Contract and Unjustified Enrichment Ordinary

Handout - Lectures 21-22

Unjustified Enrichment and Negotiorum Gestio

Reading: *MacQueen and Thomson, paras 1.22-1.24; 1.38-1.53; 5.77-5.85

Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1998 SC (HL) 90
- (*Lord Hope’s speech at 98)
*Morgan Guaranty Trust Co of New York v Lothian Regional Council
1995 SC 151; 1995 SLT 299; 1995 SCLR 225
*Shilliday v Smith 1998 SC 725; 1998 SLT 976
*N Whitty “Unjustified Enrichment” Stair Memorial Encyclopaedia
(reissue, 2021) paras 1-42
** H MacQueen Unjustified Enrichment (2013) (‘Law Basics’ Series)

A. Introduction

Unjustified enrichment is the principle of law that when a person (“A”) has been enriched at
another person’s (“B”) expense and there is no legal ground justifying retention of the
enrichment, A incurs an obligation to return or otherwise compensate B for the
enrichment.

“Enrichment” is anything which leads to an increase in a person’s patrimony. This can be

through:
- Addition of a new asset
- Increase to the value of an existing asset
- Prevention of loss to an asset’s value that would otherwise have happened
- Performance and discharge of an obligation

The Scots law of unjustified enrichment has its origins in the Roman principle that, according
to natural law, fairness requires that no person becomes richer by the loss and injury of
another (“iure naturae aequum est neminim cum alterius detriment et iniuria fieri
locupletorium” – D.50.17.206 (Pomponius))

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The Scottish tradition restated this principle as “no one should be enriched by another’s loss”
(“Nemo debet locupletari [ex] aliena iactura”).

Obviously, in normal commercial dealings and contracts, one party may well be enriched at
the expense of another’s loss. The law will not generally save a person from their own bad
bargain. However, the retention of the enrichment is justified on a contractual basis.
Similarly, a gift or gain through lawful competition can also form a valid basis justifying the
retention of a benefit.

In, unjustified enrichment, there is no basis for the retention of the benefit. That is, there is
no legal ground justifying the person who has been enriched keeping that enrichment.

This can be for a number of reasons, for instance:

 the original purpose for which a transfer is made subsequently fails,
o e.g. an engagement ring after the wedding is called-off
 a transfer is made in error,
o e.g. a person pays a debt they think is due, but is in fact not
 a person improves someone else’s property without authorisation
o e.g. a farmer builds a barn on what he honestly believes is his land, but he
turns out not to be the owner

The leading modern description for criteria that must be present in order for a claim of
unjustified enrichment to be successful is found in Dollar Land (Cumbernauld) Ltd v CIN
Properties Ltd 1998 SC (HL) 90:
“I think that Lord Rodger stated the matter correctly (…) when he said that the
pursuers must show that the defenders have been enriched at their expense, that there
is no legal justification for the enrichment, and that it would be equitable to compel
the defenders to redress the enrichment”
- per Lord Hope at 98

From this, four main criteria can be gleaned

1) The defender(s) must have been enriched
2) At the pursuer’s expense
3) There is no legal ground for the enrichment
4) It is equitable for the court to insist the enrichment is redressed

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This fourth criterion is problematic, as it appears that the pursuer must prove the equity of
redressing the enrichment. In fact, it is more appropriate to say that the defender must
demonstrate that there is a relevant defence that would make it inequitable for the enrichment
to be reversed.
- N V Devos Gebroeder v Sunderland Sportswear Ltd 1990 SC 291 per Lord
President Hope at 301.

Thus, it is more appropriate to state the criteria as:

1) The defender(s) must have been enriched
2) At the pursuer’s expense
3) There is no legal ground for the enrichment
4) There must be no relevant defence that makes redress inequitable or otherwise
inappropriate

B. Causes of Action and Obligations of Redress

There are three main types of event that can give rise to a claim of unjustified enrichment:

1) Enrichment by transfer
- Credit Lyonnaise v George Stevenson & Co Ltd (1901) 9 SLT 93
- Findlay v Monro (1698) Mor 1767

2) Enrichment by taking or interference with another’s property rights

- Jarvis v Manson 1954 SLT (Sh Ct) 93
- GTW Holdings Ltd v Toet 1994 SLT (Sh Ct) 16

3) Enrichment by imposition
- Newton v Newton 1925 SC 715
- York Buildings Company v Mackenzie (1795) 3 Pat 378; (1797) 3 Pat 579

It can sometimes be difficult to distinguish between some types of event. For example, in
Bank of New York v North British Steel Group 1992 SLT 613 a payment was made to the
wrong person. It was considered an enrichment by transfer but it could equally be classed as
enrichment by imposition.

