Unjustified Enrichment In Scots law

Legal disputes in Scotland typically focus on the interactions between parties that involve a contract or a violation of a duty of care. However, what happens if there are no such obligations or agreements between the parties and one party has experienced a loss? Is there anything that can be done if there is no formal agreement or duty between the parties?

Unjustified Enrichment

It is stated that unjustified enrichment “fills the gap” left by the absence of legal arrangements. Its foundation is the basis that the law should require parties to provide compensation where one party has profited unlawfully at the expense of another.

Unjustified enrichment claims have increased in recent years and are now more often brought before Scottish courts, but there are still some concerns about the remedy’s effectiveness.

What happens when there are remedies to resolve a dispute?

If a party has other legal remedies open to them, can claims based on unjustified enrichment still be pursued?

Since the 1970s, parties and the courts have debated this issue. While some judges firmly believed that all other remedies must take priority over unjustified enrichment, others believed that it depended on the particular circumstances of each case.

The Sheriff Appeal Court recently ruled that because this issue was so important, an appeal from a sheriff’s decision should be sent directly to the Inner House. Unusually, five judges then sat down to consider the appeal in order to, if necessary, overturn earlier rulings on the issue.

Pert vs McCaffrey [2020] CSIH 5’s ruling

Pert vs McCaffrey [2020] CSIH 5 was the case on appeal. Following the sale of their shared home, Ms. Pert filed a claim for unjustified enrichment against Mr. McCaffrey, her ex-partner. She argued that since the first purchase had been financed by the sale of a property she owned, he was not allowed to keep half of the sale price (given to him by Ms. Pert’s trustee in sequestration).

She was unable to make an unjustifiable enrichment claim because, according to the sheriff, she did not pursue a legal remedy available to cohabiting couples (section 28 of the Family Law (Scotland) Act 2006). According to Ms. Pert, in the specifics of her case, there was no such rule.

The Inner House agreed that typically a claim for unjustified enrichment would be disproved by the existence of a statutory remedy, but not in this case. The legislative provision in this case was created to give the court the power to impose payment in addition to any other legal remedies that may already be in place. Therefore, the use of unjustifiable enrichment was not prohibited by failing to use this specific statutory entitlement.

Sadly for Ms. Pert, the Inner House continued by pointing out that she had also relied on the presence of a contract between the parties stipulating that she would get the entire sale profits. The agreement itself could have been enforced if it had been proven, hence the fact that it existed was fatal to her claim of unfair enrichment.

What does this imply for future Unjustified Enrichment?

Although the Inner House discussed other remedies in Pert, they declined to elaborate on whether there is a general rule stating that the law of unjustified enrichment will only be permitted in situations where there are no other accessible legal remedies, given the facts of this particular case.

Because the judgement left numerous questions unanswered, it is probable that parties will continue to be unclear of their options for relief and that the possibility of unjustified enrichment as a remedy will remain unclear in many circumstances.

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