AuthorYIP Man LLB (Hons) (National University of Singapore), BCL (Oxford); Advocate and Solicitor (Singapore); Assistant Professor of Law, School of Law, Singapore Management University. YEO Tiong Min SC (honoris causa) LLB (Hons) (National University of Singapore), BCL, DPhil (Oxford); Advocate and Solicitor (Singapore); Yong Pung How Professor of Law, School of Law, Singapore Management University.
Published date01 December 2013
Date01 December 2013

22.1 In recent times, the Court of Appeal has handed down significant landmark decisions in the law of contract and torts. It is timely that it should finally turn its attention to a long-orphaned and until recently much-neglected part of the law of obligations: restitution and unjust enrichment. The year under review was highly significant and impactful in this respect. The Court of Appeal in three cases examined some fundamental questions relating to the law of restitution, including the relationship between restitution and unjust enrichment, unjust enrichment and equitable wrongs, and personal and proprietary claims.

Modernising the law of restitution and unjust enrichment

22.2 The Court of Appeal in Alwie Handoyo v Tjong Very Sumito[2013] 4 SLR 308 (‘Alwie Handoyo’) (discussed further below at paras 22.6–22.8 and 22.20–22.23) made several important general observations on the law of restitution that all litigators should take careful note of. First, it warned (at [123]) that caution should be exercised when interpreting older cases, especially those predating the seminal House of Lords decision in Lipkin Gorman v Karpnale Ltd[1991] 2 AC 548 (‘Lipkin Gorman’) which had recognised for the first time the principle of unjust enrichment as an independent source of obligations in the law. The court warned that it would be dangerous to read earlier cases as laying down principles that only came to be established and recognised much later.

22.3 Secondly, the court highlighted (at [124]–[125]) that the pleading of ‘money had and received’ did not state a cause of action. It was historically a form of action which left the basis of the claim unexplained. The court opined that ‘the underlying basis for the action for money had and received is now embraced under the rubric of unjust enrichment’, relying on Westdeutsche Landesbank Girozentrale v Islington London Borough Council[1996] AC 669 at 710. This observation of the court must be read in perspective; the court was only concerned with one class (albeit a large one) of actions pleaded under ‘money had and received’. Lord Browne-Wilkinson (at 710) only went so far as to reject implied contract as the basis of the claim in money had and received. While many cases previously pleaded under this head would now be classified as claims based on unjust enrichment, it would nevertheless be erroneous to equiparate‘money had and received’ with ‘unjust enrichment’. For example, there are also claims based on unjust enrichment which have been pleaded under other counts in indebitatus assumpsit (the historical class of cases based on an implied promise to pay which included the ‘money had and received’), eg, money paid to the use of the defendant (where a third party's receipt of money benefits the defendant), and quantum meruit (where the defendant receives services). Conversely, there have been claims historically labelled ‘money had and received’ which would not today be regarded as based on unjust enrichment, for example, the claim for money owed under a foreign judgment (Walker v Witter(1778) 1 Dougl 4; 99 ER 1), and the claim by a bona fide bearer of a promissory note made payable to bearer against the maker of the note: Grant v Vaughan(1764) 3 Burr 1516; 97 ER 957.

22.4 Thirdly, the court (at [126]) explained the relationship between ‘restitution’ and ‘unjust enrichment’: ‘restitution’ describes a response to an event, and the relevant response in this area of the law is the unjust enrichment of the defendant at the expense of the plaintiff. The response of the law is to reverse the unjust enrichment. The court distinguished this category of cases from cases involving restitution in response to wrongs, ie, torts, breaches of contract and breaches of fiduciary duty. The court called for more precise use of this terminology to ameliorate the uncertainty in this nascent area of the law.

22.5 In the context of the third point, Quality Assurance Management Asia Pte Ltd v Zhang Qing[2013] 3 SLR 631 is instructive. It did not deal with the law of unjust enrichment as such, but had to do with the issue of equitable compensation for losses suffered by an employer as a result of an employee's breach of fiduciary duty. In the course of analysis, however, Vinodh Coomaraswamy JC (as he then was) helpfully distinguished different senses in which ‘restitution’ has been used in the law. He observed that the court was not concerned with (specific) restitution of property in the sense of restoration of property to its rightful owner, or with restitution to reverse an unjust enrichment at the expense of the plaintiff. Instead, in the context of equitable compensation, the court was concerned with restitution in the sense of ‘recompense for injury or loss’: at [34]. This is a timely reminder to be clear about the underlying concept whenever one is dealing with an issue of ‘restitution’.

