Unjustified Enrichment: Key Issues in Comparative Part 10 doc

P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 rationality, nationality and taxonomy 677 explained as based upon unjustified enrichment, 115 but the matter awaits exploration. 7. Unjustified enrichment and bankruptcy Legal systems will generally not allow an enrichment claim to prevail over the right of a bona fide purchaser for value from the enrichment- debtor but may sometimes allow an enrichment claim to prevail over the enrichment-debtor’s creditors on his bankruptcy. 116 Bankruptcy involves at least two transactional links in a transmission chain. The first link involves a benefit passing from an unsecured creditor to the bankrupt by the creditor’s transfer or the bankrupt’s wrongful misappropriation. The second link involves the sequestration or adjudication in bankruptcy transferring the bankrupt’s assets to the trustee for the creditors. Where a creditor has a personal right against the bankrupt, say for the unpaid price of goods or services, he cannot claim in the debtor’s bankruptcy for a preference for his claim on the ground that the gen- eral creditors have been unjustifiably enriched by their sequestration or attachment in the bankruptcy proceedings of the goods or the product of the services. 117 This is consonant with the principle of the parity of the general creditors of an insolvent and the fact that the vesting in the trustee in bankruptcy is not sine causa. 118 Much more frequently litigated is the question whether a right to the re- dress of unjustified enrichment in the first transactional link should have a priority or preference in the enrichment-debtor’s subsequent bankruptcy in competition with his general, unsecured creditors. This should depend on which specific ground of redress (‘unjust factor’) of the bankrupt’s un- justified enrichment (through the first transactional link) is relied on by the enrichment-creditor. 119 English lawyers speak of the need to examine 115 Cf. R. Chambers, Resulting Trusts (1997), who contends that in English law resulting trusts reverse unjust enrichment. 116 Why the difference? Two traditional reasons are that the general creditors when extending credit rely on the bankrupt’s personal credit not on his ownership of any asset, and, when bringing or claiming in bankruptcy proceedings, do not give new consideration. E.g. Heritable Reversionary Co. Ltd v. Millar (1892) 19 R (HL) 43 at 47–8 per Lord Watson. The same reasoning applies to a bankrupt’s donee. 117 Here there is a contract in the first transactional link (between the creditor and the bankrupt) and an enrichment claim in the form of a claim for a preference arising out of the second link (the sequestration in bankruptcy). Mess v. Sime’s Tr (1898) 1 F (HL) 22; affirming 25 R 398; [1899] AC 233. 118 Ibid. 119 For the Scots law, see Whitty, ‘Indirect Enrichment’, 267–9. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 678 niall r. whitty all the unjust factors from this standpoint. 120 This is discussed below when considering indirect enrichment in Section VIII. V. Obligations to redress unjustified enrichment distinguished from other categories of obligations The label ‘unjustified enrichment’ invokes the measure of recovery as the criterion determining the scope of the types of obligations which it describes. Several legal doctrines are concerned to some extent with the redress of unjustified enrichment, so the boundaries between enrichment law and other legal categories are not always clear. 121 1. The interface with contract law The English enrichment law revolution has rescued the subject from the fringes of contract law and destroyed the implied contract fiction. The fiction was never the basis of the civil-law and mixed systems. They char- acterise obligations to redress enrichment as obediential (arising by op- eration of law) and so springing from a different source than obligations assumed voluntarily by contract or promise. In Scots law, demarcation disputes can arise on the boundary between enrichment law and contract law 122 but in principle the distinction is clear. 