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Lloyd's Maritime and Commercial Law Quarterly

Unjust enrichment in Australia

Samuel Walpole* and Kit Barker


This year’s digest covers a much shorter period than the last—a little less than 12 months. There is just one High Court case (BMW Australia §32), the main impact of which is likely to be to dampen the funding of “open” class actions in Australia, in so far as it holds that court orders are not available at the start of a proceeding to guarantee remuneration for those funding the litigation against all litigants in the class who ultimately benefit from the litigation’s success. We report it in the main for the dissenting judgment of Edelman J, which contains a careful and discriminating analysis of claims for remuneration in respect of unrequested services. Some of these, his Honour suggests, are based on unjust enrichment, but many (for example, claims for salvage or litigation funding services) lie outside unjust enrichment law altogether and are not even strictly restitutionary—the rate granted to the service provider being only indirectly related to the benefit bestowed on a defendant and incorporating a reward element that is designed to incentivise the relevant intervention.
At an intermediate appellate level, perhaps the most significant case in the reported period from the point of view of the law’s struggle with taxonomy is Smith v Leveraged Equities (§38), which involved the misdirection of shares by a fraudster to provide security for his own, high-risk equity trades and an attempt of the defrauded party to get the shares back. The case continues a sequence of cases decided in Australia since it was held in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89; [2008] RLR §22 that the liability of remote recipients in equity for knowing receipt of misdirected property is fault-based, not strict. Since Farah, lower courts have increasingly sidestepped the High Court’s stance (or, perhaps, reduced its practical importance) by deploying a number of other mechanisms both at law and in equity which achieve a “stricter” form of liability for remote recipients of misdirected assets. The court in Smith sews the various threads together (Heperu Pty Ltd v Belle [2009] NSWCA 252; 76 NSWLR 230; [2010] RLR §29; Fistar v Riverwood Legion & Community Club Ltd [2016] NSWCA 81; (2016) 91 NSWLR 732; [2018] RLR §33; Black v S Freedman & Co (1910) 12 CLR 105; Great Investments Ltd v Warner [2016] FCAFC 85; 243 FCR 516; [2018] RLR §35; and Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548), rationalising them all as examples of unjust enrichment and continuing their onward march. At the same time, it persists with an analysis of the recipient’s liability in equity (described as strict) that is based on a defendant’s unjust “retention” of a benefit (rather than, as


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