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There are three main obligations of redress which can arise, depending on the nature of the
enrichment:

1) Repetition – the repayment of money

2) Restitution – of property other than money
3) Recompense – reimbursement for services or expenditure, or for interference with
rights, unauthorised imposition, or indirect enrichment at pursuer’s expense

These are remedies which a court can grant to reverse an unjustified enrichment but they are
not exhaustive. It may be that in certain circumstances alternative solutions may be more
appropriate.

C. Enrichment by Transfer and the condictiones

“Enrichment by transfer” - also sometimes termed “enrichment by deliberate conferral” - is

where one person (“A”) delivers the enrichment (money or property) to another person (“B”),
who consents to receive it. Consent of both parties is essential to transfer ownership in Scots
law. Thus, B owns the subject of the enrichment that A is seeking returned (restitution) or
repaid (repetition).

The condictiones describe particular circumstances in which enrichment by transfer most

commonly occur and can form the basis for an action seeking restitution or repetition.

In Roman law, the condictiones were the only actions under which a person could bring a
claim for redress. Scots law inherited this position and for a long time it was thought that they
were the exclusive grounds for action. However, in Shilliday v Smith, Lord Rodger clarified
that there is a general principle against unjustified enrichment and the condictiones are no
longer the sole grounds for action:

“a person may be said to be unjustly enriched at another's expense when he has

obtained a benefit from the other's actings or expenditure, without there being a legal
ground which would justify him in retaining that benefit. The significance of one
person being unjustly enriched at the expense of another is that in general terms it
constitutes an event which triggers a right in that other person to have the enrichment
reversed.”
- Shilliday v Smith 1998 SC 725 per Lord Rodger at 727.

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That said,
“the condictiones remain relevant to considering categories of cases in which an
obligation to redress unjustified enrichment may arise”.
- King v Adam 2023 SLT (Sh Ct) 101 at 105.

The most important condictiones for our purposes are:

 Condictio indebiti
 Condictio causa data causa non secuta
 Condictio sine causa
 Condictio ob causam finitam, and
 Condictio ob injustam vel turpem causam

Condictio indebiti

The condictio indebiti involves an action for the return of an undue payment.
The undue payment must have been made in error about either the true factual
circumstances. or the law.

“In my opinion the essentials of the condictio indebiti are that the sum which the
pursuer paid was not due and that he made the payment in error”
- *Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC
151 per Lord President (Hope) at 165.

- Peter Walker and Sons (Edinburgh) Ltd v Leith Glazing Co Ltd 1980 SLT (Sh Ct)
104

The error could be that the payer believed they were under an obligation to pay but the real
debtor was another person. For example:

Alf believes his electricity supplier is Squid Energy and so transfers £100 to Squid in
satisfaction of his bill. In fact, Alf’s energy supplier is Big Sea Energy. Therefore, Squid
Energy have been unjustifiably enriched by £100. Alf can bring an action under condictio
indebiti for repetition of the £100.

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Alternatively, it could be because the parties believed there was a valid contract which
subsequently turned out to be void, for instance due to a shared error. For example:

Legolas agrees to sell Lothlorian lembas to Gimli for £50. Gimli pays Legolas but
unbeknown to both parties, Lothlorien has already sold all its lembas to Frodo before
Gimli and Legolas contracted. The shared error renders the contract void ab initio.
Thus, the payment was not due and Gimli can use the condictio indebiti to recover his
money.

If the payer knew payment was not due (so was not in error) the payment will be
presumed to be a donation unless there are other factors justifying reversal of the
enrichment:
- Morgan Guaranty Trust Co of New York v Lothian Regional Council per Lord
Hope at 165
- (note – Lord Hope’s dictum has been criticised, in part because of the strong
presumption against donation in Scots law: see R Evans-Jones and P Hellwege
'Swaps, Error of Law and Unjustified Enrichment' (1995) 1 SLPQ 1 at p 8.)

