Vol. 5.1 March 2001


Ius Commune Lectures on European Private Law, 3


The Ius Commune Lectures on European Private Law are published under the auspices of the Ius Commune Research School. This Research School consists of the Law Faculties of Maastricht University, Utrecht University and the Catholic University of Leuven, and is directed towards research in the field of European Private Law and related subjects. Associated members of the School are the Law Faculty of the Free University Amsterdam, the Law Faculty of the Université de Liège and individual members of the University of Amsterdam.

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Cite as: Martin A. Hogg, Lowlands to Low Country: Perspectives on the Scottish and Dutch Law of Unjustified Enrichment, vol 5.1 ELECTRONIC JOURNAL OF COMPARATIVE LAW, (March 2001), <http://www.ejcl.org/ejcl/51/art51-1.html>


LOWLANDS TO LOW COUNTRY
Perspectives on the Scottish and Dutch Law of Unjustified Enrichment

Martin A. Hogg(1)


Readers are reminded that this work is protected by copyright. While they are free to use the ideas expressed in it, they may not copy, distribute or publish the work or part of it, in any form, printed, electronic or otherwise, except for reasonable quoting, clearly indicating the source. Readers are permitted to make copies, electronically or printed, for personal and classroom use.


Contents
1. Introduction
2. The scheme of unjusitfied enrichment
2.1 The Dutch scheme
2.2 The Scottish scheme
2.2.1 The traditional classification
2.2.2 Recent developments: Towards a general action for unjustified enrichment
2.2.3 Recompense as the general action
3. Comparison of the Dutch and Scots schemes
3.1 The six heads of the enrichment action
3.1.1 Enrichment
3.1.2 Impoverishment
3.1.3 Causal connection between the enrichment and the impoverishment
3.1.4 Absence of justification or cause for retention of the enrichment
3.1.5 Subsidiarity of the action
3.1.6 Actions in the pursuer's own name, in his own interest and at his own risk
3.1.7 The person impoverished must not have been at fault
4. Conclusions
Notes

1. Introduction

Since at least the seventeenth century, the Scottish and Dutch legal systems have enjoyed a productive two-way legal traffic in both persons and ideas. Scotland has benefited most profoundly from this relationship, whose origins owe more perhaps to religion and politics than to any natural affinity of the Scots and the Dutch. The relationship has seen a re-growth in recent times, with ideas exchanged through such projects as the pan-European Lando Commission, participation in joint research projects, and the undertaking by Scottish academics of teaching engagements at Dutch universities.

Scotland's most famous legal son, Viscount Lord Stair, who hailed from Ayrshire in the Scottish Lowlands, spent his time in exile from 1682 to 1688 in Leiden, where he matriculated at the University.(2) Whilst Stair's famous Institutions of the Law of Scotland does not slavishly follow the format of any prior treatise of the law, it is clear that his study of Dutch writers, both before and during his sojourn in the Low Countries, gave him a familiarity with treatises comparable to his own Institutions. In addition to his unacknowledged drawing on such sources, Stair explicitly cites several Dutch authors, including Peter Goudelin (Gudelinus), and, most frequently, Hugo de Groot (Grotius).(3)

At an even more profound level, of course, the law of Scotland and Holland in the field of unjustified enrichment owe almost their whole ancestry to the ius commune, and it is not surprising therefore to find that the treatment of problems in this area is frequently similar. The law of unjustified enrichment in Scotland is perhaps the most civilian of all areas of our common law, being almost untouched by the influences of Anglo-American law.

The purpose of this paper is to chart the similarities of the framework between the Dutch and Scots law of unjustified enrichment, and to see whether the Dutch re-codification can offer any assistance for the future development of the Scots law.


2. The scheme of unjustified enrichment

2.1 The Dutch scheme

The general scheme of unjustified enrichment in the Netherlands has recently been usefully summarised by Professor Eltjo Schrage in his article Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective.(4) It is therefore unnecessary to relate the details of this scheme ad longam in this paper. It will be recalled, however, that as a result of the recodification of the Dutch Civil Law in the New Netherlands Civil Code (Nederlands Burgerlijk Wetboek, BW), Dutch law now has a general action for the redress of unjustified enrichment (Article 6:212 BW). This is in addition to separate provisions governing undue payments(5) (Articles 6:203-211), and the management of the affairs of another(6) (Articles 6:198-202). A Scots lawyer would immediately recognise what was being dealt with in these additional sections if it were explained to him that the former grouping deals with what he would call 'restitution' and 'repetition', the latter negotiorum gestio. He might also wish to venture that the Dutch provisions on the general action of unjustified enrichment in Article 6:212 equated to the Scottish action of 'recompense'(7). These Scottish actions are explained below.

The distinction in Dutch law between the general action for unjustified enrichment and the solutio indebiti is important to note. It is not the case that where Article 6:203 applies, and an undue payment is returned, no enrichment can have occurred. There may have been an enrichment, but the point is that this is not necessary. The condictio indebiti will apply "irrespective of whether an enrichment or impoverishment has occurred or not".(8) The separate treatment by the Dutch Code of the condictio indebiti also entails, as we shall see, a difference in the nature of the recovery, the action for an undue payment being concerned with restoration, the action for unjustified enrichment being concerned with damages.

Schrage notes that in the civil law tradition, the elements necessary for the constitution of a valid enrichment claim are often expressed under the following heads: (i) an enrichment in the hands of B, (ii) an impoverishment in the hands of A, (iii) a connection between the enrichment and the impoverishment, (iv) absence of justification or cause for retention of the enrichment, and (v) that the action be subsidiary in nature.(9) He adds that in modern civilian law there is a further requirement, namely (vi) that the pursuer claiming compensation for his impoverishment must not have acted in his own name, in his own interest and at his own risk.

2.2 The Scottish scheme

2.2.1 The traditional classification

The classification of Scots law cannot be treated with the same certainty and clarity as the Dutch law. The cause of this uncertainty is both the Scots reliance on the case law rather than a code, and the lack of academic or judicial interest in the topic over a long number of years. In recent times, however, there has been an academic renaissance within unjustified enrichment, a development which is discussed below.

Stair and his contemporaries did not use the term 'unjustified enrichment' as such, and even in 1987 the basic textbook on Scots Private Law, Gloag and Henderson's The Law of Scotland, was still referring to "quasi-contract" rather than unjustified enrichment.(10) However, the understanding that it was to the redress of unjustified enrichments that the Scots actions detailed below were addressed would have been understood by lawyers long before the mid-1980's, even if they would not have commonly used such a term.(11)

What has traditionally been comprised in the Scots law of unjustified enrichment is three specific actions, namely repetition, restitution, and recompense. These three native Scots terms(12) denoted, and still denote, actions for, respectively, the return of money, the return of property other than money, and a general enrichment action.(13) The factor linking the three actions is the lack of an intention to benefit the other party (repetition and restitution) or, at least, to benefit the other party without compensation (recompense). The law was recently summarised by Lord President Hope in the case Morgan Guaranty Trust Co of New York v Lothian Regional Council,(14) which concerned an action for the return of payments made to a local government body acting ultra vires. Lord Hope said:

As a general rule, it would appear that restitution is appropriate where the demand is for the return of corporeal property, repetition where the demand is for the repayment of money and recompense where the defender has been enriched at the pursuer's expense in the implement of a supposed obligation under a contract other than by the delivery of property or the payment of money. Recompense will be available as a more broadly based remedy, in cases where the benefit was received by the defender in circumstances other than under a contract or a supposed contract.(15)

It is important to note that, in Scots law, the word "restitution" is not, unlike in English law, a synonym for unjustified enrichment, but is used to denote a specific remedy within the law of unjustified enrichment.(16) For Scots law, as for Dutch law, restitution is recognised correctly as a response - the restoration of property - appropriate in those fact situations disclosing an unjust enrichment which is being retained at the expense of another.(17)

In addition to the above Scots classification of enrichment law as comprising the actions of repetition, restitution and recompense (often referred to as "the 3 Rs"), there has been a tradition in Scots law of also using the Roman terminology of the condictiones.(18) Thus court pleadings in enrichment cases in Scotland have frequently cited the condictio indebiti or the condictio causa data causa non secuta, or, less frequently, the condictio sine causa specialis or the condictio ob turpem vel injustam causam.(19) The use of one of the condictiones often appeared alongside the relevant native term of repetition or restitution, though not of recompense.(20)

2.2.2 Recent developments: Towards a general action for unjustified enrichment

Since at least 1985,(21) there has been a renewed interest in enrichment law in Scotland. This interest has produced two main results. First, there has been a proliferation of suggested new classifications for the law of Scotland. Second, there has been judicial development of the law.

