Unjustified Enrichment: Key Issues in Comparative Part 9 pdf

P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 property, subsidiarity and unjust enrichment 597 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 assist. 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 improve- ments, and if, according to those provisions, the occupier has no claim, then a court would probably also deny a claim based on a general princi- ple against unjustified enrichment. 35 The important point 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 subsidiar- ity 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. 36 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. 37 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; 38 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 pos- sibility of a general weak subsidiarity, nor the need for strong subsidiarity in some cases. 39 35 Gagn ´ e v. Tremblay [1989] RJQ 1619 (Que Ct). 36 As observed in H. Mazaud et al., Leçons de Droit Civil, tome II, vol. I; F. Chabas, Les Obligations (8th edn, 1991), § 709. 37 Civ. (1) 3 June 1997, JCP 1998.II.10102, note Viney. I am grateful to Jean-Pascal Chazal, Universit ´ e Jean Monnet (Saint Etienne), for drawing this case to my attention. 38 As does Viney in his note, ibid. 39 Some French writers have recognised the difference between strong and weak subsidiarity: for example Chabas, Les Obligations, §§ 706–9. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 598 lionel smith 1. Strong subsidiarity The first step will be to examine strong subsidiarity. 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 none the less sue in unjustified enrichment to recover the benefit it has conferred? All legal systems have struggled with this question. 40 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 that made the contract illegal or unenforceable? 41 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 40 For Quebec, see for example Nadeau v. Doyon [1994] RJQ 2267 (Que Ct), citing Quebec and French doctrine. For Germany, Zimmermann and Du Plessis, ‘Basic Features’, 22–4. 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, Illegal Transactions: The Effect of Illegality on Contracts and Trusts (1999), Part II. 41 Dawson took the view that this is not subsidiarity as such: Dawson, Unjust Enrichment, 106; but that is understandable since he was using the term in the sense which in this paper is denoted by ‘weak subsidiarity’. 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, 2044. Still, courts in France (Req. 15 June 1892, S 1893.1.281 note Labb ´ e, DP 1892.1.596; Civ. 12 May 1914, S 1918.1.41 note Naquet; Civ. (3) 29 April 1971, GP 1971.2.554) and Quebec (B ´ edard v. B ´ edard Transport Co. [1960] CS 472) have described this as subsidiarity. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 property, subsidiarity and unjust enrichment 599 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 pro- vided along with other unjustified enrichment claims that apply only to particular fact patterns. For example, in Quebec there is a general en- richment action and also the action for r ´ eception de l’indu. It was held, under the Civil Code of Lower Canada, that the general claim is not ap- propriate where the facts fit the claim for r ´ eception de l’indu, even though the latter claim could not succeed. 42 Another example is provided by ar- ticles 955 ff., which govern the position relating to a landowner’s obli- gation to pay for improvements to land; there is no room for the gen- eral enrichment action where these provisions are apt to decide the case, even if no claim lies under them. 43 Similarly, in German law the provi- sions governing the ‘owner–possessor relationship’ expressly exclude any other enrichment remedy on facts within that relationship. 44 In both of these systems, where a plaintiff can claim his expenses for managing the business of another, unjustified enrichment is excluded. 45 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 ones. 46 (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 42 Willmor Discount Corp. v. Vaudreuil (City) [1994] 2 SCR 210 at 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 had prescribed, however, the conclusion could rest on weak subsidiarity: see 608–9. 43 Gagn ´ e v. Tremblay [1989] RJQ 1619 (Que Ct). 44 § 993(1), last half-sentence. In German law if the plaintiff has an enrichment claim based on a ‘performance’, he may not bring any other kind of enrichment claim against that defendant. For further discussion, see below, 604. 45 In Quebec, the general enrichment action is subsidiary to all claims, as discussed in the next section. For Germany, see Markesinis et al., Law of Contracts, 768 (noting that claims against the manager may attract concurrent liability under both regimes). 46 Note, however, the suggestion in A. S. Burrows, ‘Free Acceptance and the Law of Restitution’, (1988) 104 LQR 576, 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, 144–5. This, however, would probably be weak subsidiarity. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 600 lionel smith way is a claim in unjustified enrichment available. 