Condictio causa data causa non secuta

“Action to recover something given for a consideration which has failed”

- Cantiere San Rocco SA v Clyde Shipbuilding and Engineering Ltd [1924] AC 226
per Lord Birkenhead at 235.
“ …the term condictio causa data, causa non secuta covers situations where A is
enriched because B has paid him money or transferred property to him in the
expectation of receiving a consideration from A, but A does not provide that
consideration”
- Shilliday v Smith 1998 SC 725 per Lord President (Rodger) at 727.

The condictio causa data causa non secuta (“CCDCNS”) – literally translated as ‘for a cause
that does not follow’ - is the relevant condictio where the enrichment is due to a transfer
made at a time when there is a valid cause justifying it but that cause subsequently fails.
The defender does not render the required performance previously agreed to for which the
transfer is made. The paradigmatic example is that of an engagement ring given as
‘consideration’ for a marriage but the marriage does not take place.

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The CCDCNS does not apply only where there has been an advance payment made, but to all
cases where there has been a performance which is not subsequently met by counter-
performance.

- Cantiere San Rocco SA v Clyde Shipbuilding and Engineering Ltd [1924] AC 226
The appellants had paid sums due under a ship-building contract that, due to the outbreak of
war, was subsequently frustrated. Thus, there was no longer a contractual basis justifying the
respondents’ retention of the money. It has been argued that this would more correctly be
described as a claim based on the condictio ob causam finitum, on which see below.

- Shilliday v Smith 1998 SC 725

In Shilliday the pursuer had paid for, and given the defender money towards, improvements
to the defender’s property. The parties were at the time engaged and living together. The
pursuer returned home one day to find the locks changed. She raised the action for repayment

- McKenzie v Nutter (SLT (Sh Ct) 17)

A couple agreed to sell their respective homes and purchase a house together. The respondent
sold his property and put the whole proceeds towards a deposit for a house taken in both
party’s names on the understanding that the appellant would pay the outstanding balance
from the proceeds of the sale of her property. The appellant did not move into the new
property, nor pay the mortgage, and when the couple separated obtained a decree for division
and sale of the property. She would found liable to the respondent for her pro indiviso ½
share of the proceeds of the sale. The situation fell under the CCDCNS as the obligation of
the appellant to pay the mortgage was not fulfilled.

Condictio sine causa

Sine causa = “without cause”

Where other condictiones do not fully describe the situation in which enrichment arises, for
instance because there is no error on the payer’s part about their liability to pay, but redress is
nonetheless deemed appropriate, the condictio sine causa can be employed.

The following are a couple of examples.

Payment under compulsion:

- British Oxygen Co v South of Scotland Electricity Board 1959 SC (HL) 17

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SSEB supplied electricity at high voltage to BOC. This cost less to SSEB to supply than
ordinary lower voltage suppliers but they failed to differentiate between their prices. BOC
complained but SSEB refused to lower the supply price. If BOC did not pay as demanded
SSEB would cut their supply altogether. As SSEB were a statutory monopoly supplier, BOC
had no choice but to pay the unreasonably high price. It was held that the payments were
made under compulsion and SSEB were enriched to the extent of the difference between cost
of the low and high voltage supply.

Payments subject to protest or reservations:

- Nurden & Peacock PLC v Ramsden & Co Ltd (1999) 1 WLR 1249
P paid D despite suspecting they did not need to do so under the presumption P would be able
to recover should it transpire that in fact payment was not due. D knew of P’s belief that they
could recover. This amounted to a reservation of the right to recover and redress permitted.
This is not a case that falls within the scope of the condictio indebiti as P was only in doubt,
not error, as to their obligation to pay.

Condictio ob causam finitam

“The condictio ob causam finitam (…) requires a valid basis for payment or transfer
which has subsequently ceased to exist; in other words, there must have been an
existing state of affairs which provides the reason for the transfer, but that reason has
subsequently come to an end”

- *King v Adam 2023 SLT (Sh Ct) 101 at [30]

Two friends jointly purchased a property in Kilmarnock and moved in together. When they
subsequently fell out, the pursuer left the shared property and was granted a decree of
division and sale. The defender counter-claimed in unjustified enrichment, arguing that she
had expended greater funds on the purchase and improvement of the property on the
understanding that the parties would continue to reside together. Once the parties ceased to
lived together and the property was sold, the cause for the expenditure came to an end. The
defender argued that equal split of the proceeds from the house sale would result in the
pursuer being unjustifiably enriched.