There is as yet no agreement amongst academics as to how Scots enrichment law should be reclassified. Eric Clive, formerly of the Scottish Law Commission, has produced a draft Code of Unjustified Enrichment. Niall Whitty, also formerly of the Scottish Law Commission, has suggested a reclassification along the lines of the Wilburg/von Caemerer taxonomy. Professor Hector MacQueen and David Sellar of the University of Edinburgh have argued that Scots law has a general enrichment action at common law, under the guise of the action of recompense. Unless Clive's promotion of a civil code bears fruit, however, then development in this area will have to come via the case law of Scotland. To that end, the development of recompense as a general action may provide the avenue with the most prospects of success.

Judicial development of the law has been in the direction of the development of a general action. There has been no abandonment thus far by the Scottish courts of the traditional 3 Rs. There has, however, been a renewed emphasis by the courts on the fact that a general principle of unjustified enrichment underlies the various actions of the law. This principle has been restated in several recent cases(22) by the maxim nemo debet locupletari ex aliena jactura,(23) which is to say, no one is entitled to gain at the expense of another's loss. Lord Hope in Morgan Guaranty, having provided the definition of the 3 Rs given above, continued:

But the important point is that these actions are all means to the same end, which is to redress an unjustified enrichment upon the broad equitable principle nemo debet locupletari aliena jactura.(24)

In a similar vein, Lord President Rodger in a subsequent case said:

repetition, restitution, reduction and recompense are simply examples of remedies which the courts grant to reverse an unjust enrichment(25)

and also that

at the most general level the pursuer's case depends on the defender's alleged unjust enrichment at her expense.(26)

Whilst it is thus clear that the judiciary is now championing the recognition of a general principle remedying unjustified enrichment, it is unclear whether such principle will bear fruit as simply a broad foundation underlying the various Scots remedies, or whether the Courts will go further and recognise the existence of a general action for unjustified enrichment.

2.2.3 Recompense as the general action

Mention has already been made of the academic view that the action of recompense is the general action for unjustified enrichment in Scots law.(27) The point has been succinctly put:

from the time of Stair, recompense has been in effect the general enrichment action of Scots law, although not so recognised or described … any taxonomy proposed for enrichment in Scots law should take this into account.(28)

It remains to be seen if this view will command general acceptance in Scots law. Recompense certainly fits very well into the civilian model of an enrichment action described by Schrage and Nicholas. As is described below, the requirements for recompense correspond well to the individual heads of such a civilian enrichment action.

Dutch law, as noted, divides the general action from both the case of the solutio indebiti and the actio negotiorum gestorum. Scots law clearly divides unjustified enrichment from the actio negotiorum gestorum, but does it distinguish unjustified enrichment from the case of the solutio indebiti? There has certainly been a distinction, in traditional terms, between repetition, restitution and recompense. The law has stipulated that different requirements apply to repetition and restitution on the one hand, and recompense on the other. More controversially, it has been said that enrichment is not crucial in an action of repetition. Lord Justice-Clerk Ross, giving judgement in The Royal Bank of Scotland plc v Watt(29), a repetition action, whilst agreeing that in a general sense the basis of each of the 3 Rs was the "avoidance of undue enrichment", stated:

the extent by which one party has gained is critical in the case of recompense, but not in the case of repetition.(30)

And in a later passage

The emphasis is not upon the extent to which the party receiving the payment has been enriched, but upon whether that person has any good and equitable reason to refrain from repaying the money.(31)

Whilst such a view provides a marked degree of similarity to the distinction in modern Dutch law between enrichment and undue payment actions, it has been criticised in Scotland as "an extraordinary one, and quite contrary to principle".(32) Indeed, it does not seem compatible with the more recent judicial view which has sought to unify the existing Scots actions under the concept of unjustified enrichment.

While Lord Ross' view in the Royal Bank case must thus be extremely doubtful, the same commentator who attacked it as "contrary to principle" has agreed with the result in the case. That result was remarkably similar to that in the Dutch case Sociale Verzekeringsbank v Stichting St. Jansgeleen,(33) in which the Social Security Authority was entitled to repayment of sums paid to an old people's home in respect of a resident who had in fact died. Their claim was upheld despite the fact that they had paid the sums collected over to the deceased's heirs. In the Royal Bank case, Mr Watt was bound to pay the amount of a forged cheque back to the Bank, despite having parted with the money to a third party.(34)

The correctness of seeing the condictio indebiti as separate from unjustified enrichment in Scots law cannot be upheld. Moreover, unless the decision is taken to codify Scots law and to then separate the actions for undue payments and unjustified enrichment, such a development is most unlikely to occur. This, however, should not cloud a recognition of the numerous similarities between Dutch and Scots enrichment law. One need simply proceed by bearing in mind that in the Scots law a recognisable enrichment is necessary in all actions, including cases of undue payments.(35)

In order to examine more closely the similarity between Dutch and Scots enrichment law, it is intended to proceed by comparing the two systems to each of the six heads of enrichment mentioned above. With reference to Scots law, this will be done principally with regard to recompense, although other of the Scots actions will be mentioned where appropriate.


3. Comparison of the Dutch and Scots schemes

Before embarking on a comparative analysis of the six headings of enrichment, it is useful to begin by quoting Article 6:212 BW (the general enrichment action) in its entirety. The translation provided in the 1994 volume of the Restitution Law Review is used rather than that approved by the Ministry of Justice:(36)

Art. 212.

1. A person who has been unjustifiably enriched at the expense of another is obliged, so far as reasonable, to make good the other's loss, up to the amount of his enrichment.

2. An enrichment shall be discounted to the extent that it is decreased by reason of circumstances for which the person enriched is not answerable.

3. An enrichment shall be discounted to the extent that it is decreased during a time in which the person enriched could not as a reasonable person be expected to take into consideration the existence of an obligation to make good the other's loss. The calculation of this decrease must include expenses which would not have been incurred but for the enrichment.(37)

What similarities exist between the provisions of this Article and the law of Scotland?

Paragraph 1 of the Article sets out a general rule for the restoration of unjustifiably retained enrichments. This mirrors the understanding of the principle underlying the Scots actions, recently restated by Lord Presidents Hope and Rodger. Whilst paragraph 1 of the Dutch provision clearly provides for the reversal of unjustified enrichment as a matter of legal right, it adds that reversal of the enrichment need only be made "so far as reasonable". There may be a parallel with the Scots emphasis on the equitable nature of unjustified enrichment. Scots law has always emphasised that while a pursuer may fall within a fact scenario prima facie justifying the reversal of an enrichment, the court must consider the equities of so ordering. Scots law, might for instance, put a ceiling on recovery under an enrichment action brought by a builder in default of his contractual obligations. A court would not allow the builder to abandon the contract and sue for a greater price than that agreed merely because the value of the work carried out to date had surpassed the contract price.(38) Dutch law would likewise consider some enrichment claims to be "unreasonable". It would not, for instance, permit me to paint my neighbour's house while she was at work and then claim the costs of so doing upon her return. Such a claim would not be reasonable.

