Uren v First National Home Finance Ltd

A claimant cannot recover merely by pleading that the defendant was enriched at his expense in circumstances said to be unjust. The claim must be based on an established restitutionary category, or a justifiable extension of one, and the facts must show a legally sufficient causal connection between the claimant’s loss and the defendant’s enrichment. Expenditure made to or for the benefit of one company does not become enrichment at the claimant’s expense merely because another company later acquires the developed property and profits from it. Where enrichment is alleged to arise on that acquisition, the cause of action accrues then for limitation purposes. A subsequent profit does not postpone accrual if it is attributable to extrinsic factors rather than to the claimant’s payments.

The claimant was one of several purchasers who had paid money towards a development in Tenerife. After companies connected with the development entered receivership, companies within the defendant bank’s group acquired the development and later entered into a transaction said to generate further business for the bank.

The claimant alleged unjust enrichment, asserting that his payments had contributed to the value of the development and that the bank had acted improperly in taking control of it. The District Judge declined to strike out the claim or grant summary judgment. The bank appealed, contending that no proper cause of action had been pleaded, that there was no sufficient nexus between the claimant’s payments and the bank’s alleged enrichment, and that the claim was statute-barred.

1. Appeal allowed; claim dismissed or struck out. Even allowing the pleaded facts at their highest, the claim was bound to fail and there was no other reason for it to proceed to trial.
2. The court observed that the law of restitution was developing, but a claimant could not simply plead facts said to show unjust enrichment without bringing the case within an established restitutionary claim or a justifiable extension of one. This issue was not strictly necessary to the decision because the appeal could be resolved on the nexus and limitation grounds.
3. The claimant’s payments had been made to or for the benefit of Arrish Limited and Pitchcott Limited, not to the bank. The first payment was lost when Arrish entered receivership. The later payment passed through the fighting fund and was used in connection with Pitchcott’s indebtedness. Neither payment thereby created a relationship between the claimant and the bank.
4. For unjust enrichment, the claimant had to show a proper causal connection between his loss and the defendant’s enrichment. It was insufficient that the bank later acquired the development, or that the development had been improved using money contributed by purchasers. The alleged enrichment resulted from the bank’s acquisition and subsequent dealings with the property, not from a legally sufficient transfer or benefit at the claimant’s expense.
5. Even assuming a stand-alone unjust enrichment claim, the cause of action could not accrue before enrichment occurred. If the bank acquired the property at true value, there was no relevant enrichment. If it acquired the property at an undervalue, any enrichment occurred on acquisition, more than six years before proceedings were issued. A later profit or business opportunity did not postpone accrual.
6. The court recognised that any wrong arising from the bank’s conduct might give rise to remedies vested in the companies owning or developing the property, or to contractual damages. Unjust enrichment could not be fashioned to overcome the separate legal identities and contractual structure of the transactions.

High Court (Chancery Division): On appeal from District Judge Mitchell’s decision dated 10 February 2005, sealed on 19 February 2005, which had declined to strike out the claim or grant summary judgment. The appeal was allowed and the action was dismissed or struck out.