Lloyd's Maritime and Commercial Law Quarterly
UNJUST ENRICHMENT AND CONTRACT
Lumbers v. Cook
The recent decision of the High Court of Australia in Lumbers v. W Cook Builders Pty Ltd (in liquidation)
1 concerned the relationship between the law of unjust enrichment and the law of contract. The facts were simple and the result seemed obvious. But the reasoning raises deep questions about the future of unjust enrichment in Australia.
Matthew and Warwick Lumbers entered into a contract with a company, W Cook and Sons Pty Ltd (“Sons”). Without the knowledge of the Lumbers, Sons entered into a subcontract for the work to be performed by a closely related company, W Cook Builders Pty Ltd (in Liquidation) (“Builders”).2 After the work was completed, Sons wrote to the Lumbers asserting that the work had been done by Builders and that all accounts had been processed by Builders. Sons told the Lumbers that the Lumbers owed nothing to Sons. Builders (now in liquidation) claimed the balance of $274,791 from both Sons and the Lumbers. The contractual claim against Sons was discontinued because Builders failed to provide security for costs. The only question for the High Court of Australia was whether, notwithstanding Builders’ contract with Sons, they could recover the value of the work done from the Lumbers. Put simply, could Builders “leapfrog”3 their contract with Sons and sue Lumbers for unjust enrichment? The answer given by the High Court of Australia
1. [2008] HCA 27.
2. The argument by Builders that these arrangements were too uncertain to amount to a subcontract was raised for the first time in the High Court of Australia and was not considered: see [109–111].
3. This expression is Birks’s: P Birks, Unjust Enrichment, 2nd edn (Clarendon, Oxford, 2005), 89.
CASE AND COMMENT
445