Paragraph 1 continues that the measure of recovery is "the amount of his [the enriched's] enrichment". This mirrors the position in the Scots recompense action, where recovery is in the measure quantum lucratus,(39) that is, the amount of the enrichment.

Paragraphs 2 and 3 of Article 6:212 together provide what may be described as a change of position defence. Paragraph 2 deals with situations where the alteration in the enrichment results from circumstances beyond the control of the enriched person, whilst paragraph 3 covers alterations made by actions of the enriched person justified by reason of his reasonable lack of knowledge of the impoverished party's claim. The provision in paragraph 2 might be said to be somewhat vague - what circumstances should be deemed to be beyond the control of the enriched? This remains to be fleshed out from the case law. Scots law allows for a change of position defence also, though it has not been judicially referred to as such.(40)

One distinction between the two systems worth noting at this stage is in the classification of sums payable for the redress of an unjustified enrichment. In Scots law, whilst sums due under the obligation could be seen in some sense as 'compensatory', that is, as compensating the loss of the impoverished party, it would be better to see them as restorative, that is, as representing the restoration of the asset improperly retained by the defender. In Dutch law, on the other hand, sums due to redress an unjustified enrichment are treated as damages, and as such fall within the regime for the paying of damages set out in Articles 6:95 to 6:110 BW. It has been argued by at least one learned Dutch academic that this treatment of an enrichment claim as a damages claim is not only theoretically out of step with the historical view of enrichment claims as being restorative rather than compensatory, but is also problematic in its application.(41)

3.1 The six heads of the enrichment action(42)

3.1.1 Enrichment

The first requirement is that the defender be enriched.

Issue 1: What constitutes an enrichment?

(i) Money

Under both systems the transfer of money may constitute an enrichment. Thus, in Dutch law, an enrichment will have occurred where the Collector of taxes erroneously pays a sum of money to the receiver of a company.(43) Furthermore, in Dutch law, failure to pay a sum of money due may constitute an enrichment, where the defender is better off through not having paid the sum.(44)

If another person pays a debt which I owe, then under both Scots and Dutch law I am considered enriched, and the payer may recover against me.(45)

(ii) Other property

The transfer of property of whatever kind may, of course, constitute an enrichment in both systems. Thus Scots law has allowed enrichment actions where goods have been wrongly delivered,(46) lost, stolen,(47) or transferred under a contract which was frustrated, for instance by the outbreak of war.(48)

It has been said of Dutch law that:

enrichment entails an increase in assets (property, limited real rights, claims) or a decrease in liabilities (by savings or discount). The concept estate is therefore taken widely, to include recovery of, for instance, the unauthorised use or enjoyment of possession. In short, "anything which can be the object of an obligation can amount to enrichment".(49)

(iii) The rendering of services

In both jurisdictions, the rendering of services to another may constitute an enrichment.(50)

(iv) Illegal transfers

In Scotland, an enrichment illegally transferred will be irrecoverable,(51) but not transfers made under mere error of law. In Dutch law, by contrast, sums illegally transferred are in general recoverable.(52)

Issue 2: What is the value of enrichment recoverable?

It has already been commented that in Scots law, the measure of recovery is quantum lucratus. In Dutch law, the measure is the amount of the enrichment. However, as the enrichment claim is also treated as a damages claim, the amount of the loss can also operate as a ceiling. What, therefore, if the amount of enrichment and impoverishment do not correspond?

Enrichment exceeds initial impoverishment

As the Compendium van het Nederlands vermogensrecht indicates, in practice three measures can operate independently as a ceiling on any enrichment claim:

For the obligation to compensate damage, three maxima are set:

(i) not more than the enrichment;

(ii) not more than the loss;

(iii) only so much of the loss as is reasonable.(53)

If the enrichment exceeds the impoverishment, then Article 6:212 BW allows a further claim in respect of profits beyond the amount of the impoverishment. As the Compendium notes:

[Where] the enrichment thereafter increases. In essence, there is talk of an additional new enrichment, which leads to (extra) compensatory damage on the footing of 6:212.(54)

Scots law likewise must deal with the position where an initial impoverishment has been transformed into a much larger enrichment, whether via the passage of time or efforts expended by the defender. In general, where money or property transferred remains in the hands of the defender, the obligation is to restore that sum. If the money or property has been used to create a profit, then the profit must be transferred to the pursuer also.(55) Thus, in Scots law, the ultimate measure of recovery is quantum lucratus est, the amount by which the recipient is enriched.

Enrichment less than initial impoverishment

This issue has already been touched on above, under the concept of change of position. In Scots law, if goods are consumed in bona fides, there is no liability for restitution. If goods are sold in bona fides to a third party, again there is no duty to make restitution, but there is a duty to recount for any profit made.(56) The Dutch change of position defences have been discussed above.(57)

3.1.2 Impoverishment

This is an essential requirement of the action: gain by the defender is not actionable without loss by the pursuer. Thus, if in heating my home, I provide some heat to my neighbour, I cannot sue him for the amount by which he is enriched, for I have suffered no loss: I would have heated my house in any event.(58) In a Scottish case concerning a tram company which had placed boards on the sides of its new trams, thus saving advertisers the cost of erecting any boards on which to place their advertisements, the Court of Session held that the tram company could not recover the cost of the boards: it would have added the boards to its trams anyway, and thus had suffered no loss.(59)

Impoverishment may take the form of loss of money, property, or the expending of time and labour.

Money spent improving the matrimonial home
Many situations in Dutch law exemplifying this head have involved actions by former wives or husbands against their former partners. Impoverishment certainly occurs in Dutch law where one spouse pays the full price for immoveable (or as Scots law would term it, 'heritable') property, and both parties become equal co-owners.(60) Scots law would similarly consider the contributing spouse in this situation to be impoverished, but if readjustment occurred upon divorce then it would be governed by a statutory remedy and not enrichment law.(61)

If the parties were unmarried cohabitants, however, enrichment law would apply. Thus, in the recent Scots case Shilliday v Smith,(62) a fiancée who had spent money on the repair of the intended matrimonial home (owned by her husband-to-be) was entitled to recover the sums expended when the engagement was broken off.

Expending time and labour
In the Dutch case Baartman v Huijbers,(63) a husband who was divorced from his wife raised an action in unjustified enrichment in respect of the value of his labour undertaken in making improvements to the house. The Hoge Raad held that he was not entitled to be compensated for labour and lost hours spent working on the house. It said that because he was unemployed at the time, he could not have applied his labour elsewhere, and thus had suffered no loss. In fact, it is the view of Dutch law that in general "the performance of domestic labour by one of the parties is, however dignified, in principle unpaid".(64)

Whilst there is no clear authority on this, it is arguable that Scots law would allow a claim in these circumstances. The fact that a husband or other co-habitant might not have worked otherwise would be seen irrelevant to the issue of whether he had been impoverished. There is a presumption in Scots law that the provision of services gives rise to an obligation to make payment, whether under contract or in unjustified enrichment.

3.1.3 Causal connection between the enrichment and the impoverishment

There must be a direct(65) causal connection between the pursuer's loss and the defender's gain. Much of the difficulty here comes with cases where the enrichment is too indirect. The causality requirement is one which has only recently begun to be considered with care in Scots law.(66)

Dutch law

(i) Direct payment of money or transfer of property

Direct payments or transfers of property pose no problems. As well as an enrichment action to recover a payment not due, the circumstances could also give rise to an action for an undue payment (under Article 6:203), thus opening up the possibility of a concursus actionum.(67)

(ii) Transfer of value by A to B, followed by conferral of benefit by B upon C

Where a payment is made by A to B, and then C receives a benefit from B, C may be held to be enriched at A's expense.(68) Similarly, performance of an obligation by A under a contract with B, which enhances the value of property of C, may allow an enrichment claim by A against C if B does not pay under the contract.(69)

(iii) Transfer of value by A to B, followed by conferral of benefit by C upon B

In cases such as these, B appears to have benefited twice, and A seeks to reclaim the value transferred by him. Cases in this category tend to encompass situations where A has transferred value under a contractual obligation in order to compensate B for some loss he has suffered, but then B recovers from another source in respect of the loss also.

