McDonald v Coys of Kensington [2004] EWCA Civ 47

[2004] EWCA Civ 47
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HH JUDGE SIMPSON
(MAYOR’S AND CITY OF LONDON COURT)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 5 February 2004
Before
LORD JUSTICE THORPELORD JUSTICE MANCEMR. JUSTICE WILSON
Between
R. McDONALDAppellantCOYS OF KENSINGTONRespondent
Mr Joshua Swirsky (instructed by S. Newman & Co.) for AppellantMr James Purchas (instructed by Wilmot & Co.) for Respondent
Hearing Hearing date : 2 December 2003JUDGMENT

Introduction

[1]This is a case about a personalised (or “cherished”) car registration number, TAC 1, with a value, as found by the judge, of £15,000. The Part 20 defendant, Mr McDonald, appeals in respect of a judgment for that sum given against him by HHJ Simpson in the Mayor’s and City of London Court on 3rd April 2003. The judgment was in favour of the defendant (the Part 20 claimant), Coys of Kensington (Sales) Limited (“Coys”), who recovered the sum in two parts and on two bases:(i) £1,391.88 pursuant to a claim assigned to Coys by the original claimants in the action, Mr and Mrs Cressman, and(ii) £13,608.12 by way of contribution under the Civil Liability (Contribution) Act 1978. Coys also recovered their costs of the Part 20 claim from Mr McDonald on an indemnity basis.[2]The late Mr T. A. Cressman owned a Mercedes 280SL car carrying the registration TAC 1. Mr and Mrs Cressman are his executors. Coys are car auctioneers. Mr Cressman, no doubt for Mrs Cressman also, instructed Coys on or about 17th November 2000 to sell the car without its personalised registration mark. Mr McDonald was the successful bidder when Coys auctioned the car on 11th December 2000. These proceedings arise from Coys’ failure to retain the mark, when the car was paid for by and delivered to Mr McDonald on 12th December 2000, and from Mr McDonald’s subsequent refusal to re-transfer the mark.

The status of registration marks

[3]A registration mark is assigned by the Secretary of State to any vehicle registered in the United Kingdom under s.21 of the Vehicle Excise and Registration Act 1994 (“the 1994 Act”), and features on its number plate. Specific marks can therefore have significant value to vehicle owners. A vehicle owner wishing to have one may be prepared to pay, and a vehicle owner having one may be able to realise, substantial sums. The legal machinery by which a vehicle owner may either(a) make an immediate transfer of a mark to another vehicle or(b) hold a mark back with a view to having it assigned to another vehicle at a later date is contained in ss.23-27 of the 1994 Act and The Retention of Registration Marks Regulations 1993 SI No. 987 as amended by The Retention of Registration Marks (Amendment) Regulations 1994 SI No. 2976. Different forms have evolved to cover situations (a) and (b), but both situations fall within the Regulations.[4]S.23 of the 1994 Act provides “23. —(1) Where the Secretary of State registers a vehicle under section 21(1) he shall assign to the vehicle a mark (a "registration mark") indicating the registered number of the vehicle. (2) The Secretary of State may, in such circumstances as he may determine—(a) assign a registration mark to a vehicle to which another registration mark has previously been assigned,(b) assign to a vehicle (whether on its first registration or later) a registration mark previously assigned to another vehicle,(c) (whether or not in connection with an assignment within paragraph (a) or (b)) withdraw any registration mark for the time being assigned to a vehicle, …..”[5]The 1993 Regulations (as amended) provide inter alia: Rights of retention 3. Subject to the following provisions of these Regulations, a person in whose name a vehicle which is recorded as being a registered vehicle in the G.B. records [is registered These words are omitted in the 1993 Regulations. The sense of the Regulation requires their interpolation. The predecessor Retention of Registration Marks Regulations 1992 1992 SI No. 510 read simply “…. a person in whose name a vehicle is registered ….” ] may be granted by the Secretary of State a right to have the registration mark for the time being assigned to that vehicle assigned to some other vehicle registered—(a) in that person's name; or(b) in the name of some other person nominated by him in accordance with regulation 4A. Application for a right of retention 4. —(1) An application for the grant of a right of retention shall be made to the Secretary of State and shall be accompanied by— (a) the registration document issued under the 1971 Act in respect of the vehicle; (b) a vehicle licence for the time being in force issued in respect of the vehicle under the 1994 Act, or a valid application for such a licence;(c) such of the following documents as relate to the vehicle— (i) if the vehicle is one in respect of which a test certificate is required under section 45 of the 1988 Act, the test certificate in force under that section, ……..(d) payment of the sum specified in regulation 7(a); and(e) payment of the sum referred to in regulation 7(b). (2) The applicant shall, if required to do so by the Secretary of State, make the vehicle available for inspection at a place designated by the Secretary of State. (3) In this regulation "the vehicle" means the vehicle to which the registration mark is for the time being assigned. Nominations 4A. (1) The nomination of a nominated person may be made either- (a) in the application for the grant of a right of retention; or (b) after the grant of a right of retention (but before the right is exercised) if the Secretary of State accepts an application by the grantee in relation to which the conditions specified in paragraph (3) are fulfilled. …… Refusal of applications 6. The Secretary of State may refuse an application for the grant of a right of retention, or for an extension of the period in which a right of retention may be exercised, or for the assignment of a registration mark under a right of retention, if it appears to him that there are special reasons for doing so. Payments on application for rights of retention 7. In respect of an application for a right of retention there shall be payable a fee made up as follows— (a) £25, and (b) a sum equal to the amount of the charge which could have been made pursuant to section 25(1) of the 1994 Act for an assignment of the registration mark to which the application relates if the assignment had been made on the date on which the application was made. …… Retention documents 9. —(1) If the Secretary of State decides to grant a right of retention he shall issue to the grantee a retention document. That document shall state— (a) the date of the grant; (b) the name and address of the grantee and, where appropriate, the name of the nominated person; …… (d) the registration mark in respect of which the grant has been made; and (e) the type of vehicle to which the registration mark was assigned at the time of the grant. ….. Exercise of a right of retention 10. —(1) A right of retention shall be exercisable on only one occasion.(2) Subject to the provisions of regulation 11, a right of retention shall be exercisable by the grantee— (a) surrendering to the Secretary of State, for retention by him, the retention document; (b) surrendering to the Secretary of State, for replacement by him; (i) the registration document issued under the 1994 Act in which the name and address of the grantee or, where appropriate, the nominated person, are stated as the owner of the vehicle within the Registration and Licensing Regulations, and (ii) the vehicle licence in force under the 1994 Act, or a valid application for such a licence; and (c) sending to the Secretary of State, for endorsement and return, such of the following documents as relate to the vehicle in respect of which the grantee proposes to exercise the right of retention— (i) if the vehicle is one in respect of which a test certificate is required under section 45 of the 1988 Act, the test certificate in force under that section; ….. (3) In this regulation "the vehicle" means the vehicle to which the grantee proposes that the registration mark shall be assigned.” Rights of retention Application for a right of retention Nominations Refusal of applications Payments on application for rights of retention Retention documents Exercise of a right of retention

