#6745 - Cn 1973 Greenwood V. Bennet - Restitution of Unjust Enrichment BCL

Greenwood v. Bennet (1973; CA)

Facts

Case concerning improvements done to a Jaguar motor car – for present purposes it may be treated as the property of their manager, Mr. Bennett, who was in charge of their garage at Truro - it needed some repairs done to it so as to command a better price. So Mr. Bennett entrusted it to a Mr. Searle, who agreed to do the repairs for the sum of 85. Instead of doing the repairs, he took it out on to the road and drove it for his own purposes – accident – it was extensively damaged, so much so that Mr. Searle, made up his mind to sell it himself in its damaged state - he sold it to Mr. Harper, for the sum of 75 - Mr. Harper bought it in good faith for 75 - Mr. Harper did a great deal of work on it himself - In all, it cost him 226.47 for labour and material - Then he sold it to a finance company who let it on hire purchase to Mr. Prattle for 450.

Denning LJ

Applying the principles stated by Lord Macnaghten, I should have thought that the county court judge here should have imposed a condition on the plaintiffs. He should have required them to pay Mr. Harper the 226 as a condition of being given delivery of the car… But the judge did not impose such a condition. The plaintiffs have regained the car, and sold it. What then is to be done? It seems to me that we must order the plaintiffs to pay Mr. Harper the 226; for that is the only way of putting the position right.

Mr. Rawlins has referred us to the familiar cases which say that a man is not entitled to compensation for work done on the goods or property of another unless there is a contract express or implied, to pay for it. We all remember the saying of Pollock C.B.: "One cleans another's shoes; what can the other do but put them on?"Taylor v. Laird (1856) 25 L.J.Ex. 329, 332. That is undoubtedly the law when the person who does the work knows, or ought to know, that the property does not belong to him. He takes the risk of not being paid for his work on it. But it is very different when he honestly believes himself to be the owner of the property and does the work in that belief. (That distinction is drawn in the mining cases such asWood v. Morewood (1841) 3 Q.B. 440andLivingstone v. Rawyards Coal Co. (1880) 5 App.Cas. 25). Here we have an innocent purchaser who bought the car in good faith and without notice of any defect in the title to it. He did work on it to the value of 226. The law is hard enough on him when it makes him give up the car itself. It would be most unjust if the company could not only take the car from him, but also the value of the improvements he has done to it - without paying for them. There is a principle at hand to meet the case. It derives from the law of restitution. The plaintiffs should not be allowed unjustly to enrich themselves at his expense. The court will order the plaintiffs, if they recover the car, or its improved value, to recompense the innocent purchaser for the work he has done on it. No matter whether the plaintiffs recover it with the aid of the courts, or without it, the innocent purchaser will recover the value of the improvements he has done to it.

In my opinion, therefore, the judge ought not to have released the car to the plaintiffs except on condition that the plaintiffs paid Mr. Harper the 226. But now that it has been released to them and they have sold it, we should order Mr. Bennett's company to pay Mr. Harper 226 in respect of the improvements he made to the car.

PHILLIMORE L.J.

In those circumstances it seems to me perfectly clear that on equitable principles someone who has improved the car since it was originally converted and who is not himself a wrongdoer - and it is not suggested that Mr. Harper was in any way a wrongdoer - should be credited with the value of the work which he had put into the car by way of improving it. It was not seriously disputed in this case that the 226 had improved the value of the car, making its value far above what it was.

Comments:

1. Incontrovertible Benefit: the case presumes that the increase in value to the car is an incontrovertible benefit. Lord Denning addresses a possible counter-argument to this view when he cites Pollock CB’s statement regarding shoes that were being polished without the owner’s knowledge or consent – that statement clearly directs itself at subjective devaluation, suggesting that the polishing of the shoes is of no additional subjective value/benefit to that particular owner. He overcomes this point however, by suggesting that the situation is different when the improvements are carried out by a person who believes bona fide that he is the real owner of the goods – that situation according to him is quite unlike a case where the services were rendered by a person who was fully aware that the property did not belong to him and still went ahead with the improvements.

2. Though Denning LJ seems to have been influenced by the good faith of the claimant in this case, the decision is amenable to explanation on the basis of “incontrovertible benefit”. Facts indicate that the Garage manager, Mr. Bennet had actually sold the car thus realizing its increased market value [this supports Prof. Birks’ view according to which only benefits that are actually realized can be considered incontrovertible benefits]. Thus, he cannot be heard to argue based on subjective devaluation. This does not however, explain if actual realization, as Prof. Birks suggests is the only circumstance that establishes an incontrovertible benefit.

3. The decision could equally be explained on the basis of the view taken by Goff and Jones according to which the mere fact that the benefit is potentially realizable in value is sufficient to establish it as an incontrovertible benefit. The fact that the reasoning in the decision does not seem to premise itself on the fact that the car was actually sold indicates that the case would have been decided similarly even if the car had actually not been sold by Mr. Bennet. Thus, the fact that the court considered the benefit incontrovertible not relying on the fact that it was actually realized indicates that the mere possibility that the value could have been realized by the defendant is sufficient to establish the fact that the benefit is incontrovertible.

4. The decision could also be explained on the basis of Prof. Burrows’ view according to which an incontrovertible benefit is constituted when it is “reasonably certain” that the benefit will be realized. The fact that the defendant garage owner had entrusted the car to Mr. Searle in the first place for getting it ready for sale indicates that the ultimate purpose of the repairs were to sell the car. In other words, it was “reasonably certain”, that the defendants would sell the car and thus realize its increased value due to...