Unjust enrichment and contract

22.6 The Court of Appeal in Alwie Handoyo upheld the principle that it will not allow a claim based on unjust enrichment to subvert a valid and existing contract, relying on leading Commonwealth cases of Pan Ocean Shipping Co Ltd v Creditcorp Ltd[1994] 1 WLR 161, Lumbers v W Cook Builders Pty Ltd(2008) 232 CLR 635 and MacDonald Dickens & Macklin v Costello[2012] QB 244. The facts of the case are complex, but the gist that is relevant to the restitutionary claim can be simply stated. The plaintiff had entered into an agreement to sell certain shares to X, and the contract stipulated that X had to make certain payments to Y. The High Court (Tjong Very Sumito v Chan Sing En[2012] 3 SLR 953) had held that Y had received the payments as agent for the plaintiff, and allowed the plaintiff's claim against Y in unjust enrichment. The Court of Appeal reversed the finding of agency as a matter of construction of the contract and the surrounding circumstances. On this basis, the court held (at [109]) that the unjust enrichment claim failed simply because the payment made by X to Y was pursuant to contractual obligations, and allowing the claim would subvert the allocation of risk in the contract; the plaintiff's recourse in relation to the contract was against X in accordance with the contract.

Lawful receipt

22.7 On the facts of Alwie Handoyo, the Court of Appeal, relying on Andrew Tettenborn, ‘Lawful Receipt – A Justifying Factor’[1997] RLR 1, further held (at [110]) that in any event Y had not been unjustly enriched in the first place, because a defendant cannot be regarded as having been unjustly enriched if he has lawfully received a benefit from a third party when the benefit was the unencumbered property of the third party.

22.8 It is not clear where ‘lawful receipt’ fits into the conceptual scheme of analysis. The court explained it on the basis that there was no unjust enrichment. Presumably, the court meant that the enrichment was not unjust because there can be no doubt that the defendant had been enriched. Tettenborn classifies it as a defence, which may not be inconsistent with the Court of Appeal's view because the author considered it as a defence which justifies the enrichment. Another way of looking at it is that the plaintiff cannot establish that the enrichment was at the plaintiff's expense in such cases. Indeed, this proposition is entirely consistent with the proposition the Court of Appeal upheld in Wee Chiaw Sek Anna v Ng Li-Ann Genevieve[2013] 3 SLR 801 (‘Anna Wee’) that in indirect enrichment cases the nexus for establishing enrichment ‘at the expense of’ the plaintiff must be a proprietary one, or at least linked to the plaintiff's assets (see below, paras 22.13–22.14).

At the expense of

22.9 Anna Wee is one of the landmark judgments of the year – noteworthy for its in-depth discussion of many aspects of the law of unjust enrichment. One aspect that has been clarified by the Court of Appeal is the ‘at the expense of’ element.

22.10 The essential facts of Anna Wee may be simply stated. The plaintiff sued her (deceased) ex-husband for fraudulently misrepresenting the value of his assets at the time of their divorce, resulting in her agreeing to forgo applying for statutory division of matrimonial property. She later discovered that he had earned substantial moneys that were settled on trusts. As such, she also sought restitution against the trustee (who held two of the trusts) for receiving moneys that would have gone to her had she not forgone asset division in the first place, claiming that a remedial constructive trust be imposed over the moneys which she would have been entitled to. Both claims failed. Specifically on the claim in unjust enrichment, the plaintiff was unable to establish the elements of ‘at the expense of’ and a relevant unjust factor. We shall return to the unjust factor below (see discussion below at paras 22.15–22.16 and 22.19).

Correspondence of loss and gain

22.11 At a general level, it is noteworthy that the Court of Appeal had described (at [109]) the law of unjust enrichment as being focused on ‘the claimant's loss or deprivation’, a description that might lend itself to be interpreted as endorsing the view that unjust enrichment requires a correspondence between the plaintiff's loss and the defendant's gain. Where the enrichment is money, the correspondence is exact, but more difficult issues arise where the enrichment concerned is non-monetary in nature. The resolution of this question has important implications for the law of unjust enrichment, including the divide between restitution for unjust enrichment and restitution for wrongs as well as the measure of restitution. Endorsing a correspondence view of ‘at the expense of’ might also revive the defence of passing on under Singapore law, which had been previously rejected (at least for private law claims) by the Court of Appeal in Management Corporation Strata Title Plan No 473 v De Beers Jewellery Pte Ltd[2002] 1 SLR(R) 418. Central to this...

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