Restitution: a New Start ?

LIONEL SMITH *

I. Th e Problem

In my view, something has gone wrong in the law of restitution for unjust enrichment. In this chapter, I aim to explain what I think has gone wrong, and to propose the beginning of a solution. Th e fi rst part aims to describe the problem and why it is a serious one. Th e second part off ers the beginning of a way forward. Private law in the common law is oriented around causes of action. Causes of action are normative packages that justify liability. Th e phrase ‘ cause of action’ is actually quite ambiguous and in my view has three distinct meanings or senses.1 Th e fi rst meaning is the most abstract and general. An example of it is in the sentence, ‘ the cause of action in battery consists of the intentional infl iction upon the body of another of a harmful or off ensive contact ’ .2 Th is is a statement that if any conduct occurs that fi ts this general description, a claim will arise (subject to defences). Th e second meaning focuses on facts. It is oft en found in judicial defi ni- tions, like this one: A cause of action has traditionally been defi ned as comprising every fact which it would be necessary for the plaintiff to prove, if disputed, in order to support his or her right to the judgment of the court.3 On this defi nition, a cause of action is not a general statement but a collection of particular facts that have happened. Th is defi nition is important when, for example, you have to know where or when a cause of action arose, as you might for

* I thank Professor Robert Stevens for sharing many ideas, in particular from his recent unpublished work. I also thank Professor Peter Devonshire and Mr Rohan Havelock for their kind invitation to and hospitality at the Faculty of Law, University of Auckland on 18 – 19 September 2017, where a version of this chapter was presented. 1 For a fuller argument, see L Smith , ‘ Defences and the Disunity of Unjust Enrichment ’ in A Dyson , J Goudkamp and F Wilmot-Smith (eds), Defences in Unjust Enrichment ( Oxford , Hart Publishing , 2016 ) 27 . In the current chapter I discuss the common law, but the earlier paper looks at this question comparatively and notes that civilian systems have an approach that is not dissimilar. 2 S e e Bettel v Yim ( 1978 ) 20 OR (2d) 617 (Ontario County Court) 621. 3 Danyluk v Ainsworth Technologies Inc 2001 SCC 44 , [2001] 2 SCR 460 [54]. 88 Lionel Smith jurisdictional reasons or in relation to concerns about the limitation of actions. Th e third and fi nal meaning is also particular: a lawyer might say, ‘ you have a cause of action in libel against that publisher’ . She is not referring to a general proposition about how liability can arise (the fi rst sense), nor to a set of facts (the second sense). She is saying that because certain facts have occurred (a cause of action in the second sense), those facts, when combined with a general rule (a cause of action in the fi rst sense), create a claim by this particular plaintiff against this particular defendant. Her claim is thus both normative and very particular: that defendant is liable to this plaintiff . My concern is with the fi rst sense: general statements of the conditions on which claims will arise. A cause of action in this sense exists to protect something valuable, something we consider worthy of protection. Th e cause of action in libel protects our reputations, while the cause of action in battery protects our bodily integrity. Th ose are usually treated as diff erent rights that we have, founded on diff erent aspects of personality that are worthy of protection. Th is is why committing the tort of libel is diff erent from committing the tort of battery. Th is explains why the defences to the two are diff erent, and why a battery is much more likely to be a crime than a libel. Other causes of action may be founded on constitutional values, which are also things that are valuable and worthy of protection. In the law of unjust enrichment, some of us have failed to articulate the causes of action. Th e majority of scholars in the fi eld, and some courts, have avoided this issue. I am here speaking principally of the approach pioneered by Peter Birks, an approach to which I have largely adhered. In my view, many scholars have avoided this issue unintentionally. Th ey have avoided it by simultaneously acting as if there is only one cause of action in unjust enrichment, while also acting as if there are multiple causes of action in unjust enrichment. Many textbooks on unjust enrichment contain a discussion as to whether unjust enrichment is itself a cause of action, or rather a ‘ principle ’ that might contain multiple causes of action. In general, this question is then dismissed as unimportant. 4 In my view, it is very important. In the next sections I will aim to explain why this is so. Before getting to that, it is important to say that diff erent scholars use the term ‘ unjust enrichment’ in diff erent ways. Some include a great deal more in it than others. Some think it is only a principle; still others do not think it is useful at all. I will say something about this only because I think that the problem which I wish to highlight exists among all of those who treat unjust enrichment as a ground of liability.

A. Big Unjust Enrichment

Among those who write about unjust enrichment, even if we confi ne ourselves to those taking what might be called a Birksian approach, there is a somewhat

4 Smith, ‘ Defences ’ (n 1) 41. Restitution: A New Start? 89 hidden diversity of views as to what is the scope of this fi eld. Peter Birks himself had a very expansive view of its scope; indeed, one which grew during his career.5 In his fi nal book, he included among claims in unjust enrichment, the following: (i) a claim by a person who had made a mistaken or compelled payment to recover it from the payee; (ii) a claim by a person to recover the value of benefi ts conferred under a contract that was later set aside or frustrated; (iii) a claim by a person who had paid taxes not due, without mistake, to recover them; (iv) a claim by a person who had discharged a debt, but who was not primarily liable, to recover from the person who was primarily or co-equally liable (including a claim by the fi rst person to take over rights of discharged credi- tors of the person primarily liable); (v) a claim by a person who had acted under necessity, against a person who had benefi ted from that act; (vi) a claim by a person for the benefi t acquired by another person from the use, without authority, of an asset in which the fi rst person held legal or equitable rights. In what follows I will call this ‘ big unjust enrichment ’ . In my view, one diffi culty about Birks’ s project is this: he was unclear about causes of action. He frequently invoked the maxim that ‘ like cases must be treated alike ’ , as part of an argu- mentative strategy for the development of the law.6 But what is a ‘ like case’ ? We do not assume that defences that are available to the tort of inducing breach of contract – such as ‘ justifi cation’ – must be available to the tort of false impris- onment. Th ose are not ‘ like cases’ , in the relevant sense, even though both are torts. Phrased in terms of causes of action, the problem is this: Birks, and others, have assumed or taken for granted that all examples of liability in the law of unjust enrichment fall under a single cause of action, and so must be treated alike in a strong sense: the elements of the claim must be the same, the defences must be the same, the things that are not relevant (such as the defendant ’ s ignorance of the conferral of a benefi t) must be the same. So far as I know, Birks never expressly

5 I examined how Birks ’ s view of unjust enrichment evolved over time precisely to include more and more claims within its scope, in L Smith , ‘ Tracing ’ in AS Burrows and A Rodger (eds), Mapping the Law: Essays in Memory of Peter Birks ( Oxford , Oxford University Press , 2006 ) 119 . He rejected any requirement that the plaintiff have transferred its rights to the defendant – indeed any requirement that the plaintiff have suff ered any loss at all – and he rejected any requirement that the plaintiff show a positive reason for restitution. 6 One prominent example was his conviction that since the common law provides strict liability for a mistaken payment, therefore a defendant should be strictly liable who receives trust property, even though in the latter case the claim only lies if the plaintiff ’ s interest survives: see, eg P Birks , ‘ Receipt’ in P Birks and A Pretto (eds), Breach of Trust ( Oxford , Hart Publishing , 2002 ) 213 . 90 Lionel Smith said that there is only one cause of action. But consciously or not, he took this for granted, because if there are multiple causes of action in unjust enrichment, as there are in the law of torts, then all these causes of action can be expected to reveal diversity in relation to all these aspects, just as is the case in the law of torts. Within ‘ big unjust enrichment’ , it seems quite clear that there are multiple causes of action. Take claim (vi) in the list above. On the expansive view that Birks took, this includes cases of the unauthorised infringement of the property rights of the plaintiff , such as the famous Kentucky Caves case;7 liability for the receipt of trust property; and proprietary claims to the traceable proceeds of trust property. In his view, even a situation in which one person simply takes another ’ s assets could be analysed as revealing a claim in unjust enrichment (though, like the Kentucky Caves case, it might also reveal a tort). 8 But a moment’ s refl ection shows that these cannot be examples of the same cause of action as the cause of action that applies in the case of a payment of money by mistake. In claim (vi) above, it is essential that the plaintiff had a right in, or in relation to, some particular asset that the defendant received or employed, and moreover that the plaintiff ’ s right survived the defendant’ s infringement. It is quite clear that this is not necessary in a case of liability to repay a mistaken payment. Th ere, the claim arises even though all of the plaintiff ’ s rights of property pass to the defendant. eTh causes of action are diff erent because the essential elements of the claim are diff erent.9 When that is true, the argument that ‘ like cases must be treated alike’ falls away almost into irrelevance. It has no more force than it would if one was reasoning between a case of the tort of conversion and a case of the tort of misfeasance in public offi ce. Both are torts, but there the commonality ends.