2. The interface with fiduciary obligations in Scots law Views may differ on how the category of fiduciary obligations fits into the masterplan of the Scottish law of obligations which ought in prin- ciple to be unitary. For several reasons, however, it is probably better to 120 E.g. Swadling, ‘New Role?’; Smith, Law of Tracing, chap. 8 on ‘Proprietary claims’. 121 As regards remedies, it might be helpful if Scots law were to adopt Lionel Smith’s lucid and precise distinction between (i) ‘disgorgement’ whereby D surrenders (i.e. gives up) his enrichment to P; (ii) ‘compensation’ or ‘reparation’ whereby D pays P the amount of P’s loss; and (iii) ‘restitution’ whereby D surrenders (i.e. gives back) his enrichment to P to compensate P for his loss. Restitution (iii) is a combination of disgorgement (i) and compensation (ii). See L. D. Smith, ‘The Province of the Law of Restitution’, (1992) 71 Canadian Bar Review 672 at 695–7. In Scots law (unlike English law) ‘damages’ always has reference to compensatory damages. In this perspective, the term ‘restitutionary damages’ (fashionable in English law) is a misnomer because it is a synonym for ‘disgorgement’ and is therefore neither ‘damages’ in the Scottish sense nor ‘restitutionary’ in the normal or natural sense. The verb ‘disgorge’ is sometimes found in older Scots cases. The older Scottish synonym for ‘to disgorge’ was ‘to make furthcoming’, still used in the law of diligence. 122 See H. L. MacQueen, ‘Contract, Unjustified Enrichment and Concurrent Liability: A Scots Perspective’, [1997] Acta Juridica 176. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 rationality, nationality and taxonomy 679 classify fiduciary obligations to account for and surrender unauthorised gains separately from obligations under the general law for the redress of unjustified enrichment. For example, the fiduciary’s enrichment is not necessarily ‘at the expense of’ the constructive beneficiary: rather, it arises from a wrong against him (breach of fiduciary obligation) even in the ab- sence of mirror loss on his part. 123 Moreover, the rationale is different. 124 Arguably the law on the special obligations of fiduciaries differs from the law on unjustified enrichment in that the policy behind it is not so much to redress an imbalance as to encourage high standards of probity. The status of a fiduciary obligation is unclear and it may be that it only arises within the context of some already existing branch of law. 125 Again, a breach of fiduciary obligation 126 attracts the privileges of a constructive trust and tracing, which are not normally available for breaches of obli- gations to redress unjustified enrichment. 3. The interface with delict The big question here is whether there is a category of enrichment from wrongs, ‘or whether that category is redundant, and perhaps incoherent, if a category such as “enrichment from invasion of rights”is recognised’. 127 German law has chosen a category of ‘encroachment on rights’ (the Eingriffskondiktion). 128 Stemming from the old doctrine of ‘waiver of tort’, 129 the dominant English view is that an enriched person is liable to redress an enrichment arising from his own act only if (a) the act is a tort or equitable wrong and (b) the wrong is one of those for which restitution lies. 130 The role of enrichment law is to add the remedy of disgorgement (surrender of enrichment without mirror loss) to the usual remedy of 123 See J. Blackie, ‘Enrichment and Wrongs in Scots Law’, [1992] Acta Juridica 23. 124 See Clive, Draft Rules, 93. 125 Gretton, ‘Constructive Trusts’, 290. 126 Or the mala fide or gratuitous acquisition of ‘trust property’ from a fiduciary in breach. 127 J. Blackie, ‘Enrichment, Wrongs and Invasion of Rights in Scots Law’, [1997] Acta Juridica 284 reprinted in: Visser, Limits of the Law of Obligations, 284. It is convenient to address this question here, though ‘wrongs’ might include not only torts/delicts but also breaches of contract or of trust. 128 See Gallo, ‘Unjust Enrichment’, 449; Zimmermann and Du Plessis, ‘Basic Features’, 28–39; Markesinis, Lorenz and Dannemann, Law of Contracts, 710 ff.; R. Zimmermann, ‘Unjustified Enrichment: The Modern Civilian Approach’, (1995) 15 Oxford JLS 403, 418–21. 129 I.e. the rule under which the plaintiff may elect to sue in restitution to recover the defendant’s unjustified enrichment rather than in tort for damages. 