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RECURRING ISSUES IN FAILURE OF BASIS

Lloyd's Maritime and Commercial Law Quarterly

RECURRING ISSUES IN FAILURE OF BASIS

Charles Mitchell * and Paul Mitchell

Claims in unjust enrichment lie to recover benefits transferred on a basis which fails. Such claims are often made in cases where the parties had a contract that was terminated for breach, with the result that the issues arise, whether a claim in unjust enrichment should be allowed, and if so, whether the existence of the parties’ contract should affect the substance of the claim. Another issue, which arises in every failure of basis case, is that one cannot know whether a failure of basis has occurred unless one has first identified the basis for the defendant’s enrichment—and doing this may require the court to undertake a tricky process of interpretation. The article discusses these points, drawing on recent appellate decisions from around the common law world for illustrative examples.

1. INTRODUCTION

At first glance, claims in unjust enrichment founded on failure of basis look straightforward: a benefit is transferred on an understanding that the recipient’s enrichment is conditional; the condition fails; the benefit must be returned. It is a simple enough idea, and it has been recognised in the law, under one name or another, for centuries. However, several recent cases from around the common law world have shown that the legal principles which govern restitution on this ground can be complicated, problematic and controversial.
The cases are Benzline Auto Pte Ltd v Supercars Lorinser Pte Ltd,1 Simpson Marine (SEA) Pte Ltd v Jiaravanon,2 HEB Enterprises Ltd v Richards,3 Barton v Gwyn-Jones 4 and Mann v Paterson Constructions Pty Ltd. 5 The first two were decided by the Court of Appeal of Singapore, the third by the Cayman Islands Court of Appeal, the fourth by the Court of Appeal of England and Wales, and the fifth by the High Court of Australia. In this article, we analyse the cases thematically, starting with Barton and Mann, both of which ultimately turned on the relationship between unjust enrichment claims for failure of basis and claims for breach of contract or debt. We then discuss how the basis of a defendant’s enrichment should be identified, the issue which was central to the other three cases.
Recurring issues in failure of basis

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