47 An initial reaction might be to see 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. It is not true to say that claims in unjustified enrichment are subsidiary to claims in breach of contract, because in all of the systems under consid- eration 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 either as a contractual one or as founded on unjustified enrichment. 48 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. 49 One might try to formulate the relevant principle by saying that en- richment claims are weakly subsidiary to primary contractual rights. This would reflect the general position that there can be no enrichment claim 47 That is, the plaintiff must show that the contract was void or unenforceable ab initio, or has been avoided or terminated. German law: Markesinis et al., Law of Contracts, 45. Quebec law: Challies, Doctrine of Unjustified Enrichment, 95–6; J. Pineau, D. Burman and S. Gaudet, Th ´ eorie des Obligations (3rd edn, 1996), 305–6, 601–2. Common law: Pan Ocean Shipping Co. Ltd v. Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164F (HL) per Lord Goff; Singh v. Singh (1992) 71 BCLR 2d 336; [1993] 2 WWR 59 (CA); 337965 B.C. Ltd v. Tackama Forest Products Ltd (1992) 67 BCLR 2d 1; 91 DLR 4th 129 (CA), leave to appeal refused [1993] 1 SCR v; Building Design 2 Ltd v. Wascana Rehabilitation Centre [1992] 6 WWR 343 (Sask QB); Hesjedal v. Granville Estate (1993) 117 Sask R 2d 111; 109 DLR 4th 353 (QB); Scott v. Noble (1994) 99 BCLR 2d 137 (CA); Luscar Ltd v. Pembina Resources Ltd (1994) 24 Alta LR 3d 305; [1995] 2 WWR 153 (CA), §§ 111–22, leave to appeal refused [1995] 3 SCR vii; Windisman v. Toronto College Park Ltd (1996) 28 OR 3d 29; 132 DLR 4th 512 (Gen Div). 48 R. Zimmermann, ‘Restitution After Termination for Breach of Contract in German Law’, [1997] Restitution LR 13, 17–18: 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 (6th edn by J L. Aubert, 1994), vol. II, 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 arts. 1699–707 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. 49 Zimmermann, ‘Restitution After Termination’, 18, apparently disagreeing with the majority view; D. P. Visser, ‘Rethinking Unjustified Enrichment: A Perspective of the Competition between Contractual and Enrichment Remedies’, [1992] Acta Juridica 203, 209–10. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 property, subsidiarity and unjust enrichment 601 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, unjusti- fied enrichment is excluded even where there are no primary rights. This can be illustrated by Rillford Investments Ltd v. Gravure International Capital Corp. 50 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 ar- rangement would end after sixty 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 ex- ecuted, 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 enrich- ment, 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’. 51 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 enrich- ment claim. The decision was made under the common law, but one could expect a similar holding in each of the systems under consideration. If so, it follows that the unavailability of unjust enrichment in the contractual context cannot be understood through weak subsidiarity. Rather, the exis- tence 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 subsidiarity. 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 50 (1997) 118 Man R 2d 11; [1997] 7 WWR 534 (CA). 51 Ibid., § 30. 52 S. Smith, ‘Concurrent Liability in Contract and Unjust Enrichment’, (1999) 115 LQR 245. See also Visser, ‘Rethinking Unjustified Enrichment’, 231–6. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 602 lionel smith 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 Where there is a relevant distribution of risks and rewards between plain- tiff and defendant, enrichment claims are in general 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 con- tract 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 Boudier decision, 53 the case in which the Cour de cassation recognised the actio de in rem verso as a general enrichment remedy. The plaintiff contracted with a lessee of land to fertilise 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 situa- tion 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 fertiliser, and, with his right to payment still in- tact (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 article 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 un- der Quebec law (as in France) the claim lies only if both the enrichment and the impoverishment were unjustified. 57 53 Req. 15 June 1892, S 1893.1.281 note Labb ´ e, DP 1892.1.596. 54 At 616. 55 Challies, Doctrine of Unjustified Enrichment, 30. 56 Contrast art. 1494, which establishes a relationship of weak subsidiarity between claims in unjustified enrichment and other claims: see below, 607–8. 57 Art. 1493. Surprisingly, however, it is suggested in Pineau et al., Th ´ eorie, 406–7, that a claim in unjustified enrichment would be available in this situation. Cf. Pavage Rolland Fortier Inc. v. Caisse Populaire Desjardins de la Plaine [1998] RJQ 1221 at 1227 (SC), although citing French doctrine. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 property, subsidiarity and unjust enrichment 603 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 circum- stances 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 re- distribute risks for which provision has been made under an applicable contract’. 