Just Deserts: Unjust Enrichment in the Context of Family and Non-Commercial Relationships

In the aftermath of many family relationship breakdowns, second only to complaints about bad behaviour, a pervasive sentiment arises: one party believes they have invested or contributed disproportionately to the family economy, family assets or businesses, leading to perceived unfairness.

Whilst statute provides a framework within which such considerations can be evaluated and reflected in the division of the family assets at the end of a marriage or civil partnership, for cohabiting couples or other familial relations, the only potential avenues for recourse lie in civil law. The law of constructive trusts and proprietary estoppel will come to mind as the most obvious territory for claims on relationship breakdown. The objective of this article is to explore the scope for unjust enrichment to offer an alternative foundation for redress.

Unjust enrichment – overview

The essential aim of restitution for unjust enrichment is to provide redress in circumstances where one party has received a benefit from another in circumstances where it would be unjust for the recipient to retain the benefit. Whilst unjust enrichment has been recognised as a distinct pillar of English law,1 unjust enrichment is best thought of not as a single unified doctrine but as a body of law that encompasses a variety of different causes of action, each concerned with achieving the essential aim of combating unjust enrichment but with distinct rules and nuances.

Consistent with the last point, it must be understood that there is no general rule giving a claimant a right of recovery from a defendant who has been unjustly enriched at the claimant’s expense, and judges do not have a general discretionary power to order repayment whenever it seems just and equitable to do so.2 Whilst the categories of unjust enrichment are not closed, a claimant must be able to point to a ground of recovery that falls within or is sufficiently analogous to the established categories of claim. The categories of claim are numerous;3 the main categories of potential interest in the family context include restitution for payments made on a mistaken basis, the discharge of debts on behalf of another at the other’s request, work done (quantum meruit claims) or goods provided (quantum valebat claims) in circumstances where there was no contract.

Unjust enrichment – establishing the claim

There are four key questions that need to be addressed in an unjust enrichment claim:

1. Has the defendant been enriched?
2. Was the enrichment at the claimant’s expense?
3. Was the enrichment unjust?
4. Are there any defences available to the defendant?4

It has been emphasised that these questions serve as signposts towards the relevant areas of enquiries and are not themselves legal tests to be treated as if the words have the force of statute.5

Enrichment

Enrichment may take many forms. An addition to the recipient’s wealth is enrichment of an obvious kind, but enrichment may also be found where there has been the transfer of a right, or the saving of an expense that would otherwise have been incurred or the payment of a debt that would otherwise have to be discharged by the benefiting party, or where the claimant has forgone a claim of some description or supplied a service which results in a benefit to the defendant.

Where there has been free acceptance or acquiescence on the part of the defendant, the defendant is considered to be enriched if they have received a benefit or services from the claimant even if the service does not add to the defendant’s wealth where, for example, work is done in anticipation of some event that does not subsequently materialise.6

What is essential, however, is that the ‘enrichment’ must take the form of a benefit that has financial value. A person is not enriched in the sense required to found an unjust enrichment claim by the provision of love and affection or companionship that might enrich their wellbeing merely in an emotional sense.

At the claimant’s expense

It may be that the claimant has incurred expenditure, but the claimant need not suffer a loss in the same sense as in the law of damages. Restitution is not a compensatory remedy. Unpaid labour may amount to the provision of a benefit at the expense of the claimant, where the claimant has provided services which would otherwise have been provided for reward, and has done so without the intention of donation.7

Unjust enrichment

The defendant’s acceptance of the benefit must be unjust. The defendant must be given sufficient notice of the impending benefit, know or ought to have known that the claimant expected to be paid for the services, and must have had the opportunity to reject the benefit.8

Defences

Depending on the circumstances, the defendant may be able to raise a defence capable of defeating the claim. For example, where a change of position on the part of the defendant renders restitution inequitable,9 or where counter restitution (i.e. the return of any benefit received by the claimant) has become impossible,10 on the grounds of illegality, or where a limitation or laches defence applies.

Valuing the claim

If the claim is made out, the remedy will be an order that the defendant pays money representing the value of the benefit received at the claimant’s expense. The leading case on the valuation of benefit in the context of claims concerning the provision of services is the decision of the Supreme Court in Benedetti v Sawiris & Ors [2013] UKSC 50.