The facts in detail

[6]Under Regulations 3 and 4, if a seller is to sell a car but retain the right under the legislative scheme to its personalised registration mark, the seller needs to apply for and obtain a right of retention while still owner of the car. Coys failed to do this on behalf of the Cressmans. On 8th December 2000 they sent to the DVLA a defective application for retention, which the DVLA rejected and returned on 14th December 2000. Meanwhile on 11th December 2000, Coys had auctioned the car. Mr McDonald bid by telephone and it was knocked down to him for £17,250.00 plus a buyer’s premium of £3,040.31 inclusive of VAT. However, Coys had made clear prior to the auction that the vehicle was being sold without its existing registration number. Mr McDonald had prior to the auction carefully inspected the car. He admitted that he observed that the car had no number plates. The judge found, contrary to Mr McDonald’s case, that the windscreen also bore a notice dated 10th December 2000 which stated:
“Please note that this vehicle’s registration number has been removed and an age related number will be issued by the DVLA shortly.”

The judge therefore held that, when Mr McDonald bid by telephone:

“because …. he had seen the sticker, or should have, he knew that he was not going to get the original mark, but he was going to get a replacement”
. So, the judge held: “…. it was an express term of the contract that the buyer at auction would not get the old mark and number plate”.[7]On 12th December 2000, Mr McDonald paid for and, under the relevant auction conditions, obtained title to the car. He collected it by trailer, still without any number plate, and unusable for this reason (and it appears probably also on other grounds) on a public road. The judge held, again rejecting Mr McDonald’s evidence, that there was at that point a conversation during which Mr Brownlee of Coys said words to the effect:
“As you know we are processing the transfer of the number plate at the moment and waiting for the issue of the age related plate which will be issued to you in due course.”
According to Mr Brownlee’s evidence, which the judge accepted, “it was clear that Mr McDonald knew perfectly well that the number plate was not to be passed over”. Consistently with this, the auction “bill of sale” which Mr McDonald also signed when taking delivery, specified the car’s chassis number and approximate date of manufacture, but contained a “dash” against the words “Registration No.”. It further stated that the car was sold “as a collector’s item and not an operational means of transport”.[8]The consequence of Coys’ failure to obtain for the Cressmans a right of retention in respect of the registration mark was that, under the legislative scheme:(i) the mark remained assigned to the car upon and after its sale to Mr McDonald, and(ii) Mr McDonald was (unless he applied for its “retention” with a view to transferring it to another car) entitled to have the car registered in his name with that mark. However, as between the Cressmans and Mr McDonald, both these consequences were, on the judge’s findings, contrary to an express term of the contract made by Coys on behalf of the Cressmans, whereby it was agreed that the mark would be retained by the Cressmans as the car’s sellers.[9]It was common ground before us that the judge’s findings as to subsequent events were not complete or wholly accurate. The documents and Mr McDonald’s own evidence show that on 13th December 2000 he spoke twice to a Mr Elliot Brown of the DVLA. During the first conversation, Mr McDonald either knew already from the file of documents with the car (cf his evidence at I33E) or was told by Mr Brown and subsequently confirmed from the file (cf his earlier evidence at I8B and his statement at C24) that the car’s registration mark was TAC 1. Mr McDonald wrote on the copy Vehicle Registration Document V5 which was in the file “V62. Spoke Elliot Brown. Sale of Mark. Cherished transfer”. A V62 is the form which Mr Brown told Mr McDonald that he would need to submit to register the car in his name (since he had not received any form of registration document from the sellers). On the same day, again as recorded on the V5, Mr McDonald sent a completed V62 to DVLA in Swansea, entering in it the registration mark TAC 1.[10]On 3rd January 2001 Mr McDonald, not having received a new V5, spoke to a Miss Sarah Martin of the DVLA, who informed him that, as he had not sent in an original V5, the DVLA had tried to contact the original owner, but that the registration document was now due to be sent to him on 10th January 2001. Mr McDonald’s note on this conversation on his copy of the old V5 further refers to “no retention being in place”. In due course on or about 10th January 2001, and despite representations by Coys’ solicitors by letter dated 5th January 2001, the DVLA sent the new V5 to Mr McDonald, as they had promised and as the statutory scheme provided.[11]According to Mr McDonald’s evidence, it was not for some 18 months thereafter that he obtained an MOT certificate, or could therefore presumably use the car. The judge in fact concluded that the vehicle had an MOT certificate when auctioned, although the only one before the court had expired some nine months previously. The judge thought that this conclusion followed from the fact that the DVLA rejected the application for retention on grounds other than lack of an MOT certificate. But, as note F to form V778/1 indicates with its warning about using a vehicle without a valid MOT certificate on public roads, an application to retain a mark may relate to a vehicle which (even if of sufficient age) does not require a valid MOT certificate. So the judge’s reasoning on this point does not appear cogent.[12]On 4th January 2001 Mr Brownlee of Coys contacted Mr McDonald by telephone and by letter to say that he was not entitled to the original registration. Solicitors for the Cressmans also wrote on the next day asking Mr McDonald to confirm his agreement with Coys’ position. The judge found that Mr McDonald took offence at what he thought was Coys’ aggressive tone and that his subsequent stance stemmed from his perception of how Coys dealt with the matter, bearing in mind that it was they who had clearly made a mistake.[13]Mr McDonald’s subsequent stance is indicated by a letter from his solicitors dated 22 January 2001 in reply to the Cressmans’ solicitors’ letter dated 5th January 2001:
“We are instructed by our client that our client bought the car in question at auction as seen. At no time was our client informed prior to purchase that the purchase of the car did not include the car’s registered number “TAC 1” and there is no such special condition that the registered number is excluded from the sale in the auction sale particulars. Following completion of his purchase our client applied in the usual way to have the car registered in his name and that registration has now been completed We have advised our client that for the registration mark “TAC 1” to have not belonged to the car at the time of sale, there should have been a special condition to this effect in the sales particulars and a further condition that title to the car would not pass nor would the vehicle be released until the registration mark “TAC 1” had been transferred to another vehicle. In those circumstances we have advised our client that he is quite lawfully the owner of the car bearing the registration mark “TAC 1” and there is no question of him relinquishing this registration mark.”
[14]Also on 22nd January 2001 Coys wrote direct to Mr McDonald, referring to the contractual position, and imploring him to cooperate and to contact them to discuss the matter, failing which legal action would be taken. Mr McDonald’s solicitors’ response dated 25th January 2001 repeated Mr McDonald’s stance, that he had had no notice that the registration number TAC 1 was not to be sold with the vehicle, and that it belonged to the vehicle as he had purchased it.[15]On 30th January 2001 solicitors for Coys wrote to Mr McDonald’s solicitors, saying that he was trying to take advantage of an administrative error, and would not be allowed to do so. Mr McDonald’s solicitors replied as follows on 8th February 2001:
“We refer to your letter of 30th January 2001, upon which we have taken our client’s instructions. We anticipate it will not surprise you that our client does not accept that the ‘Facts’ are as you assert them to be. Your clients’ auction terms state that an astrix means the registration was not available at the time of printing. That does not mean that the registration number is excluded from the sale of the vehicle in question. Our client agrees that he viewed the car at the design centre but is adamant that there was no notice stating that the car’s existing registered number was not included in the sale of the car. In our client’s experience it is not uncommon for number plates to be covered or removed to maintain privacy and security and the absence of number plates on a vehicle does not mean that it does not possess a registration number. Our client accepts that he successfully bid for the car by telephone, having carefully inspected the car earlier. The car was paid for by a chaps payment before our client attended to collect his car. Our client denies there was any such conversation as you allege between him and Mr. Brownlee, and also with Mr. Heslop. As far as we and our client understand the position is that DVLA have acted entirely correctly and that there is no administrative mix up as far as legal registration is concerned. As far as we are aware, it is clear from the DVLA forms that any retention to a registration number must be completed before any sale of the vehicle and the vehicle must be retained for inspection whilst that retention takes place. The retention form actually states in the declaration by the keeper of the vehicle:- ‘I understand that if the vehicle is disposed of before the replacement V5 registration document has been received, my right to the mark will pass immediately to the new keeper and the retention will not be authorised’. Our client does not seek to take advantage of an obvious administrative error as you allege. It is simply a question that the registration number belongs to the vehicle that our client purchased. Our client does not intend to sell the car or the number plate and, therefore, there is no question of a financial gain from his point of view. There is no question of false indignation on our client’s part. Our client bought a vehicle at auction as the car stood which included the car’s registered number. Our client did not fail to read a notice. There was no notice for him to read. Our client is prepared to allow the court to decide whether he should be penalised for your client’s clear error in failing to retain the vehicle until the registered number was placed on retention if that was what they had been instructed to do.”