59 John Dawson said that the denial of recovery was ‘almost un- challenged’ in US 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 escap- ing 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 ten- tative 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, alawyer. 63 In Peter Birks’s 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 the assumptions of 58 Harris v. Nugent (1996) 193 AR 113; 141 DLR 4th 410 (CA); Toronto-Dominion Bank v. Carotenuto (1997) 154 DLR 4th 627 (CA). See also Nicholson v. St Denis (1975) 8 OR 2d 315; 57 DLR 3d 699 (Ont CA), leave to appeal to SCC refused. 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. For other cases denying recovery, but with a slight factual twist on this basic pattern, see below, n. 77. 59 Pan Ocean Shipping Co. Ltd v. Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 166E–F (HL). 60 J. P. Dawson, ‘Indirect Enrichment’, in: E. von Caemmerer, S. Mentschikoff and K. Zweigert (eds.), Ius Privatum Gentium: Festschrift f ¨ ur Max Rheinstein (1969), vol. II, 789, 805, with citations to US authority; see also J. P. Dawson, ‘The Self-serving Intermeddler’, (1974) 87 Harvard LR 1409, 1444–50. 61 Dawson, ‘Indirect Enrichment’, 805. The special treatment of lawyers was the jumping-off point of Dawson’s important article ‘The Self-serving Intermeddler’, and Dawson returned to the theme in ‘Lawyers and Involuntary Clients: Attorney Fees from Funds’, (1974) 87 Harvard LR 1597 and ‘Lawyers and Involuntary Clients in Public Interest Litigation’, (1975) 88 Harvard LR 849. 62 (1993) 15 OR 3d 387 (Gen Div). 63 Taylor (SA) Building Ltd v. Von Muenchhausen (1995) 165 NBR 2d 219; 424 APR 219 (CA). P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 604 lionel smith the current chapter, 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 that requires only that the plaintiff conferred the enrich- ment on the defendant. 64 The present chapter is attempting to analyse this additional principle. Consider the position on this point in Germany, where the law is abso- lutely 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 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 of Leistung serves as a compass in this ter- ritory; once one has found who has performed to whom, one will normally know the right plaintiff and the right defendant for an action in unjusti- fied 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 enrich- ment claim by the plaintiff against the defendant is excluded. 68 (ii) Defendant’s contract with a third party What if it is the defendant who is in a contractual relationship with some third party, and that relationship contemplates provision of the 64 This is supported by the contributions to this volume of Daniel 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. 65 Zimmermann and Du Plessis, ‘Basic Features’, 25; Markesinis et al., Law of Contracts, 720. The translation ‘performance’ is that of Markesinis et al.; Zimmermann and Du Plessis translate Leistung as ‘transfer’. 66 Markesinis et al., Law of Contracts, 719. 67 Zimmermann and Du Plessis, ‘Basic Features’, 37, discussing possible exceptions at 37–8; Markesinis et al., Law of Contracts, 723. 68 The 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. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 property, subsidiarity and unjust enrichment 605 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 case of the plaintiff’s contract with a third party; 71 the denial of recovery 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 the assumption here is 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 plain- tiff 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 de- fendant contracted, or a fourth party. Under German law, since in this case the plaintiff was making a performance toward his contractual coun- terparty, his only claim will be an enrichment claim against that coun- terparty. Quebec law appears to generate the same conclusion. Liability for unjustified enrichment under article 1493 is defeated if either the de- fendant’s enrichment or the plaintiff’s impoverishment is justified; under article 1494, ‘[e]nrichment or impoverishment is justified where it results 69 This point is taken in Dawson, ‘The Self-serving Intermeddler’, 1446–7. 70 See, however, Turf Masters Landscaping Ltd v. TAG Developments Ltd (1995) 143 NSR 2d 275; 411 APR 275 (CA), leave to appeal refused (1996) 151 NSR 2d 240; 440 APR 240 (SCC). This was a ‘combination’ case as discussed in the next section: the plaintiff and the defendant both had contracts with the same third party (but not with each other); the Court’s denial of the claim was based on the non-enrichment of the defendant. 71 Above, 602–4 and n. 64. 72 It 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., Law of Contracts, 731–2. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-21 October 10, 2001 23:21 Char Count= 0 606 lionel smith from the performance of an obligation’. So in this case of defendant’s con- tract 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. 