In summary, when assessing the value of the remedy:

1. The enrichment has to be valued at the time it was received.
2. The claimant is entitled to damages equivalent to the objective market value of the services performed; this means the price which a reasonable person in the defendant’s position would have had to pay for the services.
3. Where a defendant would have had to pay for the services by way of commission-based payment, that is the correct approach to valuing their services.
4. Except where it is appropriate to value the service on a commission basis by reference to the defendant’s gains, the value of any subsequent profit made by the defendant is otherwise immaterial.

This last point is a particularly important one. The objective is not to strip the defendant of the gain they receive, neither is it to compensate the claimant for loss. Rather, the focus of the exercise is on reversing the transfer of value between the claimant and the defendant. The point is well illustrated in Yeoman’s Row Management Ltd & Anor v Cobbe [2008] UKHL 55, [2008] 1 WLR 1752, in which Lord Scott observed [41]:

‘But what is the extent of the unjust enrichment? It is not, in my opinion, the difference in market value between the property without the planning permission and the property with it. The planning permission did not create the development potential of the property; it unlocked it. The defendant company was unjustly enriched because it obtained the value of [the claimant’s] services without having to pay for them. An analogy might be drawn with the case of a locked cabinet which is believed to contain valuable treasures but to which there is no key. The Cabinet has a high intrinsic value and its owner is unwilling to destroy it in order to ascertain its contents. Instead a locksmith agrees to try to fashion a key. He does so successfully and the cabinet is unlocked. As had been hoped, it is found to contain valuable treasures. The locksmith had hoped to be awarded a share of their value but no agreement to that effect had been concluded and the owner proposes to reward him with no more than sincere gratitude. The owner has been enriched by his work and, many would think, unjustly enriched. For why should a craftsman work for nothing? But surely the extent of the enrichment is no more than the value of the locksmith’s services in fashioning the key. Everything else the owner of the cabinet already owned.’

As Yeoman’s Row Management Ltd & Anor v Cobbe demonstrates, unjust enrichment may afford a remedy where a claimant is unable to establish all of the elements for a successful proprietary estoppel or constructive trust claim. Unjust enrichment may provide a basis for securing a monetary award where the proprietary claim fails, where, for example the claimant is able to prove that they have acted in a way that has benefited the defendant, which they rely upon as detrimental reliance, but is unable to prove that there was a promise or understanding that they were to acquire an interest in the land. Thus, in Yeoman’s Row Management Ltd & Anor v Cobbe, the claimant failed to establish that a proprietary estoppel or constructive had been created by the defendant company’s actions in withdrawing from negotiations after the claimant had spent a considerable time and effort in bringing obtaining planning permission for the redevelopment of the company’s property. However, the claimant was entitled to succeed in his claim for unjust enrichment, which was valued on a quantum meruit basis, not by reference to the enhanced value of the defendant’s land, but rather by reference to the market value of the service rendered.

Unjust enrichment in the family context: examples from the case-law

Steele v Steele

In Steele v Steele [2001] All ER (D) 50 (Oct), a wife sought to raise an unjust enrichment claim against her husband where payments had been made out of a joint account totalling £50,000 which she contended had been for the benefit of the husband, including the discharge of his liabilities to educate and maintain his sons. The wife had brought assets into the relationship, but the husband, other than his income, had not. Over the course of the relationship, those assets had been largely dissipated. It may be inferred from those facts that a financial remedy claim was likely to yield little benefit to the wife. The wife claimed that the funds in the joint account belonged beneficially to her and that the husband had been unjustly enriched by those payments. The wife’s arguments were rejected. Where a husband and wife open a joint account at a bank on terms that permit either of them to draw on the account, in the absence of facts or circumstances which indicate that the account was intended, or was kept, for some specific or limited purpose, each spouse can draw upon it not only for the benefit of both spouses but also for his or her own benefit without being liable to account to the other. There was no basis for disapplying that principle, in circumstances where the facts showed that the funds in the joint account represented a pooling of assets. Ferris J concluded at [75]:

‘I appreciate that the claimant is bitter that not only did her marriage collapse but while it lasted she experienced increasing financial stringency and the dissipation of the proceeds of sale of her house. She is also resentful of the fact that significant sums had to be paid out for the education and maintenance of the defendant’s sons by his first marriage. She has managed to convince herself that all this was done at her expense. I do not consider that this was truly the case, but even if the claimant has borne an unfair share of the over-spending which took place between 1988 and 1991 this does not, in my judgment, give rise to the claim in restitution which she seeks to maintain in these proceedings.’

