks the two imposed enrichment categories. Furthermore much of recompense for interference in Scots law is in English law the domain of the strict-liability proprietary torts.[34] Abolition of recompense for enrichment by interference would leave a large gap in our law of obligations.
9. Consolidation, not reappraisal. The help given to Scots law by civilian lawyers was direct in assisting us to develop our own sources but also indirect by accomplishing the astonishing feat of undermining the credibility of the unjust factors system as a working model in English law, its jurisdiction of origin,[35] and a fortiori in Scots law. The effect of Birks’s change of allegiance in 2003 from unjust factors to absence of juristic reason has been traumatic throughout the Common law world. It triggered what in 2006 Lord Walker of Gestingthorpe called a period of reappraisal,[36] which seems to be still on-going in 2022.[37] I do think, however, that our position in Scotland is different. We need a period of consolidation, not reappraisal. If the Scottish academic consensus is right, our legal system has chosen its road through the enrichment forest and we must now strive to make it work well.
10. Unfinished business. It is difficult to effect a major restructuring of the common law by judicial decisions. There seems to be little or no support for codification or legislation. A Restatement backed by an advisory group of judges, practitioners and academics[38] would be a different matter. In developing Scots enrichment law many challenges lie ahead. While no doubt there are many more, a few possible examples of such challenges are set out below with reference also to their discussion in the Reissue:
- In order to complete the restructuring of Scots enrichment law, the four-point test of liability affirmed in Dollar Land should entirely replace the five-point test in Varney. Reissue paras 85-88.
- The doctrine of subsidiarity in Varney should be replaced by the broader requirement of absence of legal justification for the enrichment comprised in the Dollar Land Reissue paras 137-140.
- The Law/Equity divide laid down in Varney should be abrogated. Reissue paras 78-81.
- There is a need to clarify the requirement of ‘mutually agreed understanding’ in the condictio causa data causa non secuta and to make the condictio more effective in preventing unjustified enrichment of one cohabitant at the other’s expense on the termination of the cohabitation. Reissue paras 316-318, 321-322.
- There is a concurrence of causes of action between (a) the condictio cdcns as extended by the Shilliday case[39] to recompense for services, and (b) recompense under the bona fide possessor’s claim for improvements or analogous claims. The tests for liability are different and should be kept distinct but in practice are sometimes mixed and muddled. Judicial guidance on resolving this concurrence is needed. Reissue paras 319, 590-596.
- There is a need to examine the law on testamentary promises in the light of long-standing cases which refused a remedy of recompense to pursuers who have rendered services on the faith of a testamentary promise which is subsequently broken Reissue paras 452-453.
- There is a need to examine the Scots law relating to constructive trusts and constructive trusteeship with a view to assessing whether, and if so how, these remedies should be integrated into Scots law. It is a difficult question whether assets misapplied in breach of fiduciary obligation should invariably have priority in the insolvency of the recipient of the asset. Reissue paras 882-901.
I believe that with our new analytic framework we are now in a better position to meet these and other challenges. As Jacques du Plessis has memorably declared, ‘Long live the law of unjustified enrichment!’[40]
*Note from the editor: This paper is a written version of a talk by Professor Whitty for a seminar of the ECPL that marked the publication the Unjustified Enrichment Reissue within the Stair Memorial Encyclopaedia. Here is a link to the recording of the talk.
[1] In that academic year T B Smith’s neo-civilian crusade against uncritical anglicisation reached a high point: see T B Smith, British Justice: The Scottish Contribution (The Hamlyn Lectures)(1961); idem. Studies Critical and Comparative (1962); idem, A Short Commentary on the Law of Scotland (1962).
[2] Sinclair v Brougham [1914] AC 398 (HL) denying restitution in quasi-contract of benefits conferred under an ultra vires contract because an ultra vires contract could not be imputed to the parties.
[3] Eg Krell v Henry [1903] 2 K B 740. (disallowing restitution following frustration of contract).
[4] Cantiere San Rocco v Clyde Shipbuilding and Engineering Co Ltd 1923 SC (HL) 105; 1923 SLT 624.
[5] The first four editions of Goff & Jones were published in 1966,1978,1986 and 1993; also P Birks, An Introduction to the Law of Restitution in 1985 (rev 1989); unjust enrichment was recognised as a cause of action in Lipkin Gorman v Karpnale [1991] 2 AC 548(HL).
[6] See eg the introduction of the Law-Equity divide as a test of subsidiarity of recompense in Varney (Scotland) Ltd v Lanark Town Council 1974 S C 245; 1976 SLT 46 (2 Div); see also Royal Bank of Scotland v Watt 1991 SC 48; 1991 SLT 13 (text at note 12 below).
[7] See K G C Reid, “The Third Branch of the Profession; The Rise of the Academic Lawyer in Scotland” in H L MacQueen (ed), Scots Law into the 21st Century; Essays in Honour of W A Wilson (1996) 39 at 42, Table 2: the number of full time lecturers rose from 57 in 1960-61 to 190 in 1994-95.
[8] E J Weinrib, Corrective Justice (2012) p 185.
[9] P Birks, “Six Questions in Search of a Subject – Unjust Enrichment in a Crisis of Identity” 1985 JR 227; P Birks, “Restitution – A View of the Scots Law” (1985) 38 CLP 57.
[10] (1) enrichment; (2)’at the expense of’; (3) the reason for reversing the enrichment; (4) no defence.
[11] Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC 151; 1995 SLT 299; (Inner House Court of Five Judges); Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1999 SC (HL) 90; 1998 SLT 992; Shilliday v Smith 1998 SC 725; 1998 SLT 976.