B. Small Unjust Enrichment

Many members of the Birksian school, including myself, have held a smaller vision of the law of unjust enrichment, in an eff ort to preserve a stronger normative unity for the subject. Th is view excludes any situation in which part of the plaintiff ’ s claim is that a pre-existing right of property (in a broad sense, that includes equitable rights) subsists through the claim; it excludes them on the ground that those are cases in which the defendant ’ s interference with the plaintiff ’ s pre-existing right forms the foundation of the claim, which is clearly not true in, for example, the case of liability for the receipt of a mistaken payment. Th is view says that claim

7 Edwards v Lee’ s Administrator ( 1936 ) 96 SW 2d 1028 (Ky CA); see P Birks , Unjust Enrichment , 2nd edn ( Oxford , Oxford University Press , 2005 ) 84 . 8 Burrows follows Birks in this respect: AS Burrows , Th e Law of Restitution, 3rd edn (Oxford , Oxford University Press , 2011 ) 67 – 69 ; 77 – 76; 194 – 98. 9 See W Swadling , ‘ Ignorance and Unjust Enrichment : Th e Problem of Title’ (2008 ) 28 OJLS 627 . In rejecting this analysis, Burrows (ibid) argues (194– 98) that it is immaterial whether or not the plaintiff retains its rights in the asset, while also arguing (77– 76) that in some cases, it is essential that the plaintiff does retain those rights. Restitution: A New Start? 91

(vi) in the list in the preceding section is not part of the law of unjust enrichment. It places at least some such cases into what has been called ‘ restitution for wrongs ’ or ‘ disgorgement for wrongs’ , outside of unjust enrichment.10 But it permits the retention of claims (i)– (v). To describe it more positively, this approach posits that every claim in unjust enrichment is founded on a transfer: a transfer which is somehow defective or problematic in the eyes of the law. Th e enrichment of the defendant is not simply a measure of recovery; it is one side of a transfer, the other side of which is the plaintiff ’ s deprivation. Canadian common law seems to have aligned itself with this approach, inasmuch as it holds that the plaintiff must show that the defendant has been enriched and that the plaintiff has suff ered a ‘ corresponding deprivation’ . ‘ Corresponding ’ means corresponding to the defendant’ s enrichment, and this represents a view of unjust enrichment as being concerned with normatively defective transfers.11 Th is narrower view is also popular among scholars.12 It is not necessary here to say much more about the diff erences between big and small unjust enrichment, because the problem that is evident within big unjust enrichment is also present within small unjust enrichment. I repeat my description of that problem: some scholars, and some courts, have assumed or taken for granted that all of the law of unjust enrichment falls under a single cause of action, and so must be treated alike in a strong sense: the elements of the claim must be the same, the defences must be the same, the things that are not relevant (such as the defendant’ s ignorance of the conferral of a benefi t) must be the same. But if there are multiple causes of action, as there are in the law of torts, then all these things can also have a range of answers, just as they do in torts. I used to think that small unjust enrichment contained a single cause of action, the cause of action in unjust enrichment.13 Th is is a view that has been adopted by the Supreme Court of Canada.14 Since the appearance of Birks’ s fi rst book on restitution, some scholars have been sceptical of the utility of a principle of unjust enrichment.15 Th ere have been many others who were comfortable with a principle

10 Th is was Birks ’ s position in P Birks , An Introduction to the Law of Restitution, rev edn (Oxford , Clarendon Press , 1989 ) . In Unjust Enrichment (n 7), he still took the view that gain-based recovery for wrongs was a separate possibility, but that most cases could also be give rise to liability in unjust enrichment. Th e earlier book sometimes used the phrase ‘ subtractive unjust enrichment ’ in a way that corresponds to what I am calling small unjust enrichment. 11 Kingstreet Investments Ltd v New Brunswick (Department of Finance) 2007 SCC 1 , [2007] 1 SCR 3 [32]. 12 See, eg the Review Article that followed the publication of Unjust Enrichment (n 7): A Burrows et al, ‘ Th e New Birksian Approach to Unjust Enrichment ’ ( 2004 ) 12 Restitution Law Review 260, 265 – 67 . 13 L S m i t h , ‘ Th e Province of the Law of Restitution ’ ( 1992 ) 71 Canadian Bar Review 672 . 14 Peel (Regional Municipality) v Canada [ 1992 ] 3 SCR 762 , 784, 788; Garland v Consumers’ Gas Co 2004 SCC 25, [ 2004 ] 1 SCR 629 [30]. 15 An early and consistent sceptic was Steve Hedley: see S Hedley , ‘ Unjust Enrichment as the Basis of Restitution – An Overworked Concept ’ ( 1985 ) 5 Legal Studies 5 6 ; S H e d l e y , Restitution: Its Division and Ordering ( London , Sweet & Maxwell , 2001 ) . See also P Watts , ‘ Restitution – A Property Principle and a Services Principle ’ ( 1995 ) 3 Restitution Law Review 4 9 a n d n o w P Wa t t s , 92 Lionel Smith of unjust enrichment, but refused to treat unjust enrichment as a cause of action that could be applied directly to the facts to determine liability. 16 I am now of the view that it is incorrect to think that there is a single cause of action even for small unjust enrichment. I have both positive and negative reasons for changing my mind. Th e positive reason has arisen from a refl ection on the nature of a cause of action as a set of elements that are individually necessary and collectively suffi cient to make a defendant liable. As noted above, a cause of action is a kind of normative pack- age that justifi es liability. As I will argue below, the reasons for liability in a case of a mistaken payment are quite diff erent from the reasons for liability in a case in which a guarantor, having paid the debt, sues the person who was primarily liable. Th e negative reason is that the assumption – stated or, more oft en, unstated – that there is a single cause of action for all of the law of unjust enrichment has led to some indefensible outcomes. Th is is what I call the problem of overgeneralisation.

C. Th e Problem of Overgeneralisation

I have distinguished ‘ big ’ unjust enrichment from ‘ small ’ unjust enrichment mainly to make it clear that while there are important diff erences between them, the problem of overgeneralisation arises in both. Th e problem arises when one, consciously or not, treats the whole fi eld (whether big or small) as governed by a single cause of action. Th is has happened through the adoption of a single test for liability that is supposed to govern all cases within the fi eld, however the fi eld is defi ned. Robert Goff and Gareth Jones published the fi rst edition of Th e Law of Restitu- tion in 1966.17 In 1985, Peter Birks published the fi rst edition of his Introduction to the Law of Restitution.18 Birks said that his book was ‘ pre-occupied with the task of fi nding the simplest structure on which the material in Goff and Jones can hang’ . 19 To achieve this goal, he set out an agenda of fi ve points, one of which was the acquisition of ‘ a stable set of large questions capable of breaking all problems down into instantly recognisable phases’ . 20 Many people, myself included, joined in this

‘ ‘ Unjust Enrichment ’ – the Potion that Induces Well-meaning Sloppiness of Th ought ’ ( 2016 ) 69 Current Legal Problems 289 ; J Dietrich , Restitution: A New Perspective (Leichhardt (NSW), Federation Press, 1998 ) ; I Jackman , Th e Varieties of Restitution , 2nd edn ( Sydney , Federation Press , 2017 ) ; P Jaff e y , Th e Nature and Scope of Restitution: Vitiated Transfers, Imputed Contracts and Disgorgement ( O x f o r d , Hart Publishing , 2000 ) . 16 P D M a d d a u g h a n d J D M c C a m u s , Th e Law of Restitution , looseleaf edn ( Toronto , Canada Law Book , 2004 ) ; American Law Institute, Restatement of the Law Th ird: Restitution and Unjust Enrichment , 2 vols (Philadephia, American Law Institute, 2011). 17 R G o ff and GH Jones , Th e Law of Restitution ( London , Sweet & Maxwell , 1966 ) . 18 Birks, Law of Restitution (n 10). 19 Birks (n 10) 3. 20 Th e fi ve points are at Birks (n 10) 6 – 7, and the quotation is from point 4 at p 7. Restitution: A New Start? 93 exciting project. Birks achieved great success with the goal of creating a stable set of large questions. Among a wide range of commentators, and also a wide range of courts, there has been acceptance that one can decide whether or not a defendant is liable in unjust enrichment by asking a series of questions, usually three questions on liability and one about defences. Th e three liability questions are whether the defendant was enriched; whether that enrichment was at the expense of the plaintiff ; and whether the enrichment was unjust, or unjustifi ed.21 But the three-part test has created the problem of overgeneralisation. If it was never intended to be a cause of action, then no one should ever have tried to apply it directly to the facts of cases. If it was only a principle that unifi ed a diverse group of causes of action, then it was like the principle that says ‘ you should not violate other people ’ s (extracontractual) rights ’ that unifi es the law of torts. We do not apply that principle directly to the facts of cases. Instead, the three-part test was treated as applicable to the facts. It was treated as a cause of action. Th is has led to some puzzles and diffi culties.

i. Th ree Non-Liability Cases In this section I will discuss three cases which must be cases in which the defendant is not liable. And yet, they seem to satisfy the three-part test. Th us they are examples of the problem of overgeneralisation.

a. Rising Heat Peter Birks himself was conscious of the problem of overgeneralisation when he discussed the case of Rising Heat, which is traceable to a dictum of Lord President Dunedin. 22 Th e ground-fl oor tenant moves in and starts heating his fl at; heat rises; the tenant above is enriched because his heating bills go down. No one thinks this is a case for liability. But there is an enrichment, at the plaintiff ’ s expense, and it is not obvious that there is a legal basis for it. Birks said it was a grudging gift , but this is not satisfactory. We can change the case so that the ground-fl oor tenant was acting under a causative mistake; perhaps he genuinely believed that the ceiling was so well-insulated that no heat could get through it. Th at mistaken plaintiff might be able to prove that had he known how much heat was rising, he would have lowered the thermostat or moved. Now we have a causative mistake on the plaintiff ’ s part, and we have excluded any kind of gift . It doesn ’ t matter; it is still a no-liability case.

