Who Says I’ve Been Enriched? Subjective Devaluation And Revaluation In Restitution For Unjust Enrichment

In an interesting decision that will no doubt influence the calculation of restitutionary awards and quantum meruit payments in Canada and elsewhere, the United Kingdom Supreme Court recently engaged in, in the words of Lord Clarke, "a wide-ranging discussion of the principles relevant to an aspect of unjust enrichment which has been the subject of lively debate among academics." The Court considered whether restitution for services rendered in the absence of a contract could take into account the defendant's opinion of the value of those services. The Court held that it could - but only to decrease, not increase, the award.

Background

The Plaintiff provided services to the Defendant in furtherance of a multi-billion euro acquisition of a telecommunications company. The Plaintiff's action for compensation under his Acquisition Agreement with the Defendant failed, as the trial judge found that the investment arrangement that it contemplated had not been concluded. Only the Plaintiff's claim for quantum meruit, defined in the trial judgment as a reasonable sum for services provided outside of a contractual relationship, succeeded.

The trial judge found, based on expert evidence, that the total market value of the Plaintiff's services was €36.3 million. However, the Defendant had paid €67 million for 60% of those services, and had offered an additional €75.1 million for the remainder - an amount that the Plaintiff did not accept. The trial judge, relying upon the Defendant's assessment of the value of the services received but not paid for, awarded €75.1 million.

The Court of Appeal reduced the award to 40% of €36.3 million, or €14.52 million, to reflect the market value of the unpaid services.

The Plaintiff appealed on the basis that the value of the unpaid services to the Defendant exceeded their objective market value. The Defendant cross-appealed, arguing that the Plaintiff was not entitled to anything as he had already received more than the fair market price.

The Decision

This appeal was driven by the Defendant's apparent willingness to pay the Plaintiff much more than the market price. The Plaintiff argued that the Defendant's calculation of the benefit that he received should be taken into account when determining the value of the unpaid services.

The Plaintiff's argument sprung from the academic debate surrounding "subjective devaluation". According to that concept, the measure of unjust enrichment may be reduced below the market...