74 (iii) Combinations 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, as where a building project involves a general contractor and sub-contractors. The owner of the site contracts with the general contractor, and the general contractor con- tracts with sub-contractors. If the general contractor becomes insolvent, can the sub-contractors sue the owner in unjustified enrichment? There will often be legislative solutions to assist the sub-contractors, such as the possibility of registering a real security interest in the land, or a statu- tory trust fund of payments made by the owner to the general contractor which is for the benefit of sub-contractors. Such solutions are motivated by policies aimed at protecting the sub-contractors, 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 principle. 76 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 73 As noted in Simon Whittaker’s contribution to this volume, 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. None the less, note that in discussing the position under the Civil Code of Lower Canada (and in French law), Challies, Doctrine of Unjustified Enrichment, 104–12, was of the view that no claim could be made in such a case. 74 Friesen (P. H.) Ltd v. Cypress Colony Farms Ltd (1993) 87 Man R 2d 250 (QB) suggests that the defendant’s contract with a third party is not a bar. 75 Dawson, Unjust Enrichment, 125. See also his ‘Indirect Enrichment’ 802–3 and ‘The Self-serving Intermeddler’, 1450–7. 76 In order to deny a claim in unjustified enrichment where the statutory protection was unavailable, it would also have to be a strong subsidiarity principle. [...]... relevant: Pineau et al., Th´orie, e 406–7; Pavage Rolland Fortier Inc v Caisse Populaire Desjardins de la Plaine [ 199 8] RJQ 1221 at 1227, citing French doctrine [ 199 9] 2 AC 3 49; [ 199 8] 4 All ER 513 The argument was built on points made in P B H Birks, ‘No Consideration: Restitution After Void Contracts’, ( 199 3) 23 University of Western Australia LR 195 , 230, n 137 Guinness Mahon & Co Ltd v Kensington and... have 77 78 79 Pan Ocean Shipping Co Ltd v Creditcorp Ltd [ 199 4] 1 WLR 161 (HL); Turf Masters Landscaping Ltd v TAG Developments Ltd ( 199 5) 143 NSR 2d 275; 411 APR 275 (CA), leave to appeal refused ( 199 6) 151 NSR 2d 240; 440 APR 240 (SCC); Hussey Seating Co (Canada) Ltd v Ottawa (City) ( 199 7) 145 DLR 4th 493 (Gen Div) affirmed ( 199 8) 41 OR 3d 254 (CA) Writing particularly of the three-party building contract... 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 103 ( 199 7) 118 Man R 2d 11; [ 199 7] 7 WWR 534 (CA) P1: FCH/FYX P2: FCH/FYX CU074-Johnston... status now uncertain) of Canadian constitutional law .97 Sometimes it is possible for a provincial legislature and the federal Parliament both to pass legislation which overlaps in its effects, each level of government being able to point to jurisdictional powers to justify the 93 94 95 96 97 Upon the institution of the Judicature Act system, consolidating the two legal regimes into a single court, it... Meditation on Institutes 3.13’, in: P Birks (ed.), The Classification of Obligations ( 199 8), 1; also his ‘Misnomer’, in: W Cornish, R Nolan, J O’Sullivan and G Virgo (eds.), Restitution: Past, Present and Future ( 199 8), 1; and his ‘The Law of Restitution at the End of an Epoch’, ( 199 9) 28 University of Western Australia LR 13 See, for example, Spring v Guardian Assurance plc [ 199 5] 2 AC 296 , where the... 137 Guinness Mahon & Co Ltd v Kensington and Chelsea Royal LBC [ 199 9] QB 215 (CA) See Lord Goff at [ 199 8] 3 WLR 1126–7; Lord Hope at 1153H Birks himself has now made this point: P B H Birks, ‘Restitution at the End of an Epoch’, ( 199 9) 28 University of Western Australia LR 13, 37 9; see also L D Smith, ‘Restitution for Mistake of Law’, [ 199 9] Restitution LR 148, 157 P1: FCH/FYX P2: FCH/FYX CU074-Johnston... significance to the question of taxonomy Indeed the English law of tort is, in all probability, incapable of being analysed within a single classificatory framework given the extent to which the torts intersect and cut across each other’s boundaries.5 Provided 3 4 5 As a result of the Contracts (Rights of Third Parties) Act 199 9 The Act has not abolished the doctrine of privity; in the words of the Law Commission,... wide-ranging exception to the third party rule but it leaves the rule intact for cases not covered by the statute’ (Privity of Contract: Contracts for the Benefit of Third Parties: Law Com No 242, 199 6, § 5.16) See, for example, P Birks, ‘Equity in the Modern Law: An Exercise in Taxonomy’, ( 199 6) 26 University of Western Australian LR 1; also his ‘Property and Unjust Enrichment: Categorical Truths’, [ 199 7]... 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 in uence on the law of... 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 that 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 . per Lord Goff; Singh v. Singh ( 199 2) 71 BCLR 2d 336; [ 199 3] 2 WWR 59 (CA); 33 796 5 B.C. Ltd v. Tackama Forest Products Ltd ( 199 2) 67 BCLR 2d 1; 91 DLR 4th 1 29 (CA), leave to appeal refused [ 199 3] 1 SCR. 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 103 ( 199 7) 118 Man R 2d 11; [ 199 7] 7 WWR. Hussey Seating Co. (Canada) Ltd v. Ottawa (City) ( 199 7) 145 DLR 4th 493 (Gen Div) affirmed ( 199 8) 41 OR 3d 254 (CA). Writing particularly of the three-party building contract cases in US law, Dawson,