21 Sometimes a separate question is added to the list, about whether restitution shall be personal or proprietary. 22 Edinburgh and District Tramways Co Ltd v Courtenay 1909 SC 99 (IH) 105 – 06, extracted in J Beatson and EJH Schrage (eds), Cases, Materials and Texts on Unjustifi ed Enrichment ( O x f o r d , H a r t Publishing, 2003 ) 87 – 88 , discussed in Birks (n 7) 158. 94 Lionel Smith

An advocate of small unjust enrichment might say that this case reveals no loss of the plaintiff .23 But this is not clear. Th e plaintiff had to pay for the heating, including the benefi t to the defendant. If the plaintiff had, by mistake, paid the defendant ’ s heating bill, that would be a loss. So the idea that the plaintiff did not suff er a loss in Rising Heat must be put diff erently. It might be said that the plaintiff ’ s loss was one that he would in any event have incurred. But this is not true in the variation that includes a mistake about the insulation. It might be said that the plaintiff had to heat his own fl at anyway. But there is nothing in the three questions that disqualifi es a plaintiff who, while enriching the defendant, did something that he had to do anyway. Indeed, if the compulsory discharge of another person ’ s obligation can give rise to a claim in unjust enrichment, the contrary must be true. When a guarantor pays the guaranteed debt, he generally has to do so, but he still has a claim against the primary debtor. Another approach would be to accept that the plaintiff suff ered a loss, but to argue that the resulting benefi t to the defendant was only incidental. Th is approach was recently invoked by the Supreme Court of the United Kingdom in Investment Trust Companies v Revenue and Customs Commissioners.24 Th is case raised a question about who could recover from a taxing authority: was it only the taxpayer (TP) who had paid the tax, or could there be direct recovery by a plaintiff who had paid TP’ s bill to the plaintiff , that included the tax ? Th e court held that only TP could recover from the taxing authority, and the plaintiff had to recover from TP. In so doing, the Court held that a benefi t was not ‘ at the expense of’ the plaintiff if it was an ‘ incidental benefi t’ , and a benefi t is incidental if the plaintiff conferred it while acting in its own self-interest. 25 Such an approach is also found in Edinburgh and District Tramways Co Ltd , where Lord President Dunedin said there could be no recovery where ‘ the thing done was as much for the benefi t of the man who did it as for that of the other person ’.26 Just like the attempt to solve the problem of Rising Heat by saying that the plaintiff had to heat his own fl at anyway, this argument does not work as a general limiting factor. Th e reason is that there are many, many cases in which plaintiff s can recover even though they are acting in their own self-interest. Th ink of all the cases of restitution that arise in the context of work done or money paid under a contract which is discharged by breach or frustration. Typically, the plaintiff is trying to obtain some benefi t by performing her side of the contract. To para- phrase the Lord President, she acts as much for her own benefi t as for that of the defendant. And yet she can recover. Paying a debt for which you stand surety is

23 Th is was one part of the analysis of Lord President Dunedin. 24 Th e Commissioners for Her Majesty ’ s Revenue and Customs v Investment Trust Companies (in liqui- dation) [ 2017 ] UKSC 29 , [2017] 2 WLR 1200. 25 ibid [52]– [58], discussing Edinburgh and District Tramways Co Ltd and indeed Rising Heat. 26 Edinburgh and District Tramways Co Ltd (n 22) 106. For another example of the invoca- tion of self-interest as barring recovery, see the analysis of a former judge of the Supreme Court of Canada, regarding the law of Quebec: P-B Mignault , ‘ L ’enrichissement sans cause ’ ( 1934 ) 13 Revue de Droit 157, 168 . Restitution: A New Start? 95 also a case in which you act for your own benefi t as much as for that of the primary debtor, and yet you have a claim against him. In other words, a great many cases studied in the law of restitution are inconsistent with any disqualifying factor of acting in your own interest. Andrew Tettenborn saw years ago that the test of self-interest does not work, at least if there is to be a general principle of unjust enrichment.27 He advocated an ‘ admittedly imprecise ’ test of directness, as had John Dawson from a comparative perspective many years earlier.28 A guarantor pays the creditor; surely the benefi t to the creditor is direct, while the benefi t to the primary debtor is indirect or even incidental. And yet a claim lies by the guarantor against the primary debtor, a claim that is understood to be explained by the three-part test. Th e reason a rule of directness is always going to be imprecise is the same reason that one cannot solve these problems by saying that the plaintiff cannot succeed when he acts in his own self-interest, which is the same reason that one cannot solve these problems by saying that the plaintiff did not suff er a loss if he needed in any event to do whatever he did. Th at reason is this: overgeneralised limiting factors cannot solve the problem of overgeneralised liability conditions. In other words, you do not need a general requirement of directness, or a disqualifying rule about acting in your own self-interest, if you do not have a very wide general formula for liability that on its face points to liability in far too many cases.

b. Destroyed Stamp Another hypothetical has been generated recently in which the plaintiff and the defendant each own the only two examples of a rare and valuable stamp.29 Th e plaintiff gets mixed up during a purge of his stamp collection and mistak- enly destroys his example. Th e defendant ’ s example rises astronomically in value. Th is reveals an enrichment, at the plaintiff ’ s expense, caused by a mistake, and for which there is no legal basis; and there is a clear loss to the plaintiff here. It seems to satisfy the three-part test, but like Rising Heat, Destroyed Stamp must

27 A M Te t t e n b o r n , Th e Law of Restitution in England and Ireland , 3rd edn ( London , Cavendish , 2002 ) 30 – 31 . 28 J P D a w s o n , Unjust Enrichment: A Comparative Analysis (Boston , Little, Brown and Company, 1951 ) 120 – 27 . My reading of the development of German law is that Dawson was just going out of date in saying (119– 23) that it uses a requirement of directness. German law tried that system, when § 812 BGB (which came into force in 1900) was read as creating a single, very general claim. Th e famous ‘ Wilburg/von Caemmerer taxonomy ’ was completed in the 1950s; by treating § 812 as containing four distinct causes of action (Anspr ü che) , it did away with any need for a general requirement of directness. See R Zimmermann and J du Plessis, ‘ Basic Features of the German Law of Unjustifi ed Enrichment ’ ( 1994 ) 2 Restitution Law Review 14, 24 – 27 ; G Dannemann , Th e German Law of Unjustifi ed Enrichment and Restitution: A Comparative Introduction ( Oxford , Oxford Unversity Press , 2009 ) 21 – 25. 29 I fi rst heard of it from Robert Stevens, but he notes that a version of it was formulated by Daniel Friedmann: D Friedmann , ‘ Restitution of Benefi ts Obtained through the Appropriation of Property or the Commission of a Wrong ’ ( 1980 ) 80 Columbia Law Review 504, 532 fn 144. 96 Lionel Smith be a no-liability case. One might try to square this case with the three-part test by saying (again) that the enrichment is not at the plaintiff ’ s expense in the relevant sense, or that the plaintiff ’ s deprivation does not ‘ correspond ’ to the defendant ’ s enrichment in the relevant sense. And yet the causal connection between the two could not be clearer, and that is usually what we look for. Th ere is nothing in the three questions that explains why there is no liability.

c. Stolen Spectacle In my third no-liability case, the plaintiff runs a horse-racing track and the defendant builds a platform, on his own land, from which the races can be seen. Th is allows the defendant to make a profi t by broadcasting the proceedings in real time. Th e plaintiff suff ers a loss as a result, because it is no longer necessary for interested customers to pay for admission to the plaintiff ’ s grounds.30 Again, this seems to satisfy at least one version of the three-part test: there is an enrichment of the defendant, at the plaintiff ’ s expense, and no obvious legal basis. eTh plaintiff ’ s loss is clear and directly causally related to the defendant ’ s gain. And yet there is no liability in this case, and the only obvious way to fi nd it would be through some kind of intellectual property analysis, not as a claim in restitution. Some analysts might say that there is no positive reason for restitution here, but it has been argued by Birks and Burrows that since mistake on the part of the plaintiff is a reason for restitution, total helplessness and ignorance on the part of the plaintiff should be seen as a fortiori cases. 31 At least one of those seems to be present in Stolen Spectacle.

d. Implication In all of these cases, something is missing from the plaintiff ’ s case. In all of them, one could appeal to an absence of ‘ directness ’ or say that the benefi t is only ‘ incidental ’. We have seen the diffi culties with those approaches: they are ad hoc . Th ey posit a general limiting factor, but the general limiting factor does not apply generally, or to say the same thing another way, it applies diff erently in diff erent kinds of case. Th e alternative is to accept that the three-part test is too general. If instead of trying to cover the fi eld with a single formula, we realised that there are multiple causes of action, we might well fi nd that in each of these three cases, none of the causes of action could be established.