One such example is insurance cases. In a decision of the Hoge Raad of 5 April 1991,(70) an insurance company which had sued an insured for the return of an out-of-court settlement was denied recovery under unjustified enrichment. The insurance company's payment to the defender had included an element of VAT. After receiving the payment, the defender had changed his tax position so that he was able to set-off the VAT. The Hoge Raad did not allow the VAT payment to be reclaimed by the insurance company. This case may be analysed in terms of causation: the pursuer did not suffer impoverishment as a result of the defender's gain. On the contrary, the pursuer's impoverishment resulted from the settlement, which had been freely and voluntarily negotiated. Additionally, the case may be analysed under the next head (see 3.1.4 below: lack of justification or cause), by saying that the defender's enrichment was justified by the agreement made.

Scots law

In Scots law, not all of the above situations would give rise to an enrichment remedy.

(i) Direct payment of money

Erroneous payments may certainly be recovered, even where the payment was made under an error of law.(71) The appropriate condictio would normally be pleaded.

(ii) Transfer of value by A to B, with subsequent conferral of benefit by B upon C

Payments to intermediaries which benefit the defender may, in appropriate circumstances, be classified as a recoverable enrichment. Thus if A paid a sum of money to department store B in order that B deliver a wedding present to C, and C failed to marry, the condictio causa data causa non secuta would lie at the suit of A against C. In this circumstance, however, B is considered the agent of A. In other cases, where agency is not involved, the action may be held too indirect, and the court may declare the pursuer to have accepted the risk of conferring a benefit without opportunity to recover it.(72) Where recovery by the impoverished party would interfere with the rights of creditors in bankruptcy, Scots law has not allowed recovery of the enrichment from the trustee in bankruptcy.(73) However, where a mistaken payment has been made to a liquidator after the commencement of the liquidation, it is thought that Scots law would allow recovery from the liquidator,(74) thus adopting a similar position to that of the Hoge Raad in Ontvanger v Hamm q.q.(75)

Scots law would not normally allow an enrichment action by a contractual party against one who had benefited under a contract but was not the other contracting party. This is the case even if the benefit consists in improvement to immoveable/heritable property or the transfer of title via accession.(76) The enrichment would be considered too indirect, and allowing its recovery would be held to subvert the contractual arrangements.(77) The position would, of course, be otherwise if the ultimate beneficiary were the principal, and the person concluding the contract merely an agent.

(iii) Transfer of value by A to B, followed by conferral of benefit by C upon B

On the example given above of the claim by the insurance company, Scots law would take a similar view. No recovery would be allowed: the enrichment would not be seen as being at the expense of the pursuer.

3.1.4 Absence of justification or cause for retention of the enrichment

Whilst English academics have shown a desire in recent years for providing exhaustive lists enumerating specific factors which will render retention of a benefit unjustified, the approach of Dutch(78) and Scots law(79) has been to state the issue in general terms and leave it to the courts to develop specific instances where retention will be unjustified, without rendering these situations definitive.(80)

Factors justifying restitution
There are various factors which may found a claim for restitution of a benefit. An erroneous belief that a transfer was made under an obligation is one such ground. Hence, mistaken payments may be recovered under both systems. However, in both Dutch and Scots law, if a debtor (or his mandatory, such as a bank) pays a sum which he does not intend to - a mistaken payment - but the sum is in fact due, then the amount cannot be recovered from the creditor as an undue payment.(81) The creditor is not enriched unjustifiably, because the sum was due, albeit that the debtor did not intend to pay it at this stage.(82) Thus, in a Dutch case, a bank which paid to one of its client's creditors, a sum greater than that authorised by the client, was held not entitled to restitution of the overpayment, where the overpayment was in fact due by the client.(83) In Scots law, recovery in this situation would likewise not be permitted, as the essence of the condictio indebiti is that the sum paid was not due. Similarly, in England, a bank which acted without mandate in paying a customer's debt was not allowed restitution of the sum, as the recipient was held not enriched unjustifiably, the debt being due.(84)

There may also be public policy reasons preventing recovery. For instance, under Dutch law, actions at the instance of public authorities have been denied on the basis that the public are entitled to rely on the fact that such payments will be legally due.(85)

Asser-Hartkamp provides a list of examples where the factor present justifies an enrichment claim.(86)

Factors justifying retention
There are also factors which will justify the retention of the benefit by the enriched. Perhaps the most important is where the transfer was required by law.(87) A legal requirement to transfer may be imposed by contractual agreement, by delict, or by some other force of law, including statute.(88) Thus, in a recent Scots case concerning the termination of a lease according to provisions in the lease,(89) it was held that rental benefits which consequently accrued to one party were not unjustified at the expense of the other.(90) As Lord Hope commented in the case: "There can be no better justification for an enrichment than that it was obtained and is being retained in the exercise of a contractual right against the party who seeks to invoke the remedy."(91) In a Dutch case,(92) the Hoge Raad held that the enrichment of a lessee was justified as it fell within the scope of the contractual provisions.

Another factor justifying retention is where the transfer was not the result of a conscious acceptance by the defender: Thus, if irrigation works on my land burst, breaking on to your property and watering your parched crops, should I be entitled to recover from you the value of your enrichment? I am impoverished, you have been enriched, and your enrichment has been caused at my expense.

The answer, of course, is no, I may not. This is an instance of a situation where you have a justification to retain the benefit of the enrichment, because it was thrust upon you.(93) As Schrage comments, "the claim of the impoverished person may be so unjust that it is to be dismissed. This may be the case if the enrichment took place without any act of the person enriched (the enrichment was thrust upon him)." This describes very well the situation of the landowner who has benefited from unexpected irrigation.(94) As noted earlier, one of the three maxima applicable to the level of recovery is 'as much of the loss as is reasonable'.

A striking difference between the view of Dutch and Scots law on one ground, however, is seen with respect to the claim of improvements to land made by a mala fide possessor. An enrichment claim by such a person is permitted by Dutch law: Article 3:121 lid 2.(95) In Scots law, whilst the bona fide improver of land may have a claim,(96) not so the mala fide improver.(97) However, where the true owner of the land knows of the improvements and does nothing to prevent them, restitution may be allowed on the basis of personal bar.

Asser-Hartkamp provides a list of circumstances where the factor present justifies retention.(98)

3.1.5 Subsidiarity of the action

It is under this head, that Scots and Dutch law, so similar on many matters, appear to diverge somewhat. One needs first to consider what is meant by the 'subsidiarity' of the enrichment action. The way in which the term is used here is to denote the non-availability of a claim in enrichment, when another avenue of recovery (for instance, under contract) is available. In that sense, we shall see that Scots law does consider the enrichment action to be subsidiary. Another way in which the term might be used is in the sense that enrichment law is merely a 'gap-filler', plugging the holes left by the other obligations. Whilst one could argue that this second sense follows automatically from the first, this would be misleading. It may be recognised that enrichment actions are subsidiary in the first sense, while still according to the enrichment action a separate demarcated status as an autonomous and equal member of the recognised obligations in law.

