Unjustified Enrichment: Key Issues in Comparative Part 9 pdf

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Then there is a much stronger idea of subsidiarity, which denies the
availability of a claim in unjustified enrichment due to the applicability
of some other set of legal principles, even if, according to those principles,
no claim will lie. An example will assist. Assume that an occupier of land,
who is not the owner, has made improvements to the land. If a codified
system has a set of provisions which deal specifically with such improve-
ments, and if, according to those provisions, the occupier has no claim,
then a court would probably also deny a claim based on a general princi-
ple against unjustified enrichment.
35
The important point is that here the
plaintiff has no claim at all. Weak subsidiarity, as discussed in the previous
paragraph, only directs a plaintiff to the correct claim; strong subsidiar-
ity can deny the plaintiff any claim. It can also be said that while weak
subsidiarity is a relationship between claims, strong subsidiarity is better
understood as a relationship between legal dispositions or sets of rules.
It will be argued below that each of the systems under consideration
makes unjustified enrichment strongly subsidiary in some circumstances.
It would be possible for a system to make unjustified enrichment claims
weakly subsidiary to all other claims, and indeed it appears that this is the
law of Quebec. It would not, however, make sense for a system to make
unjust enrichment strongly subsidiary to all other rules of law. The effect
would be that there could never be a claim in unjustified enrichment.
36
This can be illustrated by a recent French case, in which the plaintiff
sought recourse by an action of guarantee as well as an action de in rem
verso.
37

The action of guarantee was rejected since no fault was shown
on the part of the defendant, but the claim in unjustified enrichment
was allowed. The defendant appealed on the ground that this ignored
its subsidiary character, but the Cour de cassation rejected the appeal.
One might view the decision as an occasion for dispensing entirely with
subsidiarity;
38
but it can be understood more narrowly, as holding that
there was no strong subsidiarity between the action of guarantee and the
action in unjustified enrichment. In that light, it does not touch the pos-
sibility of a general weak subsidiarity, nor the need for strong subsidiarity
in some cases.
39
35
Gagn
´
e v. Tremblay [1989] RJQ 1619 (Que Ct).
36
As observed in H. Mazaud et al., Leçons de Droit Civil, tome II, vol. I; F. Chabas, Les
Obligations (8th edn, 1991),
§ 709.
37
Civ. (1) 3 June 1997, JCP 1998.II.10102, note Viney. I am grateful to Jean-Pascal Chazal,
Universit
´
e Jean Monnet (Saint Etienne), for drawing this case to my attention.
38
As does Viney in his note, ibid.
39
Some French writers have recognised the difference between strong and weak

subsidiarity: for example Chabas, Les Obligations,
§§ 706–9.
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1. Strong subsidiarity
The first step will be to examine strong subsidiarity. In what circumstances
do other legal regimes exclude the possibility of a claim in unjustified
enrichment, even where the elements of the claim are present, and even
where the plaintiff has no other claim against the enriched defendant?
(a) Excluding claims due to the relationship
between plaintiff and defendant
Strong subsidiarity often operates based on the legal relationship between
the plaintiff and the defendant. There are a number of examples.
(i) Illegal, void or unenforceable transactions
Consider the case where some statutory provision comes into play to deny
the plaintiff a right which it would otherwise have. Take the case of an
illegal contract under which the plaintiff has conferred a benefit upon
the defendant. A rule of law operates to take away the plaintiff’s ability
to sue for contractual performance; can the plaintiff none the less sue in
unjustified enrichment to recover the benefit it has conferred? All legal
systems have struggled with this question.
40
It can also arise where the
contract is made merely unenforceable or void, rather than illegal. It is
a question of trying to determine the intention of the legislator: would
allowing the enrichment claim subvert the goals of the rule that made
the contract illegal or unenforceable?
41
It is clear that, in any system, an

unjust enrichment claim must be excluded by any legislative provision
which implicitly denies it.
(ii) Different types of unjustified enrichment claims
The same reasoning can apply to the case in which a system provides
more than one type of claim for unjustified enrichment. It might be that
40
For Quebec, see for example Nadeau v. Doyon [1994] RJQ 2267 (Que Ct), citing Quebec
and French doctrine. For Germany, Zimmermann and Du Plessis, ‘Basic Features’,
22–4. For the common law, G. Virgo, ‘The Effect of Illegality on Claims for Restitution
in English Law’, in: W. Swadling (ed.), The Limits of Restitutionary Claims: A Comparative
Analysis (1997), 141 ff.; Law Commission Consultation Paper No. 154, Illegal
Transactions: The Effect of Illegality on Contracts and Trusts (1999), Part II.
41
Dawson took the view that this is not subsidiarity as such: Dawson, Unjust Enrichment,
106; but that is understandable since he was using the term in the sense which in
this paper is denoted by ‘weak subsidiarity’. See also B. Nicholas, ‘Unjust Enrichment
and Subsidiarity’, in: F. Santoro Passarelli and M. Lupoi (eds.), Scintillae iuris: studi in
memoria di Gino Gorla (1994), 2037, 2044. Still, courts in France (Req. 15 June 1892, S
1893.1.281 note Labb
´
e, DP 1892.1.596; Civ. 12 May 1914, S 1918.1.41 note Naquet; Civ.
(3) 29 April 1971, GP 1971.2.554) and Quebec (B
´
edard v. B
´
edard Transport Co. [1960] CS
472) have described this as subsidiarity.
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a plaintiff will not be allowed a free choice among them, even where
the facts of the case satisfy more than one claim. Such a doctrinal rule
could be justified where a general unjustified enrichment claim is pro-
vided along with other unjustified enrichment claims that apply only to
particular fact patterns. For example, in Quebec there is a general en-
richment action and also the action for r
´
eception de l’indu. It was held,
under the Civil Code of Lower Canada, that the general claim is not ap-
propriate where the facts fit the claim for r
´
eception de l’indu, even though
the latter claim could not succeed.
42
Another example is provided by ar-
ticles 955 ff., which govern the position relating to a landowner’s obli-
gation to pay for improvements to land; there is no room for the gen-
eral enrichment action where these provisions are apt to decide the case,
even if no claim lies under them.
43
Similarly, in German law the provi-
sions governing the ‘owner–possessor relationship’ expressly exclude any
other enrichment remedy on facts within that relationship.
44
In both of
these systems, where a plaintiff can claim his expenses for managing the
business of another, unjustified enrichment is excluded.
45
This kind of
subsidiarity does not seem to be relevant in the common-law system,

which does not have a general enrichment claim alongside more specific
ones.
46
(iii) Unjustified enrichment and contracts
Unjustified enrichment claims are not allowed where the matter in issue
is dealt with by a subsisting contract between the parties. In that case,
it is said, the contract governs, and only if it can be disposed of in some
42
Willmor Discount Corp. v. Vaudreuil (City) [1994] 2 SCR 210 at 227. This conclusion can be
expected to remain true under the Civil Code of Quebec. Because the action for
reception of a thing not due had prescribed, however, the conclusion could rest on
weak subsidiarity: see 608–9.
43
Gagn
´
e v. Tremblay [1989] RJQ 1619 (Que Ct).
44
§ 993(1), last half-sentence. In German law if the plaintiff has an enrichment claim
based on a ‘performance’, he may not bring any other kind of enrichment claim
against that defendant. For further discussion, see below, 604.
45
In Quebec, the general enrichment action is subsidiary to all claims, as discussed
in the next section. For Germany, see Markesinis et al., Law of Contracts, 768 (noting
that claims against the manager may attract concurrent liability under both
regimes).
46
Note, however, the suggestion in A. S. Burrows, ‘Free Acceptance and the Law of
Restitution’, (1988) 104 LQR 576, 599, that if the common law allows claims based on
‘free acceptance’, these should not be available except where no other basis for a
claim exists. The suggestion is adopted in P. B. H. Birks, ‘In Defence of Free

