Limitation of Actions Consultation - Law Commission

defendant’s unjust enrichment has been subtracted from the wealth of the plaintiff,
that is, where the defendant’s gain is equivalent to the plaintiff’s loss. Payments
made by a mistake or for a consideration that has failed are examples. Restitution
for wrongs refers to restitutionary claims which strip away gains made by the
commission of a wrong, such as a tort or breach of trust.
5.5 For the purposes of completeness we should add that there is no judicial discretion
or long-stop in play in the area of restitutionary claims.
2. AUTONOMOUS UNJUST ENRICHMENT
5.6 It has long been thought that the limitation period for simple contracts laid down
in section 5 of the 1980 Act applies to “quasi-contractual” claims, such as the
action for money had and received to the plaintiff’s use, for money paid to the
defendant’s use, and a quantum meruit. For example, in Re Diplock, 3
Lord Greene
assumed that this section covered claims for money had and received. It must be
noted however that this case was decided at a time when the implied contract
theory, although under attack, 4
was still used to explain “quasi-contractual” claims.
This theory has since been rejected by the House of Lords. 5
5.7 Now that quasi-contract has become authoritatively recognised as belonging to a
law of restitution that is independent of contract (and rests on the principle against
unjust enrichment, not implied contract), can it still be said that section 5 applies?
Hobhouse J has said that it does. In Kleinwort Benson Ltd v Sandwell Borough
Council, 6
which dealt with restitutionary claims in respect of payments made under
a void “swap” agreement, Hobhouse J relied on the decision in Pepper v Hart 7
and
referred to Hansard to determine that the section was intended by Parliament to
cover a claim for money had and received. It therefore seems clear that section 5
applies to restitutionary claims that historically have been grouped under the
heading of quasi-contract.
5.8 If, then, the limitation period is six years from the date on which the cause of
action accrued, when does the cause of action accrue for the purposes of time
starting to run? The case law has largely focused on actions for money had and
received, where it has been held that the cause of action accrues at the date when
the payment which the plaintiff seeks to recover has been made, and that the
limitation period therefore runs from that point. 8
But it is probably more accurate
3 [1948] Ch 465, 514.
4 See Fibrosa Spolka Akcyjina v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 62 - 3,
per Lord Wright.
5 Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. See also Westdeutsche Landesbank
Girozentrale v Islington London Borough Council [1996] AC 669.
6 [1994] 4 All ER 890, 942 - 3.
7 [1993] AC 593.
8 See Baker v Courage & Co [1910] 1 KB 56; In re Mason [1928] 1 Ch 385, 393; Re Blake
[1932] 1 Ch 54, 60; Anglo-Scottish Beet Sugar Corporation, Ltd v Spalding Urban District
Authority [1937] 2 KB 607, 627. Cf Freeman v Jeffries (1869) LR 4 Exch 189 in which it
was suggested that the plaintiff was obliged to give formal notice of his entitlement to the
money to the defendant before he could maintain an action for the return of that money
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