(i) Scots law

Scots law, like that of England, takes a bright-line approach to the division between enrichment law and actions based upon other obligations, adopting the view that where a party has the ability to sue in contract or delict, he is barred from raising an enrichment action. Furthermore, where an enrichment may be justified by regard to a contractual term, a claim in unjustified enrichment is similarly barred.(99) There are numerous dicta to this effect. The matter was expressed succinctly by Lord President Hope in relation to the action of recompense:

recompense is a remedy which is available only where there is no contract or where, if there is one, the party who makes the claim is for some reason precluded from maintaining an action upon the contract for the price.(100)

The adoption of such a view does not seem surprising to the Scots lawyer. For, if a contract exists, this provides the justification for the retention of the enrichment. Justification and subsidiarity are thus seen to be intimately related heads of the enrichment action. In Scots law, the preference for a delictual action over an enrichment action is also not seen to be controversial, though there are fewer dicta to this effect.(101) Where a pursuer has been injured as the result of the fault (culpa) of another, Scots law has traditionally seen the role of the law as providing reparation for the injuries suffered by the pursuer. Thus a delictual action will not normally allow for the disgorgement of any profit made by the defender as a result of the delict.(102)

This prohibition on concurrence of actions in Scots law does not apply to concurrence between delict and contract. A pursuer may choose between these two heads of recovery. This is so even where he makes a choice in order to avoid the operation or legal rules restricted to one of the remedies, such as prescription. This contrasts to Dutch law, where the prescription of a contractual remedy will prevent the use of an enrichment remedy.(103)

Whilst choosing enrichment over contract is generally not permitted in Scots law, the situation is otherwise where a contract has been terminated due to rescission or frustration. Thus, where a contract is rescinded due to the breach of contract of one of the parties, the party at fault, though unable to sue for the contract price due to his breach, may be allowed a claim in recompense for the value of the work he has rendered.(104) As regards frustration, restitution is permitted following this occurrence.(105)

It is also naturally the case that the mere presence of a contract in the background will not prevent an action for unjustified enrichment, if the enrichment action does not depend upon the contractual nexus. Thus, if a party pays a bill twice in error, the mere fact that he was due to pay the bill will not prevent recovery of the overpayment.

(ii) Dutch law

The view has been expressed that Dutch law gives no definitive answer applicable in all cases on the matter of the subsidiarity of the action for unjustified enrichment, and that, in each case, one must compare the enrichment action with any other action which may be possible. If that alternative action envisages the possibility of concurrence, then the enrichment action may be brought; if the alternative action envisages its sole application, then the enrichment action is excluded.(106)

This view of the permissibility in theory of concurrence finds support in the comment in the Compendium van het Nederlands vermogensrecht(107) that the fact that another ground of action can be raised, does not in principle stand in the way of an enrichment claim under 6:212.(108) The example is given of a claim for compensatory damages, which the Compendium asserts may be classed both under the heading of an unlawful act (6:162) as well as an unjustified enrichment (6:212), or the example that (as has been noted already) a claim in respect of an undue payment might in some cases be classed alternatively as an unjustified enrichment. One may also note the possibility of concurrence with a claim for restitutio in integrum following rescission of a contract.(109) Furthermore, the non-subsidiarity of the enrichment claim has also been affirmed recently by the Hoge Raad in its decision in Setz v Brunings.(110)

The position in Dutch law has been described as being that enrichment remedies are not legally subsidiary to other claims, but may be factually subsidiary in certain instances.(111) That is to say, while a claim fitting the requirements of Article 6:203 (undue payment) could also be raised as an enrichment claim (i.e. there is no legal subsidiarity), it is likely in fact that it will be raised as an undue payment claim, as this obviates the need to prove any enrichment in the hands of the recipient.

A classic example of the distinction between the application of Scots and Dutch law in respect to subsidiarity may be seen in the Dutch case Van Rijswijk v Vermobo discussed earlier.(112) In that case, the Hoge Raad permitted a contractual party to sue the person whose land had been enriched by the pursuer's services, even though the pursuer could have sued the other contracting party. Scots law would not permit such a claim, but would rather insist that the presence of the contractual claim, whether it be practicable or not, precludes the operation of any enrichment claim.(113)

3.1.6 Actions in the pursuer's own name, in his own interest and at his own risk

Dutch and Scots law will both allow an enrichment claim where a party has provided services rendering a benefit, but negotiations to form a contract have not been concluded,(114) though in both jurisdictions some claims may fall instead within the contractual regime. However, if no benefit is conferred but initial expenditure is carried out, recovery under Scots law is more problematic.

There is an older line of authority which suggests that some pre-contractual expenditure may be recoverable in Scots law.(115) These cases often concerned situations where a contract would have existed but for the absence of some formality required by law. The courts have not allowed recovery where they have termed the pursuer's expenditure in suo, that is to say, for his own benefit. The courts have taken the stance that if parties wish to expend money in the hope or expectation of winning a contract for themselves, but they do not secure the contract, then such speculative expenditure should not be recovered.(116) English law has taken a similar view.(117)

This prohibition on allowing recovery of expenditure made in suo reflects the element identified in civilian law(118) of acts in the pursuer's own name, in his own interest and at his own risk. This head is not very fully developed in Dutch law, though it is possible to classify some Dutch decisions with respect to it. The head is much more clearly developed in Scots law.

There is authority in Scots law that an engaged person (and, one also assumes, ex-spouse) may recover expenditure on the proposed marital home, without such being considered in suo. In Shilliday v Smith,(119) Lord President Rodger characterised such expenditure as made "in contemplation of the parties' marriage",(120) not merely for the disappointed spouse, thus permitting a claim in unjustified enrichment. This view is not universally shared among modern civilian systems.(121)

3.1.7 The person impoverished must not have been at fault

This was not included as a separate head when these were listed at the beginning of this article. However, it has been suggested by Barry Nicholas as a requirement in civilian systems, and has been discussed by other scholars of the ius commune.

Scots law

In Scots law there is case authority which may be seen as restricting the pursuer's right to sue for restitution of an enrichment where he has exhibited culpa or dolus. I have already mentioned the prohibition on the action by a mala fide possessor, who thus exhibits dolus.

The courts have taken the view that, in respect of the condictio indebiti, a pursuer may be barred from succeeding if the error under which he made his payment was culpable. While in the recent case of Morgan Guaranty Trust Co v Lothian Regional Council(122) the view was rejected that a pursuer must show that his error was 'excusable' before he may recover, Lord President Hope commented that

[t]hat is not to say that the nature of the error and the question whether it could have been avoided may not play a part in a decision as to where the equities may lie.(123)

However, Lord Hope added that once the pursuer had established the formal requirements to succeed in the action, it was for the defender to plead equitable considerations which might defeat the claim. Thus, if this recourse to the culpability of the error in the condictio indebiti is an application of the civilian requirement that a pursuer must not have been at fault, it is not so much a requirement to be met by the pursuer as a defence that may be raised to his claim.

The consideration of fault may touch upon a defender also, as was seen with respect to restriction of the change of position defence by persons who have acted in bad faith.

Dutch law

Schrage notes several cases where he says the fault of the pursuer was an issue.(124) However this head seems not to be well developed in Dutch law. Again, it may be that it is addressed more naturally under other heads.

A separate head?
This head of fault may be seen as comprising aspects better subsumed within other heads of the action. In Scots law, the issue would be seen as touching on the fundamental nature of unjustified enrichment as an equitable doctrine, available to those to whom equity and justice require restitution. Clearly the fault of a pursuer may affect such equity.


4. Conclusions

It may be seen from the above that there is a high degree of convergence between both the general schema and the particular decisions of the Scots and Dutch enrichment law. This should not surprise us, for, as we have seen, the two systems share a common parentage in the ius commune. Indeed, in many instances the two share similarities which mark them out from the divergent approach of English law.