130 D. Friedmann, ‘Restitution for Wrongs: The Basis of Liability’, in: Cornish et al., Restitution, 133. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 680 niall r. whitty damages compensating for loss. 131 This ‘parasitic’ theory has been attacked. 132 Within enrichment law the concept of ‘encroachment on rights’ differs from the notion of wrong because liability may arise even though the mental element (malice, intent or negligence) required for wrongfulness is missing. It may be that English law can work with ‘resti- tution for wrongs’ only because some English torts (for example, conver- sion) attract strict liability. On that view Scots law, which has not received these torts, cannot with advantage take over the English concept. 133 It is thought that Scots law does and should allow redress of unjustified enrich- ment arising out of encroachments on patrimonial rights independently of delict. The existence of a category of encroachment on rights wider than delict has taxonomic implications explored below. 134 A claim for disgorge- ment of profits arising from a delict encroaching on patrimonial rights (for example, wrongful use of another’s property or confidential informa- tion) would not be inconsistent with the rule against punitive damages: ‘there is no public policy against allowing unjustified enrichments to be redressed – quite the reverse – and it therefore seems that the policy against punitive damages is based on upholding the purity of the idea that damages are for the compensation of loss and resisting the idea that the civil courts should have a broad discretion to punish for conduct of which they disapprove’. 135 4. Other excluded or doubtful categories Some other categories of obligations concerned with restoring or sur- rendering enrichments 136 have rules of their own and do not fall under the general law of obligations for the redress of unjustified enrichment, namely rights of relief of cautioners and co-obligants; 137 subrogation of 131 Ibid., 133, 134. 132 J. Beatson, ‘The Nature of Waiver of Tort’, in: J. Beatson, The Use and Abuse of Unjust Enrichment (1990), 206; S. Hedley, ‘The Myth of Waiver of Tort’, (1984) 100 LQR 653; N. J. McBride and P. McGrath, ‘The Nature of Restitution’, (1995) 15 Oxford JLS 33 at 44, 45 (arguing that claims in respect of the defendant’s unauthorised use of the plaintiff’s property involve a wrong but the wrong is incidental to, and not the basis of, the plaintiff’s claim); Friedmann ‘Restitution for Wrongs’ (arguing that, under his ‘independent claim theory’, liability is founded on the defendant’s enrichment by the ‘invasion or appropriation’ of the plaintiff’s ‘protected interest’ as defined by enrichment law not tort law). 133 I am indebted to Dr Sonja Meier for this observation. 134 Section VII, 3, below. 135 Clive, Draft Rules, comment on rule 11(1), page 82. In its report on Breach of Confidence (Scot Law Com No. 90, 1984, § 4.98) the Scottish Law Commission recommended that the remedy of an accounting for profits should be available in respect of a knowing and deliberate breach of an obligation of confidence. 136 Clive, Draft Rules, comment on rule 12, 92. 137 In actions of relief, there is no defence of change of position. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 rationality, nationality and taxonomy 681 insurers or of those who have paid an indemnity; 138 the rules derived from thecaseofWalker v. Milne; 139 and general average or salvage. In negotiorum gestio, unjustified enrichment provides neither the ground of action, nor the measure of recovery, in the gestor’s claim (the actio negotiorum gestorum contraria). The gestio must have been useful but in principle ‘initial utility’ suffices 140 so that the dominus may be liable though not enriched. Further, apart from certain isolated cases, 141 the measure of recovery is limited to the gestor’s expenses (if initially useful) and outlays and does not extend to the full enrichment of the dominus. 142 Negotiorum gestio is separately regulated in all the codes. 