30 Th is is of course based on the famous case of Victoria Park Racing & Recreation Grounds Co Ltd v Taylor ( 1937 ) 58 CLR 479 . Th e original idea for this example, however, came from a diff erent hypothetical for which I thank Lusina Ho. 31 Burrows, Th e Law of Restitution (n 8) 403– 08, citing Birks’ s arguments. In my view, this a fortiori argument is simply another example of the problem of overgeneralisation. Once it is seen that the three-part test is too general to be a cause of action, the a fortiori argument largely falls away. See also Swadling, ‘ Ignorance and Unjust Enrichment ’ (n 8). Restitution: A New Start? 97

ii. Th e Travails of Enrichment One other illustration of the problem of overgeneralisation comes from the diffi - cult fi eld of improvements to the property of another. Th is is the subject of a recent article by Mitchell McInnes, discussing developments in Canadian law.32 McInnes takes a thoroughly Birksian approach, as he does also in his monumental textbook on Canadian law.33 McInnes ’ s article makes a great deal of room for balancing the improver’ s interest in having restitution for his outlay of work or assets, against the defendant’ s interest in having freedom of choice as to how to spend his resources. He deploys Birks’ s idea of ‘ subjective devaluation’ , which tells us that it is not enough that the defendant has been enriched in the sense that the market value of his land has gone up. He might not like the improvement, and he cannot be forced to spend his money on things he never wanted. An enrichment in money is always enriching; it is an ‘ incontrovertible benefi t’ . But improvements to land are not like that. Th ey are liable to subjective devaluation. When it is deployed successfully, this idea leads to the conclusion that the defendant was not enriched, even though the value of his land has gone up. Th at gives a negative answer to one of the three high-level questions that together establish liability, on the model that I have called an overgeneralisation. In other words, it is a way to explain an absence of liability within the three-part test, even though the defendant has been enriched in one sense and thus the three-part test seems to be established. Why would we let the defendant decide whether an element of the plaintiff ’ s claim is made out ? It sounds perfectly right to say that the plaintiff cannot make choices for the defendant as to how the defendant shall spend his money. But let us be careful: that is inconsistent with another axiom of the approach through the three questions. In a case involving the payment of money or the discharge of the defendant ’ s debt, it is said that the defendant ’ s liability is justifi ed even though the defendant did not do anything wrongful, because the liability makes the defendant no worse off . 34 In other words, we can ignore the defendant’ s interests and choices, as long as we don’ t make him worse off . And yet, if the defendant’ s interest in land is now worth more as a result of the improvement, he is objectively enriched, and will not be made fi nancially worse off if he is liable for the increment. McInnes adds a concern that a person should not have to sell, or presumably mortgage, their home to meet a liability for an improvement they did not want. 35 But this also seems odd. If a person is rightly liable, do we take away the plaintiff ’ s claim because the defendant has trouble paying ? And why would we make a general rule denying liability to deal with a problem that only some defendants will have ?

32 M McInnes , ‘ Improvements to Land, Equity, Proprietary Estoppel, and Unjust Enrichment ’ ( 2016 ) 2 Canadian Journal of Comparative and Contemporary Law 421 . 33 M M c I n n e s , Th e Canadian Law of Unjust Enrichment and Restitution ( Markham (Ontario) , LexisNexis Canada , 2014 ) ch 2. 34 eg McInnes, ‘ Improvements ’ (n 32) 438 – 40. 35 ibid 434. 98 Lionel Smith

I now think that when explaining why the defendant is liable, we must always consider, and can never ignore, the defendant ’ s role in the events that generate liability.36 Building on this, to say that we worry about the defendant ’ s choices only makes sense if we accept that there will be at least some cases of non-liability even though there has been an enrichment. Th e diffi culty about unwanted improvements arises because the defendant has indeed been objectively enriched. If he is allowed to subjectively devalue, he is allowed to avoid liability despite being objectively enriched. In other words, he is allowed to avoid liability even though making him liable would not make him fi nancially worse off . It is a mistake to ignore this and to pretend that a defendant is never allowed to retain an enrichment. He is.37 Th at mistake arises from overgeneralisation, from a conviction that the same framework of analysis that governs a mistaken payment of money must govern an unrequested improvement to land. Within the three-part framework, if a defendant is not to be liable for a mistaken improvement, we have to say that the defendant was not enriched, even though he is enriched on any normal use of the word. Th is point is amply supported by looking at the academic debate within the Birksian school that has arisen as to the frontiers of subjective devaluation. Imagine the case of a defendant who did not want the improvement – who could have subjectively devalued it – but who has sold the improved property and realised the improvement into money. Th is, on the Birksian account, is no diff erent from a case in which the defendant had been paid money, and so he is liable.38 Th e debate was, and is, around the intermediate case: the defendant has not sold the property and turned the improvement into cash, but he could. Even though the gain has not been ‘ realised ’, some still say that the defendant can be liable if it is ‘ realisable ’ or perhaps ‘ readily realisable ’ . 39 In my view, this debate shows that a wrong turn was taken long ago. How can it be right to say that an owner of improved property is not liable to pay for improvements because we do not want to force him to sell (or mortgage) his property to pay for the improvements, but at the same time to say that if by chance he does sell, or maybe could sell, he is aft er all liable ? Surely the logically prior question is whether he has to pay for the improvements or not. If he has to pay for them, he has to pay for them whether he sells the property or not. If he does not, he does not, and can do whatever he wants with his property without changing that. In his article, McInnes aims to address some of these perplexities by suggesting that the potentially liable defendant can avoid these diffi culties by waiting until

36 EJ Weinrib , ‘ Correctively Unjust Enrichment ’ in R Chambers , C Mitchell , and J Penner (eds), Philosophical Foundations of the Law of Unjust Enrichment ( Oxford , Oxford University Press , 2009 ) 31 ; EJ Weinrib , Corrective Justice ( Oxford , Oxford University Press , 2012 ) ch 6. In this I retract part of my argument in L Smith , ‘ Restitution : Th e Heart of Corrective Justice ’ ( 2001 ) 79 Texas Law Review 2115 . I return to this below. 37 C o m p a r e Benedetti v Sawiris [ 2013 ] UKSC 50 , [2014] 1 AC 938 [117] – [118]. 38 Discussed by McInnes (n 32) 440– 41. 39 eg McInnes (ibid); Burrows, Th e Law of Restitution (n 8) 48 – 49; both citing diff erent editions of Goff and Jones . Restitution: A New Start? 99 the limitation period expires before selling the property. 40 But how can this be consistent with supposedly respecting the defendant ’ s freedom of choice ? And anyway, this does not make sense because on the subjective devaluation approach, there is no enrichment until the sale takes place, and on the three-part test, there is no cause of action until there is an enrichment. Limitation periods only start running when the cause of action is complete.