In the taxonomic structure of Dutch and Scots enrichment law, the Dutch codified provisions and the Scots common law may be seen to fit in to the classic civilian framework under the heads discussed. Whilst Scots law considers the action for the recovery of the solutio indebiti to be based on enrichment law, this distinction with Dutch law is not fundamental, and there are many parallels between the condictio indebiti in the two systems.

There are some differences between the two systems, most notably in their approaches to the subsidiarity of enrichment claims. In addition, Dutch law will sometimes consider a theoretical issue under one head of the action, when Scots law chooses another. This, however, is a feature found when one compares any of the various civilian systems. Dutch law will sometimes consider a question as falling within contract law, when Scots law will choose enrichment, and vice versa. This again is not surprising, and reflects the historical way in which the law has compartmentalised specific problems which have arisen within national systems.

Scots civil law is at a crucial juncture of its development. A newly re-instituted Scottish Parliament has the power to re-invigorate our law; academic contacts are flourishing between Scottish and Dutch (as well as South African) Universities; the prospect of greater legal autonomy has reawakened study of Scots law's civilian roots. The recently inaugurated Scottish Civil Code project, which plans to produce a draft Civil Code for Scottish private law, will address the area of unjustified enrichment. Draft enrichment provisions, prepared by Eric Clive, already exist, and have been suggested as a model for a European Code.(125) The final text of any proposal submitted to the Scottish Parliament and Executive for adoption in a Scottish Civil Code may yet differ from this draft, however, and the ongoing dialogue between Scottish and Dutch enrichment academics can only further the quest for common European principles in this area. As in Stair's day, there is much room for a fruitful dialogue between the Netherlands and Scotland.




Notes

1. Lecturer, The School of Law, University of Edinburgh. The author wishes to thank W D Sellar, J Backx and H van Kooten for their helpful comments on earlier drafts of this paper. The text of this article is an amended version of a lecture delivered at the Molengraaff Instituut, University of Utrecht, in November 1999.

2. See further the Introduction in the tercentenary reprint of Stair's Institutions (1981), ed. David M. Walker.

3. Stair cites his De Jure Belli ac Pacis rather than the Inleidinge tot de Hollandsche Rechtsgeleerheid. He is not, however, afraid to contradict Grotius: see, for instance, Inst. 1.8.3. On Stair's knowledge of Grotius, see W M Gordon, Stair, Grotius and the sources of Stair's Institutions, in J A Ankum et al (eds), Satura Roberto Feenstra (1985) 571ff.

4. (1999) 46 NILR 57.

5. Onverschuldigde betaling.

6. Zaakwaarneming.

7. Furthermore, a Scottish lawyer would have available to him a comparative survey of other European classifications, including the Dutch, in vol 15 of The Laws Of Scotland, Robert Black QC (ed.), paras 76-80.

8. Schrage, The Law of Restitution: the History of Dutch Legislation, in Schrage (ed), Unjust Enrichment: The Comparative Legal History of the Law of Restitution, pp 323-333, at p 331. The notion of enrichment is not wholly irrelevant to the provision on undue payments, however: see Art 6:210 (2).

9. See Schrage, Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, 1999 NILR 57, at p 65, who cites Barry Nicholas, Unjust Enrichment in the Civil Law and Louisiana Law, 36 Tulane Law Review (1962) pp. 605-646, cont. in 37 Tulane Law Review (1963) pp. 49-66. Nicholas also states a seventh head: that the pursuer not have been at fault. Whether this features in Dutch or Scots law is touched on infra below.

10. It would have to wait until 1995, and the tenth edition of Gloag and Henderson, for the term unjustified enrichment to appear.

11. Cf. the Dutch law, prior to the new BW, which did not recognise a general action for the redress of unjustified enrichment: Quint v te Poel HR 30 januari 1959, NJ 1959, 548.

12. Developed by Stair in his Institutions. Stair deals with restitution and repetition in 1.7 and recompense in 1.8.

13. Many recompense claims are for the provision of services, although recompense extends beyond such instances. It is argued in this paper, following W D H Sellar, that recompense is the general enrichment action in Scots law: see further infra, and also W D H Sellar in The Laws of Scotland, Vol 15, para 82.

14. 1995 SC 151, 1995 SLT 299.

15. 1995 SC 151, 155 B-C, 1995 SLT 299, 309 I-J.

16. In fact there are two further complications. Restitution (in the law of unjustified enrichment) at its most specific level denotes the action for the return of property other than money (see the main text). But it has also been used by some Scots writers to encompass both restitution (narrowly defined) and repetition. Thus, restitution (more widely defined) encompasses restitution (narrowly defined) and repetition. Such complications add weight to the campaign for a restatement of the law of Scotland. The second complication concerns the fact that restitution is also a term sometimes used in property law in Scotland, and denotes an action for the return of property which still belongs to the pursuer: in other words, an action equating to the rei vindicatio of the ius commune. This of course is an action to vindicate a ius in rem and has nothing to do with the law of unjustified enrichment, concerning as the latter does iura in personam.

17. There is appreciation of the distinction amongst English academics also. Peter Birks has warned against equating the categories of contract and delict with the category restitution, arguing that the former two are events but the latter a response: see P Birks, Definition and Division: A Meditation on Institutes 3.13, in P Birks (ed) The Classification of Obligations (1997).

18. Indeed, the more 'user-friendly' native Scottish taxonomy were developed out of the condictiones.

19. Lord President Rodger said that "in Scots law the term condictio causa data, causa non secuta is used, not to describe a remedy, but to describe one particular group of situations in which the law may provide a remedy because one party is enriched at the expense of the other" Shilliday v Smith 1998 SC 725, 728 C-D. Lord Rodger describes the condictio as the "ground of action" and the Scots term, repetition, as the remedy being sought (see 728 D-H).

20. The reason being that the Roman condictiones did not apply in respect of a factum (with which the Scots action of recompense is concerned). Somewhat unorthodoxly, Lord Rodger described a recompense claim as also falling within the ground condictio causa data causa non secuta (see Shilliday v Smith 1998 SC 725, 728 H - 729 A.

21. In which year Professor Peter Birks, then Professor of Civil Law at the University of Edinburgh, wrote two articles on the subject, viz Restitution: A View of the Scots Law (1985) 38 CLP 57 and Six Questions in Search of a Subject - Unjustified Enrichment in a Crisis of Identity 1985 JR 227.

22. Though it has been stated in many cases since the time of Stair.

23. Or as Pomponius puts it: "Nam hoc natura aequum est neminem cum alterius detrimento fieri locupletiorem"(D.12.6.14) (For this by nature is equitable, that no-one be enriched by the loss of another.) (See also D.50.17.206). There are several variations of the maxim, amongst them: nemo debet locupletari cum alterius jactura, nemo debet ex alieno damno lucrari, and nemo loucpletandus est cum detrimento alterius (as it is framed in Erskine 1.7.33). See further J Hallebeek, The Concept of Unjustified Enrichment in Late Scholasticism (1996), and W D H Sellar, in The Laws of Scotland, Vol. 15, para.11.

24. 1995 SLT 299, 309L.

25. Shilliday v Smith 1998 SC 725, 728B. Lord Rodger has added 'reduction' to the traditional 3 Rs, but it seems that reduction (the setting aside of a legally completed transaction) is merely a means to effect the end of restitution.

26. 1998 SC 725, 727 A.

27. See text at 2.2.2 above.

28. The opinion of W D H Sellar, expressed in Vol. 15 of the Laws of Scotland, para 73.

29. 1991 SC 48.

30. 1991 SC 48, 56.

31. Ibid., 57.

32. See W D H Sellar in The Laws of Scotland, Vol 15, para 30. The decision has also been criticised by other authors including N Whitty and A Rodger.

