Unjust Enrichment – Does What It Says On The Tin?

What is unjust enrichment?

Unjust enrichment occurs when one person benefits financially at the expense of another in very particular circumstances. When it occurs, the law imposes an obligation on the party who has benefited, to make restitution if it considers the enrichment to be unjust.

The two cases below illustrate how it might, or might not, arise.

Case law

Case one

In 2011, the Court of Appeal heard a case in which a builder sought payment in the following circumstances.

An individual owned a company and he also owned a piece of land personally. He required some building work, and his company entered into a contract with the builder to carry out the works on his land.

In the event, the company failed to pay the builder’s account. The builder attempted to secure payment from the individual on the basis that he had benefited from the works on his land arguing that he had therefore been unjustly enriched. The Court of Appeal decided that, given the existence of a clear contract between the builder and the individual’s company there could be no claim for unjust enrichment against the individual.

Case two

In the most recent 2019 case of Barton v Gwyn Jones, Barton entered into a contract with Gwyn Jones to find a purchaser for land belonging to Gwyn Jones. It was agreed that Barton would be paid a fee of £1.2 million in return for introducing a purchaser who was willing to pay £6.5 million for the property. In the event, the land was purchased for £6 million. Gwyn Jones then refused to pay Barton on the basis that the fee had been conditional on a purchase price of £6.5 million.

Barton brought proceedings against Gwyn Jones for, amongst other things, a claim in unjust enrichment as the company had benefited at his expense.

The Court of Appeal found that the contract between Barton and Gwyn Jones was informal as the parties had not considered any circumstances other than a sale at £6.5 million. Had the parties wanted to exclude any other arrangement, apart from a sale at £6.5 million, they should have entered into an agreement which made it clear that a payment was to be made if, and only if, this specific event occurred. However, as the agreement was informal, and did not exclude the possibility of an alternative fee, the Court decided that Gwyn Jones had indeed been unjustly enriched as a consequence of not paying any fee to Barton.

The calculation of the unjust enrichment is based on the benefit unjustly gained, rather than compensation for loss of the fee.

The Court decided that the gain was the objective market value of the services rendered, having regard to the price which a reasonable person would have to pay for that service. In arriving at his decision, the Judge considered other arrangements which the company had previously reached with introducing agencies who had previously failed to sell the same property.

Unjust enrichment claims

If the contract is clear, the parties will be bound by it. If there is room in an agreement for an alternative interpretation of the arrangement between the parties, then there might be room for an unjust enrichment claim. The amount of that enrichment will reflect any unjust gain made by the recipient.