The course of the proceedings

[16]The present proceedings were begun by Mr and Mrs Cressman in May 2001 to recover from Coys loss consisting in the value of the personalised number plate. On 26th March 2002 the Cressmans assigned to Coys all and any causes of action which the Cressmans might have against Mr McDonald arising out of or in connection with the sale of the car registration number TAC 1, on terms that Coys would hold any recoveries on trust for the Cressmans in diminution of any claim that the Cressmans might have against Coys. On 24th May 2002 Coys then joined Mr McDonald as Part 20 defendant. In March 2003, Coys settled the Cressmans’ claim against Coys by a payment of £12,000 together with interest, making in all (it appears) £13,608.12. Coys’ contribution claim was introduced thereafter.[17]The judge held that Mr McDonald had been unjustly enriched, by receiving, at the expense of Mr T. A. Cressman’s estate, a benefit in the form of the personalised number plate valued at £15,000 which he knew or ought to have known that he was not (contractually) to have. In so far as the estate had not been compensated by the settlement with Coys, Coys as assignees of the estate’s causes of action were entitled to recover damages (the £1,391.88 mentioned in paragraph 1 of this judgment). The remaining sum of £13,608.12 awarded to Coys was awarded as contribution on the basis that both Coys and Mr McDonald had been liable to the Cressmans in respect of the same damage, within the meaning of s.1 of the Civil Liability (Contribution) Act 1978, and that it was under s.2(1) “just and equitable having regard to the extent of [Mr McDonald’s] responsibility for the damage in question” that he should make a full 100% contribution in respect of Coys’ liability to the Cressmans, calculated as £13,608.12.

Mr McDonald’s gift to his partner

[18]The judge also dealt with an unpleaded point that was raised in the light of Mr McDonald’s evidence. This was that Mr McDonald had given the car to his partner. At the trial, Mr McDonald said that he was no longer the owner of the car, but precisely when and how it became his partner’s was not directly addressed. The judge said :
“It was submitted on Mr McDonald’s behalf that he has received no benefit. The mark went with the car and he has given the car to his partner. It is true that he has given the car to her, but he did this after he received the benefit because he got a benefit as soon as he left the auction room having paid for it.”
Later, in relation to passing of the mark by operation of law,

the judge said:

“that is true because Coys made a mistake but it was open to Mr McDonald in due course to make an application himself, and is open to his partner now. It would be quite unreal to treat them separately in the circumstances that they were living together with their young family, so it is unreal to suggest that the car is not his property; he never suggested for a moment that there would be any difficulty in persuading his partner to make the necessary application. Then it is suggested that he has a defence to this because he has changed his position by giving the car to her, and as I have already indicated he has done this only after he obtained the benefit.”

The judge therefore made no finding as to precisely when the car may have become the partner’s.

