Restitution

• Author: YIP Man LLB (Hons) (National University of Singapore), BCL (Oxon); Advocate and Solicitor (Singapore); Associate Professor of Law, School of Law, Singapore Management University.
• Published date: 01 December 2019
• Citation: (2019) 20 SAL Ann Rev 647
• Publication year: 2019
• Date: 01 December 2019

I. Introduction

24.1 The 2019 cases on restitution examined a broad range of topics in the law of unjust enrichment and restitution, with a high concentration of the decisions being concerned with the recoverability of payments made in anticipation of events that did not ultimately realise. Of the 11 decisions that are examined in this chapter, most involved disputes arising in the commercial context. Notably, two were handed down by the Singapore International Commercial Court presided by International Judges ruling on restitutionary issues under Singapore law. It is thus fair to say that the law of restitution has a role in the regulation of commercial life, even as contract continues to be the primary regulator. For this reason, the continued development and clarification of the principles of restitution under Singapore law is an important project.

II. Pleading a claim in unjust enrichment

24.2 An important lesson that has emerged from four High Court decisions is that the party invoking a claim in unjust enrichment must plead the facts which give rise to the claim and in particular, it must identify a relevant unjust factor that grounds the claim. A failure to do so will be fatal to the claim.

24.3 In MSP4GE Asia Pte Ltd v MSP Global Pte Ltd1 (“MSP4GE”), the dispute concerned the plaintiff's payment of a deposit to the defendant for the purpose of making a subsequent order of products which, according to the plaintiff, was never placed. The plaintiff thus demanded the return of the deposit payment. The plaintiff's claim in unjust enrichment was rejected for failing to plead the relevant facts to explain how the constituent elements of the claim (enrichment, at the expense of and unjust factor) were established in the case. The plaintiff merely asserted that the defendant was unjustly enriched. Interestingly, the court added that had the plaintiff taken greater pains in the pleadings, the unjust

enrichment claim might have succeeded.2 In this connection, the court, whilst acknowledging that it might be possible to do so, refused to infer that the claim was founded upon the ground of failure of consideration because it was not fleshed out in the plaintiff's pleadings.3

24.4 Similarly, in Red Star Marine Consultants Pte Ltd v Personal Representatives of the Estate of Satwant Kaur d/o Sardara Singh, deceased4 (“Red Star Marine”), the plaintiff “simply asserted that the defendants were liable to it in unjust enrichment”, without identifying a recognised unjust factor to support the cause of action.5 The court said that this omission was fatal to the claim.6

24.5 Red Star Marine was followed in Mookan Sadaiyakumar v Kim Hock Corp Pte Ltd.7 The defendant failed to identify a recognised ground of restitution in its pleadings to support its counterclaim in unjust enrichment against the plaintiff. On a generous reading of the defendant's pleadings, the court was of the view that the defendant relied on the “absence of basis” as an unjust factor, which is not presently recognised under Singapore law.8 As such, the counterclaim was unsuccessful.

24.6 In the fourth case, Ahmad Ebrahim s/o S M E Mohamed Sadik v Ilangchizian Manogaran,9 the plaintiff tried to recover a sum of money he had paid to the defendant on the basis of “money had and received”.10 The plaintiff claimed that the money was paid to the defendant for the purpose of investment, in pursuance of an alleged oral agreement between them. The court noted that the plaintiff failed to properly plead its claim in unjust enrichment by identifying the constituent ingredients.11 Further, as the court had rejected the plaintiff's version of events on its key factual findings, the claim was unsuccessful.

24.7 This group of cases should serve as a strong caution to plaintiffs in future cases to plead all relevant facts to support their claims in unjust enrichment and to clearly identify how the constituent elements are

satisfied, instead of holding onto the hope that the court would take a generous or benevolent reading of their pleadings and infer a relevant unjust factor to support their claims.12

III. “At the expense of” — Indirect enrichment

24.8 The “at the expense of” element of an unjust enrichment claim shows that the enrichment has come from the plaintiff. A beguilingly simple label belies deep controversies as to what degree of connection between the enrichment and the plaintiff is required. Whilst this inquiry does not normally cause problems in a direct transfer scenario involving two parties, the analysis is more complex where the enrichment has come from a third party, as in the case of Anuva Technologies Pte Ltd v Advanced Sierra Electrotech Pte Ltd13 (“Anuva”).