D. Conclusion

Th is section has aimed to show what has gone wrong through the assumption that the three-part test can function like a cause of action across all of even small unjust enrichment (let alone big unjust enrichment). It is only by thinking that there is a single cause of action that we have ended up with ad hoc reasoning about incidental benefi ts and acting in one’ s own self-interest, and with the muddle of subjective devaluation, its exceptions, and the arguments about realised and realisable enrichments. Th e recognition of a plurality of causes of action within even small unjust enrichment can solve the problem of overgeneralisation. It abandons the idea that there is one giant claim that must be applied consistently across diverse situations. On the contrary, it posits that there are diverse claims that rightly have diff erent contours. Some, but not all of them, may be inapplicable if a plaintiff was acting in its own self-interest. Some of them will address the defendant’ s freedom of choice in diff erent ways from others, with the result that it is revealed to be a mistake to try to have a grand unifi ed theory of how we address the defendant’ s freedom of choice. If two cases are governed by diff erent causes of action, then it is simply falla- cious to reason that since one of them has some feature or characteristic, then the other must also have it. Th at is the problem of overgeneralisation in a nutshell. It may have it, but this requires an argument that takes account of the structure and justifi cation of the two causes of action. What will become of the three-part test for unjust enrichment if we stop treating it as a cause of action? Some common lawyers call that test, or one version of it, a ‘ civilian ’ approach. 41 If this is meant to suggest that the civil law treats the fi eld of even small unjust enrichment as governed by a single claim, it is based on a profound misunderstanding. In German and French law, a claim for improvements to another’ s property is not treated as part of the law of unjust enrichment if the improver believes the property to be his, or wishes it to be, as in the case of a squatter.42 Nor are claims arising through subrogation when one person pays

40 ibid. 41 Birks (n 7) 102ff ; McInnes (n 32) 459. 42 For the propositions in this paragraph, see for German law G Dannemann, Th e German Law of Unjustifi ed Enrichment and Restitution (n 28) 13– 18. For French law, improvements are 100 Lionel Smith a debt for which another is primarily liable. In French law and related systems, a claim to recover a mistaken payment, a claim to recover performance made under a contract that is set aside, and a claim to recover a non-money benefi t conferred outside of any contractual framework are likely to be governed by three diff erent sets of principles. German law may seem to be a little more unifi ed, since there is a ‘ general ’ action in unjustifi ed enrichment in paragraph § 812 of the BGB, the German Civil Code. But this is misleading. Claims to restitution arising in the context of contracts discharged for breach are not considered part of the law of unjust enrichment. And even § 812 itself is understood to contain four diff erent claims, each governed by diff erent principles.43 Indeed, the German history can teach us something. For some years aft er the BGB came into force in 1900, § 812 was viewed as containing a single, general claim, at least for some part of small unjust enrichment.44 Only decades later did the modern position evolve, in which it is understood to contain four distinct claims. Speaking of the early interpretation, Gerhard Dannemann has described it in words which could be applied to the common law ’ s three-part test: [I]n this generality, the clause took German law back to the times of von Savigny, by describing what unjustifi ed enrichment is about rather than defi ning who is entitled to restitution. … In this reading, the general clause serves predominantly as a description of an area of case law rather than as a defi nition of a claim. 45 Th e three-part test cannot be a cause of action. It is a mistake to think it can be applied directly to the facts to answer questions about liability. 46 It is simply a description of an area of the law.

II. Th e Way Forward

Th ere are multiple causes of action and they must be identifi ed, because it is causes of action that are applied to the facts of a case to decide whether a defendant is liable. Moreover, it is the diff erences between the diff erent causes of action that help us to understand how we can take account of the defendant’ s freedom of choice in diff erent ways as suits the case. considered part of the law of property; subrogation and the restitution of contractual performance are seen as two diff erent parts of the general theory of obligations; and the claim to recover a mistaken payment is separate from the claim in unjust enrichment. For discussion in English of the (similar) law of Quebec as it was under the prior Civil Code of Lower Canada (in force 1866 – 1993), see JEC Brierley and RA Macdonald (eds), Quebec Civil Law: An Introduction to Quebec Private Law ( Toronto , Emond Montgomery , 1993 ) paras 266, 441 – 44, 504 – 13, 544. 43 R Zimmermann and J du Plessis, ‘ Basic Features of the German Law of Unjustifi ed Enrichment ’ (n 28) 24 – 27; G Dannemann (n 28) 21 – 25. 44 Again, most improvement cases, subrogation, and claims in the context of discharged contracts are not part of the German law of unjust enrichment. 45 Dannemann (n 28) 22 – 23. 46 Lord Reed said for the UK Supreme Court in Commissioners for Her Majesty’ s Revenue and Customs v Investment Trust Companies (n 24) [41] that the high-level questions ‘ are not themselves legal tests ’ . Restitution: A New Start? 101

Th e goal of this part of the chapter is to say something about the causes of action in the common law of restitution. Th ese are packages of normatively signifi - cant facts, described generically, that are individually necessary and collectively suffi cient to generate a liability.

A. Lessons from the Past

In the days of the forms of action, trespass included assumpsit , the wrong of breaking a promise; assumpsit included indebitatus assumpsit, the wrong of breaching a promise to pay an existing debt; and the promise to pay a debt became a legal fi ction aft er 1602. Th is was on the basis that every debt imports a promise; in other words, every debt should be actionable just as if the debtor had promised to pay, even if he had not. Th us you could bring indebitatus assumpsit so long as you could show a debt. Debts, meanwhile, included debts arising by consent, or by operation of law. At the time of the abolition of the forms of action in 1853, there were seven principal ‘ common counts ’, which were ways of establishing a debt that would allow a claim in indebitatus assumpsit.47 Four of those included some of the law of restitution (only some, inasmuch as some of it came from Chancery): they were quantum meruit (for services rendered), quantum valebat (for goods provided), ‘ money had and received to the use of the plaintiff ’ (for payments to the defendant), and ‘ money paid to the use of the defendant’ (for payments to another that benefi ted the defendant). Th ose common counts should by now have passed into legal history, with the death of the forms of action that they unlocked. At least, they should have been changed, like the torts of conversion or trespass to chattels, into causes of action: general rules that can justifi ably, in combination with certain sets of facts, generate claims and liabilities. Th at did not happen. Quantum meruit , a label still used by some, has contractual and non-contractual aspects so it is not a single cause of action. Money had and received could be deployed for mistaken payments, but also for some three-party cases involving the enforcement of promises regarding money,48 and even for the unlawful taking of a bank note. 49 Th at one alone, in other words, contained elements of what we would now classify as tort, contract, and others. It is not a cause of action in the modern sense. In articulating causes of action, we should bear in mind the advice of the Supreme Court of Canada in Peel (Regional Municipality) v Canada ,50 that the

47 J H B a k e r , An Introduction to English Legal History , 4th edn ( London , Butterworths , 2002 ) 348 . As Baker explains in fn 7 on p 348, there could be eight or even nine depending upon how one enumerates them. 48 J H B a k e r , ‘ Th e History of Quasi-Contract in English Law ’ in WR Cornish et al (eds), Restitution: Past, Present and Future: Essays in Honour of Gareth Jones ( Oxford , Hart Publishing , 1998 ) 37 . 49 Holiday v Sigil (1826) 2 Car & P 176, 172 ER 81. 50 Peel (Regional Municipality) (n 14) 786. 102 Lionel Smith traditional categories of recovery are not determinative but can be instructive. We cannot use the common counts but we should mine them for wisdom.

B. Big and Small Unjust Enrichment, Again

In my view, the following proposition is too clear to need argument: any claim which requires that the plaintiff show an interference with some existing right is founded on a cause of action that is diff erent from any claim that does not require such a showing.51 Th e core of a cause of action is a reason for a fi nding of liability; the interference with a pre-existing right is a perfectly intelligible example of such a reason. Th e diff erence between big and small unjust enrichment is the exclusion from the latter of such cases. I now leave those cases aside to focus on the remaining causes of action, those in small unjust enrichment, which do not involve interference with a pre-existing right.52

C. Th e Plurality of Small Unjust Enrichment

i. Th e Adjustment of Liabilities Even within small unjust enrichment, there is a range of causes of action. In an earlier section, I noted that the subject so circumscribed includes many claims.53 Let me explain why I believe this reveals many causes of action, using two cases. One is the mistaken payment, which is almost always a case for restitution in the common law and the civil law, and which is considered part of the law of unjust enrichment by almost everyone who uses that category.54 Th e other is the case in which one person who is only secondarily liable on a debt pays that debt, and then claims against the person who was primarily liable.55 Why does the mistaken payment create an obligation owed by the recipient ? I will argue later – not very originally – that the value being protected by the law

