#6826 - Brewer Street Investment V. Barclays Wollen Co. - Restitution of Unjust Enrichment BCL

Brewer Street Investment v. Barclay’s Wollen Co.

Facts

The defendants, who were prospective tenants of certain premises, and the plaintiff landlords were in negotiation as to the terms of a lease. Agreement on the principal matters had been reached subject to contract. The plaintiffs undertook to make certain alterations in the premises desired by the defendants, who accepted responsibility for the cost. The parties were eventually unable to agree on a term of the lease concerning a possible future sale of the premises to the defendants and, as a result, the matter went off, and work on the alterations, which had progressed to a considerable extent, was stopped.

The landlords (plaintiffs) here claim remuneration from the tenants (defendants).

Holding

Somervell LJ

Fault Reasoning

It seems to me that much turns upon the reason why the whole of this matter came to an end, and the correspondence seems to me to show that the reason was that the defendants insisted on having an option though an option had never been promised, so for that reason the whole of the negotiations came to an end.

The highest I think that it could be stated from the point of view of the defendants was as I have put it, namely, that the promise was on the basis of the plaintiffs remaining of the same mind as they had revealed before the promise to pay for items of work was made. Although the plaintiffs by the first draft of their lease were seeming to depart from it, the correspondence seems to me to show that the real reason why this matter went off was that the defendants were insisting on an option.

Implied Contract/Undertaking of Responsibility Reasoning

I agree with that construction of the correspondence, but if one considers the matter in principle the defendants undertook responsibility for this work at a time when they knew that either side could resile and decide not to conclude a lease.

Denning LJ

In these circumstances, the proper way to formulate the claim is on a request implied in law, or, as I would prefer to put it in these days, on a claim in restitution.

It is clear on the facts that the parties proceeded on a fundamental assumption - that the lease would be granted - which has turned out to be wrong. The work done has been wasted. The question is: on whom is the loss to fall? The parties themselves did not envisage the situation which has emerged and did not provide for it; and we do not know what they would have provided if they had envisaged it. Only the law can resolve their rights and liabilities in the new situation, either by means of implying terms or, more simply, by asking on whom should the risk fall.

For the benefit of the defendants: What, then, is the position when the negotiations go off without the default of either? On whom should the risk fall? In my opinion the prospective tenants ought to pay all the costs thrown away. The work was done to meet their special requirements and was prima facie for their benefit and not for the benefit of the landlords. If and in so far as the work is shown to have been of benefit to the landlords, credit should be given in such sum as may be just.

Undertaking responsibility to pay: Subject to such credit, the prospective tenants ought to pay the cost of the work, because they in the first place agreed to take responsibility for it; and when the matter goes off without the default of either side, they should pay the costs thrown away. There is no finding here that the work was of any benefit to the landlords, and in the circumstances the prospective tenants should, I think, pay the amount claimed.

No fault: I do not think, however, that in the present case it can be said that either party was really at fault. Neither party sought to alter the rent or any other point which had been agreed upon. They fell out on a point which had not been agreed atall.

Romer LJ

Assumed responsibility/implied contract reasoning

On January 26, 1951, the defendants' architect wrote to the plaintiffs unequivocally accepting...