Walsh v Singh

Walsh v Singh [2009] EWHC 3219 (Ch) concerned a claim following the breakdown of the parties’ relationship. The parties had been engaged to be married and in the course of the relationship, Mr Singh purchased a property for which he had paid the entire purchase price. The parties planned to set up an equine centre on the land. Ms Walsh gave up her career at the Bar in order to help develop the business and had undertaken other activities such as researching the planning history of the property and assisting with and supervising renovation works. Ms Walsh sought to claim a beneficial interest in the property on the grounds of constructive trust or proprietary estoppel based on alleged promises on the part of Mr Singh of a half share in the property, coupled with detrimental reliance based on her activities at the property and giving up her career at the Bar. Alternatively, she sought a quantum meruit payment, based on unjust enrichment, to reflect the value of her contributions to the project. Mr Singh for his part also sought redress on the grounds of unjust enrichment in seeking to recover maintenance payments that he had made to Ms Walsh following the separation on the grounds that he claimed to have been misled by her into believing that she had a legal claim against him when she did not.

Mr Singh’s claim failed on the facts. HHJ Purle QC found that the maintenance payments were made voluntarily and out of a sense of moral obligation following the separation.

Ms Walsh’s constructive trust and proprietary estoppel claims were dismissed because, whilst her activities would have amounted to detrimental reliance if the necessary common intention could be established, the judge concluded that there had been no relevant assurance of an interest and that her contributions were referrable to her commitment to the relationship and not the belief that she had or would one day acquire a beneficial interest in the property.

Ms Walsh’s unjust enrichment claim also failed. The court distinguished Yeoman’s Row Management Ltd & Anor v Cobbe [2008] UKHL 55, [2008] 1 WLR 1752 on the grounds that, on the facts as found, Ms Walsh had never intended to charge for her services whether directly or indirectly by obtaining a share of any property. Her contributions were made voluntarily and not in the expectation of reward. The judge further noted the difficulties in this sort of case in evaluating the extent of the enrichment (the sole evidence of which comprised Ms Walsh’s own evaluation of her worth) and there would be a need to look at how much benefit had passed the other way and the considerable financial support provided by Mr Singh. The principal planning permissions obtained were mainly attributable to his efforts. HHJ Purle QC concluded at [67]:

‘If Miss Walsh’s claim was otherwise good in principle, therefore, it would probably fail for want of proof. However, I prefer to rest my decision on the proposition that the claim is bad in principle, as Miss Walsh never intended to act for reward. If dashed expectations of a long-term domestic relationship open the door to unjust enrichment claims, a wide range of claims which the concept of unjust enrichment was never meant, and is ill equipped, to deal with will come marching through.’

Ledger-Beadell v Peach

In Ledger-Beadell v Peach [2006] EWHC 2940 (Ch), the parents of Mr Ledger-Beadell had provided the sum of £200,000 towards the purchase of a property which was acquired in the sole name of his fiancé, Miss Peach. The reason for the property being acquired that way was because Mr Ledger-Beadell was trying to conceal the fact of his cohabitation and his intended acquisition of a property from the court dealing with the financial remedy proceedings following his divorce. A letter from Mr Ledger-Beadell’s parents to Miss Peach stated that the money was not a gift to her and that ‘some form of trust or contract’ was to be agreed between the parties as to the terms on which the moneys had been advanced. The relationship between Mr Ledger-Beadell and Miss Peach subsequently broke down. The property had been sold by the date of trial, but the proceeds of sale amounted only to £100,000. The parents asserted that the advance was a loan to Miss Peach. Miss Peach contended that the money advanced had belonged to Mr Ledger-Beadell and had been a gift to her in contemplation of marriage, but alternatively that there was a constructive trust over the proceeds of sale (that being a better result for her than a finding that she was liable to return the full sum of the advance).