[19]Before us, similar submissions were pursued on Mr McDonald’s behalf based on his gift of the car to his partner, and it was submitted that the judge ought to have made still further and more favourable findings than he did in this regard. Reliance was placed on a passage in Mr McDonald’s evidence, to the effect that his partner had given him a “brief” and he had gone on a “mission” to buy the car for her; and that, when he had shown her the car on the evening of 13th December 2000, she knew it was being bought for her and it was her car and “she sat in the car and was happy for both of us”. It was submitted that the judge ought on this basis to have found that the car was the partner’s at least from the evening of 13th December 2000. There are however other passages in the evidence where Mr McDonald spoke of the car as something for both of them to have and share, and at one point he also said that “At the end of the day, we have no intention, or she has no intention of selling the car ….”. Further, the car was registered by Mr McDonald in his own name, in which it remained so far as appears at all material times thereafter.[20]Had Mr McDonald raised any question of transfer of the car to his partner in the pleadings or witness statement, both the facts and the implications of the point would no doubt have been fully and much more precisely investigated before and at the trial. It is regrettable that points based on the transfer of title to the partner were raised at trial without prior notice. But, since no formal objection appears to have been taken to this occurring, I deal with them on their merits as the judge did. Nonetheless, I regard it as of considerable evidential significance that such points were never mooted prior to trial. Had Mr McDonald parted with the car and put it beyond his power to restore any benefit relating to the mark, in circumstances where he had no knowledge that he had received a mark for which he had not contracted, he would have been expected to raise this forceful objection to the Cressmans’ and Coys’ claims from the outset. There is nothing of that kind. Instead, there are Mr McDonald’s solicitors’ letters of 22nd and 25th January and 8th February 2001, written on his instructions. Their references to the car as his and the statement in the latter that he “does not intend to sell the car” are impossible to reconcile with any idea that Mr McDonald had by then parted with the car, still less with control over the mark. One is left with Mr McDonald’s statements in evidence (which are all that the judge expressly accepted) that at the time of trial both the car and therefore the mark belonged not to him but his partner. But these statements must be taken to refer to some transfer at some date after 8th February 2001, and so after Mr McDonald knew of all relevant facts and knew that both the Cressmans and Coys would be pursuing claims against him relating to the mark.[21]I add that, even if I had concluded that Mr McDonald transferred the car with its mark to his partner on the evening of 13th December 2000, he can only have done so knowing (from the absence of registration plates on the car when he saw it, from his conversation with Mr Brownlee on 12th December 2000, from the copy V5 in the file and from his conversations with the DVLA on 13th December 2000) that the car had brought with it, through some mistake, the right to a “cherished” mark TAC 1 which was not part of the auction bargain. The judge also said this (immediately after referring to the gift to the partner and to Mr McDonald as receiving a benefit as soon as he paid for and collected the car):
“So I am in no doubt that Mr McDonald has obtained a benefit valued at £15,000 by this mark which he knew he was never supposed to get in the first place”
. Since Mr McDonald did not realise or think that he had obtained any such benefit until 13th December 2000, this conclusion requires minor modification. But the judge clearly considered, and I agree, that, as soon as Mr McDonald knew that the car had brought with it an entitlement to the mark, he knew that this was something that he was not supposed to have. The course of conversation on 13th December 2000 (as noted by Mr McDonald himself) and his immediate pursuit of the registration of the car in his name under its old registration mark also suggest that he chose at once to take advantage of the evident mistake and to obtain the mark contrary to the bargain, rather than to investigate and take any step necessary to correct the mistake. Mr McDonald’s subsequent conduct, as found by the judge, confirms the suggestion.

Restitution - general

[22]The issue which is basic to all aspects of this appeal is whether the circumstances gave the Cressmans any claim against Mr McDonald based on unjust enrichment. It is common ground that four questions arise when considering a claim for unjust enrichment:(1) Has the defendant benefited or been enriched?(2) Was the enrichment at the expense of the claimant?(3) Was the enrichment unjust?(4) Is there any specific defence available to the defendant (such as change of position)? See Banque Financière de la Cité v. Parc (Battersea) Ltd. [1999] 1 AC 221, 227A per Lord Steyn and The Queen on the application of Charles Rowe v. Vale of White Horse DC [2003] EWHC 388 (Admin.), paras. 10-11 per Lightman J.

The statutory scheme

[23]The first proposition advanced on Mr McDonald’s behalf is that Mr McDonald’s acquisition of the registration mark was a consequence of the statutory scheme, and of his performance of his contractual obligations in ignorance of any problem about the mark, and that “it would be wrong, and it is submitted contrary to public policy, to hold an individual liable for the consequences, which he did not seek, of the administration of the vehicle registration scheme”.[24]It was the statutory scheme that meant that Mr McDonald acquired the registration mark. That does not mean that there was no enrichment or no unjust enrichment. On the contrary, it is the reason why there may have been. His potential enrichment consisted in his acquisition of a car carrying with it a potentially valuable registration mark. Any such enrichment must have been at the expense of the estate of Mr T. A. Cressman. Mr Swirsky, who appears for Mr McDonald, does not seriously dispute that.[25]Further, it was legally unjust for Mr McDonald to keep the registration mark, since it was an express term of the auction contract that he would not receive the vehicle’s existing mark (whatever that might be), but would instead get an age-related mark, and he only obtained the old, cherished mark as the result of a mistaken failure by Coys to operate the statutory scheme correctly on behalf of the estate, about which mistake Mr McDonald soon became aware. Subject to any points arising from any transfer to his partner, Mr McDonald could easily have cooperated with the Cressmans and Coys as they invited, and could have arranged for the mark TAC 1 to be re-transferred, in which connection Coys would no doubt have been only too pleased to resolve the matter by meeting any re-transfer costs, and Mr McDonald would have received instead from the DVLA the age-related mark which he had expected. There is nothing in the suggestion that the statutory scheme means that principles of unjust enrichment can have no application.