33. HR 31 maart 1978, NJ 1978, 363.

34. Under the new Civil Code, the old people's home would have had a defence (under Art 6:204 lid. 2) if they had acted in good faith. This was not the case, however, as they knew or ought to have known that the payments were not due. Similarly, in the Royal Bank case, Lord Ross took the view that it would be inequitable for the defender not to repay the sums he received, as he had acted unreasonably in agreeing to cash the cheque for a complete stranger (see Lord Ross at 1991 SC 48, 57).

35. Though as the Royal Bank case demonstrated (see main text at footnote 30), it is unnecessary in every case for the recipient to still be in possession of the enrichment for the action to succeed.

36. The Ministry of Justice approved translation is, in the opinion of the author, inferior and, at places, confusing. One example is the extremely misleading English of the official translation of paragraph 2 of Art 6:212 which reads: "A decrease in the enrichment is not taken into consideration to the extent that it results from a cause which cannot be imputed to the enriched person."

37. The original Dutch text reads: "Art. 212 - 1. Hij die ongerechtvaardigd is verrijkt ten koste van een ander, is verplicht, voor zover dit redelijk is, diens schade te vergoeden tot het bedrag van zijn verrijking. - 2. Voor zover de verrijking is verminderd als gevolg van een omstandigheid die niet aan de verrijkte kan worden toegerekend, blijft zij buiten beschouwing. - 3. Is de verrijking verminderd in de periode waarin de verrijkte redelijkerwijze met een verplichting tot vergoeding van de schade geen rekening behoefde te houden, dan wordt hem dit niet toegerekend. Bij de vaststelling van deze vermindering wordt mede rekening gehouden met uitgaven die zonder de verrijking zouden zijn uitgebleven."

38. This would, furthermore, offend against the subsidiary nature of unjustified enrichment in Scots law (as to which, see infra below).

39. Also expressed as in quantum locupletior factus est: see Stair 1,8,6.

40. See the discussion of the Royal Bank of Scotland case above, which is authority for the view that a bad faith change of position will be no defence to a claim.

41. These comments were made in an address delivered on 20 October 2000 by Professor Arthur S Hartkamp to the Bregstein Congress on Unjustified Enrichment in Amsterdam.

42. On the elements comprising the action of recompense in Scots law, see W D H Sellar in The Laws of Scotland, Vol 15, para.82.

43. Ontvanger v Hamm q.q. HR 5 September 1997, NJ 1998, 437, m. nt. PvS. In fact, the case proceeded on the basis of undue payment (onverschuldigde betaling), although the company was also clearly enriched. For a comparative discussion of this case from a Scots law point of view, see M A Hogg and J Backx, Restitution in bankruptcy: a Scots law view of Ontvanger v Hamm q.q., 2000 ERPL 509.

44. Similarly, Stair said of Scots law: "We are enriched either by accession of gain or prevention of loss." (Inst. I.8.8)

45. For Dutch law, see the comments of Asser-Hartkamp in Deel III De Verbintenis uit de wet, tiende druk, Tjeenk Willink, Deventer, 1998, para 355, on such circumstances. For Scots law, see the comments of H L MacQueen in Paying another's debt, in R Zimmermann and D Johnston (eds), The Comparative Law of Unjustified Enrichment (forthcoming, 2001).

46. Findlay v Monro (1698) Mor 1707.

47. Although, as stolen goods remain the property of the rightful owner, one can consider the action to recover them as an example of restitution in property law, not in the law of unjustified enrichment.

48. The Cantiere San Rocco SA v The Clyde Shipbuilding and Engineering Company Limited 1923 SC (HL) 105.

49. E F D Engelhard and G E van Maanen, De vordering uit ongerechtvaardigde verrijking; geen billijkheidsactie! Het hek moet weer op de dam …, NTBR 1998/9, pp 309-324. (It should be noted, however, that the overall thesis of Engelhard and Maanen - that a general enrichment action would open the law to dangerous, unquantifiable claims - has not been accepted by the academic and legal community).

50. Thus, for instance, in Scots law the provision of accommodation obliges the possessor to pay for it even in the absence of any contractual agreement: GTW Holdings v Toet 1994 SLT (Sh Ct) 16 and Secretary of State for Defence v Johnstone 1997 SLT (Sh Ct) 37. In Dutch law, note the comments of Asser-Hartkamp, Verbintenissenrecht, Deel III, para 354: "For we may speak of enrichment and impoverishment if the one has rendered services to the other (e.g. giving lessons, rendering medical, legal or accounting services), or the one has had the enjoyment of parts of the estate of the other, e.g. enjoyment of tenancy rights."

51. For Scots law, see the authorities cited in the Laws of Scotland, Vol. 15, paras 764-765.

52. See Asser-Hartkamp, in Deel III De Verbintenis uit de wet, tiende druk, Tjeenk Willink, Deventer, 1998, paras 345-348.

53. "Aan de verbintenis tot schadevergoeding zijn drie maxima gesteld: 1. Niet meer dan de verrijking. 2. Niet meer dan de schade. 3. Slechts voorzover schadevergoeding redelijk is." (Compendium van het Nederlands vermogensrecht: Leidraad voor het nieuwe BW, J. Hijma and M.M. Olthof, Kluwer Deventer, 1999, para 451).

54. "De verrijking neemt nadien toe. In wezen is sprake van een bijkomende nieuwe verrijking, die op de voet van 6:212 tot (extra) schadevergoeding leidt." (Compendium, para 451).

55. This includes situations where, for instance, animals have given birth to young. Both the animal and the young must be restored to the pursuer.

56. North West Securities Ltd v Barrhead Coachworks Ltd 1976 SC 68, 1976 SLT 99, OH.

57. The Compendium, whilst stating that "[When] the enrichment thereafter decreases. Reduction of the enrichment has in principle no influence on the one time outstanding obligation of compensatory damage" (Compendium, para 451), goes on to note the change of position defences under Art 6:212 lid. 2 and 3.

58. This example is given by Lord President Dunedin in his speech in Edinburgh and District Tramways Co Ltd v Courtenay 1909 SC 99, 16 SLT 548.

59. Edinburgh and District Tramways Co Ltd v Courtenay 1909 SC 99.

60. Schrage, Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, p 74.

61. Under The Family Law (Scotland) Act 1985.

62. 1998 SC 725.

63. HR 11 April 1986, NJ 1986, 622.

64. Schrage, Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, p 74.

65. Although each system may allow the permissibility of some claims which have a degree of indirectness. For Dutch law see Asser-Hartkamp, Deel III De Verbintenis uit de wet, tiende druk, Tjeenk Willink, Deventer, 1998, para 354.

66. See Niall Whitty, Indirect Enrichment in Scots Law, 1994 JR 200 and 239.

67. See Schrage, Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, p 66.

68. Scheringa v De Geus, Court of Appeal, Amsterdam, 24 oktober 1956, NJ 1957, 368.

69. Van Rijswijk v Vermobo, HR 29 januari 1993, NJ 1994, 172.

70. HR 5 April 1991, NJ 1992, 244.

71. Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC 151, 1995 SLT 299.

72. In the recent case Mercedes-Benz Finance Limited v Clydesdale Bank plc, 1996 SCLR 1005, 1997 SLT 905, where the pursuers had delivered cars to an intermediary, who had sold the cars before depositing the funds with the defenders, Lord Penrose held an enrichment action by the pursuers relevant. However, the action was arguably too indirect, even if the bank were unjustifiable enriched.

73. Mess v Sime's Tr (1898) 1 F (HL) 22, affirming the earlier decision at (1898) 25 R 398.

74. On this point, see M A Hogg and J Backx, Restitution in Bankruptcy, A Scots Law view of Ontvanger v Hamm, 2000 ERPL 509.