Condictio ob injustam vel turpem causam

“Action for recovery of a transfer made for an illegal or immoral cause”

Normally, the courts will not intervene to permit recovery when money is paid for an illegal
purpose – ex turpi causa non oritur action

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However, recovery of a transfer made for an illegal or immoral cause may be possible when
the parties are not equally responsible for the illegality or there is no turpitude (immoral
behaviour) by the pursuer.

If the parties are equally responsible then losses are normally allowed to lie where they fall,
as the defender’s possessory right is considered stronger – in pari delicto potior est conditio
defendentis.

The exception to this is where there is no moral turpitude. In this instance a party may
nonetheless be able to recover their losses. Additionally, where a party attempts to withdraw
before the illegal conduct is actually performed, they may be able to recover any payment or
transfer already made.

- Cuthbertson v Lowes (1870) 8 M 1073

A pursuer was allowed to recover his loss for potatoes transferred under a contract that was
void under statute because “there was no turpitude in a man selling his potatoes by the Scotch
and not by the imperial acre” (at p 1075).

- Jamieson v Watt’s Trustee 1950 SC 265

A pursuer was barred from recovering losses sustained through performance rendered under a
contract that was void because he had not obtained the proper licences prior to undertaking
the work. A party cannot rely on their own illegality in order to obtain relief under unjustified
enrichment.

- *Patel v Mirza [2016] UKSC 42

Patel was entitled to recover £62,000 transferred to Mirza to ‘bet’ on RBS share prices. Lord
Toulson (at para 120 of judgement) held that when determining whether recovery under an
illegal contract should be allowed the courts should consider:
- the purpose of the law which made the contract illegal
- whether another relevant public policy will be made ineffective by rejection of the
claim
- whether refusal of the claim would be a proportionate response to the wrongdoing

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Although an English case, it is thought that the Scottish courts will follow Patel. So far, there
have been no significant decisions although it has been cited with approval in some Sheriff
Court cases, for instance:

- VMS Enterprises Ltd v The Brexit Party Ltd [2021] 7 WLUK 665
- Travers v City of Edinburgh Council [2021] 6 WLUK 619

For commentary on Patel from a Scottish perspective see:

- E Obiora and J Macleod “Restitution under an illegal contract: a Scots law
perspective on Patel v Mirza” (2018) 26 (2) ERPL 273-281

D. Enrichment by taking or interference with another’s rights

This is one of the broadest categories under which an enrichment claim may be brought. It
can apply to situations:

 where the defender has taken the property of another,

 where the defender has taken fruits rightfully due to another party,
 where the defender has occupied another’s property,
 where the defender has become owner of another’s property through some
other process, for instance specification.

- Glen v Roy (1882) 10 R 239

A son occupied his father’s property without a lease. The son was found liable to pay for
enrichment arising from his occupation as there was no evidence led to suggest his father
allowed the possession with the intention of gift

- Rochester Post Services Ltd v A G Barr PLC 1994 SLT (Sh Ct) 2
AG Barr leased an advertising board in Glasgow from RPS. At the end of the lease, AGB
continued to use the board for 17 months. AGB were held to be enriched to the extent of the
annual worth of the site during the time of their continued use.

- Mellor v William Beardmore 1927 SC 597

The owner of a patent’s employers used the invention without agreeing to give, or paying, the
owner royalties. They were found liable to pay a reasonable sum for royalties.

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E. Enrichment by imposition

i) Imposed enrichment by a bona fide possessor’s unauthorised improvement of

another’s property

As discussed previously, where a person improves or increases the value of the another’s
property, for instance by paying for renovations or repairs, this can give rise to an obligation
of redress.

- Edinburgh Life Assurance Co v Balderston (1909) 2 SLT 323

In this case, assignees under a failed assignation made payments keeping a life insurance
policy in force. The payers were in good faith. The payments meant the property of the
defender was maintained and was thus benefitted.