[12] Royal Bank of Scotland v Watt 1991 SC 48; 1991 SLT 13.
[13] Birks (1985) 38 CLP 57 at 63, quoted with approval in Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1999 SC (HL) 90 at 98, 1998 SLT 992 at 998 per Lord Hope.
[14] Birks note 9, passim..
[15] In the paradigm case of a mistaken undue payments, Scots law held the payment recoverable if it was undue and not intended as a donation. Error merely played the subsidiary role of showing that the payment was not a donation. By contrast recovery in English law depended on the mistake which was and is an autonomous unjust factor and the fact that the payment was undue only provided a defence (absence of consideration).
[16] Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1996 SC 327 at 349; 1997 SLT 260 at 271F.
[17] Interference with another’s rights; obtruding benefit by improving another’s property; obtruding benefit by payment of another’s debt; and finally indirect enrichment.
[18] Especially members of the lehrstuhl of Professor Zimmermann at Regensburg and later the the Max-Planck Institute of International and Comparative Private Law in Hamburg.
[19] See A Rodger, “Scottish Advocates in the Nineteenth Century: The German Connection” (1994) 110 LQR 563 at 581.
[20] R Zimmermann, “A road through the enrichment-forest? Experiences with a general enrichment action” (1985) 18 CILSA 1; and see further (apropos the Scots law) idem, “Unjustified Enrichment: The Modern Civilian Approach” (1995) 15 OJLS 403.
[21] Eg Scottish Law Commission, Discussion Paper No 95 on Recovery of Benefits Conferred Under Error of Law (1993), 2 vols.
[22] Eg R Evans-Jones, Unjustified Enrichment, vol 1 (2003); vol 2 (2013); M Hogg, Obligations (2d edn; 2006) 195-201; H MacQueen, Unjustified Enrichment (Law Basics) (3d edn; 2013); Gloag and Henderson, The Law of Scotland (12th edn;2007 ch 25; (15th edn; 2022) ch 24 (forthcoming); Stair Memorial Encyclopaedia, Unjustified Enrichment Reissue (2021) passim.
[23] Eg J E du Plessis, P Hellwege, J Dieckmann.
[24] R Evans-Jones, see note 22; D Visser, Unjustified Enrichment (2008); J du Plessis, The South African Law of Unjustified Enrichment (2012).
[25] Sir Jack Beatson, “Legal academics: forgotten players or interlopers” in A Burrows, D Johnston and R Zimmermann (eds), Judge and Jurist: Essays in Memory of Lord Rodger of Earlsferry (2013) 523 at 527: ‘He considered the assistance would be limited to providing only broad guidance about the development of a field of law because of the need to investigate the detail of the relevant authority and its capacity to be applied within the framework of our own system.’
[26] Shilliday v Smith 1998 SC 725 at 727, 1998 SLT 976 at 978A.
[27] M Hogg, “Continued uncertainties in the analysis of unjustified enrichment” 2013 SLT (News) 111 commenting on Corrie v Craig (31.10.2012; unreported Kirkcudbright Sh Ct); 2013 GWD 1-55.
[28] “Unjust factors versus absence of juristic reason” ch 15 in E Bant, K Barker and S Degeling (eds), Research Handbook on Unjust Enrichment and Restitution (2020) 290 at 299. She continues (ibid): ‘The law of unjust(ified) enrichment is particularly prone to be seen as a mere “gap-filler”: as providing a remedy where the more established fields of law fail to cater for a perceived need. Accordingly, what exactly it means for an enrichment to be ‘unjust’ or ‘unjustified’ is partly predetermined by the type of scenarios that have to be dealt with under this heading.’
[29] L Smith, “Restitution: A new start?” in P Devonshire and R Havelock (eds), The Impact of Equity and Restitution in Commerce (2019) 91; R Stevens, “The unjust enrichment disaster” (2018) 134 LQR 574.
[30] Investment Trust Companies (in liquidation) v HMRC [2017] UKSC 29; [2018] AC 275.
[31] The important maxim, nemo debet locupltari aliena jactura, literally construed, is an example of over-generalisation and normative inadequacy since it lacks the qualification sine causa.
[32] Such as gain-based damages and constructive trusts. However, recompense lies at common law for infringement of intellectual property rights. On principle and secondary authority gratuitous receipt as distinct from ‘knowing receipt’ (bad faith) is arguably in Scotland a basis of liability for the imposition de lege of an institutional constructive trust.
[33] One possible exception is the winding up of contracts: see S Meier, “Unwinding Failed Contracts: New European Developments” (2017) 29 Edin LR 1. Another exception may be recompense for unauthorised fulfilment of another’s obligation ad factum praestandum which is often difficult to justify.
[34] Conversion trespass to goods and trespass to land.
[35] P Birks, Unjust Enrichment (2nd edn; 2005) pp 44 and 113 gave special praise to Professor Sonja Meier’s writings which made a powerful case for the reorientation of the English law of unjust enrichment towards the civilian sine causa approach.
[36] Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL 49 at [158], [2007] 1 AC 558.
[37] For an overview see H Scott, “Comparative taxonomy an introduction’ ch 8 in E Bant et al (eds) Research Handbook (note 26 above) 145.
[38] Cf A Burrows, A Restatement of the English Law of Unjust Enrichment (2012).
[39] Shilliday v Smith 1998 SC 725 at 735, 1998 SLT 976.
[40] J du Plessis, “Long live the law of unjustified enrichment – A response to Jansen” [2019] Acta Juridica 371.
