Time-Bar For Claims In Unjust Enrichment - When Does The Cause Of Action Accrue?
Published date | 27 February 2023 |
Subject Matter | Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution |
Law Firm | Quadrant Chambers |
Author | Mr Benjamin Coffer |
OVERVIEW
When does time start to run for limitation purposes in a claim for the recovery of sums transferred on a basis that subsequently fails?
The Commercial Court has decided that it is not necessary for the underlying contract to be terminated before any claim in unjust enrichment can be brought and that the cause of action accrues - and time starts to run - when the state of affairs contemplated as the basis or reason for the payments fails to materialise.
In an interesting judgment handed down on Tuesday, 14th February 2023 (Anron Bunkering DMCC v Glencore Energy UK Ltd [2023] EWHC 295 (Comm), Simon Colton KC (sitting as a Judge of the High Court) summarily dismissed a claim for restitution of unjust enrichment on the basis that it was time-barred.
Benjamin Coffer appeared for the successful Defendant, instructed by Eleanor Coates, Anna Fomina and Iman Anjarwalla at Clyde & Co.
The underlying claim arose out of two contracts for the sale of unleaded gasoline. The Claimant sought to recover various advance payments it had made under the two sale contracts on the basis that the Defendant had failed to deliver the correct amount of gasoline. The Claimant contended that the alleged failure to deliver the full amount of gasoline meant that the consideration for which the advance payments were made had failed and that it was therefore entitled to restitution of unjust enrichment.
The Defendant applied to have the claim summarily dismissed on the basis that it was time-barred, the alleged non-delivery having occurred more than six years before the claim was issued.
The Judge reiterated that claims for unjust enrichment are "founded on simple contract" within the meaning of section 5 of the Limitation Act 1980 and that the limitation period is accordingly six years from the date on which the cause of action accrues. The Judge confirmed that in claims for restitution of sums transferred on a basis that subsequently fails, the cause of action accrues when the failure of basis occurs. The question was then when, on the Claimant's pleaded case, did the failure of basis occur?
The Defendant argued that the basis failed at the moment of the alleged non-delivery or, at the latest, when the balance was sold to a third party. Both events occurred more than six years before the claim was issued. These submissions gave rise to the interesting question of whether, in a claim in unjust...
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