RESTITUTION & THE LAW OF UNJUST ENRICHMENT

Restitutionary awards Total ailure o !onsideration or re und o " #urely $ust return %oods& su'(e!t to a'ility to return %oods )uantu$ Meruit* + !ontra!tual , a!!ounted or in !ontra!t+ restitution )uantu$ .ale'at W/at is it0 Payment for work completed under the terms of a breached contract (such an award may be made by the court if the contract is partially fulfilled) The recovery of money or property from a person who has been unjustly enriched by it. A legal procedure whereby you can seek reimbursement from another who benefited from your action or property without legal justification Three conditions which must be met before you can get a court to force reimbursement based on " njust enrichment"! o An actual enrichment or benefit to the defendant" o A corresponding deprivation to the plaintiff" o And the absence of a legal reason for the defendant#s enrichment Restitutionary Awards $. Purpose % to reverse any unjust enrichment gained by the defendant at the e&pense of the plaintiff '. Applies % when there is no contract at all between parties () when the contract has been vitiated*terminated +ee Infocommunications Development Authority of Singapore v Singapore Telecommunications Ltd (No 2) (2002) (see !L) ,. -. on a restitutionary basis a. /ot under contract law b. The law of unjust enrichment (also known as the law of 0uasi1contract) c. A claim may be made for a reasonable sum in relation to the partial provision of works and services 23 the party who was unjustly enriched had the option of freely accepting or rejecting the benefit of the partial performance. d. 2f" for e&ample" person A pays money to person 4 under a contract which is later ruled to be unlawful" A has no action in breach of contract to recover the money" because there is no contract. 5e probably has no action in tort" because it may be the case that no fault can be ascribed to 4. 5owever" if 4 has been unjustly enriched by the receipt of the money" then A will have an action in restitution. Un(ust enri!/$ent 1 Is t/e #lainti 'la$eless or at ault0

2lainti 3la$eless* 45 a. Ltd ('()*) b. c. d. e. f. 6efinition of 7consideration8 1 7when one is considering the law of failure of consideration9 (in relation to the law of 0uasi1contract)" it is the P:)3().A/;: of the promise (and not just the promise itself)< Total failure of basis =here the basis or the 7consideration8 here is the actual performance and completion of any e&ecutory consideration9 4P> $?.@A applied by the courts where there is a breach of contract to the e&tent that the defendant has completely failed to provide the performance of his contractual obligations overlap occurs when there is a breach of contract as the plaintiff can decide to sue by i. total failure of consideration (seeking a refund of money paid) ii. damages for breach of contract (seeking compensation for all e&penses incurred in reliance of the performance of the contract) iii. the difference is that in restitution there is no mitigation" remoteness issues and the plaintiff is only allowed to recover the sums paid to the party1in1breach iv. courts may award refunds of advance payments for total failure of consideration" damages for wasted e&penditure and*or lost profits v. +ee +illar,s +achinery &o Ltd v David -ay . Son vi. Treitel suggests that 7 the claimant cannot combine the various types of claims so as to recover more than once for the same loss8 vii. )e0uires that the plaintiff got no part of the promised benefit viii. +ee /o%land v Divall ('(2*) and "i#rosa ('()*) i&. 7the test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contracts8 /over International Ltd v &annon "ilm Sales Ltd ('(0() Total ailure o !onsideration +ee "i#rosa Spol$a A$cyina v "air#arn La%son &om#e ar#our

65

3ene its in 7ind 1 )uantu$ Meruit ,Ser8i!es- & )uantu$ .ale'ant ,9oodsB )uantu$ Meruit $. A claim upon a #0uantum meruit# is a claim in respect of unremunerated services. 2f one party breaks a contract that involves services" the other party may" instead of claiming damages" sue upon a 0uantum meruit to recover the amount earned by his labours! PlanchC v. ;olburn $D,$ '. +uch a claim will not favour the one who has broken the contract! 2f a person agrees to do something for a lump sum" he can normally only sue for payment if the work is substantially completed. 5e cannot do half the work" then renounce the contract and claim a 0uantum merit. The courts will not imply a contract in favour of one who has made an e&press agreement and failed to perform it! ;utter v. Powell $AE@