143 VI. The internal taxonomy of obligations to redress unjustified enrichment 1. Overview In enrichment law, the complexities of three-party situations present espe- cially difficult legal problems and some of them attract rules of their own, which are examined in Section VIII. This section is mainly confined to two- party cases. With the breakdown of its centuries-old system of classifying obligations for redress of unjustified enrichment, Scots law has to reor- ganise its principles and rules in accordance with a new taxonomy. This section first places Scots enrichment law in its comparative context. It be- longs in the same tradition as civil-law systems, which distinguish between enrichment by transfer (the modern successor of the condictio indebiti) and other modes of acquiring enrichment. The main English taxonomies are 138 Now regarded in England as a remedy to redress unjust enrichment: Goff and Jones, Law of Restitution, chap. 3, 120 ff. 139 (1823) 2 S 379; (1824) 3 S 123; (1825) 3 S 478 (whereby loss suffered or expenditure incurred in the expectation of a contract may in certain circumstances be recovered). 140 R. D. Leslie, ‘Negotiorum Gestio in Scots Law: The Claim of the Priviliged Gestor’, [1983] JR 12, 15, 16, 28–32; D. H. van Zyl, Negotiorum Gestio in South African Law (1985), 40–6; S. J. Stoljar, ‘Negotiorum Gestio’, in: International Encyclopedia of Comparative Law (1984), vol. X, chap. 17, §§ 49–54, 99–102; N. R. Whitty, ‘Negotiorum Gestio’, in: Stair Memorial Encyclopaedia (1996), vol. XV, §§ 117–20; Stair, Institutions, Book I, Title 8, 3. 141 Stoljar, ‘Negotiorum Gestio’, § 171; van Zyl, ‘Negotiorum Gestio’, 84–118; Whitty, ‘Negotiorum Gestio’, §§ 137–41. 142 Stoljar, ‘Negotiorum Gestio’, 52; van Zyl, ‘Negotiorum Gestio’; Whitty, ‘Negotiorum Gestio’, § 121. 143 E.g. France, Code civil (1804), arts. 1372–5; Netherlands, Burgerlijk Wetboek (1992), arts. 6:198–6:202; Germany, BGB (1900), §§ 677–87; Italy, Codice civile (1942), arts. 2028–32; Switzerland, OR (1912), §§ 419–24; Austria, ABGB (1811), §§ 1035–40; Civil Code of Quebec (1991), arts. 1482–90; Louisiana Civil Code (revised articles inserted in 1996), arts. 2292–7. For a comparative survey of codal provisions in 1985, see van Zyl, ‘Negotiorum Gestio’, chap. 6. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 682 niall r. whitty unsuitable models for Scots law, though that of Birks has some Scottish supporters. All these approaches provide that an enrichment at another’s expense is ‘unjustified if ’ certain grounds are established. On Clive’s alter- native approach, an enrichment at another’s expense is ‘unjustified unless’ it is justified by a legal cause or public policy. The section then argues in more detail that the Wilburg/von Caemmerer plan of German enrichment law would fit the Scottish legal terrain and accord best with the natural development of the Scots law. 2. The existing laws and models: civilian and mixed systems (a) Transfer (repetition of the undue) and enrichment without cause Many European legal systems draw a distinction between repetition of an undue transfer and a residual category of redress of enrichment without cause or unjustified enrichment. Repetition of the undue stems by direct lineage from the condictiones of the Roman law. These regulated restitution of property and money transferred by the claimant directly to the enriched party without legal cause. Two limitations were important which have left marks on the modern law. 144 First, the condictiones reversed the transfer (datio) of money or a thing and did not provide recompense for the value of services (a factum) performed without legal ground. 145 This limitation remains in some codes requiring separate articles or supplement outside the codes 146 and distinguishes restitution from recompense in Scots law. 147 Secondly, for any of the relevant condictiones to lie, there had to be a direct legal transaction (negotium) between the parties 148 so that such a condictio could not redress ‘indirect enrichment’ – for example, enrichment arising from a contract between two others. The residual category of unjustified enrichment derives from scattered texts and forms of action of Roman law, as developed by the ius commune 149 or even by post-codal judicial decisions as, famously, in France. 150 144 De Vos, ‘Liability arising from Unjustified Enrichment’, 131, 137. 145 Ibid., 131. 146 See the codes in France, Italy, Quebec and Louisiana described below. 