It was held that a constructive trust had arisen and that the parents were entitled to a share of the proceeds of sale. However, Nicholas Strauss QC further held (having raised the point himself, to the surprise it appears of both counsel) that if a constructive trust had not arisen, the parents would have had a restitutionary claim on the basis that Miss Peach had been unjustly enriched. The circumstances were sufficiently analogous with prior authority in which a right to restitution had been recognised in the context of ineffective transactions pursuant to which one party had acquired a benefit at the expense of the other, such as Way v Latilla [1937] 3 All ER 759. The facts in Way v Latilla were far removed from a domestic cohabitation context, concerning the provision of information by Mr Way to Mr Latilla relating to gold mining prospects in West Africa. In return, Mr Way was promised a share of some description in the acquired concessions or Mr Latilla’s company but the parties never reached concluded contractual terms. Mr Way was nonetheless entitled to a quantum meruit payment for his services. On the facts of the instant case, had a constructive trust not been found, Miss Peach would have obtained an unjust benefit from the parents on the basis of an agreement which had been void for uncertainty, similar to the ‘agreement to agree’ in Way.

Mate v Mate & Ors

In the recent case of Mate v Mate & Ors [2023] EWHC 238 (Ch), the claimant, Julie Mate, pursued claims based on proprietary estoppel and, in the alternative, unjust enrichment against her mother and two brothers. The case centred around the claimant’s efforts to remove a Green Belt restriction from part of the family farm, which, following the death of her father had been left to Julie’s mother and brothers. Although Julie claimed that her mother and brothers made promises to the effect that she would be entitled to a share of the proceeds from its sale, the judge found that there had been no promise or assurance sufficient to found a proprietary estoppel claim, and no equity therefore arose.

However, Julie’s unjust enrichment claim succeeded. Her work was significant in unlocking the development potential of the land and the defendants had therefore been enriched. The enrichment had been at Julie’s expense as she had invested hundreds of hours in the project. Further, the enrichment was unjust. The defendants had asked Julie to assist. Although no promise had been made to her of an interest in the land, the defendants had been aware that Julie had not intended to act gratuitously and that she expected to benefit from her efforts. She was deemed to be entitled to be paid for her services on a quantum meruit basis calculated on an equivalent basis to a land promoter’s fee but discounted to reflect the fact that she was not in fact a professional land promoter and she had not played any role in the later stages of the planning process which ultimately resulted in the grant of planning permission. Taking into consideration the uplift in the market value of the land, the judge determined that the claimant was entitled to be paid £652,500, which corresponded to a commission fee of 7.5% (as compared to professional fees of between 15% and 20%) of the £8.7m uplift in the market value of the land.

Conclusions and learning points for practitioners

Unjust enrichment undoubtedly has potential as a means of obtaining redress where one party has derived benefits at the expense of another in the course of a relationship or in a domestic or family setting. In the family context, the sorts of circumstances that may conceivably give rise to an unjust enrichment claim are multifarious but may include one party paying off a debt belonging to another, including paying an increased share of a joint liability, or advancing money in circumstances where a gift was not intended but the terms of the advance are otherwise unclear, or providing services of some description where there was an expectation of some sort of reward.

To date, there appears to have been greater success for claimants, such as Julie in Mate v Mate & Ors and the parents in Ledger-Beadell v Peach who stand in a more remote relationship to the benefiting party, as compared to parties who have lived together as a couple, as in Steele v Steele and Walsh v Singh. This reflects the fact that unjust enrichment has not yet shaken its commercial roots and that, generally, parties to a romantic relationship do not expect to micro-account for expenditure or to be paid for what they do for one another. In Walsh, the problem was that the court rejected the suggestion that Ms Walsh had any expectation of reward for her labours, coupled with the fact that there had been a relatively generous flow of benefits in her direction from Mr Singh. In Steele, it was not enough that Mrs Steele might have shouldered an unfair share of the parties’ expenditure, the essence of the decision is that she too had effectively consented to this in putting funds into the joint account.

Unjust enrichment is a comparatively youthful field of English law. There is certainly scope for further development and extension of the recognised categories of claim. As the judgment in Ledger-Beadell and Mate show, principles developed in the context of claims between parties in a commercial relationship may be applied to claims between family members. However, just as with claims based on proprietary estoppel and constructive trusts, unjust enrichment is not an opportunity for a judge to whip out the portable palm tree and do what seems ‘fair’ where one party has disproportionately contributed in the course of a relationship.

Article by Charlotte John – first published in the Financial Remedies Journal