51 Section I A above. 52 Some might note that in German law, enrichments acquired by interference with the plaintiff ’ s rights are considered part of the law of unjust enrichment. Th is actually proves my point, because the principles governing such cases are quite diff erent from those governing, for example, mistaken payments. To say, in German law, that both are part of unjust enrichment is not to say that they are governed by the same principles, but only to say that they both belong to the law of gains that cannot be kept. 53 See the list of claims in ‘ big ’ unjust enrichment in Section I A. Only item (vi) is excluded for present purposes to make ‘ small ’ unjust enrichment. 54 In fact, in the French legal tradition, which covers a huge number of countries, a mistaken payment is not considered a case of unjust enrichment in a technical sense, although it might be considered so in a wide or loose sense. Th at tradition views unjust enrichment, in a technical sense, as a narrow residual category, much smaller than in the common law or in German law. 55 I am here primarily concerned with the direct personal claim that arises at common law, not with subrogation. I will however suggest that my point is even stronger in relation to subrogation. Restitution: A New Start? 103 is the integrity of the plaintiff ’ s decision-making, although I will aim to incor- porate respect for the defendant’ s decisions as well. Why does the payment of a debt for which one is only secondarily liable create an obligation owed by the person primarily liable? Well, because the second person, the defendant, was primarily liable. It is not because anyone’ s consent was impaired. Th ere can be more than one explanation for why the defendant was primarily liable: it may be based on the interpretation of contracts, as in the case of a guarantee, or the interpretation of a statute, as in the famous case of Brook’ s Wharf and Bull Wharf Ltd v Goodman Bros. 56 But once you have concluded that, before the plaintiff ’ s payment to the creditor, the plaintiff was – as between the plaintiff and the defendant – only secondarily liable, you have explained the defendant ’ s liability. It arises out of a pre-existing relationship, not out of the circumstances of the payment. It protects and enforces that relationship, rather than protecting the integrity of the plaintiff ’ s consent in relation to the payment. Th erefore, the reasons for restitution are quite diff erent. In my terms, this means the causes of action are diff erent. Th e values and interests that the law is protecting are diff erent. Th e defences may be diff erent. Th e facts that need to be proved to substantiate the claim are not at all the same. It is even possible to argue that in the adjustment of liabilities, we are not concerned with restitution. If a guarantor pays the debt and sues the primary debtor, is he seeking restitution? Restitution would come from the person he paid. We are not putting things back the way they were; we are putting things in order as they should be. Th is is clearer in the case of contribution among co-guarantors: if one has paid the whole debt, he may recover half from the other co-guarantor. Th e claim is not designed to reverse a transfer or even an enrichment: the co-guarantor has been relieved of all his liability to the creditor, not half of it. Rather, it is a claim designed to make the right persons pay the right shares in accordance with their pre-existing relationship. Th is may be even clearer when we consider a picayune rule: if two co-guarantors gave guarantees with diff erent limits, they must share liability in the proportions of the limits.57 Th us if one guarantor paid a guaranteed debt of $ 1,000, and the limit of his guarantee was $ 4,000, and there was a co-guarantor whose guarantee was limited to $ 1,000, the one who paid would have a claim for contribution that would adjust the liabilities into the ratio 1:4; the claim would be for $ 200. Th at does not look like restitution. In this context, subrogation to the rights of the creditor also does not look like restitution. Th e one who paid the debt gets, not a claim to recover something, but an ability to take over rights (personal rights or security rights) formerly held by the creditor .58 In this way, the law again aims to protect a pre-existing

56 Brook ’ s Wharf and Bull Wharf Ltd v Goodman Bros [ 1937 ] 1 KB 534 (CA) . 57 Ellesmere Brewery Co v Cooper [ 1896 ] 1 QB 75 (Divisional Court). 58 See, in the context of a diff erent kind of subrogation, Lowick Rose LLP v Swynson Ltd [ 2017 ] UKSC 32 , [2017] 2 WLR 1161 [30]: ‘ Subrogation … does not restore the parties to their pre-transfer position. ’ 104 Lionel Smith relationship: the creditor cannot harm the guarantor by foregoing the creditor ’ s own rights against the debtor.59

ii. Division of Cohabitational Property In Canada, the courts have used unjust enrichment to divide property rights between cohabitants for almost 40 years.60 In 2011, the Supreme Court of Canada restated the foundation of such claims, holding that they arise out of a ‘ joint family venture ’.61 Where such a venture is established, the parties have operated as a single economic unit. Th is can justify a division of rights held by the parties at the end of the relationship, either equally or according to some other formula. Th e Court continues to describe the claim that arises as one in unjust enrichment, but again it seems that all that is happening is the enforcement of a pre-existing relationship. Th e fi nding of the joint family venture does all of the normative work needed to establish the plaintiff ’ s claim.

iii. Th e Recovery of Undue Taxes A person who pays money as a tax can recover it if it was collected without Parlia- mentary authority.62 It does not matter whether the payer was mistaken. Again, this shows that this is a diff erent cause of action, because the reason for liability is quite diff erent. Th is cause of action does not make a defendant liable in the pursuit of protecting the plaintiff ’ s decision-making, but in the pursuit of upholding the constitution. Th is is underlined by the consensus that the defendant in such a case – the Crown or State – cannot deploy the defence of change of position.63 When a defence is never available, it seems the claim must be founded on a diff erent cause of action.

iv. Necessitous Intervention Th ere has been a lot of discussion as to whether the common law allows claims for necessitous intervention, in the absence of any request from the defendant. It certainly does sometimes: in extreme cases, the law may oblige the plaintiff to intervene, granting at the same time a right of indemnity.64 It is arguable whether

59 J A D i e c k m a n n , ‘ Th e Normative Basis of Subrogation and Comparative Law: Select Explanations in the Common Law, Civil Law and in Mixed Legal Systems of the Guarantor’ s Right to Derivative Recourse’ (2012 ) 27 Tulane European and Civil Law Forum 49, 76 – 83 . Th e doctrine of marshalling (which no one, to my knowledge, has suggested is an example of unjust enrichment) rests on the same basis. 60 Th e starting point was Pettkus v Becker [ 1980 ] 2 SCR 834 , 117 DLR (3d) 257. 61 Kerr v Baranow 2011 SCC 10 , [2011] 1 SCR 269. 62 Woolwich Equitable Building Society v IRC [ 1993 ] AC 70 (HL); Kingstreet Investments Ltd (n 11). 63 E B a n t , Th e Change of Position Defence ( Oxford , Hart Publishing , 2009 ) 203 – 04 . 64 Great Northern Railway Co v Swaffi eld ( 1874 ) LR 9 Exch 132 (Exch); Matheson v Smiley [ 1932 ] 2 DLR 787 (Man CA). Restitution: A New Start? 105 this kind of claim depends at all on enrichment.65 Another kind of case is one in which the defendant had an obligation, but the plaintiff did not; for example, the plaintiff buried a body that the defendant was obliged to bury. 66 Liability in such a case must be based on something like necessitous intervention. Th is, like a claim to recover undue taxes, is a claim that does not rest on any misunderstanding on the plaintiff ’ s part. It must rest on a decision that certain kinds of valued interventions, even if not legally obligatory, should be indemnifi ed. In the case of an unburied body, for example, this has much more to do with public health and the dignity of the deceased than on whether the plaintiff was somehow compelled by circumstances. If a doctrine of necessity were to reach, perhaps sometimes, to actions that are only factually necessary (that is, neither the defendant nor the plaintiff was under a duty to act), it would be approaching the civilian doctrine of negotiorum gestio. Under the three-part test, such cases may be discussed in relation to enrichment, because if the defendant did not request the intervention, the concern about ‘ subjective devaluation ’ arises. Th is may lead some scholars to say that even a ‘ factually necessary expense ’ amounts to an ‘ incontrovertible benefi t’ . 67 But while the defendant’ s freedom of choice is important, it is not always addressed in the same way. Th e very concept of allowing recovery for necessitous intervention must contend with the potential for overriding the defendant ’ s freedom of choice, and must resolve it in relation to the decisions about which interventions shall be actionable. It is not necessary to address it separately through an enrichment enquiry.

v. Implication Th at makes four causes of action within small unjust enrichment, and more could be identifi ed, such as illegality in its role as the basis of a plaintiff ’ s claim, or claims between co-owners for expenses incurred. And we still have not got to the main attraction: all of the law of mistaken or compelled transfers or enrichments, and all of the law on failure of consideration or basis. Th is suggests that unjust enrichment – even small unjust enrichment – has no normative unity in relation to the reason for liability. Th ere is no unifying explanation for why the defendant is liable; on the contrary, there is a range of reasons. Steve Hedley has been saying something like this for decades. 68 I think it is fair to put his point in this way: if you take all of the cases in which the common law allows claims for restitution, even confi ning oneself to reversing transfers (thus to small unjust enrichment), they

65 I n Matheson (n 64), for example, the plaintiff doctor was entitled to payment from the estate of the deceased, even though the doctor ’ s intervention had failed and was almost certainly undesired (since the defendant committed suicide). 66 Rogers v Price (1829) 3 Y & J 28, 148 ER 1080. 67 See, eg McInnes (n 32) 439. 68 As have others: see n 15. 106 Lionel Smith are a conceptual miscellany in relation to the reason that restitution is required. Sometimes Hedley puts this point rather strongly, once calling restitution ‘ the miscellaneous rubbish of the law ’.69 But rhetoric apart, the point is sound.

