The current coronavirus crisis has many troubling faces, not least that some are actively seeking to profit financially from a pandemic that is costing 1000’s of people their lives and leaving many other people unable to work or cover their day-to-day bills and living costs.
Of course, whilst not all profits made during these unprecedented times will be the result of what many might consider to be distasteful decision-making, the crisis will no doubt lead to other instances where some profit at the expense of others. In some instances, any losses might result from a direct breach of contract, whereby a remedy would exist under the usual laws of contract. However, what if a contract had not been finalised such that there were no grounds for a breach of contract claim? What remedy might then exist for the aggrieved party? From a legal point of view this could give rise to a claim for restitution on the grounds of unjust enrichment.
To establish a claim in restitution, a proposed claimant must establish that the proposed defendant has been enriched or received a benefit which was unjust, and that the enrichment has also arisen at the expense of the proposed claimant. Therefore, any such claim would not be for the direct losses of the proposed claimant, but instead be for the benefit being enjoyed by the proposed defendant at the expense of the proposed claimant. Restitution claims are generally brought as standalone claims, but can also be advanced in the context of a failed contract, and so could conceivably be relied upon in situations which it is reasonable to assume are currently unravelling throughout England and Wales.
A possible scenario in which a claim for unjust enrichment might be possible would be where money has been paid to a proposed defendant in return for a consideration, such as the performance of a service or supply of goods, that has totally failed, perhaps on account of direct restrictions placed on the proposed defendant because of the UK Government’s lockdown, or on account of the proposed defendant themselves being unable to receive goods or services upon which they were relying to perform their own contractual obligations already paid for. In these circumstances a contract could arguably not have materialised despite a payment having been made and, unless the parties come to some further agreement about how to resolve matters, the proposed claimant could then be left out of pocket.
In considering a restitution claim the courts would consider not only the benefit to the proposed defendant, but how far they went to procure the benefit, whether the failure of the contract was due to any fault on their part, and whether they have acted unconscionably in declining to make some sort of recompense for the benefit gained to the proposed claimant. The court would also consider whether the proposed claimant has obtained any benefit itself from the enrichment, even if incidental, as if they were to have done so, this would likely be a bar to any unjust enrichment claim being pursued against the proposed defendant.
If it seems that any such grounds might exist, the law of restitution may well entitle a proposed claimant to demand that a proposed defendant pays a sum that is equivalent to the value of the enrichment which the proposed defendant has obtained unjustly at the proposed claimant’s expense. Unjust enrichment is a relatively new area of law, and the facts upon which it can be claimed are developing, with the courts appearing willing to consider novel grounds and arguments, with a view to ultimately ensuring that justice is done.
Given the uncertainties of the current circumstances arising from the coronavirus crisis, such a novel and relatively flexible remedy may well prove very useful indeed. However, as with any legal claim, the strength of the arguments would depend upon the facts and, if you consider that you might have grounds to bring an action for unjust enrichment, you should obtain qualified legal advice in respect of your specific circumstances as soon as possible.
Rachel Waller is a Senior Associate with the Dispute Resolution department. If you need advice or assistance on any of the issues mentioned in this article please contact Rachel or another member of our expert Dispute Resolution team on 020 7631 4141 or email litigation@bishopandsewell.co.uk
The above is accurate as at 14 April 2020. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.