This seems rather harshF so in 5oenig v. 2saacs $E@' a 0uantum meruit was granted on behalf of a party who had failed to perform" subject to deduction of costs accrued to the other party. 3urthermore" the >aw )eform (3rustrated ;ontracts) Act $EG, has replaced the rule in ;utter v. Powell $AE@. ,. -uantum meruit may also be used in order to recover a reasonable remuneration for the performance of a contract when no specific remuneration has been agreed upon. This (#0uantum valebat#) also applies when no price for goods is deter1 minded. B )uantu$ .ale'at $. As much as it was worth. =hen goods are sold" without specifying any price" the law implies a promise from the buyer to the seller that he will pay him for them as much as they were worth. The plaintiff may" in such case" suggest in this declaration that the defendant promised to pay him as much as the said goods were worth" and then claim that they were worth so much" which the defendant has refused to pay. 65 W/ere #lainti /as !o$#leted so$e o'li%ations i. An award for -. seems to be unobjectionable so long as such an award wold be less than any possible award fr damages for breach of contract. ii. 4ased on oomer v +uir ('(**) and Lodder v Slo%ey ('(0))" the recovery based on -. need not be related to the contractually agreed price for the plaintiff8s work. iii. +hould not be assumed that every case of partial performance of an obligation amounts to a benefit to a defendant since 7benefit8 is determined subjectively. iv. A plaintiff8s partial performance can be subjectively devalued. v. 5ard to prove this if the benefit is incontrovertible (benefit takes the form of money or savings) vi. 2s the benefit to the defendant incontrovertible or derived from the 7bargained1for8 presumptionH :5 W/ere #lainti /as !o$#leted all o'li%ations i. Plaintiff cab sue the defendant to recover the price in an action for a fi&ed sum ii. 6amages for breach of contract usually unavaible for an obligation merely to pay money. iii. -. only used when the amount recoverable would be greater than the contractually agreed price as in oomer1 ;5 Resitutionary <a$a%es or 3rea!/ o Contra!t a. Ieneral position! 4reach of contract simpliciter i. Traditional view % restitution is not awarded for breach of contract

ii. +ee Tito v -addell (No 2) ('(22) % 7 the 0uestion is not one of making the defendant disgorge what he has saved by committing the wrong " but one of compensating the plaintiff< iii. +ee Surrey &ounty &ouncil v redero 3omes Ltd ('((*) %no damages based on the e&cess profit earned by the defendants as a result of their breach of contract is awarded. b. .ore than just breach of contract i. -rotham !ar$ 4state &o Ltd v !ar$side 3omes Ltd ('(2)) % it was held that the defendants could be made to disgorge the profits it had made ii. 5ighly restrictive approach to awards of damges on a resitutionary basis may be open to change as observed by the case of Attorney 5eneral v la$e (200') involving the obligations of a fiduciary and special interests 2lainti at ault* 45 !onsideration0 3ene its in Money* Total Failure o

a. /o restirctionn on an action for unjust enrichment where the benefit provided is in the form of money. b. +ee Dies v ritish and International +ining and "inance &orporation6 Ltd ('(*7) and /over ('(0() c. 4oth cases support the view that it is irrelevant whether the plaintiff himself is a contract1breaker. 65 3ene its in 7ind* )M0

a. +ee Sumpter v 3edges ('0(0) and olton v +ahadeva ('(22) b. 4oth judgments were decided against the plaintiff seeking -. and were based on the fact that the obligations on the part of the plaintiff were 7entire8. c. 2n 3ain Steamship &ompany Ltd v Tate . Lyle Ltd ('(*8)" >ord =right suggested otherwise. d. 2n +ingapore" as observed by the case Lee Siong 9ee v eng Tiong Trading6 Import and 4:port ('(00) !te Ltd (200)" hints that -. is unavailable to a contract1breaker. 5owever this issue remains unclear. W/ere t/e !ontra!t is <is!/ar%ed or ot/er reasons t/an 'rea!/ +o long as the re0uirements for a restitutionary claim are fulfilled" refunds and 0uantum meruit are available regardless of the cause of the failure of contract. Note e=!e#tions* 45 Contra!ts dis!/ar%ed 'y a%ree$ent a. 2n Lee Siong 9ee (2000) % -. unavailable

b. unclear. c. or )ule of lawH

Position in +ingapore )ule of interpretation

65 Contra!ts dis!/ar%ed 'y rustration a. 3rustrated ;ontracts Act ($EG,) overrule b. :&cept for categories of contracts which are e&cluded % section ,(@) :5 Contra!ts .itiated 'y Ille%ality a. 7the loss falls where it lies8 b. )estitutionary damages unavailable

Again! 2lainti !an esta'lis/ lia'ility or restitution 'y #ro8in%& $. the defendant was enriched '. at the e&pense of the plaintiff ,. in circumstances which are unjust (there is no justification or reason for the defendant to keep that enrichment) G. there is no defence available to the defendant to resist the justice of disgorgement of his unjust enrichment in favour of the plaintiff Restri!tions on re!o8ery or un(ust enri!/$ent* De eers (2002) 6efence of the change of position recogniJed in Lip$in 5orman (a firm) v 9arpnale Ltd ('((') and locally" Seagate Technology !te Ltd v 5oh 3an 9im ('((7) and most recently IDA v Singtel (2002). A defendant recipient of a benefit from the plaintiff will be able to resist or minimiJe restitution if! $.the payee has changed his position '. the change is bona fide ,. it would be ine0uitable to re0uire him to make restitution or to make restitution in full G. there is a causal link between the receipt of the benefit and the recipient8s change of position Ta>e note o earnest $oney and or eiture !lauses5