147 Stair, Institutions, Book I, Title 7 (restitution); Book I, Title 8 (recompense). 148 Celsus D. 12, 1, 32; De Vos, ‘Liability arising from Unjustified Enrichment’, 131; R. Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (paperback edn, 1996), 853–4, 874, 880–1; J. Hallebeek, ‘Developments in Mediaeval Roman Law’, in: E. J. H. Schrage (ed.), Unjust Enrichment: The Comparative Legal History of the Law of Restitution (1995), 59, 108–11. 149 Especially the actio de in rem verso; the action against the pupil (the actio in quantum locupletior factus est); and the actio negotiorum gestorum contraria in its role as an enrichment action. 150 Boudier decision, Req. 15 June 1892, S 1893.1.281. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 rationality, nationality and taxonomy 683 (b) From indebitum solutum to ‘enrichment by transfer’ French law deals with paiement de l’indu in the Code civil (1804) 151 and developed the actio de in rem verso by judicial decisions as a remedy for l’enrichissement sans cause outside the code in the late nineteenth century. 152 In Italian law, following the French pattern and influence, the first na- tional code of 1865 catered for pagamento dell’indebito leaving a judicial remedy for ‘enrichment without cause’ (arrichimento senza causa)tobede- veloped outside the code. 153 The Codice civile of 1942 expressly recognised the latter and enacted separate provisions on both. 154 The very recent co- dal revisions in Quebec 155 and Louisiana, 156 the two main mixed systems within the French tradition, have done the same. The Dutch Civil Code of 1838, while recognising the condictio indebiti and some other specific en- richment cases, lacked a general enrichment obligation. 157 The new Civil Code (Burgerlijk Wetboek) of 1992, after regulating ‘undue performance’ in nine articles, introduces a statutory general obligation for redress of un- justified enrichment separately in another article. 158 A similar distinction is made by the Swiss Code of Obligations 159 and the Austrian General Civil 151 Arts. 1376–81. 152 Dawson, Unjust Enrichment, 98–107; Nicholas, ‘Unjustified Enrichment’, 622 ff. 153 P. Gallo, ‘Remedies for Unjust Enrichment in the History of Italian Law and in the Codice Civile’, in: Schrage, Unjust Enrichment 275, 275–8. 154 Ibid., 278 ff. For pagamento dell’indebito, see arts. 2033–40; for arrichimento senza causa, see arts. 2041, 2042. 155 Quebec Code Civil (1991), Book 5 (Obligations), Title 1 (Obligations in general), chapter IV (Other sources of obligations), Section II (Reception of a thing not due), arts. 1491, 1492; Section III (Unjust enrichment), arts. 1493–6; (art. 1492 applies the rules on prestation of payments in arts. 1699–707). 156 Louisiana Civil Code (1995), art. 2298 (enrichment without cause: compensation); arts. 2299–305 (payment of a thing not owed). See C. L. Martin, ‘Louisiana State Law Institute Proposes Revision of Negotiorum Gestio and Codification of Unjust Enrichment’, (1994) 69 Tulane LR 181; P. Birks, ‘Obligations Arising Without Agreement Under the Louisiana Civil Code’, [1997] Restitution LR 222. 157 In the leading case of Quint v. Te Poel, NJ 1959, 546, the Hoge Raad ‘held that in unjust enrichment cases for which there is no express statutory basis, an action for recovery may nonetheless be awarded if this fits in “the system of law” and if it can be linked with cases which have been expressly dealt with by statute’: H. L. E. Verhagen and N. E. D. Faber, ‘A Trace of Chase Manhattan in the Netherlands’, [1998] Restitution LR 165. 158 Book 6 (General part of the law of obligations), Title 4 (Obligations from a source other than delict or contract), Section 2 (Performance not due), arts. 6:203–6:211; Section 3 (Unjustfied enrichment), art. 6.212. See E. J. H. Schrage, ‘The Law of Restitution: The History of Dutch Legislation’, in: Schrage, Unjust Enrichment, 323; E. Schrage, ‘Restitution in the New Dutch Civil Code’, [1994] Restitution LR 208; also published with modification in P. W. L. Russell (ed.), Unjustified Enrichment: A Comparative Study of the Law of Restitution (1996), 9. 159 Code des Obligations, arts. 62 II and 63 I. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 684 niall r. whitty Code (ABGB). 