Acceptance’, in: A. Burrows (ed.), Essays on the Law of Restitution (1991), 105, 144–5. This,
however, would probably be weak subsidiarity.
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way is a claim in unjustified enrichment available.
47
An initial reaction
might be to see this as an example of weak subsidiarity, on the view
that rights in unjust enrichment are subsidiary to the parties’ contractual
rights. On a closer examination, however, it appears that the governing
principle is strong subsidiarity.
It is not true to say that claims in unjustified enrichment are subsidiary
to claims in breach of contract, because in all of the systems under consid-
eration such claims are alternatives. If a contract is cancelled for breach
(and conceptualisations of ‘cancelled’ vary in different systems), the non-
breaching party is allowed to choose to recover the benefits it conferred,
as an alternative to seeking damages valued by performance. A system
may view this claim to recover benefits either as a contractual one or as
founded on unjustified enrichment.
48
The claim is not one which can be
understood as enforcing any contractual promise, and it is arguable that
wherever the claim may appear in a civil code, its function is to prevent
unjustified enrichment.
49
One might try to formulate the relevant principle by saying that en-
richment claims are weakly subsidiary to primary contractual rights. This
would reflect the general position that there can be no enrichment claim
47

That is, the plaintiff must show that the contract was void or unenforceable ab initio,
or has been avoided or terminated. German law: Markesinis et al., Law of Contracts, 45.
Quebec law: Challies, Doctrine of Unjustified Enrichment, 95–6; J. Pineau, D. Burman and
S. Gaudet, Th
´
eorie des Obligations (3rd edn, 1996), 305–6, 601–2. Common law: Pan Ocean
Shipping Co. Ltd v. Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164F (HL) per
Lord Goff; Singh v. Singh (1992) 71 BCLR 2d 336; [1993] 2 WWR 59 (CA); 337965 B.C. Ltd v.
Tackama Forest Products Ltd (1992) 67 BCLR 2d 1; 91 DLR 4th 129 (CA), leave to appeal
refused [1993] 1 SCR v; Building Design 2 Ltd v. Wascana Rehabilitation Centre [1992] 6
WWR 343 (Sask QB); Hesjedal v. Granville Estate (1993) 117 Sask R 2d 111; 109 DLR 4th
353 (QB); Scott v. Noble (1994) 99 BCLR 2d 137 (CA); Luscar Ltd v. Pembina Resources Ltd
(1994) 24 Alta LR 3d 305; [1995] 2 WWR 153 (CA),
§§ 111–22, leave to appeal refused
[1995] 3 SCR vii; Windisman v. Toronto College Park Ltd (1996) 28 OR 3d 29; 132 DLR 4th
512 (Gen Div).
48
R. Zimmermann, ‘Restitution After Termination for Breach of Contract in German
Law’, [1997] Restitution LR 13, 17–18: the idea that the relevant provisions in the BGB
are a special kind of enrichment claim is no longer accepted by most German jurists.
Recovery in French law is usually understood as based on the claim for reception of a
thing not due: J. Flour and J L. Aubert, Droit Civil: Les Obligations (6th edn by J L.
Aubert, 1994), vol. II, 26; J. Bell, S. Boyron and S. Whittaker, Principles of French Law
(1998), 421; even if the basis is said to be theoretically different, it is conceded that
this is the practical outcome: M. Malaurie, Les Restitutions en Droit Civil (1991), 35. In
Quebec, the provisions on ‘restitution of prestations’ in arts. 1699–707 were added in
the new Civil Code for just this type of situation. In the plan of the code, they belong
neither to unjust enrichment nor to contract.
49
Zimmermann, ‘Restitution After Termination’, 18, apparently disagreeing with the

majority view; D. P. Visser, ‘Rethinking Unjustified Enrichment: A Perspective of the
Competition between Contractual and Enrichment Remedies’, [1992] Acta Juridica 203,
209–10.
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so long as there is a subsisting contract between the parties. Of course,
this covers the case where there has been no breach of the contract; but
it also deals with the position where there has been a breach, so long
as the breach does not lead to cancellation of the contract. Even this,
however, does not appear to be quite wide enough. Sometimes, unjusti-
fied enrichment is excluded even where there are no primary rights. This
can be illustrated by Rillford Investments Ltd v. Gravure International Capital
Corp.
50
The plaintiff’s business was to broker mergers and acquisitions.
The defendant wanted to be acquired and it entered into a contract with
the plaintiff providing for the payment of a healthy commission to the
plaintiff, should the plaintiff arrange for the acquisition of the defendant
by another corporation. The terms of the contract provided that the ar-
rangement would end after sixty days, but that the fee would be payable
if the defendant were acquired within 365 days by a company introduced
by the plaintiff. The plaintiff introduced a potential buyer, Graphic Corp.,
but no sale was agreed. Two-and-a-half years after the agreement was ex-
ecuted, Graphic Corp. acquired the defendant. The plaintiff sued, relying
on implied contract and unjust enrichment, but the claim was rejected.
Although the contract said nothing about liability in unjustified enrich-
ment, the Court held that it ‘contemplated the possibility that the plaintiff
would receive no compensation if the defendant was enriched by virtue of
the sale of his business beyond the time of the expiry of the agreement’.

51
By the time all of the facts had occurred which allegedly generated an
unjustified enrichment, there was no contract; there were no primary or
secondary obligations. And yet somehow the contract excluded the enrich-
ment claim. The decision was made under the common law, but one could
expect a similar holding in each of the systems under consideration. If so,
it follows that the unavailability of unjust enrichment in the contractual
context cannot be understood through weak subsidiarity. Rather, the exis-
tence of a relevant distribution of risks and rewards between plaintiff and
defendant excludes unjustified enrichment, even though the plaintiff has
no other claim. This is strong subsidiarity.
At this point it must be observed that Stephen Smith has now argued
that, for the common law, there should be concurrent liability in contract
and unjustified enrichment just as there is between contract and tort.
52
The gist of the argument is the same as that which eventually prevailed
in the debates about contract and tort: that is, the only question is whether
the elements of the different causes of action can be established, and if
50
(1997) 118 Man R 2d 11; [1997] 7 WWR 534 (CA).
51
Ibid., § 30.
52
S. Smith, ‘Concurrent Liability in Contract and Unjust Enrichment’, (1999) 115 LQR
245. See also Visser, ‘Rethinking Unjustified Enrichment’, 231–6.
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they can, then both types of claim are available. Clearly, this argument
depends on the absence of any governing principle of subsidiarity, and it

must be assessed in the light of the justifications for this principle, which
are discussed below.
(b) Excluding claims due to relationships involving third parties
Where there is a relevant distribution of risks and rewards between plain-
tiff and defendant, enrichment claims are in general excluded. Here we
need to consider some slightly more complex situations, namely where
there is no contract between plaintiff and defendant, but there is a con-
tract between one or the other of them and some third party.
(i) Plaintiff’s contract with a third party
Consider first the case in which the plaintiff has a contract with some
third party. This can be illustrated by the facts of the Boudier decision,
53
the case in which the Cour de cassation recognised the actio de in rem verso
as a general enrichment remedy. The plaintiff contracted with a lessee of
land to fertilise the land, and did so. The plaintiff was unable to recover
the price because the lessee was insolvent. The plaintiff sued the lessor,
who by that time had taken possession of the land. Recovery in that situa-
tion on the basis of unjustified enrichment raises certain difficulties. The
plaintiff entered into a legal relationship with the lessee which provided
for the payment for the fertiliser, and, with his right to payment still in-
tact (albeit impaired by the lessee’s insolvency), he was allowed to recover
from another defendant. The policies will be discussed further below,
54
but it may be observed here that Challies noted that in two cases in 1939
the Cour de cassation disallowed claims in similar fact patterns.
55
The
Civil Code of Quebec seems clearly to deny recovery such a case, as article
1494 provides: ‘Enrichment or impoverishment is justified where it results
from the performance of an obligation.’ There is no stipulation that it has

to be an obligation owed to the person who was enriched.
56
If the plaintiff
was performing an obligation, his impoverishment was justified, and un-
der Quebec law (as in France) the claim lies only if both the enrichment
and the impoverishment were unjustified.
57
53
Req. 15 June 1892, S 1893.1.281 note Labb
´
e, DP 1892.1.596.
54
At 616.
55
Challies, Doctrine of Unjustified Enrichment, 30.
56
Contrast art. 1494, which establishes a relationship of weak subsidiarity between
claims in unjustified enrichment and other claims: see below, 607–8.
57
Art. 1493. Surprisingly, however, it is suggested in Pineau et al., Th
´
eorie, 406–7, that a
claim in unjustified enrichment would be available in this situation. Cf. Pavage
Rolland Fortier Inc. v. Caisse Populaire Desjardins de la Plaine [1998] RJQ 1221 at 1227 (SC),
although citing French doctrine.
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The common law does not seem to have found its way to any firm
doctrinal rule, but most cases deny recovery in this type of situation.