For a claim to be successful when the improvement is unauthorised, the improver must be a
bona fide possessor: one who thinks they are owner or otherwise have a legitimate basis for
possessing or improving the property. For example:

A farmer thinks they have a valid lease of land and builds a milking shed. It transpires
his lease is not valid. The owner of the land has been enriched by the addition of the
milking shed and can be made to compensate the farmer for the improvement.

If a person knows they are not owner, nor have a legitimate basis for their improvements,
but spends money on improving another’s property anyway, they will not be able to recover
the cost. For example:

If, in the above example, the farmer knew that the milking shed was in fact on
neighbouring land and built it regardless, his claim will fail.

ii) Imposed enrichment by unauthorised payment of another’s debt or performance of an

obligation

Although, generally, a party cannot recover for a payment they know not to be due by them,
if the payer is paying someone else’s debt, they may be able to recover from the original
debtor.

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 Obligation

Creditor Debtor

Payment Obligation of redress

Payer

The payment of another’s debt can extinguish the original obligation between the creditor and
debtor where:
“the debt is pecuniary, and due, and demanded; or where any penal effect may arise from
delay; or where the creditor has no interest in demanding performance by the proper
debtor”
- G J Bell Principles of the Laws of Scotland § 557

If these criteria are met, the payer can request an assignation of the original debt from the
creditor. This will give them a contractual right rather than a claim under unjustified
enrichment.

If there is no assignation, the payer can alternatively raise a claim in unjustified enrichment
against the debtor.

- Reid v Lord Ruthven (1918) 55 SLR 616

Lord Ruthven (LR) owed debts to a bank. These debts were guaranteed by K. K’s debts in
turn were guaranteed by Mr Reid (R). On K’s death, he had insufficient assets to cover
LR’s debts and R was called upon to meet them. R successfully argued that LR was
unjustifiably enriched as the payment had the effect of discharging LR’s debt to the bank.

Where the enrichment is by performance of another’s obligation the enriched party may be
obliged to repay the amount saved by the pursuer’s performance:

- Lawrence Building Co v Lanarkshire County Council 1978 SC 30

A construction company (LBC) built houses and also the sewerage system connecting the
houses to the public sewers. Building the connecting sewerage system was statutorily in fact
the responsibility of the local council – Lanark Town Council. LTC were subsequently
replaced by LCC. LCC were found to be enriched to the extent their predecessor local
authority had saved on the construction of the sewers.

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F. Measures of recovery

The purpose of unjustified enrichment is to reverse the enrichment: i.e. to take the enrichment
from the defender and give it to the pursuer.

Enrichment by transfer:
Where restitution or repetition is possible, redress will be the return of the property
(certa res) or repayment (certa pecunia) of the enrichment.
Where repetition is ordered, the enriched party will be required to repay the original
amount plus interest dated from the original transfer.
Where restitution is ordered, in addition to the retransfer of the property the enriched party
may also be required to return fruits and acquisitions.
Where restitution is not possible, perhaps because the goods have been used or otherwise sold
on to a good faith third party purchaser, the courts will assess the value of the enrichment
according to the normal market price (quantum meruit):
- Wilson v Marquis of Breadalbane (1859) 21 D 957
- James Stuart & Co v Kennedy (1885) 13 R 221

Enrichment by Imposition:
Where the remedy sought is recompense, the amount of the enrichment is not as obvious on
the face of things, it is said to be incertum – literally translated as “an uncertain amount”.

Where the enrichment is through improvement of another’s property, the court will
calculate the redress according to quantum lucratus – an evaluation of the defender’s
enrichment. However, this is limited by the amount the improver has spent. In enrichment
by performance (other than transfer), this might be the value of the services (“quantum
meruit”).

Where the enrichment is made by paying another’s debt, the amount recoverable is the
amount paid to the creditor plus interest running from the date of the payment.

Where the enrichment is through performance of another’s non-monetary obligation, the

amount of the enrichment is due, for instance: the saving made by the enriched party in not
having to perform the obligation themselves. See:
- Lawrence Building Co v Lanarkshire County Council 1978 SC 30

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Enrichment by taking or interference

Where the enrichment arises from taking or using another’s property, the measure of
recovery will depend on the manner of the enrichment.

