Benedetti v Sawiris and others

A restitutionary quantum meruit for services supplied without a valid and subsisting contract is normally measured by their objective value when received. The measure is the price which a reasonable person in the defendant’s position would have paid in the relevant market. Objective characteristics affecting that price may be considered, but the defendant’s generosity, parsimony or idiosyncratic valuation is irrelevant.

The claim concerns the defendant’s gain, rather than the claimant’s loss, and values the services themselves rather than any resulting product or profit. A claimant cannot increase recovery merely because the defendant later showed a willingness to pay more than market value. Prior remuneration covering the same services must be brought into account. No further restitution is due where that remuneration exceeds their objective value.

The claimant provided services which assisted the first respondent and associated companies to acquire a telecommunications business. An earlier acquisition agreement was abandoned when the contemplated investment structure became unworkable. The claimant nevertheless continued providing services in the expectation of reward, but without an enforceable agreement determining his remuneration.

Patten J, in [2009] EWHC 1330 (Ch), dismissed the contractual and equitable claims but awarded €75.1 million as a restitutionary quantum meruit. The Court of Appeal, in [2010] EWCA Civ 1427, held that the services had an objective market value of €36.3 million and reduced the award to €14.52 million after attributing an earlier €67 million brokerage payment to 60% of the services. It also discharged the Holding Companies from liability.

The claimant appealed, seeking a larger award based on the abandoned agreement or the respondent’s later offer of €75.1 million. The respondent cross-appealed on the ground that the €67 million payment had already satisfied any restitutionary entitlement. The appeal concerning the Holding Companies was abandoned before the hearing.

1. Disposition. The five-member court unanimously dismissed the claimant’s appeal and allowed the respondent’s cross-appeal. The claimant’s claim was dismissed because the €67 million already received exceeded the €36.3 million objective value of all the services.

2. Objective valuation. Lord Clarke, with whom Lord Kerr and Lord Wilson agreed, held that the starting point for identifying and valuing an enrichment consisting of services is their objective market price. The relevant price is what a reasonable person in the defendant’s position would have paid. Conditions affecting the price to any reasonable person in that position, including buying power and other objective characteristics, may be considered. The defendant’s generous or parsimonious personality is disregarded. Lord Reed and Lord Neuberger reached materially the same conclusion through separate judgments.

3. Nature and timing of the benefit. Unjust enrichment restores a benefit unjustly obtained at the claimant’s expense; it does not compensate the claimant’s loss. The services are valued when received. The court values the services themselves, rather than the end-product or any profit subsequently obtained through them.

4. Subjective valuation. Lord Clarke’s majority judgment accepted, although the point was unnecessary to the outcome, that a defendant may seek to prove that a benefit was worth less to that defendant than its market value. The burden lies on the defendant after objective value has been established, and an unsupported assertion will rarely suffice. Lord Reed preferred to analyse such cases expressly through autonomy and freedom of choice, while Lord Neuberger left the correct analytical approach open. All members agreed that this case involved free acceptance of the services and raised no operative claim to reduce their value.

5. No subjective revaluation. A claimant cannot ordinarily increase a restitutionary award above objective value merely by showing that the defendant personally valued the services more highly. A later offer may be evidence of objective value, but it does not substitute the defendant’s personal scale of values for the market measure. Here the offer of €75.1 million was unreliable as valuation evidence because it could reflect generosity, hindsight or the desire to avoid litigation. The abandoned acquisition agreement concerned a materially different venture and provided no valuation template.

6. Effect of the earlier payment. The services were remunerated in the market as a single transaction fee rather than as separately priced components. The earlier €67 million payment covered the same completed services and had to be brought into account. The trial judge’s 60:40 apportionment was inconsistent with the finding that all the tasks formed one broker or adviser role. Since the payment exceeded the €36.3 million market value, no unjust enrichment remained.

1. United Kingdom Supreme Court: In Benedetti v Sawiris and others [2013] UKSC 50, the court unanimously dismissed the claimant’s appeal, allowed the respondent’s cross-appeal and dismissed the claim.
2. Court of Appeal: In Benedetti v Sawiris and others [2010] EWCA Civ 1427, the court reduced the restitutionary award from €75.1 million to €14.52 million and held that the Holding Companies were not liable.
3. High Court: In Benedetti v Sawiris and others [2009] EWHC 1330 (Ch), Patten J dismissed the contractual and equitable claims but awarded €75.1 million as a restitutionary quantum meruit.