Dollar Land (Cumbernauld) Ltd v. C.I.N. Properties Ltd (Scotland)

An enrichment is not unjustified where a valid contract provides the legal ground for obtaining and retaining the benefit. A tenant therefore cannot obtain recompense for benefits accruing to a landlord through the exercise of a conventional irritancy when those benefits fall within the parties’ agreed irritancy clause.

The remedy of recompense requires the claimant to establish enrichment at its expense, the absence of legal justification and the equity of requiring redress. Disproportion between the parties’ resulting gains and losses does not remove the contractual justification.

The appellants acquired the tenant’s interest in a long commercial sublease of a shopping centre. After they failed to pay rent, the respondents exercised a conventional irritancy. The resulting declarator was upheld in earlier proceedings.

The appellants then sought recompense for the respondents’ enrichment, particularly the benefit of receiving the whole occupational rental stream. The Lord Ordinary rejected the claim. A majority of an Extra Division of the Inner House affirmed that decision in 1996 S.C. 331, holding that the irritancy clause contractually justified the benefit.

The central issue was whether the law of unjustified enrichment could require compensation after the respondents had obtained no more than the contract expressly conferred upon enforcement of the irritancy.

1. Appeal dismissed unanimously. Lord Hope of Craighead delivered the leading speech. Lord Browne-Wilkinson, Lord Jauncey of Tullichettle, Lord Nolan and Lord Hoffmann agreed that the appeal should be dismissed.
2. Per Lord Hope, an obligation to reverse an enrichment arises where the defender lacks a legal ground for retaining the benefit. A contractual right provides the strongest justification for an enrichment obtained and retained through its exercise. Unjustified enrichment therefore has no operation while the defender has received no more than the contract confers.
3. The appellants had to establish that the respondents were enriched at their expense, that the enrichment lacked legal justification and that it would be equitable to require redress. The respondents were undoubtedly enriched: the appellants lost their share of the occupational rents, while the respondents obtained the entire benefit. That enrichment was nevertheless expressly authorised by the irritancy clause. The clause provided that the tenant forfeited all rights, the premises reverted to the landlord and the landlord could possess them and uplift the rents.
4. Per Lord Hope, the preliminary development agreement did not supply a distinct basis for recovery. Like an ordinary agreement preceding a lease, it was implemented and superseded by the grant. The respondents’ post-irritancy rights therefore depended upon the words of the sublease. The fact that they obtained the benefit of the appellants’ investment did not make their possession legally different from other cases in which an irritancy gives the landlord improvements, a grassum, an increased rental opportunity or another contractual advantage.
5. Lord Hope classified the monetary remedy claimed as recompense. Repetition ordinarily concerns repayment of money; restitution concerns the return of moveable property; and recompense concerns payment representing the value of a benefit enjoyed. These expressions describe remedies for reversing unjustified enrichment rather than distinct sources of obligation.
6. Lord Jauncey agreed and added that reasonable enforcement of an irritancy must be distinguished from oppressive enforcement. Outcomes which the parties or their predecessors specifically and willingly contracted to produce could not be treated as unjust merely because they enriched the landlord. Any reform concerning severe consequences of irritancy was more appropriately addressed through conditions upon purgation than through recompense after enforcement.
7. The respondents did not insist upon their cross-appeal because the irritancy clause disposed of the appellants’ claim.

1. House of Lords: The appellants’ appeal was dismissed unanimously. The respondents did not insist upon their cross-appeal.
2. Extra Division of the Inner House: By a majority, affirmed the Lord Ordinary’s rejection of the unjustified-enrichment claim: 1996 S.C. 331.
3. Lord Ordinary: Lord Coulsfield held that the appellants’ averments in support of recompense were irrelevant and rejected the claim.