A workshop took place in the famous Raeburn Room at Edinburgh University on Friday 24 January on the theme of “New Directions in Unjustified Enrichment: Learning from South Africa”.
Many great beasts of the enrichment forest were there, from England and Germany as well as South Africa and Scotland. The main speakers were Helen Scott (Cape Town) and Jacques du Plessis (Stellenbosch). There were responses from Andrew Burrows (Oxford), Daniё Visser (Cape Town) and Hector MacQueen (Edinburgh) followed by general discussion. The focus was on the “unjustified” element in an unjustified enrichment claim and mainly on enrichments by transfer.
Helen Scott explained why she thought that the South African law in this area could not be properly explained without giving a prominent role to mistake and other so-called “unjust factors”. Jacques du Plessis explained why he thought that it was both unnecessary and undesirable to give a prominent role to these unjust factors. He conceded that they could have a weak or subordinate role—e.g. in negating free consent. Both papers were rich and well-argued and a joy to listen to. From the point of view of learning lessons for the development of European private law the most interesting feature was that there seemed to be more consensus than there had been in the same room some 20 years ago when Reinhard Zimmermann and Peter Birks had argued respectively for an absence of legal ground approach and an unjust factors approach. The dispute now seemed to be largely about what Hector MacQueen called the “starting point” and about the emphasis to be placed on different elements.
A sort of consensus emerged even more clearly after the beautifully incisive response of Andrew Burrows and the general discussion which followed. Andrew noted, as the main speakers had already done in their written papers, that English law now (belatedly!) recognised that an enrichment conferred by mistake would not be recoverable if the recipient had a legal entitlement to it. As it also seemed to be generally (although perhaps not universally) recognised that under a more civilian approach an enrichment obtained without legal ground would not be recoverable if it had been freely and voluntarily conferred, the way seemed to be opening for a both/and approach instead of an either/or approach.
Two fact situations, derived with variations from Andrew Burrows’ presentation, illustrate the convergence.
Situation 1. X owes £20 to Y and £20 to Z, both work colleagues. Intending to pay off Y he puts £20 in a blank envelope with a signed note saying “Here is the £20 I owe you”. By mistake he puts this in Z’s pigeon hole.
Situation 2. X pays Y £100 under a contract which is void on some technical ground. X thinks the contract is void but also thinks that it would be dishonourable in the circumstances to found on a technicality. So he pays freely and voluntarily without error.
The general view in the room seemed to be that in neither case should X be entitled to repayment under the law on unjustified enrichment, whether it was based primarily on unjust factors or on a lack of legal ground. In the first case, X has paid Z by mistake but, even on an unjust factors approach, he has no right to get the £20 back because Z is legally entitled to it. In the second case X has paid money which was not due but, even under an absence of legal ground approach, he has no right to get the £100 back because he paid freely and without error. Jacques du Plessis noted that South African authorities sometimes treated this last type of payment as a “deemed gift”.
A further question is whether one of these two elements should be regarded as the main rule and the other as a defence. Helen Scott was clear that in the context of the present South African law on enrichment by transfer “unjust factors such as mistake and compulsion are not defences in disguise: their role is not simply to preclude any inference of voluntariness”. Jacques du Plessis thought that in the future there would be much to be said for confining mistake and other such unjust factors to a role in a defence. Andrew Burrows stressed that under English law the recipient’s legal entitlement was not a defence.
Here I was reminded of a recent seminar on the question of defences in general where Eric Descheemaeker made the excellent point that it was often more appropriate to regard the absence of something as an element of the main rule rather than to regard its presence as a defence. For example it is more appropriate to define rape as sexual intercourse without consent than to say that millions of happily married men are rapists but have the defence of consent. In the context of unjustified enrichment it seems to me to be more appropriate to say that an enrichment to which the recipient is legally entitled is a justified enrichment and similarly that an enrichment which is freely and voluntarily conferred is a justified enrichment than to say that either is unjustified but there is a defence.
Many more points were covered in the discussion. For example, what about the burden of proof? Who has to prove what? What about the Scottish presumption against donation? How might that affect a “deemed gift” approach? Here Lord Hodge of the UK Supreme Court made the valuable observation that a modern court would be reluctant to decide a civil case purely and simply on the basis of a presumption or burden of proof.
There was some criticism of the Wilburg/von Caemmerer taxonomy which has been so influential in recent Scottish and South African writing on unjustified enrichment. What is the significant difference between some of the categories? What is a transfer? This last question turned out to be trickier than might have been supposed.
And there was discussion of the question whether such matters as restitution on the avoidance or termination of a contract should be regarded as part of contract law or unjustified enrichment law. There is a lot of fluctuation on this, with lines being drawn in different places in different systems. The explanation is probably that the law develops in bits and pieces, contract law often developing before unjustified enrichment law, and bits which have developed strong rules of their own might not be readily incorporated into general unjustified enrichment law at a later date. So the divisions are often accidents of history. We can see exactly the same thing happening again in the Common European Sales Law, which has a chapter on restitution when a contract within its scope is avoided or terminated. This uses the Draft Common Frame of Reference (DCFR) but does not follow it exactly and draws lines at different places. It does not have a requirement of an absence of free consent but cases where consent might be present could be dealt with under the “equitable modification” rule in article 176 if the consenting party had a change of mind and sought restitution. Such cases would probably be rare: an example might be where a buyer provides photographic evidence of serious faults in the goods purchased and the seller allows the buyer to keep the rejected goods after termination of the contract rather than return them.
Throughout the meeting I was wondering whether the distinguished contributions would cast any light, critical or otherwise, on the model rules in the DCFR. I concluded that, on the “unjustified” point at least, the DCFR had got it about right. Article VII. – 2:101 makes it clear that an enrichment will be regarded as justified, and hence non-recoverable, if:
“(a) the enriched person is entitled as against the disadvantaged person to the enrichment by virtue of a contract or other juridical act, a court order or a rule of law; or
(b) the disadvantaged person consented freely and without error to the disadvantage.”
This is pretty much what the workshop seemed to want. A dispute about which paragraph should come first would be a sterile one. In the coffee break Sonja Meier (University of Freiburg) told me that she did not much like the DCFR’s approach because it gave too much emphasis to unjust factors. This surprised me — shocked me indeed — because I had never looked at it that way. It made me think a bit and look at the rules again with fresh eyes. In fact I do not believe the DCFR does give too much emphasis to unjust factors. It does not use that ghastly expression (factors are never unjust) and the role of mistake, fraud, coercion etc is simply that they can negate full and free consent. They are mentioned in this context in article VII.-2:103(1). This is a weak role of the type to which Jacques du Plessis referred in his paper. It is very different from using the factors in a closed list of grounds of action.
Finally, a note on terminology. Andrew Burrows made an impassioned plea for the abandonment of the expression “enrichment law” without any preceding adjective. “We do not, after all, talk of loss law.” Nor, it could be added, do we talk of impoverishment law. I have every sympathy with this plea but the problem then becomes “What should the preceding adjective be?” Maybe now that English law recognises that an enrichment to which the recipient is legally entitled is not recoverable it should stop using “unjust enrichment” and talk either of “the law of unjust and unjustified enrichment” or, preferably, “the law of unjustified enrichment”.