Benefit

[26]On this basis, the next submission advanced on Mr McDonald’s behalf is that his receipt of the mark was insufficient to amount to a benefit or enrichment. What was necessary was either realisation of its value or at the least proof of an intention to benefit by realising its value. Our attention was drawn to the discussion on the nature of the benefit required in leading academic works, particularly An Introduction to the Law of Restitution by Professor Peter Birks at pp.114-128, The Law of Restitution (6th Ed.) by Goff and Jones at paras. 1-017 to 1-032 and The Law of Restitution (2nd Ed.) by Professor Andrew Burrows at pp.16-25.[27]Arguments about the respective merits of the differing approaches taken in these works were not very fully developed before us, and we were not shown the articles to which I refer in the next paragraph of this judgment. So far as possible, I shall therefore avoid expressing positive conclusions favouring any one of the approaches. But they contain much common ground and give considerable guidance as to the type of factors which are likely to be relevant when determining whether a defendant has received a sufficient benefit to enable a claimant to assert that he has been enriched for the purposes of a claim for unjust enrichment. It seems to me, however, that the parties’ submissions failed generally to give due weight to the fact that the academic debate in the passages cited about ‘free acceptance’ and ‘indisputable benefit’ relates primarily to situations (typically the supply of services) where any benefit is not readily returnable.[28]The law’s general concern is with benefit to the particular defendant, or so-called ‘subjective devaluation’. Mr McDonald has not actually realised or received any monetary benefit from the mark. Professor Birks and Goff & Jones both identify(a) free acceptance and(b) incontrovertible benefit as two main categories of case in which a defendant who has not realised any actual monetary benefit may be treated as unjustly enriched. Professor Birks (in response to a critique by Professor Burrows) has stressed that ‘free acceptance’ should not be understood as meaning that the recipient values the thing in question, but as unconscientious conduct precluding him or her from exercising the usual right to assert that he or she was not subjectively benefited: see In Defence of Free Acceptance in Essays on the Law of Restitution (ed. Burrows) (1991) pp. 105-146. Professor Burrows disagrees about the possibility of free acceptance - cf Free Acceptance and the Law of Restitution (1988) 104 LQR 576 and The Law of Restitution pp. 20-23 - basically because free acceptance may amount to “nothing more than indifference to the objective benefit being rendered”. Consistently with that objection, he suggests that ‘reprehensible seeking-out’ (where a recipient’s conduct clearly shows that he wants the benefit, but also that he is unwilling to pay for it) should suffice as a test of benefit (pp. 24-25). Citing some extreme examples (holding a pistol to a doctor’s head and demanding medical treatment, stealing goods and intentionally using another’s land without permission), he goes on:
“Although there are no authorities specifically on this point, the defendant in such situations must be regarded as benefited (by the objective value of the subject matter). He cannot rationally say that he was indifferent to receiving the thing: and he cannot be allowed to raise the argument ‘I was not willing to pay’ because his reprehensible conduct shows a disregard for the bargaining process (ie the market system).”
In a footnote he comments at this point:
“It is arguable the ‘seeking-out’ is sufficient to outweigh the subjective devaluation objection. But as the argument for this test is one of principle, without direct support from the case law, it has been considered preferable to focus on the stronger case whether the conduct is also reprehensible”
It is of interest to recall that Professor Birks’ explanation of the theory of ‘free acceptance’ is that the recipient’s ‘unconscientious conduct’ precludes him or her from denying subjective benefit. Professor Burrows’ text continues:
“Clearly this test runs close to free acceptance. But it is crucially distinct because in requiring a ‘seeking-out’ of the benefit rather than a standing-by it overcomes the indifference argument. Moreover the test is a test of benefit only. It is not intended to establish that the enrichment is unjust.” “It is arguable the ‘seeking-out’ is sufficient to outweigh the subjective devaluation objection. But as the argument for this test is one of principle, without direct support from the case law, it has been considered preferable to focus on the stronger case whether the conduct is also reprehensible” “Clearly this test runs close to free acceptance. But it is crucially distinct because in requiring a ‘seeking-out’ of the benefit rather than a standing-by it overcomes the indifference argument. Moreover the test is a test of benefit only. It is not intended to establish that the enrichment is unjust.”
[29]‘Free acceptance’ and ‘reprehensible seeking out’ represent tests focusing on the circumstances under which Mr McDonald came to have a car carrying the registration mark TAC 1, while ‘incontrovertible benefit’ focuses on the subjective value to him of the mark once acquired, regardless of those circumstances. Here, because of Coys’ mistake, Mr McDonald acquired a car on 12th December 2000 which had, under the statutory scheme, a right to the mark TAC 1. His acquisition of the car on that date cannot have involved any ‘free acceptance’ of either the mark or the right to it. Mr Brownlee of Coys had reminded or told him and he knew on 12th December that he was not to get the old mark. But the process by which Mr McDonald came to have a car carrying that mark can, I think, be regarded as extending beyond 12th December 2000. In order to register himself as keeper he applied for a registration document, entering on the form V62 the mark TAC 1 in the knowledge that this would lead to the car being registered in his name with that mark. Notes B, C and E to the form Retention of Vehicle Registration Number V778/1 (trial document E14) indicate that Mr McDonald could, even on 13th December 2000, have applied to retain the mark, with a view to re-transferring it to the estate or its order. But he made, so far as appears, no enquiry and certainly did not pursue the obvious possibility that such a step could be taken.[30]Further, on 3rd January 2001, it is clear that his discussion with the DVLA covered the possibility of retention by the sellers, and he must have been aware that this was also a course open to him. By 5th January 2001, Mr McDonald was aware that the estate and Coys would be pursuing claims against him in relation to the mark. Notwithstanding that, he still did not make any application to retain the mark, with a view to its re-transfer to the estate. Only on or about 10th January 2001 did the DVLA register him as the keeper of the car with the mark TAC 1, so that he had every opportunity to correct the position before the mistake made in his favour was consolidated.[31]It is a salient feature of this case that Mr McDonald could have exercised a right of “retention” so as to re-transfer the registration mark to the Cressmans’ order, and would then in lieu have received from the DVLA the age-related mark which he had expected; he could have done this at any stage after his acquisition of the car - at least until its gift to his partner which, as I have said, cannot have been before 8th February 2001; and he refused to do this knowing that he had received the mark by mistake contrary to the auction bargain. The mark was here not just realisable, but easily returnable. The case lies outside the scope of Pollock CJ’s aphorism in Taylor v. Laird (1856) 25 L.J. Exch. 329, 332: “One man cleans another’s shoes. What can the other do but put them on?”.[32]If the case turned on whether there was ‘free acceptance’ or ‘reprehensible seeking-out’, it would be borderline. Bearing in mind the circumstances in which Mr McDonald came to register in his name a car carrying the mark TAC 1, it could, I think, be regarded as falling within the general principle of free acceptance advocated by Professor Birks and Goff & Jones. On and after 13th December 2000 Mr McDonald was acting unconscientiously in seeking and in insisting upon such registration, in the knowledge that this was not in accordance with the bargain made and that there had been an obvious mistake. Professor Burrows’ test of “reprehensible seeking-out” is on its face more stringent. But it is designed to overcome any suggestion of indifference, and it could be consistent with this rationale if the test were, if necessary, given a slightly wider re-formulation to cover circumstances such as the present. The qualification “reprehensible” derives from what Professor Burrows himself describes as “the stronger case” where the defendant shows a ‘disregard for the bargaining process”. Mere ‘seeking-out’ might in his view suffice. Here, there was positive conduct aimed at the registration in his name of his car with the old cherished mark contrary to the known bargain. What happened involved sufficient elements of knowledge, choice and action to overcome any suggestion of indifference, and can once again be seen as reprehensible in so far as it was in conscious disregard of the prior bargain. However, the case does not need to turn on whether or not its facts can be brought within a concept of ‘free acceptance’ or ‘[reprehensible] seeking-out’.[33]The alternative basis of restitutionary recovery on which Coys rely is “incontrovertible benefit”. This does not depend on analysis of the circumstances in which the benefit came to be acquired and fully enjoyed. It depends on the nature and value of the benefit as and when acquired. This basis of recovery was approved in principle by Hirst J in a dictum in Procter & Gamble Philippine Manufacturing Corpn. v. Peter Cremer GmbH (The Manila) [1988] 3 AER 843. In BP Exploration Co. (Libya) Ltd. v. Hunt (No. 2) [1979] 1 WLR 783, Robert Goff J used a similar phrase at p.805D in relation to the Law Reform (Frustrated Contracts) Act 1943, which he explained at p.799D as grounded on principles of unjust enrichment. Professor Birks suggests as the test of incontrovertible benefit whether “no reasonable man would say that the defendant was not enriched”. However he emphasises the major difference, in his view, between this and “the adoption of a straightforward objective standard of value” (p.116), and identifies two main cases in which the test should, in his view, be satisfied. They are cases of necessary expenditure (not here in issue) and cases of realised benefit. While he also identifies, under a third heading of “(c) others”, some cases in which courts “simply took the view that the benefit was ‘obvious’” (page 124), he evidently regards them as incompletely explained and exceptional cases of recourse to an objective standard.[34]In contrast, Goff & Jones in addressing incontrovertible benefits submit that it should be sufficient “that the benefit is realisable” and that it should not be necessary to show that it has been realised (para. 1-023). They comment:
