Paul Bugden, Bugden + Co., London
Ref: Rogers v Wills [2025] EWHC 1367 (Ch), Ch D HHJ Mathews.
It is not uncommon in transport law matters for the law of unjust enrichment to be engaged where the carrier finds that he has no contract with the merchant for the relevant work or expense incurred for and on behalf of the merchant. In some cases the carrier or other contractor may be able to rely on an implied contract of remuneration or indemnity where such implication is the only explanation of the conduct of the parties. In other cases he may be able to rely on a specific right of indemnity implied by law as in the case of an agent acting on the instructions of his principal; but otherwise he may need to have resort to the general law of unjust enrichment for a remedy.
This recent decision contains a useful review of the law of unjust enrichment which repays careful study. This note summaries the judge’s review of the law.
Unjust enrichment generally as a remedy
Unjust enrichment is a separate source of obligation from contract and tort. Unlike tort, it does not proceed from a legal wrong. Unlike contract, it does not proceed from a consensus between the parties (although elements of consensus are sometimes present, such as the acceptance of benefits). The development of the law of unjust enrichment in England and Wales in the last half-century or so owes much to a small number of lawyers, mostly academic, who wrote about, taught and debated the subject in the last third of the twentieth century.
In Investment Trust Companies v HMRC [2018] AC 275, SC, Lord Reed (with whom all the other judges agreed) referred to
“24.… the approach adopted by Lord Steyn in Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221, 227, [which] asked: (a) Has the defendant been benefited, in the sense of being enriched? (b) Was the enrichment at the claimant’s expense? (c) Was the enrichment unjust? (d) Are there any defences?”
But Lord Reed sounded an important crucial note of caution:
“40.… Although judicial reasoning based on modern theories of unjust enrichment is in some respects relatively novel, there are centuries’ worth of relevant authorities, whose value should not be underestimated. The wisdom of our predecessors is a valuable resource, and the doctrine of precedent continues to apply. The courts should not be reinventing the wheel.
Lord Steyn’s four questions in Banque Financière de la Cité are no more than broad headings for ease of exposition. They are intended to ensure a structured approach to the analysis of unjust enrichment, by identifying the essential elements in broad terms. If they are not separately considered and answered, there is a risk that courts will resort to an unstructured approach driven by perceptions of fairness, with consequent uncertainty and unpredictability. At the same time, the questions are not themselves legal tests, but are signposts towards areas of inquiry involving a number of distinct legal requirements …
The structured approach provided by the four questions does not, therefore, dispense with the necessity for a careful legal analysis of individual cases. In carrying out that analysis, it is important to have at the forefront of one’s mind the purpose of the law of unjust enrichment. to correct normatively defective transfers of value, usually by restoring the parties to their pre-transfer positions.
A number of “unjust” factors have now been identified in the caselaw for the purposes of the unjust enrichment doctrine. But these correspond, more or less, to the various circumstances in which the case law of the old law of restitution gave relief to a claimant, such as mistake, duress, undue influence, legal compulsion, and so on. The two factors which, were of the most importance in this case were “failure of basis” and “free acceptance”. .
Failure of basis as an unjust factor
As explained by Lord Toulson in Barnes v Eastenders Cash & Carry plc [2015] AC 1, [105] this used to be known as “total failure of consideration”. Lord Mansfield CJ referred to it in Moses v Macferlan (1760) 2 Burr 1005, 1012, as a claim “for money paid … upon a consideration which happens to fail”. It was already well known half a century earlier, in the time of Holt CJ: see Holmes v Hall (1704) Holt 36.
104. Confusion is sometimes caused by the fact that the term ‘consideration’, when used in the phrase ‘failure of consideration’” as a reason for a restitutionary claim, does not mean the same thing as it does when considering whether there is sufficient consideration to support the formation of a valid contract. Viscount Simon LC explained this in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 48 …
105. To avoid this confusion, Goff and Jones suggest, at paras 12-10 to 12-15, that the expression ‘failure of basis’ is preferable to ‘failure of consideration’ because it accurately identifies the essence of the claim being pursued. Whichever terminology is used, the legal content is the same. The attraction of ‘failure of basis’ is that it is more apt, but ‘failure of consideration’ is more familiar.