24.9 In Anuva, X asserted a claim in unjust enrichment against Y in respect of a sum of money mistakenly paid by Z to Y. Z should have made the payment to X instead. X contended that the payment was made without its consent, a controversial unjust factor that has yet to be accepted by the Court of Appeal. More importantly, the High Court rightly identified that the crux of the dispute lied in the “at the expense of” inquiry. Given that Y had received the payment from a third party (Z), the question was “whether [Y] had been unjustly enriched at [X's] expense”.14

24.10 According to the court, X had suffered no loss because X retained the contractual right to pursue Z for the outstanding payment.15 In other words, Z, the mistaken payor, is left with the remedy of claiming against Y in unjust enrichment on the basis of mistake. A direct claim by X against Z is only allowed if Z's liability to X is discharged by reason of Z's payment to Y.16 This is because in such a situation, the gain received by the defendant involved a subtraction from the plaintiff's accrued wealth.

24.11 The court also considered Burrows' suggestion to allow the plaintiff to elect whether to treat the debt owed by the third party to him

as discharged or not.17 However, as parties had not made submissions on this point, the court refrained from making “a significant and substantive departure from the orthodox position”.18

24.12 Accordingly, Anuva did not depart from the legal position laid down by the Court of Appeal in Wee Chiaw Sek Anna v Ng Li-Ann Genevieve19 (“Anna Wee”). In Anna Wee, the Court of Appeal held that the enrichment received by the plaintiff must be one that the plaintiff is legally entitled to or forms part of the plaintiff's assets, whether the benefit is one of traceable property or a mere value transferred.20

24.13 It may also be observed that the current Singapore position is aligned with recent developments in England and Wales. In Investment Trust Companies v Revenue and Customs Commissioners,21 the UK Supreme Court held that in cases involving indirect enrichment, “it is generally difficult to maintain that the defendant has been enriched at the claimant's expense” if it does not involve a situation of agency and the benefit does not consist of property in which the claimant has an interest or a traceable interest.22 The UK Supreme Court identified situations where an indirect enrichment could be treated as a direct enrichment, for example, where (a) the enrichment was transferred through an agent interposed between the parties; (b) the intervening transaction was a sham; and (c) there was a series of co-ordinated transactions that formed a single scheme.23 Lord Reed also recognised that the plaintiff's discharge of a debt owed by the defendant to a third party who transferred the enrichment to the defendant was a situation of preventing unjust enrichment, although it did not entail the effect of restoring the parties to their ex ante position.24

IV. Failure of consideration: Recovery of moneys paid in anticipation of contracts or events that did not materialise

24.14 In 2019, five cases concerned the recovery of moneys paid in anticipation of contracts or events that did not materialise. Of these five cases, four cases involved the recovery of deposits.

A. Establishing a fresh basis for the benefit

24.15 In Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon25 (“Simpson Marine”), the Court of Appeal overturned the High Court's decision26 on the basis of factual findings. In this case, the respondent buyer and the appellant yacht dealer signed an invoice pursuant to which the respondent paid a deposit to the appellant for the purpose of securing two specific yachts (yachts A and B) until 15 May 2013, at which time and upon the respondent's election, the deposit was to be applied for the down payment of either yacht that the respondent had chosen. However, subsequently, the respondent was informed that yacht B was sold off by the yacht maker and the next available yacht was yacht C. On 8 May 2013, the respondent met with representatives of the appellant and the yacht maker for the viewing of another yacht. The appellant contended that an agreement was reached at this meeting that the respondent's deposit would be used to secure yachts C and D until 31 May 2013, at which point and upon the respondent's election, the deposit would be transferred for the payment of the purchase price of the yacht that the respondent had chosen. The respondent disagreed that such an agreement was made. Ultimately, the respondent did not buy either yacht C or yacht D. Pursuant to a compromise agreement between the parties, half of the deposit was used to pay for another yacht that the respondent had already purchased. The balance formed the subject of the dispute.

24.16 The High Court, on examining the evidence before it, came to the conclusion that the deposit was “a holding deposit” to secure yachts A and B until 15 May 2013. This basis failed when yacht B was sold off before 15 May 2013 (the initial basis).27 As such, the respondent was entitled to recover his deposit. Importantly, the High Court was not satisfied on the evidence that a new agreement was entered into between the...