D . Th e Normative Unity of a Portion of Small Unjust Enrichment

Th e large number of liability situations that I have not yet addressed do, it seems to me, have some normative unity as to the reasons for liability. Th ey are cases in which the plaintiff ’ s claim is founded on protecting the integrity of the plaintiff ’ s choices, while also paying due attention to the choices and expectations of the defendant. Th is area includes mistaken and compelled enrichments, and failures of consideration or basis. Even within this more modest fi eld, there is diversity. My objection to overgeneralisation is that it is a mistake to assign a single normative foundation to a set of claims that have diff erent normative foundations. Within this more modest fi eld, I will aim to make a provisional claim that even though there is probably more than one cause of action, the basic reasons for liability in each of them are similar. Unlike in the law of torts, these reasons cannot be formulated in terms of the infringement of a pre-existing right. A great deal has been written aimed at provid- ing philosophical justifi cations for liabilities in unjust enrichment. I do not directly engage with that literature for two reasons. One is that the subject matter which I am aiming to address here is diff erent: it is a subset of the set of liabilities that many theorists have addressed, and even within that subset I will identify more than one basis for the defendant ’ s liability. Th e other reason is that this is only a provisional account.

i. Th e Plaintiff ’ s Complaint In his Introduction , Birks divided the reasons for restitution into three families. When he presented them with Robert Chambers, each family was given a name in what they called ‘ nursery terms ’ . Th e fi rst was ‘ I didn ’ t mean it ’ ; the second, ‘ it was bad of you to receive it’ ; the third, ‘ Mother says give it back anyway’ . 70 In this story, Mother stands for the policy of the law, standing apart from the choices of the parties. Th ose ‘ policy-based ’ cases involve their own causes of action, some of which have already been discussed. For the fi rst two families, my suggestion is that they are one. Birks ’ s understanding of ‘ free acceptance ’ evolved. In the Introduction, he argued that it played two roles.71 In the enrichment inquiry, it could disqualify a defendant from

69 H e d l e y , Restitution (n 15) 228. 70 ‘ Restitution Research Resource’ (1997) Restitution Law Review (2nd supp). 71 Birks (n 10) ch 8. Restitution: A New Start? 107 pleading subjective devaluation. But it could also serve as a reason for restitution, the sole member of the family ‘ it was bad of you to receive it’ . Andrew Burrows argued that in this setting, in the framework that Birks had created, it was superfl uous.72 Birks agreed, reluctantly I think, although he later went one better than Burrows by abandoning reasons for restitution altogether, a step in which Burrows has not followed him to date. I have come to agree with Weinrib:73 where the plaintiff ’ s claim is founded on the protection of the integrity of his own choices, those of the defendant must also be considered. ‘ I didn ’ t mean it ’ leads to recovery only if, at the same time, ‘ it was bad of you to take it ’ , or at least, ‘ and you chose to take it anyway’ . Outside of what Birks called policy-based restitution, there is only one family of reasons for restitution. Th is leaves a question on which Birks changed his mind. Does the plaintiff need to show a reason for restitution, or does liability follow where there is no legal justifi cation or basis for an enrichment that has been conferred ? In my view, once the defendant’ s choices are properly considered, this question becomes much less important. On the plaintiff ’ s side, the claim rests on the conferral of a benefi t which in one way or another the plaintiff did not intend to confer. Th e plaintiff ’ s intention was undermined by mistake or compulsion or undue infl uence, or it was conditioned on an agreement which may or may not have been contractual. If the plaintiff ’ s volition was not aff ected in any way, the plaintiff generally cannot recover. 74 Such a plaintiff has accomplished what he intended. So one way to exclude that possibility is for the plaintiff herself to show mistake, compulsion, undue infl uence, or failure of an agreed basis. Another way is to say that, subject to the protection of the defendant, an enrichment needs to be restored if it did not have any juridical justifi cation. As one part of German law shows us, this does not make a huge diff erence in practise: the plaintiff needs to provide some plausible explanation as to why she conferred an enrichment when she had no reason to. Examples of plausible explanations would be, using common law terms: mistake, compulsion, undue infl uence or failure of basis. And in German law it is open to the defendant to show, by way of defence, that the plaintiff knew very well that the enrichment was not due and conferred it anyway.75

ii. Th e Defendant’ s Involvement To repeat, liability cannot arise unless the defendant ’ s autonomy is also considered. We should always be worried about the defendant’ s involvement in the story.

72 AS Burrows , ‘ Free Acceptance and the Law of Restitution ’ ( 1988 ) 104 LQR 576 . 73 Weinrib, ‘ Correctively Unjust Enrichment ’ and Corrective Justice (n 36). 74 Note that this is quite irrelevant, and does not bar recovery, in the four causes of action described in the previous section. 75 In the civil law, a valid gift is considered to have a contractual framework, and so the transfer of the gift is considered to be the performance of an obligation. A claim to recover a mistaken gift starts by annulling the contract of gift on the ground of mistake, which makes the gift not due and so recover- able. Conversely in the common law, a mistaken gift can be recovered even though it was never due. 108 Lionel Smith

People are generally responsible for things that they have done, not for things that have just happened to them. If the defendant has requested the action that was taken by the plaintiff , even advocates of ‘ subjective devaluation’ agree that concerns about the defendant ’ s choices rightly fall away. Th is goes further than they realise, because it means that the defendant can be made liable whether or not the defendant was objectively enriched; as a result, it is not obvious that such cases depend upon the defendant ’ s enrichment at all. Th e defendant, for example, may have requested a service that diminished the value of his property, or may have requested that the plaintiff perform some action that enriched some party other than the defendant. But this is not the only way to address the defendant’ s participation. In many cases, the defendant will not have requested a benefi t, but will have accepted it. Acceptance in this sense occurs only aft er the benefi t was conferred, but still with a genuine opportunity to reject it. Th is may not be evident in cases like mistaken payments, where a funds transfer might be made without the defendant ’ s awareness. But in all such cases, the defendant has necessarily made a choice to accept the transfer before the question is litigated. Th e law of gift s tells us that a defendant can always refuse to accept a gift . Th e same must be true of any transfer of rights.76 If you owe me $ 100 and you try to pay me $ 100, I must be able to refuse. Th at is why we have the defence called ‘ tender ’ : you cannot make me take the money against my will. You can only off er it to me. A fortiori, it is the same if you pay me $ 150 because you think you owe me $ 150 when you only owe me $ 50. Cases of mistaken payments can reveal both request and acceptance. In the famous case of Kelly v Solari ,77 the defendant both requested the payment, and accepted it. Some mistaken payment cases will not involve a request: we can think of the famous case of Chase Manhattan Bank v Israel-British Bank ,78 which involved a good payment and then a second, mistaken payment of the same amount. But even in a case like Chase Manhattan, where there was no request, there comes a time (between payment and litigation) when the defendant becomes aware that the payment has been made and received. Just as in the law of gift s, the defendant has a choice to accept or reject the payment. Rejecting it means giving it back. Accepting it means that the defendant has made a decision to acquire the rights in question. If, before the defendant ever becomes aware of the payment, it has already been somehow lost or stolen, he never had a chance to accept it, and so cannot be liable on that basis. Th is is a kind of change of position, one that owes nothing to detrimental reliance.

76 In the context of unjust enrichment, this may have fi rst been pointed out by Edelman and Bant in the fi rst edition (2006) of their text: see now J Edelman and E Bant , Unjust Enrichment , 2nd edn ( Oxford , Hart Publishing , 2016 ) 62 – 64 . 77 Kelly v Solari ( 1841 ) 9 M & W 54 , 152 ER 24. 78 Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105 (Ch). Restitution: A New Start? 109

In improvements to property, there is a range of possibilities. Th e defendant might have requested the improvement, as in the case of an anticipated, discharged or void contract. Th ere may be cases of acquiescence, which might constitute estoppels. Unlike in the case of a rights transfer, however, in the case of improvements of which the defendant is unaware, there is never an acceptance with an opportunity to reject. It is not obvious that one can apply the logic of rights transfers to cases of unrequested and unknown improvements. Lining them up is an example of the problem of overgeneralisation, represented by the approach to all cases through the three big questions. Th e diff erences – normative diff erences, not structural ones – point the other way. A defendant who has requested a service can rightly be made liable to pay for it, without having done anything wrong, if the plaintiff did not intend to confer it in the relevant sense. Request is important, because it covers failure of consideration, as well as undue infl uence and compulsion. Th e diff erence between request and duress is largely one of manners. Neither defendant can rationally say that he did not want the benefi t, or deny responsibility for its conferral. Th e alternative, as we have seen, is acceptance by the defendant. Acceptance, to be meaningful as an alternative way of ensuring that the defendant’ s choices are consulted equally with the plaintiff ’ s, must mean acceptance with an opportunity to refuse.79 And this reveals a critical diff erence between enrichments that are in the form of transfers of rights and enrichments that are not. 80 A transfer of rights can always be rejected. Services and improvements cannot. To my mind, this implies that the common law has been right to take a restric- tive approach to unrequested improvements. Th e defendant may be enriched in an important sense, but even if the plaintiff was (for example) mistaken, the defendant has never had a chance to reject this unrequested benefi t. As I argued earlier, to explain this by saying that the defendant was not enriched is to miss the point. Note what happens if we insist that the defendant either requested the benefi t of the plaintiff , or accepted a transfer of rights with the opportunity to reject it. Th e cases of Rising Heat, Destroyed Stamp and Stolen Spectacle become what they should be: they are not diffi cult puzzles, but instead they are total non-starters. Th ere is no basis on which the defendant can be made liable, even though he has been enriched.

iii. Th e Link between Plaintiff and Defendant Some years ago, I argued that the nexus of transfer from the plaintiff to the defendant was an essential ingredient to fi nding liability without wrongdoing in