Canadian cases sometimes cite the plaintiff’s contract with a third party
as the ‘juristic reason’ for the defendant’s enrichment.
58
Lord Goff has
suggested that ‘the existence of a remedy in restitution in such circum-
stances must still be regarded as a matter of debate’, but that ‘serious
difficulties arise if the law seeks to expand the law of restitution to re-
distribute risks for which provision has been made under an applicable
contract’.
59
John Dawson said that the denial of recovery was ‘almost un-
challenged’ in US law.
60
He said ‘almost’ because he noted a line of cases
in which lawyers were allowed to recover from those whom their work
had benefited when they were unable to enforce their contractual claims.
He was not overly impressed by the ‘success of American lawyers in escap-
ing their self-imposed limitations’;
61
but Canadian lawyers seem to have
taken up the torch. In Giffen, Lee & Wagner v. Zellers Ltd,
62
Zellers was sued
in negligence by another party. The action was taken over by its liability
insurers, who retained the plaintiff law firm. The plaintiffs arranged a ten-
tative settlement and sent an account for $3,220 to the insurer, which by
then had become insolvent. The law firm successfully sued Zellers for this
amount in unjust enrichment. To be fair, there is at least one recent case
allowing recovery where the plaintiff was not, so far as can be discovered,
alawyer.

63
In Peter Birks’s contribution to this volume, he takes the view that the
reason the plaintiff cannot recover in a case like this is that the defendant’s
enrichment is not at the expense of the plaintiff. On the assumptions of
58
Harris v. Nugent (1996) 193 AR 113; 141 DLR 4th 410 (CA); Toronto-Dominion Bank v.
Carotenuto (1997) 154 DLR 4th 627 (CA). See also Nicholson v. St Denis (1975) 8 OR 2d
315; 57 DLR 3d 699 (Ont CA), leave to appeal to SCC refused. This case refused
recovery on the unhelpful ground that there was no ‘special relationship’ between
plaintiff and defendant; but it is still often cited, and the facts are functionally those
of Boudier. For other cases denying recovery, but with a slight factual twist on this
basic pattern, see below, n. 77.
59
Pan Ocean Shipping Co. Ltd v. Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at
166E–F (HL).
60
J. P. Dawson, ‘Indirect Enrichment’, in: E. von Caemmerer, S. Mentschikoff and K.
Zweigert (eds.), Ius Privatum Gentium: Festschrift f
¨
ur Max Rheinstein (1969), vol. II, 789,
805, with citations to US authority; see also J. P. Dawson, ‘The Self-serving
Intermeddler’, (1974) 87 Harvard LR 1409, 1444–50.
61
Dawson, ‘Indirect Enrichment’, 805. The special treatment of lawyers was the
jumping-off point of Dawson’s important article ‘The Self-serving Intermeddler’, and
Dawson returned to the theme in ‘Lawyers and Involuntary Clients: Attorney Fees
from Funds’, (1974) 87 Harvard LR 1597 and ‘Lawyers and Involuntary Clients in
Public Interest Litigation’, (1975) 88 Harvard LR 849.
62
(1993) 15 OR 3d 387 (Gen Div).

63
Taylor (SA) Building Ltd v. Von Muenchhausen (1995) 165 NBR 2d 219; 424 APR 219 (CA).
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the current chapter, though, the plaintiff can prove all of the elements of
his enrichment claim against the defendant, and it is only the presence of
the plaintiff’s contract with another party which bars the claim. In other
words, saying that the enrichment was not at the plaintiff’s expense is just
a conclusion of law which is reached by applying a principle additional
to the basic one that requires only that the plaintiff conferred the enrich-
ment on the defendant.
64
The present chapter is attempting to analyse
this additional principle.
Consider the position on this point in Germany, where the law is abso-
lutely clear: there can be no claim in unjustified enrichment where the
enrichment was conferred pursuant to a contract between the plaintiff
and some other party. As a matter of doctrinal development of the words of
§
812 BGB, German law distinguishes between cases where the enrichment
can be described as a ‘performance’ (Leistung), and cases of enrichment in
any other way. In this context, a performance means an enlargement of
another’s estate which is brought about intentionally and with a specific
purpose in mind.
65
‘The concept of Leistung serves as a compass in this ter-
ritory; once one has found who has performed to whom, one will normally
know the right plaintiff and the right defendant for an action in unjusti-
fied enrichment.’

66
The German rule of subsidiarity is that whenever there
has been a performance, there can be no claim based on enrichment in
any other way.
67
If the plaintiff enriched the defendant pursuant to the
plaintiff’s obligations under a contract with a third party, then there has
been a performance between the plaintiff and the third party. Any enrich-
ment claim by the plaintiff against the defendant is excluded.
68
(ii) Defendant’s contract with a third party
What if it is the defendant who is in a contractual relationship with
some third party, and that relationship contemplates provision of the
64
This is supported by the contributions to this volume of Daniel Visser and Niall
Whitty, both of whom note that the ‘at the expense of’ requirement permits the
imposition of additional policy-driven constraints upon the claim.
65
Zimmermann and Du Plessis, ‘Basic Features’, 25; Markesinis et al., Law of Contracts,
720. The translation ‘performance’ is that of Markesinis et al.; Zimmermann and Du
Plessis translate Leistung as ‘transfer’.
66
Markesinis et al., Law of Contracts, 719.
67
Zimmermann and Du Plessis, ‘Basic Features’, 37, discussing possible exceptions at
37–8; Markesinis et al., Law of Contracts, 723.
68
The German rule operates to exclude the claim even if the plaintiff’s contract with
the third party was void, because the concept of performance does not depend on
the existence of an underlying contract.

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enrichment by the plaintiff ? One feature of this type of case is that even in
the absence of any rule of subsidiarity, the claim may fail as the plaintiff
may be unable to prove that the defendant was enriched. The defendant
will be liable to pay, or will already have paid, the third party under the
contract.
69
On the other hand, in the common law at least, a defendant’s
attempt to deny its enrichment on the basis of dealings with a third party
is usually understood as a matter of defence.
70
This is parallel to the case
of the plaintiff’s contract with a third party;
71
the denial of recovery can
be explained on the basis that the defendant’s enrichment was not ‘at the
expense of’ the plaintiff, but the reasoning behind that conclusion must be
unearthed.
Even though the assumption here is that the plaintiff was not bound
contractually to anyone, this does not mean that the claim against the
defendant is the plaintiff’s only possible recourse. Why might the plain-
tiff have enriched the defendant? Although there are other possibilities,
it is most likely that the plaintiff was attempting to fulfil its obligations
under a contract with some other party which turns out to be void or
unenforceable.
72
This might be the same third party with whom the de-
fendant contracted, or a fourth party. Under German law, since in this