Failure of basis, or failure of consideration as it was once called, does not necessarily require failure of a promised counter-performance; it may consist of the failure of a state of affairs on which the agreement was premised. A failure of consideration may consist of the failure of a non-promissory event or state of affairs.
The most recent consideration of failure of basis in the Supreme Court came in Barton v Morris [2023] AC 684. In that case, a property developer (Barton) agreed with a company (Foxpace Ltd) that, if a company owned by the company were sold for £6.5 million to a buyer introduced by Barton, Foxpace would pay Barton £1.2 million, Although a buyer introduced by Barton (Western) did offer £6.5 million, the price finally agreed and paid was £6 million, reduced from £6.5 million to reflect a planning issue. Foxpace later went into liquidation, Barton’s claim to remuneration was an issue in that liquidation. HHJ Pearce held that Barton had no claim under the contract and no claim in unjust enrichment for his services (which the judge assessed to have a market value of £435,000). The Court of Appeal reversed that decision, and awarded Barton £435,000. By a majority, the Supreme Court reversed the Court of Appeal, and restored the judge’s decision.
In discussing the unjust factor of “failure of basis”, Lady Rose quoted with approval from the judgment of Carr LJ (as she then was) in Dargamo Holdings Ltd v Avonqick Holdings Ltd [2022] 1 All ER (Comm) 1244, CA as follows:
“79.The core concept of ‘failure of basis’ is that a benefit has been conferred on a joint understanding that the recipient’s right to retain it is conditional. If the condition is not fulfilled, the recipient must return the benefit (see Goff & Jones at 12-01). Whilst failure of basis ranks alongside the unjust factors of mistake, duress and undue influence as a factor negativing consent, it differs in that it is concerned with qualification of consent, as opposed to impaired or vitiated consent ”
Lady Rose went on to consider the effect of the contract that was actually made between the parties on the claim in unjust enrichment. Her view was that it prevented any such claim:
“96. When parties stipulate in their contract the circumstances that must occur in order to impose a legal obligation on one party to pay, they necessarily exclude any obligation to pay in the absence of those circumstances; both any obligation to pay under the contract and any obligation to pay to avoid an enrichment they have received from the counterparty from being unjust. The “silence” of the contract as to what obligations arise on the happening of the particular event means that no obligations arise as Lord Hoffmann made clear in Belize cited earlier. This excludes not only an implied contractual term but a claim in unjust enrichment.”
Free acceptance as an unjust factor
The judge went on to consider in detail the concept of free acceptance as an unjust factor as distinct from that of failure of basis but his views here are rather more controversial. He thought that failure of basis had application only in a case where there was a contractual structure to the transaction for the claimed unjust enrichment to apply whereas in the case of free acceptance there is no agreed condition and the unjustness is engaged by the recipient not preventing the needless conferring of the benefit when that recipient realised it was happening, and that it was not free.
Whether there is this distinction may however be thought doubtful. In Barton v Morris [2023] UKSC 3, a case in free acceptance was successfully made out at first instance. However, in the Court of Appeal Asplin LJ said;
“I should also add that it is not clear to me that the judge was correct to refer to the claim in unjust enrichment as having arisen as a result of the doctrine of free acceptance. Although we were not addressed directly on this matter I note that: it is a doctrine about which there is much academic debate; it was not the basis for a claim in unjust enrichment considered by the Supreme Court in the Benedetti case, upon which the judge ultimately founded his reasoning; and it does not form the basis of my consideration of the claim in unjust enrichment”.
In the Supreme Court the issues before the court were limited to those of failure of basis only but Lord Burrows opined that acceptance was not an unjust factor in English law” and that issues of this kind should be analysed as failure of basis. However, importantly he did not think that this made any real difference as he went on to say that addressing issues of this kind as a matter of failure of basis “makes no difference to the substantive law”.
More recently in H&P Advisory Ltd v Barrick Gold (Holdings) Ltd [2025] EWHC 562 (Ch) Simon Gleeson, in the course of also conducting a valuable review of the law of unjust enrichment, came to the conclusion that there was no clear authority for the recognition of a purely receipt-based form of free acceptance and that no separate cause of action for restitutionary quantum meruit arises out of a doctrine of free acceptance.