79 Acceptance as a basis for making a defendant responsible is doubted by F Wilmot-Smith , ‘ Should the Payee Pay ? ’ ( 2017 ) 37 OJLS 1, 14– 17 . Although I cannot develop the argument here, my view is that with some elaboration, acceptance can justify the defendant ’ s liability. 80 See R Chambers , ‘ Two Kinds of Enrichment ’ in R Chambers , C Mitchell and J Penner (eds), Philosophical Foundations of the Law of Unjust Enrichment ( Oxford , Oxford University Press , 2009 ) 242 . 110 Lionel Smith such cases.81 As explained above, this made a smaller law of unjust enrichment than Birks’ s view, because it limits us to cases in which the plaintiff suff ers a deprivation that corresponds to the defendant’ s enrichment.82 In general, when enrichment passes down a chain, this smaller view implies that personal unjust enrichment claims lie only between adjacent links (while other claims, such as proprietary ones, may be diff erent). But I now think that my idea of a transfer of wealth was probably too wide. I did not mean transfer literally, but rather in a more economic sense. For example, it includes an electronic funds transfer, in which there is no assignment or other literal transfer. I meant it also to include the provision of valuable services, which some people would say cannot be fairly described as a transfer. Being myself caught up in the problem of overgeneralisation, I was also willing to see transfers where there was only a causal link between the defendant’ s enrichment and the plaintiff ’ s deprivation. This leads to the problems of Rising Heat, Destroyed Stamp, and Stolen Spectacle. I am now minded to think that the link between the plaintiff and the defendant is diff erent in diff erent kinds of case. Where the defendant made a request of one kind or another, the plaintiff has rendered some performance of one kind or another in response. What the plaintiff claims is the value of what was done at the defendant ’ s request (even if it benefi tted someone other than the defendant, or even if it did not make anyone materially better off ). Even if there has been no request, the alternative is that the defendant can be liable for having accepted a transfer of rights when he had the option to refuse. What the plaintiff claims here is either the transferred rights or their value. Applying this to the case of the Stolen Spectacle helps us to see how the diff erent elements of the claim are not independent but interdependent, and also warns of some of the dangers of reasoning a fortiori when that interdependency is not borne in mind. A defendant can be liable if she requested a benefi t; a fortiori, someone might say, a defendant who simply took a benefi t must be liable. Th is works in the case where a defendant, by threats, extorts a rights transfer from the plaintiff .83 But in the case of the Stolen Spectacle, the defendant simply took what he wanted. Th at might seem a fortiori; and yet, there is no liability. Th ere is no liability because the plaintiff did nothing in response to the defendant ’ s actions, nor was there any accepted rights transfer. A claim might exist based on an interference with a pre-existing property right (as in the case of the spectacle stealer who was a trespasser, or copyright infringer) but not by analogy to what would have happened in a case of a benefi t conferred by the plaintiff in response to a threat or a request.

81 Smith, ‘ Restitution ’ (n 36). 82 Section I B. 83 Stoltze v Fuller [ 1939 ] SCR 235 , 1 DLR 1. Restitution: A New Start? 111

iv. Implication: Causes of Action How is all of this to be formulated in causes of action? Th ere are many possible approaches. One would be to preserve at least some of the language of the old common counts.84 I have already said that in my view, this is not a good solution, although we may fi nd wisdom in the old pleadings. I note that in quantum meruit, quantum valebat, and ‘ money paid to the use of the defendant ’ , the plaintiff would allege that he acted ‘ at the special instance and request’ of the defendant.85 Th is was not necessary in ‘ money had and received by the defendant to the use of the plaintiff ’ , which in my terms always revealed a transfer of rights that could be rejected. Th e old claims thus reveal the two ways I have mentioned in which a defendant can be properly liable where the plaintiff ’ s intention was somehow imperfect.86 One common approach is to treat separately all the various ways in which the plaintiff ’ s consent may have been undermined: mistake, undue infl uence, duress, failure of consideration. One reason that this has, in my view, created the diffi culties that I described above is that it is oft en assumed implicitly that these are merely diff erent ways in which a single very general claim can be made out. Not all of those who use this approach, however, make this implicit assumption.87 On the other hand, I do not think that these authors assume that there are as many separate causes of action as the situations that they outline. In my view, a small number of causes of action – one to three of them – could be articulated for the fi eld of claims that protect the plaintiff ’ s choices as to the deployment of her resources, while also respecting the defendant ’ s choices. A full analysis would need to include the elements of these causes of action, the situations in which they can and cannot apply, who are the proper plaintiff s and defendants in diff erent factual patterns, and the relationship between them. Th ere are at least two distinct reasons for making the defendant liable: request and acceptance. Th ose could be the foundation of a pair of causes of action. Of course, claims lie only when the plaintiff ’ s intention was somehow undermined, by mistake and so on. But if those are understood to be only variations on a theme, they would not multiply the causes of action. Th at is, mistake might be a way of establishing either the cause of action for requested benefi ts or the cause of action for accepted transfers. One important question is whether cases involving an agreement between the parties must stand apart. Th is is the fi eld of failure of consideration, writ large in the

84 S e e Halsbury ’ s Laws of England, 5th edn (2012) vol 88, 305, retaining quantum meruit and quantum valebat. 85 Birks (n 10) 111 – 13. 86 I thank the Honourable Justice Stephen Gageler AC for this point. 87 Here I would give as examples Maddaugh and McCamus (n 16) and the Restatement of the Law Th ird: Restitution and Unjust Enrichment (n 16). 112 Lionel Smith sense of the recovery of benefi ts conferred pursuant to some kind understanding. Many, but not all, of these cases arise in relation to contracts that have been set aside or discharged, or are void or unenforceable. Benefi ts conferred in such situations are requested, and so these claims might fall under the cause of action for requested benefi ts. But some of these cases involve rights transfers. More impor- tantly, these cases have their own particular features. Th e agreement, even though it is not being enforced as a set of contractual promises, dominates. It may allow recovery for benefi ts conferred even if they were legally owing, on the ground that under the agreement they had not been earned. Th is is what led to the puzzle of the coronation cases, 88 and more recently has led to diffi culties in cases that involve a schedule of payments. 89 Th ere is also a strong argument that the defence of change of position is not available in these cases. 90 If that were the case, it would suggest very strongly that this is a diff erent cause of action.

III. Conclusion

Unjust enrichment sceptics think that there is nothing that unifi es the material in Goff and Jones in relation to the reason for liability. Unjust enrichment enthusiasts think, on the contrary, that the principle or cause of action in unjust enrichment unifi es all of it in relation to the reason for liability. I like big ideas, but even I have some idea of when it is time to give up. In this chapter, not quite giving up completely on fi nding some unity in this fi eld of law, I have tried to fi nd a middle way. Trying to fi nd a middle way usually pleases no one. I am ready for that. I have aimed to fi nd some unity in those cases of restitution that are based on the parties’ intentions and understandings surrounding the conferral of a benefi t. It is hard to fi nd a name for it, but maybe it is the law of unintended, as opposed to unjust, benefi ts. ‘ Benefi ts ’ seems better than ‘ enrichments ’ , since a person who requested some action can be liable to pay for it, whether it enriched him or not. I was one of many people inspired by Peter Birks, and I remain so. He changed his mind sometimes, and so have I. Unlike Birks, I do not think this means that

88 Discussed and overruled in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour, Ltd [ 1943 ] AC 32 (HL). 89 S e e Rover International Ltd v Cannon Film Sales Ltd (No 2) [ 1989 ] 1 WLR 912 (CA) and the cases discussed therein, and Stocznia Gdanska SA v Latvian Shipping Co [ 1998 ] 1 WLR 574 (HL). 90 See P Hellwege , ‘ Unwinding Mutual Contracts : Restitutio In Integrum v Th e Defence of Change of Position ’ in D Johnston and R Zimmermann (eds), Unjustifi ed Enrichment: Key Issues in Comparative Perspective ( Cambridge , Cambridge University Press , 2002 ) 243 ; R Stevens , ‘ Is there a Law of Unjust Enrichment ? ’ in S Degeling and J Edelman (eds), Unjust Enrichment in Commercial Law ( Pyrmont (NSW) , Lawbook Co , 2008 ) 11, 32 . Other authors would say that the defence is available in principle but may be ruled out if the particular facts show that the defendant knew the payment was conditional: see Bant, Th e Change of Position Defence (n 63) 197 – 98; Burrows (n 8) 546 – 47. Restitution: A New Start? 113 everything I wrote now needs to burned, nor do I think that of anything he wrote. 91 When you conclude that you were wrong, you have to change your mind. If the two positions are inconsistent, then logically, I think, there are three possibilities: you were wrong, and now are right; you were right, and now are wrong; or you were wrong, and you still are. We must take our chances.

91 Birks (n 7) xii.