case the plaintiff was making a performance toward his contractual coun-
terparty, his only claim will be an enrichment claim against that coun-
terparty. Quebec law appears to generate the same conclusion. Liability
for unjustified enrichment under article 1493 is defeated if either the de-
fendant’s enrichment or the plaintiff’s impoverishment is justified; under
article 1494, ‘[e]nrichment or impoverishment is justified where it results
69
This point is taken in Dawson, ‘The Self-serving Intermeddler’, 1446–7.
70
See, however, Turf Masters Landscaping Ltd v. TAG Developments Ltd (1995) 143 NSR 2d 275;
411 APR 275 (CA), leave to appeal refused (1996) 151 NSR 2d 240; 440 APR 240 (SCC).
This was a ‘combination’ case as discussed in the next section: the plaintiff and the
defendant both had contracts with the same third party (but not with each other);
the Court’s denial of the claim was based on the non-enrichment of the defendant.
71
Above, 602–4 and n. 64.
72
It seems just possible that a plaintiff might, by mistake, perform the prestation
owing to the defendant under the defendant’s contract with the third party. Assume
that the third party was contractually bound to shovel the snow from the defendant’s
driveway, and the plaintiff, meaning to shovel his own driveway, cleared the
defendant’s. If the defendant is still liable to pay the third party, then presumably
there can be no claim against the defendant, but rather the plaintiff could succeed
against the third party whose contract the plaintiff performed. Alternatively the
plaintiff’s actions might have frustrated the contract between the defendant and the
third party, leaving the way clear (so to speak) for an action against the defendant.
Cf. Markesinis et al., Law of Contracts, 731–2.
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from the performance of an obligation’. So in this case of defendant’s con-
tract with a third party, it could be argued that the defendant’s enrichment
is justified, since it resulted from the performance of the obligation of the
third party.
73
There is no stipulation that the obligation must be owed by
the plaintiff. In the common law, there does not appear to have emerged
any trend toward denying the plaintiff an enrichment claim against the
defendant, but there are very few cases which are not also ‘combination’
cases.
74
(iii) Combinations
Many cases involve a combination of the plaintiff’s contract with a third
party and the defendant’s contract with a third party. It might be that the
plaintiff and the defendant each have a contract, but each has contracted
with a different party. More likely, the plaintiff and the defendant have
each contracted with the same third party, as where a building project
involves a general contractor and sub-contractors. The owner of the site
contracts with the general contractor, and the general contractor con-
tracts with sub-contractors. If the general contractor becomes insolvent,
can the sub-contractors sue the owner in unjustified enrichment? There
will often be legislative solutions to assist the sub-contractors, such as the
possibility of registering a real security interest in the land, or a statu-
tory trust fund of payments made by the owner to the general contractor
which is for the benefit of sub-contractors. Such solutions are motivated
by policies aimed at protecting the sub-contractors, and cannot be seen
as reflecting the general law.
75
Moreover, such remedies cannot affect the
enrichment claim except in a system with a wide-ranging subsidiarity

principle.
76
Since this combination involves both a plaintiff’s contract with a third
party and a defendant’s contract with a third party, it follows that if
73
As noted in Simon Whittaker’s contribution to this volume, however, in the French
legal tradition obligations are viewed as personal to the parties; while the plaintiff
can perform the prestation owing under another’s obligation, it is not clear that the
plaintiff can perform another’s obligation as such. None the less, note that in
discussing the position under the Civil Code of Lower Canada (and in French law),
Challies, Doctrine of Unjustified Enrichment, 104–12, was of the view that no claim could
be made in such a case.
74
Friesen (P. H.) Ltd v. Cypress Colony Farms Ltd (1993) 87 Man R 2d 250 (QB) suggests that
the defendant’s contract with a third party is not a bar.
75
Dawson, Unjust Enrichment, 125. See also his ‘Indirect Enrichment’ 802–3 and ‘The
Self-serving Intermeddler’, 1450–7.
76
In order to deny a claim in unjustified enrichment where the statutory protection
was unavailable, it would also have to be a strong subsidiarity principle.
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either of those configurations denies the plaintiff its enrichment claim,
there can be none. Some recent common-law cases seem to support this
view.
77
Unfortunately, the simple denial of recovery in such a case does
not make clear which of the two contracts is keeping the plaintiff from

recovering.
78
2. Weak subsidiarity
The widest possible principle of weak subsidiarity would provide that a
claim in unjustified enrichment was unavailable where the plaintiff had
any other claim against some defendant. For example, if the plaintiff could
establish all of the elements of an enrichment claim against the defen-
dant, but it transpired none the less that the plaintiff held a tort claim
against some third party, the enrichment claim would be disallowed. No
system seems to have a principle as wide as this. An argument along these
lines was made and rejected for Quebec law under the Civil Code of Lower
Canada.
79
The widest possible version of weak subsidiarity operating inter partes
would say that if the plaintiff has any other claim against the defen-
dant, unjustified enrichment cannot be used. This appears to be the law
of Quebec, in respect of the general enrichment action, because article
1494 of the Civil Code of Quebec provides that enrichment or impoverish-
ment is justified where it results ‘from the failure of the person impov-
erished to exercise a right of which he may avail himself or could have
77
Pan Ocean Shipping Co. Ltd v. Creditcorp Ltd [1994] 1 WLR 161 (HL); Turf Masters
Landscaping Ltd v. TAG Developments Ltd (1995) 143 NSR 2d 275; 411 APR 275 (CA), leave
to appeal refused (1996) 151 NSR 2d 240; 440 APR 240 (SCC); Hussey Seating Co.
(Canada) Ltd v. Ottawa (City) (1997) 145 DLR 4th 493 (Gen Div) affirmed (1998) 41 OR 3d
254 (CA). Writing particularly of the three-party building contract cases in US law,
Dawson, Unjust Enrichment, 1447 said that ‘[t]he decisions, old and new, are lined up
in an unbroken phalanx against restitution recovery’.
78
In Pan Ocean Shipping Co. Ltd v. Creditcorp Ltd [1994] 1 WLR 161 (HL), Lord Goff was of

the view that it was the fact that the plaintiff had conferred the benefit under a
contractual obligation to do so; interestingly, in his comment on the case, Burrows
seems to prefer the view that it was the defendant’s contract that was decisive:
‘Restition from Assignees’, [1994] Restitution LR 52, 55.
79
Cie Immobili
`
ere Viger Lt
´
ee v. Laureat Gigu
`
ere Inc. [1977] 2 SCR 67 at 84. The words of art.
1494, Civil Code of Quebec, that enshrine the weak subsidiarity principle seem
designed to codify this ruling: enrichment or impoverishment is justified where it
results ‘from the failure of the person impoverished to exercise a right of which he
may avail himself or could have availed himself against the person enriched’ (emphasis
added). This interpretation finds favour in J L. Baudouin, Les Obligations (5th edn,
1998), 442.
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availed himself against the person enriched’.
80
A general doctrine of weak
subsidiarity of unjustified enrichment would explain the non-availability
of an enrichment claim where the rei vindicatio subsists, the phenomenon
observed for Germany and Quebec in section II of this article. An argument
has been made that the common law takes a similar line.
81
It would appear that the German version of subsidiarity is not as wide as

that prevailing in Quebec. The reason is that a generalised weak subsidiar-
ity must make unjustified enrichment claims unavailable where there is
a claim based on a wrong. If, as is suggested by the language of article
1494, this is the law of Quebec, then it would be another reason for disal-
lowing an enrichment claim in the case of the stolen horse under Quebec
law.
82
But in German law, unjustified enrichment is not subsidiary to the
law of wrongs.
83
Nor has it been suggested, to my knowledge, that there
is any such subsidiarity in the common law. In these systems, therefore,
a narrower principle applies.
A final point can usefully be addressed before attempting to understand
the reasons for subsidiarity. It relates to prescription. Assume that an un-
justified enrichment claim is subsidiary to another claim; make it a claim
for breach of contract, where the contract has not been terminated by
the breach. Now assume that the contractual claim is prescribed by the
passage of time. Does it still preclude the enrichment claim? The princi-
ple in all systems appears to be that it does.
84
This might be thought to
80
Note, however, that it was held in Willmor Discount Corp. v. Vaudreuil (City) [1994] 2 SCR
210 that a claim for reception of a thing not due is not subsidiary to a claim based
on fault, and there is no reason to think this is not still true under the Civil Code of
Quebec, where reception of a thing not due is codified separately from the general
unjustified enrichment claim, and without any language giving rise to subsidiarity.
81
R. B. Grantham and C. E. F. Rickett, ‘Restitution, Property and Ignorance – A Reply to