75. HR 5 September 1997, NJ 1998 , 437, m. nt. PvS. The decision has been criticised by some: see H L E Verhagen and N E D Faber, A Trace of Chase Manhattan in the Netherlands, 1998 3 RLR 165.

76. See Kenneth Reid, The Law of Property in Scotland, 1996, para 577. This contrasts with the position under Dutch law, for which see Vermobo v Van Rijswijk, HR 29 januari 1993, NJ 1994, 172.

77. Kirklands Garage (Kinross) Ltd v Clark 1967 SLT (Sh Ct) 60. This case concerned the repair of a car by an insurance company. The insurance company went into liquidation, and the garage sued the owner of the car as being unjustifiably enriched. The sheriff refused the action, doubting it could stand where there was a valid contract in place. Additionally, he doubted whether the owner had been enriched at all, having paid insurance premiums to ensure the free repair of the car. See also Express Coach Finishers v Caulfield 1968 SLT (Sh Ct) 11.

78. See, for instance, the comment of Engelhard and Van Maanen, op. cit.: "The absence of a valid and legitimating cause for the enrichment therefore constitutes the primary criterion for its unjustifiedness" (para 3.7).

79. In relation to recompense, there has been a tendency to address the issue by posing the general question: 'Was there an intention of donation?' See W D H Sellar in The Laws of Scotland, Vol 15, para. 82.

80. In the Dollar Land case (see footnote 90 below), Lord Hope said that "An obligation in unjustified enrichment is owed where the enrichment cannot be justified on some legal basis arising from the circumstances in which the defender was enriched." (p 995L).

81. For Dutch law see Art. 6:203 BW.

82. Cf. Asser-Hartkamp, op. cit., para 359.

83. HR 18 February 1927, NJ 1927, 574.

84. Lloyds Bank plc v Independent Insurance Co Ltd [1999] 2 WLR 986.

85. See comments made by the Hoge Raad in Cornelissen v Groningen, HR 25 October 1991, NJ 1992, 299; Collector of Taxes v R, HR 12 September 1997, NJ 1998, 145.

86. Asser-Hartkamp, op. cit., para 359.

87. As para 450 of the Compendium van het Nederlands vermogensrecht: Leidraad voor het nieuwe BW, J. Hijma and M.M. Olthof, Kluwer Deventer, 1999, notes: an enrichment is not unjustified if (a) it has a basis in a legal act (e.g. a sale at a very advantageous price), or (b) it is sanctioned by law. It should be noted, however, that the mere operation of legal rules will not always provide immunity from an enrichment action: thus, the mere fact that property law may state that moveable property has acceded to land does not prevent an enrichment action against the owner of the land.

88. See, for instance, the decision of the Court of Appeal of 's-Hertogenbosch 4 December 1995, NJ 1996, 575, concerning the application of the Dutch Consumer Credit facilities legislation (Wet op het consumentenkrediet).

89. Commonly referred to in Scots property law as 'irritation' of the lease.

90. Dollar Land (Cumbernauld ) Ltd v CIN Properties Ltd 1998 SLT 992.

91. Ibid., pp 995L-996A.

92. HR 24 februari 1938, NJ 1938, 952.

93. Alternatively, one may classify the situation as one where the pursuer must be held to have accepted the risk that the defender would be benefited (and thus deal with it under head 3.1.6 below).

94. Schrage, The Law of Restitution: the History of Dutch legislation. Schrage mentions similar cases in French law: see Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, p 77.

95. See further, the comments of Asser-Hartkamp, op. cit., para 357.

96. See for instance Newton v Newton 1925 SC 715, 1925 SLT 476.

97. Thus, one holding on a limited title (such as a liferenter or tenant) has no claim for improvements: see for instance Wallace v Braid (1900) 2 F 754 (liferenter); Thomson v Fowler (1859) 21 D. 453.

98. Asser-Hartkamp, op. cit., para 358.

99. See for instance Dollar Land (Cumbernauld) Limited v CIN Properties Limited 1997 SLT 260.

100. NV Devos Gebroeder v Sunderland Sportswear Ltd. 1990 SC 291, 301.

101. In other words, Scots law does not generally recognise what is commonly termed 'restitution for wrongs'. In the Dutch law, restitution for wrongs is addressed in Art 6:104 BW.

102. There are exceptions. Thus, it is thought that in an action for breach of confidence, as in England, an accounting of profits may be awarded by the court. The action is still classified as a delictual one, however the measure of damages includes the element of profit gained as a result of the delict.

103. Schrage: "If a debtor has lost the right to avoid a certain legal act by lapse of time, he is bound by that legal act and cannot have recourse to an unjust enrichment claim, which would in effect outflank the operation of the rules on extinctive prescription." (Restitution in the New Dutch Civil Code, p 221).

104. See the line of builders cases, beginning with Ramsay & Son v Brand (1898) 25 R 1212; 6 SLT 114.

105. Cantiere San Rocco v Clyde Shipbuilding and Engineering Co 1923 SC (HL) 105; 1923 SLT 624. In Dutch law, the position is governed by Art 6:271, in the section of the BW dealing with synallagmatic contracts.

106. Further on this point, see Schrage, Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, p 82.

107. Compendium van het Nederlands vermogensrecht: Leidraad voor het nieuwe BW, J. Hijma and M.M. Olthof, Kluwer Deventer, 1999. See also the comment of Asser-Hartkamp in Deel III De Verbintenis uit de wet, tiende druk, Tjeenk Willink, Deventer, 1998, para 355, that "the claim arising from art. 212 does not have any 'subsidiary character'".

108. "Het feit dat ook op andere grond kan worden geageerd staat in beginsel niet aan een vordering uit 6:212 in de weg": ibid., para 450. Cf the comment of E F D Engelhard and G E Maanen that "If the allegedly enriched party already has a duty, arising from another source, to compensate for the loss sustained, there can in a patrimonial sense be no enrichment." (De vordering uit ongerechtvaardigde verrijking; geen billijkheidsactie! Het hek moet weer op de dam …), NTBR 1998/9, pp 309-324, at p 314.

109. See Asser-Hartkamp, op. cit., para 360.

110. HR 27 juni 1997, NJ 1997, 719.

111. This distinction was drawn by Professor W Snijders of the University of Amsterdam in a talk given on 19 October 2000 at the Bregstein Congress on Unjustified Enrichment in Amsterdam.

112. Citation at footnote 69.

113. See for example Express Coach Finishers v Caulfield 1968 SLT (Sh Ct) 511 and Kirklands Garage (Kinross) Limited v Clark 1967 SLT (Sh Ct) 60.

114. Van der Tuuk Adriani v Batelaan may be seen in this light. English law also allows recovery in enrichment: British Steel Corporation v Cleveland Bridge Engineering Co Ltd [1984] 1 All ER 504. However speculative claims are not permitted: Westdijk v Katwijk, HR 18 April 1969, NJ 1969, 336.

115. The line begins with Walker v Milne (1823) 2 S 379. The principles underlying this area of recovery were clearly summarised by Lord Cullen in Dawson International plc v Coats Paton plc 1988 SLT 854 (affirmed in 1989 SLT 655).

116. Site Preparations Ltd v Secretary of State for Scotland 1975 SLT (Notes) 41.

117. Regalian Properties plc v London Docklands Development Corporation [1995] 1 WLR 212.

118. See the discussion at 2.1 infra.

119. 1998 SC 725.

120. 1998 SC 725, 731C.

121. Thus, the Cour de Cassation has denied a cohabitant a claim for unjustified enrichment: Civ. 7 July 1987.

122. 1995 SLT 299.

123. 1995 SLT 299, 316F.

124. Schrage, Unjustified Enrichment: Recent Dutch developments from a comparative and historical perspective, p 85.

125. This is reproduced in Towards a European Civil Code (ch. 25), eds. Hartkamp et al (1998, 2nd ed.).

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