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The Curious Case of Woolwich Equitable - the 'ugly duckling' of Unjust Enrichment?

Alexander Clevewood Ng*


It is often stated that there are three major branches of private law: contract, tort, and unjust enrichment. Briefly stated, to establish a claim in unjust enrichment in English law, the following elements must be satisfied:

  1. Enrichment of the recipient;

  2. At the expense of the donor;

  3. Which is unjust;

  4. In the absence of defences.

A transfer benefiting the recipient is deemed 'unjust' if at least one unjust factor is satisfied in the circumstances of the case. The English approach differs from the 'negative' approach in Canada and civil law jurisdictions, whereby restitution should be effectuated if a transfer has no legitimate basis, i.e. 'unjustified' instead of 'unjust'.

Ever since Lord Goff recognised the existence of unjust enrichment in modern English law in Lipkin Gorman v Karpnale [1991] 2 AC 548, much ink has been spilt on the need for its doctrinal integrity. This ensures that the development of unjust enrichment remains principled, thereby refraining from impinging upon the normative scope of other areas of private law, such as contract.

Rationalisation of Woolwich:

In the area of unjust enrichment, a major issue of contemporary relevance pertains to the positioning of the Woolwich unjust factor in the scheme of unjust enrichment.[1] A summary of Woolwich is contained within the footnotes. Its positioning is vital in determining whether it is analogisable with other unjust factors.

The Birksian classification of unjust factors should first be discussed.[2] It is an authoritative scheme compiled by the late Professor Peter Birks, a renowned restitution scholar. Two categories were proposed by him: Category 1 - factors which concern the personal autonomy of the claimant; and Category 2 – public policy. Woolwich can be deemed as a factor 'of its own', occupying Category 2. Others, including mistake and duress, concern the vindication of the claimant's impugned rights as an individual.


One major fear is that, if Woolwich were not immediately analogisable with other unjust factors, where it is imposed solely owing to public policy reasons, the ambit of unjust enrichment might become unclear. This potentially affects its relationships with other private law doctrines, such as contract. For instance, this potentially leads to challenging cases where unjust enrichment applies even when the contract governing the transaction is still valid, e.g. Roxborough v Rothmans in Australia.[3] Furthermore, this might impugn internal doctrinal coherence. This is particularly so, given that the existence of Woolwich is contended to contradict the decision in Prudential Assurance v HMRC,[4] in that the latter denies full restitution in cases concerning tax which has been unlawfully levied.[5] Maintaining doctrinal tidiness, both internal and external, is vital for the future development of unjust enrichment, as it remains a nascent doctrine following its formal recognition by Lord Goff in Lipkin Gorman v Karpnale.[6]


As a broader, cautionary note, given the potentially ambiguous contours of Woolwich, this might conflict with the common law’s conventional piecemeal approach in developing the law. This is supported by Lord Walker, who applied such dicta specifically to the development of unjust enrichment in Deutsche Morgan Grenfell v IRC.[7]


My submission is that the Woolwich unjust factor is analogisable with other unjust factors. The main argument seeks reference to the Kantian social contract theory. Woolwich, as with inter alia mistake and duress, concerns the impugnation of individual autonomy, albeit on a different scale. Restitution therein vindicates said impugnation, answering to corrective justice, which is the crux of unjust enrichment held in Investment Trust Companies v HMRC.[8]


A central concept in the Kantian social contract theory is rational possible unanimity.[9] This is defined as that a purported law promulgated by the sovereign is not valid law if ‘a whole people could not possibly give its consent’. Endorsement of the validity of a law therefore entails the positive, reasonable exercise of personal autonomy, hence respecting the intrinsic individual ‘right’ proposed by Nagel.[10] It is outside the ambit of this opinion to argue in length whether corporate entities (legal persons) should be included in Nagel's thesis. As a preliminary opinion, they should since the contrivance of corporate personhood flows directly from the volition of natural persons, i.e. founders using the corporate vehicle to attain objectives, in exercise of their autonomy.

In Woolwich and analogous cases, since the legislation underlying the legal basis of the executive’s levying of tax is void, it does not reasonably gain the consent of the entire populace. The executive’s act is thus bound to infringe the personal autonomy of at least a segment of society. The magnitude of such infringement is immaterial, since it does not alter the fact that this attracts the applicability of unjust enrichment to ‘correct’ such injustice through restitution. This argument is buttressed by developments in Canada, whereby a public law approach is favoured over unjust enrichment by the Supreme Court in a case analogous to Woolwich.[11]


Therefore, the two-tier Birksian scheme of unjust factors is in fact illusory. Woolwich can be readily construed as possessing the same doctrinal foundation as other unjust factors.


One might argue that this conceptualisation of Woolwich renders it an objective test, which differs from other unjust factors. Determining whether the transfer were effectuated under mistake depends on the claimant’s subjective state of mind.[12] This argument is rejected. This difference is not significant enough to attract a variant doctrinal analysis. Indeed, regardless of the mechanical operation of this limb, the notion of corrective justice is still engaged. Woolwich still concerns the impugnation of one’s right that requires correction. This difference would only attract evidential questions. This is particularly so when certain unjust factors which are established by virtue of an objective test, could still be readily analogisable with mistake, e.g. total failure of consideration.


To conclude, the Woolwich unjust factor is readily analogisable with other unjust factors. It does not merely stem from the amoebic bubble of public policy. It is not parasitic upon the court’s exercise of broad discretion. This promotes doctrinal coherence and the principled development of the law of unjust enrichment.

*Alexander Clevewood Ng is the Deputy Editor-in-Chief of the City Law Review. He had been an Editor of the UCL Journal of Law and Jurisprudence. He graduated from UCL Laws and is a current Bar Course student at City, University of London. His first-class undergraduate dissertation was on the crossover between unjust enrichment and tax law (i.e. immensely riveting).

[1] Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. As a brief summary, this case concerns the restitution of tax paid pursuant to legislation subsequently declared void. Constitutional arguments, including the applicability of Bill of Rights 1688 and the preservation of the legislature-executive boundary, are raised in the decision.

[2] P Birks, Unjust Enrichment (2nd edn) (OUP 2005).

[3] [2001] HCA 68.

[4] [2018] UKSC 39.

[5] This concerns whether denying restitution of the ‘time value’ of the principal sum(s) paid, in the form of compound interest, impedes full restitution. The Supreme Court held that only simple interest could be awarded instead, pursuant to s.35A of the Senior Courts Act 1981. This is still a matter of intense controversy.

[6] [1991] 2 AC 548.

[7] [2007] 1 All ER 449, [156].

[8] [2017] UKSC 29, [43].

[9] I Kant, Theory and Practice (1797), 8:297.

[10] T Nagel, ‘The value of inviolability’ in P Bloomfield (ed.), Morality and Self-Interest (OUP 2007).

[11] Kingstreet Investment v New Brunswick [2007] 1 SCR 3.

[12] n.7.

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