“It is said that the principle of respect for the subjectivity of value would be subverted if this were accepted. But it may not be unreasonable, in some circumstances, to compel a person to sell an asset which another has mistakenly improved”
Goff & Jones recognise that not every financial gain may be said to be realisable, and refer in this connection to the landowner who “subject to the equitable doctrine of acquiescence, is not obliged to make restitution to the mistaken improver even though the land can of course be sold or mortgaged”. In The Manila Hirst J recorded that it had been common ground between the parties that the test in cases of receipt of services was appropriately set out in Goff & Jones as being whether the defendant had “gained a financial benefit readily realisable without detriment to himself” (p.855f). In Marston Construction Co. Ltd. v. Kigass Ltd. (1989) 46 BLR 109, HHJ Bowsher QC preferred Goff & Jones’s to Professor Birks’ approach.[35]Professor Burrows advocates an approach lying midway between realisation and realisability. He suggests as the test of benefit whether it is reasonably certain that the defendant will realise the positive benefit in the future. He puts the position at p.19 as follows:
“A problem with the narrow Birks view is that the date of trial is made crucial. Realisation of the benefit after trial is ignored and wily defendants may therefore be encouraged simply to wait before realising the benefit. Goff and Jones’ view avoids this problem but has its own weakness because what is realisable cannot depend just on whether it is land or a chattel that is improved. The circumstances of the individual are also relevant. An improvement to a car is not realisable to the person who cannot afford to sell it and buy a suitable replacement. An improvement to land may be realisable to an owner who does not live on the land. In any event if it is clear that the defendant will not realise the benefit can it be said that he is so obviously benefited just because he could easily realise it? The best approach seems to be to take Birks’ realised test but to add that the defendant will also be regarded as incontrovertibly benefited where the court regards it as reasonably certain that he will realise the positive benefit. Assessment of the defendant’s future conduct is necessarily speculative but the courts commonly have to predict future conduct in assessing damages for loss, precisely to avoid the nonsense of rigidly cutting off loss at the date of trial.”
Mr Purchas for Coys supports Goff & Jones’s approach, while Mr Swirsky submits on behalf of Mr McDonald that we should adopt Professor Burrows’ intermediate approach. However, I think that Professor Burrows’ approach might perhaps be open to the comment that it is too restrictive, and that a requirement of proof of intention might itself also encourage tactical stances or manoeuvring not too dissimilar to that which he fears on Professor Birks’ approach.[36]Here, Mr McDonald received the mark. He did not realise any financial benefit from it, so if one were to treat Professor Birks’ suggested requirement of actual realisation as relevant, it would not be met. However, Mr McDonald could easily have arranged for re-transfer of the mark to any car nominated by the estate and its financial value was easily realisable on the market, if he had so wished. If the test suggested by Goff & Jones were accepted, there would of course be no difficulty in concluding that Mr McDonald received a readily realisable benefit. That he subsequently gave it away to his partner could go at most to a possible defence of change of position. Professor Burrows’ modified approach, requiring us to consider whether it was also reasonably certain that Mr McDonald would realise the financial benefit, would seem difficult to apply in or adapt to the present situation. It would fit a case where the defendant retains the alleged benefit at trial, not a case where he has apparently chosen to give it away, in knowledge of the relevant facts and claims (unless perhaps one could treat the gift away as the realisation of a benefit). Even if one were to attempt to ignore the gift away, it would be difficult, if not impossible, to consider what a defendant’s intention would have been regarding realisation, if he had not given the benefit away, when giving it away is what he actually chose to do.[37]Looking at the matter generally, I have no doubt that justice requires that a person, who (as a result of some mistake which it becomes evident has been made in the execution of an agreed bargain) has a benefit or the right to a benefit for which he knows that he has not bargained or paid, should reimburse the value of that benefit to the other party if it is readily returnable without substantial difficulty or detriment and he chooses to retain it (or give it away to a third party) rather than to re-transfer it on request. Even if realisable benefit alone is not generally sufficient, the law should recognise, as a distinct category of enrichment, cases where a benefit is readily returnable. A person who receives another’s chattel must either return it or pay damages, commonly measured by reference to its value. The mark is not a chattel, and it was not suggested before us that its return could at any stage (even before the gift to the partner) have been enforced, or that its non-return could sound in damages. (There were allegations below of implied duties to co-operate in the return of the mark, but the judge did not accept them, and there is no appeal in that respect.) However, Mr McDonald’s insistence on keeping the mark and the absence of any obvious means of compelling its re-transfer are reasons for analysing this case in terms of unjust enrichment. Mr McDonald knew that he had not bargained or paid for the mark. The mark or its benefit was in practice easily returnable. If Mr McDonald chose to keep it, then I see every reason for treating him as benefited.[38]It also seems to me unrealistic to suppose that Mr McDonald did not in the circumstances himself attach value to the mark. By refusing to effect a re-transfer, and by later giving the car with its mark away to his partner, Mr McDonald was exercising a deliberate preference to give himself and/or his partner the practical enjoyment of the mark for the meantime and the possibility of realising its monetary value in the longer term. Before giving the car to his partner, he could have re-transferred the mark to the estate’s order, or he could have given her the car on the understanding that she would re-transfer the mark to the estate’s order, if he so required. Further, although I would not go as far as the judge did in equating Mr McDonald and his partner for all purposes, the practical effect of their relationship and of Mr McDonald’s evidence about it cannot be ignored. They were living together with a young family, and the car was for their joint use. The expectation would have been that both would continue to benefit both by the supposed cachet and by any future sale of the mark.[39]Mr McDonald’s responses under cross-examination were to the general effect that the registration mark was a matter of indifference to him and to his partner (cf transcript pp.9-10 and judgment p.11F). If that had been so, then, as the judge said, it would be difficult to understand why he took the attitude he did and did not co-operate in a re-transfer to the estate. To my mind, Mr McDonald’s attitude in and after December 2000, and his conduct in giving his partner the mark with the car, show that he attached and attaches a value to the mark. Whatever their motives, numbers of car-owners pay good money to have a personalised plate. The inference is that Mr McDonald, despite his denials, attached real value to the mark, and determined that it should be retained for that reason.[40]In these circumstances, and in agreement with the judge, I would conclude that Mr McDonald received an incontrovertible benefit in the market value of the mark. Viewing the matter in the terms in which counsel presented it, there could be no difficulty in reaching this conclusion on the simple test of realisability advocated by Goff & Jones. Even if realisability is not alone generally sufficient, the ability to realise the mark in the future, coupled with the enjoyment of its possession and use in the meantime, seem to me considerable arguments in favour of a conclusion that Mr McDonald regarded himself as subjectively benefited by the mark and should be treated as benefited by its value. I would regard Professor Birks’ test of realised benefit, if it were to be applied to this situation, as overly narrow, and Professor Burrows’ test as inappropriate and inapplicable in the present context (unless in each case one were to treat the gift to the partner as a realisation of benefit, which seems artificial). In my view, however, the law must in any event recognise as a distinct category of enrichment cases of readily returnable benefit, of which the present is an example. I therefore conclude that Mr McDonald did obtain a benefit which he should prima facie reimburse, if not in kind then in cash.