Mr Swadling’, [1996] Lloyd’s Maritime and Commercial Law Quarterly 463, 465; see also
J. H. Baker, ‘The History of Quasi-contract in English Law’, in: Cornish et al.,
Restitution, 37 ff., 52.
82
See Pineau et al., Th
´
eorie, 404 (my translation): ‘the action de in rem verso is not
available where the plaintiff has an action arising from a contract, from
extra-contractual fault, from management of the business of another, or from
payment of a thing not due’.
83
Markesinis et al., Law of Contracts, 768.
84
Art. 1494 of the Civil Code of Quebec seems clear on this point; the claim in
unjustified enrichment is denied if the situation arises from the failure of the
plaintiff to exercise a right ‘of which he may avail himself or could have availed
himself’; this is in line with what the law was understood to be under the Civil Code
of Lower Canada; Cie Immobili
`
ere Viger Lt
´
ee v. Laureat Gigu
`
ere Inc. [1977] 2 SCR 67;
Loungnarath v. Centre Hospitalier des Laurentides [1996] RJQ 2498, per Chamberland J.
Common-law authority on the point goes the same way: Luscar Ltd v. Pembina Resources
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property, subsidiarity and unjust enrichment 609
indicate a relationship of strong subsidiarity, since the claim in unjusti-

fied enrichment is denied even though the other is unavailable. Conversely
it might be thought to be inconsistent with a relationship of weak sub-
sidiarity; that only operates when there is another viable claim. It does,
however, seem possible to reach this result even if the relationship is one
of weak subsidiarity. This involves treating the case of a prescribed claim
in the same way as a viable claim, rather than treating it like the situation
where the substantive elements of the claim cannot be established.
85
It
appears therefore that conclusions about the nature of the subsidiarity
relationship cannot be drawn from the treatment of prescribed claims.
IV. Understanding subsidiarity
1. A model of subsidiarity
The preceding comparative study suggests that subsidiarity is a general
feature of the law of unjust enrichment, although the strength of the
subsidiarity principle varies widely from system to system and even within
each system. This section is an attempt to understand what might justify
this variation in subsidiarity. This chapter is not primarily concerned with
the way in which subsidiarity is worked out in doctrinal terms. A claim
may be denied in one system due to a recognised principle of subsidiarity;
in another, it may be denied because the defendant’s enrichment is said
not to be at the plaintiff’s expense. The concern here is with making sense
of the results, in terms of principle.
It does not appear that strong subsidiarity can be justified by a desire for
orderliness in general legal categories. If claims exist, it is presumably to
meet the demands of justice, and therefore any principle which will deny
an otherwise existing claim must be one with more normative weight
than this.
86
It might be possible to understand weak subsidiarity in this

way, since weak subsidiarity only orders claims and cannot exclude them.
Even here, however, substantive rights are affected and one would hope
for a better justification.
87
Ltd (1994) 24 Alta LR 3d 305; [1995] 2 WWR 153 (CA), §§ 117, 120, leave to appeal
refused [1995] 3 SCR vii. See also E. Schrage, ‘Restitution in the New Dutch Civil
Code’, [1994] Restitution LR 208, 220–1.
85
Art. 1494, cited in the previous note, arguably does exactly this.
86
Nicholas, ‘Unjust Enrichment’, 2039–40.
87
Rights are affected in some sense when a claim in unjustified enrichment is barred
even if another claim is available. Moreover, even weak subsdiarity can prevent a
claim in unjustified enrichment when the other claim has prescribed (above, 608–9),
which obviously has a substantial effect on the plaintiff’s legal position.
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Another possible justification might be the general principle that the
specific overrides the general. This certainly comes to mind when con-
sidering how codified systems make the general unjustified enrichment
claim strongly subsidiary to a more specific regime. This result can be seen
to derive directly from the implied intention of the legislature; but the
same principle could be deployed in a wider way, if unjustified enrichment
claims could somehow be understood as more general in their application
than such things as the terms of a specific contract. A well-known feature
of the French legal tradition is its refusal to allow concurrent liability in
contract and in delict, which may be understood as based on a philosophy
that the specific terms of a particular contract should govern in prefer-

ence to a general law of fault, especially one so general as is usual in the
French tradition. But this understanding would explain too much and too
little at the same time. It would explain too little, because there are el-
ements of strong subsidiarity for unjustified enrichment claims even in
systems, such as German law and the common law, which have no gen-
eral aversion to concurrent liability. It would explain too little, because
in the French legal tradition unjustified enrichment claims are subsidiary
(albeit weakly so) even to delictual claims, and it is difficult to see how
this could be explained on the basis that the delictual claim is somehow
more specific than the claim in unjustified enrichment.
What seems to be needed is a conviction that unjustified enrichment
claims serve a corrective role.
88
In the common law, some parts of un-
just enrichment come from Equity, such as the resulting trust. But even
those parts of the law which are rooted solely in the common law can
be said to be derived not from Equity, but from equity. So said the great
common-law judge, Lord Mansfield;
89
and civilian lawyers, who have noth-
ing to do with Equity, also view unjustified enrichment as based on equity.
In both France and Quebec, the need for this corrective was so strongly
felt that a whole head of liability was created by the courts outside the
civil codes, and the basis for this step was
´
equit
´
e.
90
The impetus for the

88
Nicholas, ‘Unjust Enrichment’, 2041–3.
89
Moses v. Macferlan (1760) 2 Burr 1005; 97 ER 676 (KB). See also Baker, ‘History of
Quasi-contract’, 48–9; M. Macnair, ‘The Conceptual Basis of Trusts in the Later 17th
and Early 18th Centuries’, in: R. Helmholz and R. Zimmermann (eds.), Itinera Fiduciae:
Trust and Treuhand in Historical Perspective (1998), 207, 218.
90
J. E. C. Brierley and R. A. Macdonald (eds.), Quebec Civil Law (1993), 464, suggest that
this was the most important extra-codal development under the Civil Code of Lower
Canada. See also Baudouin, Les Obligations, 441 (my translation): ‘The action de in rem
verso exists to remedy unforeseen situations and not to replace existing dispositions
or agreements.’
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property, subsidiarity and unjust enrichment 611
inclusion of a general enrichment action in the BGB came from Otto von
Gierke, who viewed it as equitable in nature.
91
This only means that it is
corrective.
The idea of one part of the law operating so as to correct other parts
of the law is a slightly curious one. It makes sense in relation to laws
which are of different orders, as where a statute is declared void due
to its inconsistency with some constitutional principle. This may be why
some German jurists have, in the past, viewed unjustified enrichment as a
kindofhigherlaw.
92
But paradoxically, to the extent that it is subsidiary,
it is a kind of lower law. In fact, ‘correction’ by a disposition of a higher

legal order is just the natural outcome of that hierarchical structure; the
higher order governs the lower. It is when the parts of the law in question
are of the same order that correction is more difficult to conceptualise.
What follows from the conceptualisation of unjustified enrichment as
corrective of other parts of the law, while yet being of the same order
as those other parts? There is a parallel in that other great corrective
system, Equity. One of the ‘maxims of Equity’ was (or is, depending on
one’s view of such things) that ‘Equity supplements but does not contra-
dict the common law.’ This is, at the same time, fundamentally important
and completely false. It is false inasmuch as any supplementation amounts
to a kind of contradiction. There is no point in having a second, supple-
mentary set of rules unless it changes the outcome which the first set
would give. On the other hand, the maxim is fundamentally important
in the sense that it was the whole basis for the creation of Equity. When
the first chancellors enforced the first uses against legal title-holders, the
suggestion that they were contradicting the common law would have ap-
palled them. They were merely requiring those people to behave according
to good conscience (and telling them what good conscience required). Of
course, Equity developed into a set of legal rules, but the same reasoning
holds: having a second set of rules only makes sense if the second set ‘sup-
plements but does not contradict’ the first set. If one wanted to contradict
the first set, one would just change it. How can the circle be squared? For
one legal regime to correct another, without possessing the authority of
belonging to a higher legal order, it must in a sense go to a lower level;
it must defer, at least nominally, to that which it corrects. Equity corrects
the common law, but it cannot correct too much, or too obviously; the
91
B. Dickson, ‘The Law of Restitution in the Federal Republic of Germany’, (1987) 36
ICLQ 751, 770–1. See also Zweigert and K
¨

