Restitution
A restitutionary claim an action in which the plaintiff seeks to claim a benefit (or its money value) that the defendant has obtained at the expense of the plaintiff, not a claim for compensation.
The action is founded on unjust enrichment: Pavey & Matthews. The principle of unjust enrichment involves three things:
1. The defendant has been enriched by the receipt of a benefit;
2. The defendant has been enriched at the expense of the plaintiff; and
3. It would be unjust to allow the defendant to retain the benefit.
Recovery of Money
Party not in breach
If the innocent party has paid money under a contract which has been determined for the other party’s breach, the innocent party is entitled to recover any money paid (deposit and installments) if:
- the contract has be terminated; and
- there has been a total failure of consideration
Party in breach
The party in breach is entitled to recover any part payments of the contract price for which there has been a total failure of consideration.
In contracts for the sale of land, the consideration for a party payment will usually be the final completion of the contract therefore where the contract is terminated prior to the delivery of title the consideration will fail: McDonald v Dennys Lascelles Ltd. Mere possession will be insufficient: Pitt v Curotta.
The party in breach is not entitled to the return of a pre-paid "deposit" (as sum paid as an earnest or guarantee of due performance, commonly 10 per cent or less of the contract price), or any other payment, which is forfeited pursuant to a provision (express or implied) in the contract: McDonald v Dennys Lascells
However, regard must be had to the existence of an equitable power to relieve against forfeiture, that is, where the agreed contractual provision forfeiting the payment is in the nature of a penalty and it would be "unconscionable" for the other contracting party to retain the money: Coates v Sarich.
Recovery of Services – Quantum Meruit
Quantum meruit is a claim for the reasonable value of the work performed by the party. The claim is only available once the contract has been terminated or rescinded. The basis of the claim is the return of a benefit or monies worth, which has been given to the defendant in circumstance where the defendant should be required to pay for the benefit.
Unlike contractual damages recovery of a quantum meruit is generally unrelated to fault and is premised upon three elements:
1. Benefit - Has the plaintiff provided a benefit to the defendant?
2. Expenses - Was the benefit provided at the expense of the plaintiff?
3. Unjustness - Is it unjust that the defendant retains the benefit.
Services will be considered a benefit if:
· the services performed were requested by the defendant; or
· the services were freely accepted; or
· the defendant has obtained an incontrovertible benefit from the services.
Party in Breach
The party in breach will only be able to make a claim for quantum meruit not damages.
Services Were Requested
The defendant will have requested full or substantial performance pursuant to the contract not partial thus the defendant may subjectively devalue partial work, alleging that as the work is only partially complete it does not match the request and is of no benefit to him or her.
Services Freely Accepted
If the work has been done on the defendant’s property, the services will not have been freely accepted as the defendant will not have the necessary free choice to accept or reject the partial performance: Sumpter v Hedges
Incontrovertible Benefit
For a party to incontrovertibly benefit from the services, they must turn them into profit: Steele v Tardiani.
Party not in Breach
The party not in breach must choose a claim in damages or quantum meruit.
Services Were Requested
If the party is not in breach, the defendant cannot subjectively devalue the services provided as the services match the request.