Unjust enrichment for an incidental benefit

A recent English decision has confirmed that a  party can claim for unjust enrichment where an incidental benefit has occurred. The English Court of Appeal decision in TFL Management Services v Lloyds Bank PLC [2013] EWCA 1415 related to an application for summary judgement.

The facts can be summarised for these purposes as follows:

  • Pursuant to an agreement, Party C was required to pay commissions to party A.
  • Party A attempted to assign those commissions to Party B.
  • When Party C fails to pay commissions to Party B, Party B brought court proceedings against Party C to recover these.
  • At trial the Court finds that commissions were not correctly assigned to Party B; therefore Party A was still entitled to receive commissions under the agreement.
  • Party A recovered commissions from Party C.

Following this, Party B brought proceedings against Party A, claiming that they were unjustly enriched. The basis of this was that Party B had incurred expense going through litigation which inevitably conferred a benefit on Party A (Party A got to recover the commissions). Party A’s defence was that this was an incidental benefit and that unjust enrichment does not apply to incidental benefits.

The English Court of Appeal was split on the decision (2:1), the majority finding that there was no established English authority that prevented a claim for an incidental benefit. summary judgment was not awared and the issue was sent back for a full trial.

This adds certainty around the scope of an unjust enrichment claim; which can be brought where a party has received an incidental benefit.

It should be noted that before a party succeeds in a claim for unjust enrichment they will still have to satisfy the usual four considerations (taken from the judgment at [29]):

  1. Has the defendant benefited or been enriched?
  2. Was the enrichment at the expense of the claimant?
  3. Was the enrichment unjust?
  4. Is there any specific defence available to the defendant such as change of position?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s