Thus, where the enriched party has taken money, they will be required to repay the amount
taken plus interest from the date of the enrichment. Where they have taken other types
property, they will be required to return it.

If the enrichment cannot be returned, for instance, because it has been consumed,
destroyed, or sold to a bona fides third party, the enriched party must recompense the
impoverished party to the extent of the enrichment, i.e. any profit they have made.
- Jarvis v Manson 1954 SLT (Sh Ct) 93
- International Banking Corp v Ferguson, Shaw & Sons 1910 SC 182

If the enriched party was a bona fide possessor, they are not liable for fruits consumed. If
they were not in bona fides, they will be.
- Stair Inst I.7.13

Where the taker was in bad faith but no longer in possession of the property, perhaps because
they have sold it, the impoverished party may recover the property from third-party purchaser
and any profit the enriched party made from the sale.
- Faulds v Townsend (1861) 23 D 437

Where the enriched party has been enriched through the use of another’s property,
they will be required to recompense the impoverished party by a reasonable sum. What
is ‘reasonable’ depends on the specific circumstances. This could be, for example, market
rents, annual value of land, or the amount saved by the enriched party through having the use
of the pursuer’s property.
- Earl of Fife v Wilson (1864) 3 M 323

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G. Defences

As unjustified enrichment is an equitable remedy, there are many factors that the court may
take into account when deciding whether the enrichment warrants redress. Among these
include
 The nature of the relationship between the parties
 Whether the enriched party still has the enrichment
 If the enrichment was incidental
Defences to an unjustified enrichment claim are based on the idea that it would be
inequitable for the court to provide redress.

a) Balance of Equities/Change of Position

A ‘balance of equities’ defence is a general proposition that, when the facts and
circumstances are looked at as a whole, it would be unfair to grant redress.
“It must be shown that in all the circumstances it would be equitable for the pursuers
to be reimbursed”
- Lawrence Building Co Ltd v Lanarkshire County Council 1978 SC 30 per Lord
President (Emslie) at 41, 42.

Such factors that the court may consider are:

- When, in a claim brought under the condictio indebiti, the pursuer knew that the
payment was not due.
- Under the condictio indebiti, whether the pursuer’s error was excusable
- Where the pursuer, through their actions, has led the defender to believe that they
will not exercise any right that may arise from unjustified enrichment
- Where the claim arises through a contract which has failed due to the pursuer’s
actions

As a defence, if the pursuer has proved that the enrichment is unjustified, it is for the
defender to show that redress would be inequitable in the circumstances.
- Compagnie Commerciale Andre SA v Artibell Shipping Co Ltd 2001 SC 653 at
699

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Additionally, if the defender has experienced a significant change in position since the
enrichment, it may be possible to plead this as a defence. This is because it would be
inequitable for the defender to shoulder the extra loss. For example:

A and B have a contract under which B was to build a ship for A. A pays B a deposit.
Before B builds the ship, the contract is frustrated due to the outbreak of war.
Normally, (as in Cantiere San Rocco) the deposit is recoverable under the condictio
causa data causa non secuta or possibly the condictio ob causam finitum. However, if
B uses the deposit money to purchase the necessary materials for building the ship
from C, and C becomes insolvent prior to delivering the materials, B no longer has the
enrichment and therefore ordering redress might be considered inequitable due to the
change of B’s position. Alternatively, if the enriched party has become insolvent and
the enrichment claim is not raised before then, the claim may be refused on equitable
grounds
- See also Bell v Thomson (1867) 6 M 64
- Ker v Rutherford (1684) Mor 2928

However, where the change of position is due to the defender’s negligence or fault, the
defence of change of position will not be sufficient against an enrichment action:
- Royal Bank of Scotland v Watt 1991 SC 48.

b) Subsidiarity

Subsidiarity is a principle by which a claim in unjustified enrichment generally will not be

granted where there is an alternative remedy available in law, for instance: under a valid
contract.