160 In South African law, the condictiones survive 161 and are supplemented by other forms of action. 162 A general enrichment action existed in classical Roman-Dutch law and there is pressure to reintroduce it in South African law, but as yet without success. 163 Showing its age, the French code is relatively narrow. Following the Roman condictiones, it does not cover recompense for services, which still falls under the judge-made ‘enrichment without cause’. Following ‘a sys- tematic idiosyncrasy of Domat’, it does not cover the restoration of ben- efits conferred under an invalid contract. 164 It appears that Italian law is getting rid of these restrictions. 165 The new Dutch version of the con- dictio indebiti provides (in article 6:203) not only for restitution of money and property but also in respect of other benefits – for example, services. On the other hand, the Quebec and Louisiana versions of the condictio indebiti 166 do not apply to services which are governed by the articles on enrichment without cause. 167 In South African law it is disputed whether a condictio lies for services. 168 (c) Scots law At least until very recently, the uncodified mixed system in Scotland belonged in the same tradition, distinguishing between restitution and 160 §§ 1431 ff. ABGB. 161 De Vos, ‘Liability arising from Unjustified Enrichment’, 236; G. Lotz (rev. A. de W. Horak), ‘Enrichment’ in: W. A. Joubert (ed.), The Law of South Africa (first reissue), vol. IX; D. P. Visser, ‘Unjustified Enrichment’, in: D. Hutchison (ed.), Wille’s Principles of South African Law (8th edn, 1991), chap. XXXVIII; S. Eiselen and G. Pienaar, Unjustified Enrichment: A Casebook (2nd edn, 1999). 162 Notably the action against a person of limited capacity; the action for work done or services rendered; the action for improvements to another’s property; and the enrichment action of the negotiorum gestor: see previous note. 163 In Nortje v. Pool 1966 (3) SA 96 (A) the majority of the Appellate Division (Rumpff JA dissenting) held that a general enrichment action did not yet exist; see Visser, ‘Unjustified Enrichment’, 630, 631; R. Zimmermann, ‘A Road Through the Enrichment Forest?’ (1985) 18 CILSA 1; D. H. van Zyl, ‘The General Enrichment Action is Alive and Well’, [1992] Acta Juridica 115; R. Feenstra, ‘Grotius’ Doctrine of Unjust Enrichment as a Source of Obligation: Its Origin and its Influence in Roman-Dutch law’, in: Schrage, Unjust Enrichment, 197; Eiselen and Pienaar, Unjustified Enrichment, 10 ff.; D. P. Visser, ‘Unjustified Enrichment’, in: R. Zimmermann and D. Visser (eds.), Southern Cross: Civil Law and Common Law in South Africa (1996), 523, 549–55; see also Kommissaris van Binnelandse Inkomste v. Willers 1994 (3) SA 283 (A); comment by D. P. Visser, ‘Not the General Enrichment Action’, [1994] Tydskrif vir die Suid-Afrikaanse Reg 196. 164 Zimmermann, ‘Unjustified Enrichment’, 409. 165 Englard, ‘Restitution of Benefits’, § 37. 166 Quebec Code Civil, art. 1491; Louisiana Civil Code, art. 2299. 167 Quebec Civil Code, arts. 1493–1496; Louisiana Civil Code, art. 2298. 168 Nortje v. Pool 1966 (3) SA 96 (A) per Rumpff JA (dissenting); contra Gouws v. Jester Pools (Pty) Ltd 1968 3 SA 563 (T) at 575 per Jansen J, criticised by Eiselen and Pienaar, Unjustified Enrichment, 108. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 rationality, nationality and taxonomy 685 Table 23.2. Taxonomy of Scots enrichment law (up to 1998) 1. Repetition 1.1 condictio indebiti (money) 1.2 condictio causa data causa non secuta 1.3 condictio ob turpem vel iniustam causam 1.4 condictio sine causa; miscellaneous innominate claims 2. Restitution 2.1 condictio indebiti (property) 2.2 condictio causa data causa non secuta 2.3 condictio ob turpem vel iniustam causam 2.4 condictio sine causa; miscellaneous innominate claims 3. Recompense 3. general; actio de in rem verso; (services, [actio in quantum locupletior factus est]; expenditures, etc.) miscellaneous innominate claims repetition (based on the condictiones and indigenous innominate heads of claim) and recompense (based in part on the actio de in rem verso and the pupil’s action as developed in the ius commune) – see Table 23.2. 