Change of position

[41]To rebut this prima facie conclusion, Mr Swirsky repeated before us the submission advanced below to the effect that Mr McDonald had changed his position and deprived himself of any benefit by giving the car with its mark to his partner. The wide view of the doctrine of change of position is that it “looks to any change of position, causally linked to the mistaken receipt, which makes it inequitable for the recipient to be required to make restitution”: Scottish Equitable plc v. Derby [2001] EWCA 369; [2001] 3 AER 818, paras. 30-31 per Robert Walker LJ. Assuming this to be the correct view, still there can be nothing in the suggested defence in this case, having regard to the findings regarding the factual position set out in paragraphs 18-21 above. By the time Mr McDonald gave the car away, he knew that there had been a mistaken failure to obtain any right of retention under the statutory scheme and that both the estate and Coys would be pursuing him to recover the mark or its value. This negatives both any causal link and any inequity. A gift away made in such circumstances cannot have been made in reliance on the validity of the original receipt of the mark and cannot be regarded as having been made “in good faith”, so there can be no defence of change of position: see Lipkin Gorman v. Karpnale Ltd. [1991] 2 AC 548, 560C per Lord Templeman and 580C per Lord Goff; and Niru Battery Manufacturing Co. v. Milestone Trading Ltd. [2002] EWCA 1425 (Comm.), paras. 134-5 per Moore-Bick J, approved [2003] EWCA (Civ.) 1446. Even if I had found that the gift to the partner took effect on the evening of 13th December 2000, I would also have considered that Mr McDonald was by then in possession of sufficient knowledge to exclude causal reliance and inequity or good faith: see paragraph 21 above.[42]It follows that Mr McDonald became liable to the estate for unjust enrichment, to the extent of £15,000. The trial below proceeded on the basis that all but £1,391.88 of that liability was met by Coys’ settlement payment to the estate in March 2003; and that any further recovery by Coys could only be sought by way of contribution under the 1978 Act.