otz, Introduction, 561–2.
92
See Zimmermann and Du Plessis, ‘Basic Features’, 24; Dawson, ‘Indirect Enrichment’,
796–7.
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correction cannot lay itself open to the charge of being a contradiction.
93
So, down the centuries to the present day, there are those who want
Equity to do more, and those who want it to do less. Among the latter,
there are concerns about containing it. Another consequence of the cor-
rective nature of Equity is that it is very difficult to define it in any positive
way: you cannot understand what it is without understanding that it is a
corrective, and without having at least some grasp of what it corrects.
94
The parallels with unjustified enrichment are striking. It is a correc-
tive and, just as in the case of Equity, this makes it difficult to define
positively.
95
It can only be understood in the light of that which it cor-
rects. Furthermore, since this corrective regime does not stand higher in
the legal order than that which it corrects, it must not correct so much as
to contradict. Moreover, the concerns with containing unjust enrichment
liability are always to the fore.
96
So the question becomes, what are the
limits? When will correction amount to contradiction? The main difficulty
here is what might be called ‘negative implication’. This name is borrowed
from a doctrine (its status now uncertain) of Canadian constitutional

law.
97
Sometimes it is possible for a provincial legislature and the federal
Parliament both to pass legislation which overlaps in its effects, each level
of government being able to point to jurisdictional powers to justify the
93
Upon the institution of the Judicature Act system, consolidating the two legal
regimes into a single court, it was enacted that in the case of any conflict between
law and Equity, Equity should prevail; and this disposition remains operative in every
jurisdiction which possesses the Judicature Act system. To the modern lawyer this
might seem to indicate that Equity belongs to a higher legal order. Viewing the
matter in a historical light, as captured by the maxim about supplementing without
contradicting, Maitland took the view that this provision is ‘practically without
effect’; apparent conflicts resolve themselves into cases of supplementation. See F. H.
Maitland, Equity: A Course of Lectures (revised by J. Brunyate, 1936), 16–19. By contrast,
if one takes the other perspective, that any alteration of the final result amounts to
contradiction, then Equity is constantly contradicting the law: see W. N. Hohfeld,
‘The Relations Between Equity and Law’, (1913) 11 Michigan LR 537, 543–4.
94
Maitland famously gave up on any positive definition: ‘we are driven to say that
Equity now is that body of rules administered by our English courts of justice which,
were it not for the operation of the Judicature Acts, would be administered only by
those courts which would be known as Courts of Equity. This, you may well say, is
but a poor thing to call a definition’ (Maitland, Equity, 1).
95
Zweigert and K
¨
otz, Introduction, 538.
96
Zimmermann and Du Plessis, ‘Basic Features’, 24, on interpretation of the BGB;

Dawson, Unjust Enrichment, 104, 106 on French law and subsidiarity. Subsidiarity as an
adequacy test provides another parallel to Equity. Containment is a constant concern
in unjustified enrichment, more so than in other fields. See Baudouin, Les Obligations,
441; K. Barker, ‘Unjust Enrichment: Controlling the Beast’, (1995) 11 Oxford JLS 457.
97
See P. W. Hogg, Constitutional Law of Canada (3rd edn, 1992), 423–9.
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act which it has passed. If the two pieces of legislation conflict, the federal
legislation prevails under another doctrine called ‘paramountcy’.
98
But do
they conflict? This is where negative implication might have a role to play.
Here is a simple example.
99
The federal Parliament, under its power over
banking, passed legislation that provided rules for taking and enforcing a
kind of security interest. The provincial legislation, under its power over
property and civil rights in the province, passed legislation that required
formal notice to the debtor before property subject to a security interest
could be seized. The two regimes did not conflict, because it was perfectly
possible for a bank to comply with both the federal and the provincial
rules. But the doctrine of paramountcy was held to apply. In passing its
legislation, the federal Parliament implied certain things, including that
seizure could not be made more difficult by a notice requirement. The
provincial legislature must avoid conflict not only with what the federal
Act says, but with what it implies is not to have anything said about it. It
is as though the federal Act casts a shadow beyond its express provisions,
which the province must not enter. One expression sometimes used is that

the federal Parliament has ‘occupied the field’.
If this framework can be used to understand subsidiarity, then to dif-
ferent extents, corresponding to different conceptions of subsidiarity, the
law of unjustified enrichment is not supposed to contradict the effects
of other legal institutions. Weak subsidiarity sees a contradiction only
where another recourse actually exists. Strong subsidiarity incorporates
the idea of ‘negative implication’, so that in assessing whether or not
there is a contradiction, one must determine the extent to which other
legal institutions cast shadows which unjustified enrichment cannot en-
ter. Unjustified enrichment must yield to the positive dispositions and
also to the negative implications of those other legal institutions.
2. Implications of the model
First, apply this concept to the phenomenon, discussed earlier, of the
exclusion of unjustified enrichment claims by statutory implication. A
statute makes a contract unenforceable. Can the plaintiff claim in un-
just enrichment for benefits transferred? The question here is whether
the policy that made the contract illegal or unenforceable excludes the
enrichment claim. In other words, do the provisions which nullify the
contract cast a shadow over the law of unjustified enrichment as well?
98
The provincial legislation is still valid, because by assumption it was competent to
the provincial legislature; but its effects are suspended.
99
Based on Bank of Montreal v. Hall [1990] 1 SCR 121; 65 DLR 4th 361.
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Have they occupied the field? Here the relationship between the statute
and the enrichment claim is clear, because these dispositions are of dif-
ferent legal orders. In other areas the matter may be less clear.

(a) Unjust enrichment and contract law
The comparative study above suggested that all legal systems make unjus-
tified enrichment strongly subsidiary to the law of contract: the existence
of a contractual regime can exclude an enrichment claim, even where
there is no contractual claim. On the present analysis, this means that
unjustified enrichment is viewed as in some sense corrective of contract.
Or, perhaps more precisely, unjustified enrichment is corrective of some-
thing with which contract tends to deal; so that if contract does deal with
it, there is no room for correction. Can this case be made? There are many
ways of understanding what contract is about. Maybe it is about keeping
promises, maybe it is about wealth maximisation, maybe it is about rea-
sonable reliance. But on any view, it seems, contract is about the transfer
of benefits, in the sense that what people do, or promise to do, under
contract is thought by the other party to the contract to be of some ben-
efit. Unjustified enrichment, at least over much of its range, is about the
reversal of non-consensual transfers of benefits.
100
If contract law deals
with the consensual transfer of benefits, it makes sense that unjustified
enrichment, dealing with defective or non-consensual transfers, should
stand in a corrective and subsidiary role to contract.
101
Clearly, between the parties to the contract, the contract casts a long
shadow. It occupies the field relating to the transfer of benefits within
the contractual framework. The length of the shadow which is cast is
a matter of interpreting the contract to decide whether or not it dealt
with the benefit in issue, even if only in a negative way. In Hoffman v.
Sportsman Yachts Inc.,
102
the plaintiff was buying a boat from the defendant

100
In the framework developed by P. B. H. Birks, An Introduction to the Law of Restitution
(revised edn, 1989), reasons why enrichments are unjustified fall into three
categories. In most cases it is because the plaintiff’s consent to the transfer was
impaired in some way. In some cases it is because the defendant’s receipt was
unconscientious, and in some others it is because of a reason of policy which does
not depend on the position of either party to the transfer. In the other systems there
is no doctrinal framework of ‘unjust factors’, but it is true (although it may be a
matter of defence) that there can be no recovery if the plaintiff had an unimpaired
desire to make the transfer:
§ 814 BGB; Civil Code of Quebec, art. 1494, closing words.
101
In Pan Ocean Shipping Co. Ltd v. Creditcorp Ltd [1994] 1 WLR 161 at 164F, Lord Goff used
language which strongly suggested that the law of unjustified enrichment and the
parties’ contract are on different legal orders: ‘as between shipowner and charterer,
there is a contractual regime which legislates for the recovery of overpaid hire’
(emphasis added).
102
(1992) 89 DLR 4th 600.
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for $174,345. There was a term which provided for the price to rise, and
on delivery the defendant relied on this and demanded $202,500. The
plaintiff paid but then sued to recover the difference of $28,155, arguing
that the term was not enforceable. For reasons that are immaterial here,
the judge agreed that the contract had to be read without this term. So
amended, the contract had nothing to say about the extra $28,155. One
of the things which the contract was very much about was the price of
the boat. But, without the disputed term, the $28,155 was not referable