169 The basis of the distinction between these categories (the three Rs) was much disputed 170 but may have turned on whether the content of the obligation to redress enrichment concerned the return of a certum (as in restitution and repetition) or redress in respect of an incertum (recompense). 171 The courts, however, have recently transposed the three Rs from the do- main of substantive law (where they denoted the main categories of obli- gations redressing unjustified enrichment) to the law of remedies; char- acterised the condictiones as merely labels for particular ‘fact situations’ grounding recovery; extended the condictiones beyond their traditional boundaries of restitution of money and property to recompense for ex- penditures; and at the same time affirmed the existence of a unitary sys- tem of specific grounds applying to all types of benefit conferred (money, property, services and expenditures) – see Table 23.3. 172 Some supporters of a ‘pure’ general enrichment action regard the taxonomic split between enrichment by transfer and other cases as 169 See e.g. Gloag and Henderson, Law of Scotland, chap. 29. 170 See the thorough overview of the debates in Evans-Jones and Hellwege, ‘Some Observations’, 180. 171 Ibid., 181, 182, 187–9; 194, 205, 207, 208. 172 Shilliday v. Smith 1998 SC 725 (1st Division); Dollar Land (Cumbernauld) Ltd v. CIN Properties Ltd 1998 SC (HL) 90. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-23 January 16, 2002 17:18 Char Count= 0 686 niall r. whitty Table 23.3. New taxonomy of Scots enrichment law (1999) Principle of unjustified enrichment (applicable to money, property, services, expenditures) condictio indebiti condictio causa data causa non secuta condictio ob turpem vel iniustam causam condictio sine causa miscellaneous innominate claims; actio de in rem verso; [actio in quantum locupletior factus est] outmoded. 173 Yet it is deeply embedded in the civilian approach. It is found everywhere including recent codal revisions. 174 (d) Transfer; interference; obtruding benefit (Wilburg/von Caemmerer taxonomy) The BGB states the general principle against enrichment at another’s ex- pense by transfer or in another way without legal ground ( § 812(1), first sentence, combining the condictiones indebiti and sine causa) and provides separately for other condictiones. 175 It has been observed that, 176 although § 812 BGB ex facie introduces a general enrichment obligation, its word- ing as interpreted by Walter Wilburg in 1934 177 preserved the distinction between a ‘transfer’ (that is, a performance or Leistung being the pursuer’s intentional or conscious conferment of a benefit in money, goods or ser- vices on the defender 178 ) and other modes of acquiring enrichment. Then 173 See e.g. the criticism of the split in the 1995 revision of the Louisiana Civil Code, between art. 2298 and arts. 2299–305, by Birks, ‘Obligations Arising Without Agreement’, 228. See also Clive, Draft Rules (see 691–3, below). 174 In Quebec (1991), the Netherlands (1995) and Louisiana (1995). 175 § 812(1), second sentence, BGB (condictiones ob causam finitam and causa data causa non secuta) and § 817, first sentence, BGB (condictio ob turpem vel iniustam causam). 176 In describing German law, the following works are relied on: Gallo, ‘Unjust Enrichment’; Markesinis, Lorenz and Dannemann, Law of Contracts, 710 ff.; E. von Caemmerer, ‘Probl ` emes fondamentaux de l’enrichissement sans cause’, (1966) 18 Revue internationale de droit compar ´ e 573; Zimmermann, ‘A Road through the Enrichment Forest?’; also his ‘Unjustified Enrichment’; also his Law of Obligations, 889–91; Zimmermann and Du Plessis, ‘Basic Features’; K. Zweigert and H. K ¨ otz, Introduction to Comparative Law (trans. T. Weir, 3rd edn, 1998), chaps. 38 and 39. 177 W. Wilburg, Die Lehre von der ungerechtfertigten Bereicherung nach ¨ osterreichischem und deutschem Recht (1934). 178 See 694 ff., below. [...]