Additionally, where a claim could have been brought under another area of law but the
pursuer failed to do so timeously and that opportunity has now expired, for instance through
prescription, it will not generally be competent to seek redress later under unjustified
enrichment.
- Varney v Burgh of Lanark 1974 SC 245
- Transco PLC v Glasgow City Council 2005 SLT 958

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However, this is a controversial defence and some commentators have thought that it can
only be applied in enrichment by imposition cases:
- H L MacQueen “Unjustified enrichment, subsidiarity, and contract” in V Palmer
and E Reid (eds) Mixed Jurisdictions Compared: Private Law in Louisiana and
Scotland (2009) pp 339-345

This position has been strengthened since Pert v McCaffrey (over-ruling Courtney’s
Executors v Campbell [2016] CSOH 36).
- Pert V McCaffrey [2020] CSIH 5, 2020 SC 259
- See also:
o H MacQueen “Cohabitants, unjustified enrichment, contract, and subsidiarity”
17 Feb 2020, available at
https://blogs.ed.ac.uk/private-law/2020/02/17/cohabitants-unjustified-enrichment-
contract-and-subsidiarity-pert-v-mccaffrey/
o M Campbell “Unjustified enrichment and statute: Pert v McCaffery (2020) 24
Edin LR 400-404

c) Illegality

In addition to being a ground for action under the condictio ob injustam vel turpem causam,
illegality can also be a valid defence against an enrichment action.
- Jamieson v Watt’s Trustees 1950 SC 265

There are some cases where a party can found on their own illegality, however only where
the transferor belongs to a specific class of persons protected by the law that makes the
transfer illegal
- Cuthbertson v Lowes (1870) 8 M 1073

d) Good faith possession

A good faith possessor who has parted with the property will not be liable to recompense for
the value of the original property. However, they will be liable for any profit made.
- Jarvis v Manson 1954 SLT (Sh Ct) 93

A good faith possessor who has not parted with property but consumed fruits will not be
liable for the consumption, even if they must restore the property.

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e) In suo and incidental benefits

Where the pursuer is acting for their own benefit (“in suo”), and if the defender’s
enrichment is incidental to this, it will not be possible for the pursuer to recover under
unjustified enrichment. This is because they have incurred no additional loss above that
which they were spending for their own purpose. For example:

Natasha lives on the second floor of a tenement. She spends money on heating his flat.
Tony, who lives on the third floor, receives a benefit from the rising heat, thus saving him
the expense of his own energy bills. As Natasha would be heating her flat anyway, there
is no additional loss to her and she cannot recover from Tony.

- Varney v Burgh of Lanark 1974 SC 245

- Express Coach Finishers v Caulfield 1968 SLT (Sh Ct) 11
- Edinburgh and District Tramways Co Ltd v Courtenay (1871) 9 M 437 at 442

f) Other defences

Other general defences may also be available against a claim of unjustified enrichment. For
example,
- Personal bar (E Reid and J Blackie Personal Bar (2006) Ch 12)
- Prescription
o An obligation for redress prescribes 5 years after it becomes enforceable:
Prescription and Limitation (Scotland) Act 1973 Sch 1 para 1(b)
- Set-off
o Steel v Young 1907 SC 360
o North British and Mercantile Insurance Co v Stewart (1871) 9 M 534

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This content is copyright the University of Edinburgh. It must not be uploaded to any external sites outwith the University
H. Negotiorum Gestio

Benevolent intervention, known commonly by its Latin term “Negotiorum Gestio” (literally
translated as “management (or administration) of affairs”), is the area of law that enables
- a person (“the gestor”)
- who intervenes in the affairs (“negotia”) of another (“the principal” or “dominus”)
- to recover the expenses incurred through their intervention.

The doctrine is not unlimited, because if recovery were made too easy it could encourage
“officious intermeddlers” unnecessarily interfering in the affairs of others. Only if certain
criteria are met may a gestor be able to recover. These criteria are:
 The intervention must be unauthorised. The gestor must not have an agency
agreement or other legal authority to act for the principal
 The principal must be absent or otherwise unable to act for themselves.
 The gestor must be acting in the best interests of the principal but without any
intention of donation
 The intervention must be necessary

The fourth criterion is the one which guards against ‘officious intermeddling’. The level of
necessity is not unreasonably high, merely that the intervention must have at least been of
initial utility when carried out:
- SMT Sales & Services Co v Motor & General Finance Co 1954 SLT (Sh Ct) 107.