to the price even though it was paid as part of the price. It was therefore
recoverable. If that result seems obvious, recall Rillford Investments Ltd v.
Gravure International Capital Corp.
103
The plaintiff conferred a benefit long
after the contract between the parties had ended, but the Court held that
the contract ‘contemplated the possibility that the plaintiff would receive
no compensation if the defendant was enriched by virtue of the sale of his
business beyond the time of the expiry of the agreement’. This is clearly
an example of negative implication.
So sometimes a claim in unjustified enrichment may be denied even
where there is no continuing contractual tie between the parties. The
consensual distribution of risks and benefits can continue to govern, ex-
cluding unjustified enrichment, even when the contract has ceased to
operate. Conversely, there might be cases where a claim would be allowed
even though the matter was governed by a contract. If the plaintiff owed
the defendant
£50 for work done, and the plaintiff paid when the de-
fendant threatened him with personal violence, it might well be that the
money would be recoverable. The matter is governed by a contract, but the
consensual distribution of risks and benefits did not contemplate personal
violence, and so the unjustified enrichment claim is not excluded.
It begins to appear that unjustified enrichment is not actually subsidiary
to contract law. Rather, it is excluded by an operative distribution of risks
and benefits. To say that there can be no claim in unjustified enrichment
so long as there is a subsisting contract is to make a slightly inaccurate
generalisation by aiming at a false target. A subsisting contract usually
corresponds to an operative distribution of risks and benefits, but the
examples above show that it does not always do so. What implications
does this understanding have for the situations discussed above, where

the contract is not between plaintiff and defendant but between one
(or both) of them and some other party? Can the bargain cast a shadow on
third parties? The case of the plaintiff’s contract with a third party seems
to be within the principles being discussed here. The plaintiff is party to
103
(1997) 118 Man R 2d 11; [1997] 7 WWR 534 (CA).
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a regime governing the conferral and receipt of benefits, and that regime
remains in force. An enrichment claim against a third party would con-
tradict that regime if the contract is understood in this way: in providing
for some counterperformance for what the plaintiff had done, the con-
tract negatively implies that there is to be no other right of payment. The
common law may therefore be on the right track in moving, as it seems
to be, towards a rule excluding enrichment claims in this situation. The
common law has a strong commitment to privity of contract: to say that a
contract between the plaintiff and a third party affects the legal position
between the plaintiff and the defendant, who is not a party to the con-
tract, might be thought to contradict that. In fact, the privity argument
cuts both ways: nobody should have to pay for benefits conferred under a
contract to which he was not a party.
104
But in the end privity seems to
be irrelevant, since it is about controlling contractual liability.
The question has been examined most carefully by German jurists:
in German law contracts cast shadows over third parties. The doctrinal
reason is that where the plaintiff has rendered a performance (Leistung),
no enrichment claim can be brought except against the person who re-
ceived the performance. Thus, where the plaintiff enriched the defendant

pursuant to the plaintiff’s contract with a third party, the plaintiff has
no enrichment claim. Moreover, in German law this applies even if the
plaintiff’s contract is void. His actions still count as a performance and
have the same effect. The applicable policies have been elucidated by
German jurists, in particular Claus-Wilhelm Canaris. He formulated three
principles governing the availability of third-party enrichment claims in
a contractual context.
105
These are said to apply where two parties have
tried to contract, successfully or not. One principle is that the parties
should bear the risk of insolvency of their chosen counterparty. Moreover,
the parties should be able to rely upon, and to be bound by, the defences
they have against one another. These are the reasons why plaintiffs are
not allowed to make claims against third parties. Such claims would be a
way of avoiding the effects of the insolvency of their chosen counterparty,
or of avoiding his defences. While this learning is very instructive, it is
inconsistent with the view which appears to be emerging in the common
law, to the effect that void contracts can have no influence on the law
of unjust enrichment.
106
The difference between the two systems can be
104
Dawson, Unjust Enrichment, 104–5.
105
Discussed in Markesinis et al., Law of Contracts, 732–3.
106
See, for example, Rover International Ltd v. Cannon Films Sales Ltd (No. 3) [1989] 1 WLR
912 (CA).
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property, subsidiarity and unjust enrichment 617
understood in this way. German law gives effect to the parties’ transaction
as creating and distributing certain risks in relation to the transfer of
a benefit, even if the transaction fails to create a contract; and these
effects are sufficient to exclude the corrective law of unjust enrichment.
The common law takes the voidness of the contract to exclude any legal
effects whatsoever.
The German approach might well be considered more sophisticated in
this regard. It was noted above that, even within the common law, it
is inaccurate to say that unjust enrichment claims are excluded by con-
tract. That statement is, in extreme cases, both too wide and too narrow.
The point can be further tested by recalling the example of the building
project. The owner contracts with the general contractor, and the gen-
eral contractor contracts with the sub-contractor. Can the sub-contractor
sue the owner in unjustified enrichment? Surely not, if both contracts
are valid; and the same result must follow if both were valid, but are
now terminated by complete performance on both sides. By imagining
that one or both of the contracts is void it is possible to test what really
bars the action. German law will reply that the sub-contractor can never
sue the owner in unjustified enrichment even if both contracts are void;
and the theoretical underpinnings for that position seem formidable.
The position in Quebec makes an interesting contrast. Under the Civil
Code of Lower Canada, following French law, it would appear that the
plaintiff who had a contract with a third party could not prima facie
sue the defendant in unjustified enrichment. This result was superseded,
however, in the case in which it mattered most: when the third party
was insolvent. This was the situation in the root case of the whole body
of jurisprudence.
107
It was sometimes explained doctrinally by saying that

the action de in rem verso was not subsidiary to another claim if there was
a factual obstacle to that other claim.
108
To the extent that the insolvency
policies discussed above are accepted, however, this result seems difficult
107
The Boudier decision, Req. 15 June 1892, S 1893.1.281 note Labb
´
e, DP 1892.1.596.
108
This was opposed to a legal obstacle, such as prescription or inability to make out
the elements of the other claim. See P. Drakidis, ‘La “subsidiarit
´
e”, caract
`
ere
sp
´
ecifique et international de l’action d’enrichissement sans cause’, (1961) 59 Revue
trimestrielle de droit civil 577, 586–7, 613. For recovery in Quebec in the same situation,
see Challies, Doctrine of Unjustified Enrichment, 139. Italian law followed the French law
in this regard: Zweigert and K
¨
otz, Introduction, 550; Nicholas, ‘Unjust Enrichment’,
2038–9. Nicholas notes that Italian writers distinguish between an ‘abstract’ and a
‘concrete’ understanding of subsidiarity; the ‘concrete’ understanding allows the
claim in unjustified enrichment where the other claim is useless due to insolvency
or prescription.
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618 lionel smith
to justify. The wording of article 1494 of the Civil Code of Quebec appears
apt to alter this result for the future in providing that ‘[e]nrichment or
impoverishment is justified where it results from the performance of an
obligation’.
109
The analysis based on a consensual distribution of risks can also be used
to deal with another point. In Kleinwort Benson Ltd v. Lincoln City Council,
110
the House of Lords allowed a claim based upon mistake of law, even though
the swaps transaction under which the payments had been made was fully
executed. One of the arguments by which the defendants tried to resist
payment was based upon the logic of mistake. It was said that in such a
case, the force of the mistake was spent.
111
The argument in those terms
was rejected, as it had been in earlier litigation where the claim was based
on failure of consideration.
112
In other words, the ‘executed transaction’
defence does not seem to work when it is tied into the logic of unjust
factors. A mistake is a mistake, and a failure of consideration remains one,
even where the transaction is fully executed. If it is recognised that unjust
enrichment is excluded by the existence of an operative distribution of
risks and rewards, that could be used to build an independent principle
which excluded claims in such cases. The distribution of risks was fully
realised, leaving no room for unjust enrichment. This, of course, would
also depend on following the German lead in recognising that such an
effect can occur even where the contract embodying the distribution is
void.