Contribution

[43]The Civil Liability (Contribution) Act 1978 provides as follows:
“1 Entitlement to contribution (1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise). (2) A person shall be entitled to recover contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, provided that he was so liable immediately before he made or was ordered or agreed to make the payment in respect of which the contribution is sought. …… (4) A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.” 2 Assessment of contribution (1) Subject to subsection (3) below, in any proceedings for contribution under section 1 above the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage in question. …… 6 Interpretation (1) A person is liable in respect of any damage for the purposes of this Act if the person who suffered it (or anyone representing his estate or dependants) is entitled to recover compensation from him in respect of that damage (whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise)”
[44]No point was taken below regarding the applicability of s.1(1) and 2(1) of the Act to the present case. It was accepted that, if Mr McDonald was liable to the estate, then his liability related to the same damage as that in respect of which Coys were liable to the estate, so that the court would have jurisdiction to order contribution under s.2(1). In his supplemental skeleton argument dated 27th November 2003 for the present appeal, Mr Purchas representing Coys drew attention to the cases of Royal Brompton Hospital NHS Trust v. Hammond [2002] UKHL 14; [2002] 1 WLR 1397 and Dubai Aluminium Co. Ltd. v. Salaam [2002] UKHL 48; [2003] 2 AC 366, on the question, “although not in issue at first instance or on this appeal”, whether sums recoverable by way of unjust enrichment could be regarded as compensation in respect of the same damage as liability for breach of contract, within the meaning of ss.1(1) and 2(1) of the 1978 Act. He went on to say that, had any such issue been raised, Coys would have argued for contribution in accordance with the doctrine of equitable subrogation pursuant to Banque Financière de la Cité v. Parc (Battersea) Ltd. [1999] 1 AC 221. Mr Purchas’s skeleton was, we understand, served on Friday, 28th November 2003, but it was not until the hearing of the appeal on Tuesday, 3rd December 2003 that Mr Swirsky sought for the first time to raise any such issue. It was apparent that, if we permitted the amendment which he sought, Coys would have to be permitted to make amendments along the lines which Mr Purchas’s skeleton suggested, and the appeal would change radically in shape and size. There would have to be an adjournment, with considerable wasted costs, which would be likely to fall either on Coys or, more probably, on the public purse, since Mr McDonald has the benefit of legal aid. We bore in mind the principles stated in Jones v. MBNA International Bank (CA) (30th June 2000) cited in Civil Procedure Vol. 1 at para. 52.8.2. These apply mutatis mutandis to an attempt by a defendant appellant to raise on an appeal at the last moment points which could and should have been raised below, in circumstances where this would be bound to cause extra cost, work and delay for all concerned. In these circumstances we refused the application to amend. The consequence is that this appeal must proceed on a view of the scope of the Act which may in a subsequent case prove to be incorrect. Our decision should not be taken as any sort of authority on the correct construction of the Act. We are concerned to do justice between these particular parties, having regard to the way in which they by their conduct have conducted the case and committed themselves to arguing this appeal.[45]The present appeal therefore proceeds on the basis on which it was argued below, namely that ss.1(1) and 6(1) of the 1978 Act apply in a situation such as the present. The damage which Mr McDonald became liable to reimburse to the estate by way of unjust enrichment as a result of his obtaining the mark was the same as the damage which Coys became liable to pay to the estate for their failure to follow their instructions which led to Mr McDonald obtaining the mark. Mr McDonald’s skeleton before us raises a muted complaint that the judge did not articulate on what basis Coys were liable to the estate. However, there can be no possible doubt about that. Coys are professional car auctioneers, and clearly failed to show the skill, knowledge or competence to be expected of them, by obtaining a right of retention as instructed and by refraining from auctioning and transferring the car until they had done this.[46]Mr Swirsky sought, before us, to capitalise on the statutory requirement that the amount of the contribution recoverable should be “such as may be found to be just and equitable having regard to the extent of [Mr McDonald’s] responsibility for the damage in question” and pointed out that the same words had, in the predecessor statute, been interpreted to require the court to distribute damages according to the causal responsibility: see Collins v. Hertfordshire C.C. [1947] 1 KB 598, 624 per Hilbery J. Here, he argued, the mark was lost from the moment that Coys sold and passed property in the car without securing from the DVLA a right of retention. Mr McDonald had no causal responsibility for that at all. So the whole causal responsibility must fall on Coys.[47]This argument comes close to seeking to re-open the points for which we refused permission to amend. Assuming, as we must, that the claims against Mr McDonald by way of unjust enrichment and against Coys by way of damages for breach of contract seek compensation in respect of the same damage, that damage must consist in the estate’s continuing deprivation of the mark, not simply the initial transfer of the right to the mark with the car on 12th December 2000. That is, in any event, also the realistic view of Coys’ breach of contract. By itself, it would have caused no more than minor irritation and extra costs, had Mr McDonald disgorged the mark, by possession of which he was unjustly enriched, after he became aware that he had by a mistake obtained it along with the car. The real damage lies in the estate’s continuing deprivation of the mark or its value, which was still the result of Coys’ breach, but was, much more directly, the result of Mr McDonald’s determination to retain and refusal to re-transfer the mark.[48]On the hypothesis on which we must approach this part of the appeal, it was therefore open to the judge to treat both parties as causally responsible for the same damage. Bearing in mind that it is Mr McDonald who received the benefit of the mark, and that the whole proceedings would have been unnecessary had he re-transferred the mark to the estate’s order as he should have done, the judge’s conclusion that Coys should recover 100% contribution from him appears to me unassailable in this court.

Indemnity costs

[49]Mr Swirsky challenges the judge’s award of indemnity costs in respect of the Part 20 proceedings on the basis that it was insufficient justification for such an order that Mr McDonald had acted “opportunistically” and that there was nothing to take the case out of the norm. However, as the judge made clear during the argument about costs, Mr McDonald had not merely acted opportunistically (“trying to take advantage of someone else’s mistake”), he had conducted the litigation improperly, denying the conversation of 12th December 2000 from the outset and challenging the truthfulness of Coys’ witnesses in that regard. The judge was evidently and understandably also sceptical about Mr McDonald’s suggestion that he and his partner were not interested in the mark as such. These were factors sufficient to take the case out of any norm. Whether or not to award indemnity costs was very much a matter for the judge’s discretion: see CPR 44.4.2. I can see no basis for this court to interfere with the judge’s decision to award indemnity costs in respect of the Part 20 proceedings.

Conclusion

[50]In my judgment, therefore, this appeal against the judgment summarised in paragraph 1 above fails on all points and must be dismissed.[51]I agree.[52]I also agree.

Cited in 15 later judgments

and 6 more of the most senior