Restitution

Restitution is the remedy the law provides to reverse a defendant's unjust enrichment at a claimant's expense, rather than to compensate the claimant for loss. In Investment Trust Companies v Revenue and Customs Commissioners, the Supreme Court explained that recovery in restitution is treated as a matter of legal right rather than judicial discretion: quoting Lord Goff of Chieveley's rejection of the idea that a court should weigh broad notions of fairness case by case, the Court affirmed that the recovery of money in restitution is not, as a general rule, a matter of discretion for the court, and that although the underlying principle of recovery is unjust enrichment, where recovery is denied it is denied on the basis of legal principle. Unjust enrichment is recognised as ranking next to contract and tort as part of the law of obligations.

A claim in unjust enrichment classically requires showing that the defendant was enriched, that the enrichment was at the claimant's expense, that it is unjust for the defendant to retain the benefit, and that no defence applies. In the Investment Trust Companies litigation, the Supreme Court examined the 'at the expense of' requirement in detail, holding that it is not satisfied merely by the direct receipt of a benefit and that it would be unwise to attempt a single definitive test for when a defendant's enrichment is properly regarded as being at the claimant's expense.

Restitution is also distinguished sharply from an award of damages. The Court emphasised that the reversal of unjust enrichment does not require a loss in the same sense as the law of damages requires, because restitution is not a compensatory remedy: its purpose is not to compensate for loss, but to reverse the defective transfer of a benefit from claimant to defendant. This means restitution can be available even where the claimant's 'loss' and the defendant's 'gain' are not measured in the same way, so long as an unjust transfer of value between the parties can be identified and reversed.