This argument is not intended to imply that Kleinwort Benson itself was
wrongly decided, but the result may turn on the fact that the defendant
was a public body which lacked capacity to enter into the transaction.
Allowing restitution can be seen as necessary to give full legal effect to
that lack of capacity, which is imposed as a protection for the defendant’s
constituents.
113
This permits a final point to be made. The argument in
109
Some commentators and judges, however, appear to take the view that the
distinction between factual and legal obstacles remains relevant: Pineau et al., Th
´
eorie,
406–7; Pavage Rolland Fortier Inc. v. Caisse Populaire Desjardins de la Plaine [1998] RJQ 1221
at 1227, citing French doctrine.
110
[1999] 2 AC 349; [1998] 4 All ER 513.
111
The argument was built on points made in P. B. H. Birks, ‘No Consideration:
Restitution After Void Contracts’, (1993) 23 University of Western Australia LR 195, 230,
n. 137.
112
Guinness Mahon & Co. Ltd v. Kensington and Chelsea Royal LBC [1999] QB 215 (CA).
113
See Lord Goff at [1998] 3 WLR 1126–7; Lord Hope at 1153H. Birks himself has now
made this point: P. B. H. Birks, ‘Restitution at the End of an Epoch’, (1999) 28
University of Western Australia LR 13, 37–9; see also L. D. Smith, ‘Restitution for Mistake
of Law’, [1999] Restitution LR 148, 157.
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property, subsidiarity and unjust enrichment 619
this section has been that subsidiarity in the context of contracts turns
on the idea that a relevant consensual distribution of risks and rewards
ousts unjustified enrichment, to the extent that the latter is based on
non-consensual transfers of benefits. The discussion of Kleinwort Benson
Ltd v. Lincoln City Council emphasises that, in some cases, liability in un-
justified enrichment is not based on the defective consent of the plaintiff
to the transfer of wealth in question.
114
If this argument is correct, then
in exactly those cases one should expect to find that the existence of any
consensual distribution of risks and rewards cannot exclude liability in
unjustified enrichment.
(b) Unjust enrichment and property law
This section turns to the interaction between the law of unjustified en-
richment and actions which vindicate property rights. The earlier anal-
ysis suggested that enrichment claims are subsidiary to the rei vindicatio
in German and Quebec law. As was mentioned above, unjustified enrich-
ment, in the widest sense, is about the reversal of defective transfers of
value. Some such transfers are by way of services, but many are by way of
transfers of property. It therefore seems justifiable to say that one func-
tion of unjustified enrichment is as a corrective of property transfers,
which would suggest that unjustified enrichment would be subsidiary to
actions that vindicate property rights. As was mentioned above, this has
been suggested as the common-law position, but the matter is far from
clear.
115
It is complicated by the absence of any rei vindicatio for move-
ables in the common-law system. Property in moveables is protected by
the law of wrongs, and it is not suggested that unjust enrichment is sub-

sidiary to the law of wrongs. On the other hand, there is a rei vindicatio
for immoveables, and it may well be that a claim in unjust enrichment,
measured by the value of ownership of an immoveable, would not lie
where the plaintiff still held ownership of the immoveable.
116
Similarly,
Equity can provide the equivalent of a rei vindicatio in the form of a dec-
laration of trust and consequential orders, and it has been held that no
claim in unjust enrichment lies where the plaintiff retains his Equitable
ownership of the transferred asset.
117
In other words, wherever a rei vin-
dicatio is potentially available, its actual availability seems to preclude
unjust enrichment.
114
See n. 100.
115
Grantham and Rickett, ‘Reply to Swadling’, 465.
116
Baker, ‘History of Quasi-contract’, 52.
117
Portman Building Society v. Hamlyn Taylor Neck [1998] 4 All ER 202 (CA).
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620 lionel smith
Is the subsidiarity strong or weak? Although unjustified enrichment
can be understood as corrective of property dispositions, their interaction
does not seem to generate the same concerns about ‘negative implication’
as does the interaction of unjustified enrichment and contracts. The pres-
ence of a rei vindicatio may exclude an enrichment claim – this is weak

subsidiarity – but the absence of any claim that vindicates property will not
generally do the same. In other words, the fact that property has passed to
the defendant does not, by itself, generally exclude an enrichment claim.
While a contract creates a regime for the consensual transfer of benefits,
a property transfer is not so much a regime as it is an event, albeit one
which may occur within a contractual regime. As a result, a transfer of
property does not in itself cast a shadow that excludes unjustified en-
richment; any such shadow is cast by the context in which the transfer
is made. A transfer of property made outside any contractual context is
commonly the very occasion for an unjustified enrichment claim, aimed
at the recovery of the property or its value.
If unjustified enrichment is generally only weakly subsidiary to prop-
erty transfers, there is one apparent exception. Assume that the plaintiff
transfers possession of a thing to another party, X, while retaining owner-
ship. X then transfers possession to the defendant, in circumstances which
give the defendant ownership of the thing, without the plaintiff’s consent.
Here the plaintiff has lost ownership, and the defendant has acquired it;
but any claim in unjustified enrichment will be excluded.
118
Theruleby
which the defendant acquired ownership here casts a shadow which neg-
atively implies that there may be no enrichment claim. But this exception
is more apparent than real. The acquisition of ownership by the defen-
dant in such a case is not merely an event; it is also part of a transaction
between the defendant and X. This activates the considerations discussed
in the previous section. The rule that gives ownership to the defendant
is designed to protect the transaction between the defendant and X, and
this protection ousts the plaintiff’s enrichment claim.
The position in the common law (understood broadly so as to include
Equity) is also complicated by the existence of trusts raised to reverse

118
For the common law, see Smith, ‘Unjust Enrichment, Property and the Structure of
Trusts’, (2000) 116 LQR 412–44; for German law, K. Z
¨
ulch, ‘Lipkin Gorman in German
Law’, in: W. Swadling (ed.), The Limits of Restitutionary Claims: A Comparative Analysis
(1997), 106, 116–19. In Quebec the same result must follow from the requirement
(art. 1493) that a claim will not lie if either the plaintiff’s impoverishment or the
defendant’s enrichment is justified; here the defendant’s enrichment would be
justified by the rule of law giving him ownership.
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property, subsidiarity and unjust enrichment 621
unjustified enrichment. On the face of it, this phenomenon seems clearly
inconsistent with any relationship of subsidiarity between unjust enrich-
ment and claims protecting property. But on further examination, this
does not appear to be the case. If an asset is transferred at common
law in circumstances which amount to an unjustified enrichment of
the defendant, the common law will allow a personal claim to recover
the value. The common law, viewed on its own, is like a civilian sys-
tem in this regard; the law of unjust enrichment may step in to correct
(but not to contradict) the property transfer, by creating an obligation.
There is no difficulty about subsidiarity, because there is no rei vindicatio.
Equity, however, adds another layer of correction to the analysis. It has
long been established that the principle of non-contradiction which oper-
ates between common law and Equity does not prohibit interfering with
common-law ownership; that is the basis of all uses and trusts. Nor does it
prohibit the addition of Equitable proprietary rights to common-law per-
sonal rights. Unjust enrichment as it operates through Equity has different
tools at its disposal from unjust enrichment operating through common

law.
(c) Unjust enrichment and wrongs
Finally, the law of wrongs. In the German system and the common law,
there is no general subsidiarity principle between wrongs and unjustified
enrichment. The inference is that, for these systems, there is no sense
in which unjustified enrichment stands in a corrective relationship to
the law of wrongs; they do not deal with the same kind of matter.
119
Wrongs are not, in general, concerned with transfers of benefits. But this
brings us to the widest subsidiarity principle, which applies to the general
enrichment action in Quebec. If the plaintiff has a claim based on extra-
contractual fault, or even used to have one which has now prescribed,
it appears that there can be no general enrichment action. The gener-
ally subsidiary character of the general unjustified enrichment claim in
Quebec law suggests that its relationship to all other parts of the legal
system is conceived as a corrective one.
It is difficult to understand how it can be thought to have this rela-
tionship to the law of wrongs, but a historical explanation seems best.
The general enrichment action in the form of the actio de in rem verso
was an extra-codal development. This lent it a generally subsidiary air; in
119
Nicholas, ‘Unjust Enrichment’, 2043–4.