The intervention must be a positive act, such as paying the debt of another person or
repairing a house.

The gestor’s claim is limited to any expense incurred in proper course of administration
of the intervention. This applies even if the intervention does not ultimately prove beneficial
- Stair Inst I.8.3

The gestor will not be able to claim for more than expenses or outlays. Thus, any claim
for their services will not be permitted. However, where a person has been employed by the
gestor for the purposes of administration, the employed person can claim directly from the
principal for payment of their fees
- Fernie v Robertson (1871) 9 M 437

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An ancillary aspect of negotiorum gestio is that it also serves as a defence, removing any
liability for damage incidentally caused in the proper administration of the intervention.

This does not extend to any loss suffered by the principal as a result of the gestor failing to
exercise the due “care and diligence a prudent man would have shown in relation to his own
property”
- MacQueen and Eassie Gloag and Henderson: The Law of Scotland 15th edn
(2022) para 24.28.
- Kolbin & Son v United Shipping Co 1931 SC (HL) 128 at 139, per Lord Atkin

If the gestor has profited from the intervention, this gain must be passed to the principal.

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Glossary

Bona fides: Good faith

Certa pecunia: “Certain payment”. A measure of

recovery for repetition which exactly
matches the enrichment, for example
where the enrichment arises from a
condictio indebiti situation

Certa res: “Certain thing”. A measure of recovery

for specific property (except money)
where restitution is possible

Condictiones: The Roman actions under which a person

could bring a claim for redress. Still used
to describe categories of situation where
the obligation to redress an enrichment
may arise.

Enrichment: Anything which leads to an increase in a

person’s patrimony

Ex turpi causa non oritur action: “An immoral cause cannot found an
action”

Incertum: An uncertain amount

In pari delicto potior est conditio defendentis: Where the parties are equally in the
wrong, the defender’s right is stronger

Negotiorum gestio: “Benevolent intervention”. The doctrine

under which an unauthorised person (A)
who benevolently intervenes in the
affairs of another (B) who is absent or
otherwise unable to act for themselves
permits A recovery of their expenses

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Nemo debet locupletari [ex] aliena iactura: “No person should be enriched through
another’s loss”

Patrimony: The sum total of a person’s assets and

debts, i.e. everything they own and owe

Quantum lucratus: The amount of the enrichment

Quantum meruit: The amount according to market rates

Specification: A method of original acquisition of

property – i.e. where there has been no
previous owner – of a new thing made
out of other materials. The maker of the
thing becomes owner even if they did not
own the raw materials.

Subsidiarity: Doctrine under which a claim of

unjustified enrichment may not be
brought if another remedy is, or was,
available to the pursuer, for instance: a
remedy for breach of contract

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Suggested Further Reading

Unjustified enrichment has generated a vast amount of academic and legal literature. Below
are just a few further sources and articles that may be of interest or assist understanding:

N Whitty “Unjustified Enrichmet” SME (Reissue, 2021) (available online through Lexis+
UK) – *this is a very long and detailed volume but an invaluable source*
D Johnston and R Zimmermann Unjustified Enrichment: Key Issues in Comparative
Perspective (2002)
P Birks Unjust Enrichment 2nd edn (2005)
M Hogg Obligations 2nd edn (2006) Chapters 4 and 5
R Evans-Jones Unjustified Enrichment (Vol 1, 2003) (Vol 2, 2013)
H MacQueen and Lord Eassie Gloag and Henderson: The Law of Scotland 15th Edn (2022)
Chapter 24
L J Macgregor “Illegal contracts and unjustified enrichment” (2000) 4 Edin LR 19
E Obiora and J Macleod “Restitution under an illegal contract: a Scots law perspective on
Patel v Mirza” (2018) 26 (2) ERPL 273-281
R Evans-Jones and P Hellwege “Swaps, Error of Law and Unjustified Enrichment” (1995) 1
SLPQ 1
H L MacQueen “Peter Birks and Scots Enrichment Law” in A Burrows and Lord Rodger of
Earlsferry (eds) Mapping the Law: Essays in Memory of Peter Birks (2006)
R Evans-Jones “Unjustified Enrichment” in K Reid and R Zimmermann A History of Private
Law in Scotland vol 2 (2000)

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