... authority borrowing ultra vires in Magistrates of Stonehaven v Kincardineshire CC 1939 SC 760; N R Whitty, ‘Ultra Vires Swap Contracts and Unjustified Enrichment’, 1994 SLT (News) 33 A Rodger, ‘Recovering Payments under Void Contracts in Scots Law’, in: W Swadling and G Jones (eds.), The Search for Principle: Essays in Honour of Lord Goff of Chieveley (2000), 1 In a limping contract, since the pupil incapax... and ‘powerlessness’ in two-party cases In English law by contrast, the main textbooks subsume the equivalent of encroachment cases partly under the defendant’s ‘wrongdoing’302 (B in Birks’s map at Table 23.4, above) and partly under ‘defective transfer’ categories based on the plaintiff ’s reasoning processes; for example, in Birks’s taxonomy, sub-categories of non-voluntariness (A.1 in Birks’s map) such... Obtruding benefits The last two of the four categories in the Wilburg/von Caemmerer taxonomy concern principles of civilian origin which are recognised in Scots law as well as German law but are not recognised in the same form in English law, inter alia because they infringe a basic policy of English law against obtruding benefits on another against his will (a) Recompense for bona fide possessor’s mistaken... 2(3) There is a special rule for merely formal invalidity in rule 6(1) (d) In any event, in the case of executed contracts, any formal invalidity would often have been cured by rei interventus Clive, ‘A Code for Scotland?’ He continues: ‘It does mean that the legislature has to be careful in using the sanction of nullity, but that is in itself a good thing’ MacQueen, ‘A Scots Perspective’, 187: K¨ nig... step in that direction In handling cases in unjust enrichment it now regularly looks for an enrichment to one side, a corresponding deprivation in the other and the absence of a sufficient juristic 334 335 336 Westdeutsche Landesbank Girozentrale v Islington LBC [1994] All ER 890 (QBD and CA) Also Kleinwort Benson v Lincoln City Council [1999] 2 AC 349 (HL) and n 243, above Woolwich Equitable Building... view may be too optimistic since the Morgan Guaranty case suggests that proof of error is necessary in repetition of sums paid under a contract void for incapacity or ultra vires.269 There are debates on what enrichment remedy lies in particular cases, for example in the case of illegal contracts,270 underlining ‘the need for Scots law to move forward from its traditional distinctions between different... value in the knowledge that it was not being offered gratuitously A.3 A policy motivation requiring restitution to be made B Enrichment of D by wrongdoing to P B.1 Deliberate exploitation of wrongdoing for profit; B.2 An anti-enrichment policy behind the wrong itself; B.3 A prophylactic determination to apply a sanction to a wrong even before, or without asking whether, it has damaged victim distinction... encroaching on patrimonial rights (a) General In connection with the boundary between enrichment law and delict, reference was made above286 to the important distinction between enrichment by the claimant’s transfer and enrichment by the enriched party’s own act In French and Italian law, still reflecting the thinking of Charles Aubry and Charles-Henri Rau,287 there is no equivalent to the German Eingriffskondiktion... Juridica 139 reprinted in: D Visser (ed.), The Limits of the Law of Obligations (1997), 139 Cantiere San Rocco SA v Clyde Shipbuilding & Engineering Co 1923 SC (HL) 105 Evans-Jones, ‘From “Undue Transfer”’, 235 For an example of what in effect was a transfer obligandi causa see ELCAP v Milne’s Executor 1998 SLT 58 (OH) at 62E (company provided community-care service to incapax with the intention, known... confusingly across two-party cases of transfer or encroachment and threeparty indirect enrichment cases; they have never been recognised by the English courts In two-party enrichment by transfer cases, the High Court of Australia304 and Goff and Jones assert that ‘ignorance’ is subsumed within mistake305 even in cases of mechanical error.306 ‘Ignorance’ may not mop up all the cases left by confining enrichment . est]; expenditures, etc.) miscellaneous innominate claims repetition (based on the condictiones and indigenous innominate heads of claim) and recompense (based in part on the actio de in rem verso and the pupil’s. outside the code in the late nineteenth century. 152 In Italian law, following the French pattern and in uence, the first na- tional code of 1865 catered for pagamento dell’indebito leaving a judicial remedy. ‘Grotius’ Doctrine of Unjust Enrichment as a Source of Obligation: Its Origin and its In uence in Roman-Dutch law’, in: Schrage, Unjust Enrichment, 197; Eiselen and Pienaar, Unjustified Enrichment, 10