In this decision, the Court of Appeal considered whether a pleaded cause of action in restitution should be struck out. The appellant alleged that it had paid the respondent more than it would otherwise have been required to pay pursuant to a contractual provision. The contract had since been terminated. The court explained that as the contract was at an end the terms could not form the sole basis for the restitutionary claim. Therefore, the pleading was defective because it did not identify a fact that could engage an obligation to make restitution.
Sofronoff P and Philippides JA and Boddice J
27 November 2018
The appellant entered into a contract with the respondent pursuant to which the respondent would carry out certain construction works. . The effect of a number of provisions of the contract was that the respondent agreed to do the work for a fixed price (which was to be ascertained by reference to certain adjustments), but which would not exceed a certain figure (which would also be adjusted in due course) ("the guaranteed maximum price"). . The works reached practical completion, and the appellant contended that the respondent had performed some defective work. .
The contractual mechanism for resolving disputes was invoked and eventually the appellant terminated the contract pursuant to cl 39. . Clause 39.10 provided that if the contract was terminated pursuant to cl 39.4 then:
"the parties’ remedies, rights and liabilities shall be the same as they would have been under the law governing the Contract had the defaulting party repudiated the Contract and the other party elected to treat the Contract as at an end and recover damages." .
The appellant commenced proceedings against the respondent. . Relevantly for present purposes, it advanced a claim for an amount of money by which the appellant said it had overpaid the respondent. . The appellant pleaded material facts alleging that it had paid the respondent $751,692.77 more than it would ever have been obliged to pay by reason of the limit imposed by the guaranteed maximum price. . It then pleaded:
In essence, the appellant's pleaded case was "that, having regard to the contractual terms, [the respondent] had been paid more than it could ever have claimed as the Contract Price and that, consequently, the excess was recoverable". . The respondent applied to strike out a number of paragraphs of the pleading. . The respondent's complaint was that "the cause of action required an application of the terms of the Contract in order to calculate amounts payable under it but, because the Contract had been terminated, that course was not open because the terms no longer bound the parties". . The respondent succeeded at first instance before the Chief Justice. .
In the Court of Appeal, Sofronoff P (with whom Philippides JA and Boddice J agreed) noted that the claim was for restitution of an amount by which the appellant alleged the respondent had been unjustly enriched. . His Honour quoted from Goff & Jones, The Law of Unjust Enrichment, where it is noted that "claimants in unjust enrichment must demonstrate a positive reason for restitution". . His Honour also referred to English authorities holding that there is no general rule giving a plaintiff a right of recovery from a defendant who has been unjustly enriched at the plaintiff’s expense, and that courts do not have a discretionary power to order repayment whenever it seems just and equitable to do so. –.
His Honour then held:
"[The appellant's] pleading is defective because it identifies no fact that can engage an obligation to make restitution. It pleads no circumstance that the law deems unjust. The mere fact that a payment has been made in excess of what is due does not, of itself, constitute a basis upon which to conclude that the payee's enrichment was 'unjust' in the technical sense of the word." .
Accordingly, his Honour agreed with the reasons of the Chief Justice at first instance that the appellant had no real prospect of demonstrating that the relevant clause of the contract survived termination so that it could constitute the basis for a claim in restitution. . He held that the contract was at an end and the clause had no further operation as between the parties by way of contractual obligation, and as a result the terms could not form the sole basis for the restitutionary claim. .
In the result, the appeal was dismissed. –.
M J Hafeez-Baig