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Restitution of Non-Gratuitously Conferred Benefit in Malaysia: A Case for Sowing the Unjust Enrichment Seed

Published online by Cambridge University Press:  25 May 2016

Alvin W-L SEE
Alvin W-L SEE*
Affiliation:
Singapore Management University, Singapore alvinsee@smu.edu.sg
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Abstract

This article draws on the common law of unjust enrichment to rationalize and develop the right to recover a non-gratuitously conferred benefit set out in section 71 of Malaysia’s Contracts Act 1950. This attempt at legal transplant and modern restatement is made in the hope of injecting principle and clarity into the antique section with the eventual goal of reviving it for practical and modern use.

Information

Type
Articles
Information
Asian Journal of Comparative Law , Volume 11 , Issue 1 , July 2016, pp. 141 - 162
Copyright
© National University of Singapore, 2016 

As judges and lawyers become increasingly aware that the two giants of private law, contract and tort, are incapable of resolving many monetary and property disputes, they began to look elsewhere for solutions. In Malaysia, one place where they often turn to is Part VI of the Contracts Act 1950 (CA 1950),Footnote 1 the heading of which reads: “Of Certain Relations Resembling Those Created by Contract”. The existence of Part VI in the CA 1950 is an anomaly, since the provisions contained therein (sections 69-73) have nothing to do with contracts. Among them, the most curious is undoubtedly section 71, which is the focus of this article. Section 71 reads:

Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.

Section 71 is also accompanied by two statutory illustrations which appear to deal with entirely unrelated situations.Footnote 2 They read:

  1. (a) A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his own. He is bound to pay A for them.

  2. (b) A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously.

Although the content of the CA 1950 was derived mainly from mid-nineteenth century English law, there is no clear hint as to which English rule or principle section 71 was based upon. This is rather curious considering that the other provisions of Part VI are fairly clear and specific about their respective subject matters. Although the Malaysian courts were frequently presented with opportunities to consider section 71, they have made little progress in articulating a principle upon which section 71 is based. Instead, they have applied section 71 to a wide variety of unrelated situations. In Perak Motor Co Sdn Bhd v Estate Pekebun Kecil Sdn Bhd, the High Court went as far as to say that section 71 could be “applied with discretion”.Footnote 3 Such an uncertain approach has long been abhorred in the realm of private law.Footnote 4 It would create an incentive for litigants to invoke the section out of speculation and convenience in hope that the courts would find in their favour.

This article addresses the problem by suggesting that section 71 is best understood and developed by reference to the modern law of unjust enrichment.Footnote 5 More specifically, it argues that section 71 should adopt free acceptance as its core case. By allowing recovery only where the recipient has freely accepted the benefit, section 71 is prevented from applying too widely to the extent of forcing goods or services onto unwilling or unknowing recipients. Notwithstanding this suggestion, the possibility that section 71 could be applied to address other situations will also be considered.

The ensuing discussion proceeds in three parts. Part II explains the difficulty in uncovering the origin and purpose of section 71 and considers its possible relationship with the law of unjust enrichment. Part III highlights the substantive similarities between section 71 and the modern law of unjust enrichment, and further explains the usefulness of aligning section 71 with the tested common law method of analysing issues of unjust enrichment. It is in this part of the article that the precise injustice that section 71 ought to be addressing is given fuller consideration. Finally, Part IV identifies cases in which section 71 should have no application because they belong to the domains of other established branches of the law.

II. THE MYSTERY OF SECTION 71

The CA 1950 is essentially a duplicate of the Indian Contract Act 1872 (ICA 1872),Footnote 6 which was the brainchild of the Third Indian Law Commission.Footnote 7 In 1866, the Law Commission presented its Second Report on the Substantive Law for India, proposing a draft contract law which formed the basis of the ICA 1872.Footnote 8 Chapter V of the ICA 1872, which is identical to Part VI of the CA 1950, already appeared in the initial draft. However, neither the accompanying explanatory notes nor the discussions that followed shed any light on the drafters’ intent regarding the then equivalent of section 71.

There is, however, a hint as to what section 71 may be concerned with. The word “resembling” in the heading of Part VI of the CA 1950 indicates that the provisions contained therein are in fact non-contractual in nature. While the incorporation of these non-contractual provisions into a contract code may seem odd to a modern observer, the anomaly is easily explained by the fact that legal taxonomy in the mid-nineteenth century was influenced by historical accidents. At that time, contractual obligations were enforced mainly through the action of assumpsit, which entails the assertion that the defendant had made a promise (assumpsit) to pay but broke it. The element of promise gave this form of action a strong contractual flavour. By the seventeenth century, however, the action of assumpsit was extended to cover certain non-contractual claims, possibly out of convenience, by implying the required promise although none actually existed.Footnote 9 From this emerged the law of quasi-contracts.Footnote 10 Although it was clear that any resemblance between contract and quasi-contract was merely superficial,Footnote 11 the tradition of subsuming the latter within the former persisted even after the abolishment of the forms of action in 1852.Footnote 12 Part VI of the CA 1950 is a clear manifestation of this tradition.

Given this piece of historical information, the best chance of uncovering the underlying bases of the provisions in Part VI of the CA 1950 is to look to the law of quasi-contracts of mid-nineteenth century England. That this is the correct way of approaching the matter is indicated by the fact that most of the provisions in Part VI do indeed point to a quasi-contractual cause of action. Unfortunately, even the author’s most persistent investigation of the law of quasi-contracts has uncovered nothing that is remotely related to section 71. Neither did the earlier cases decided by English judges (who were usually familiar with legal history) shed any light on the matter. In Mohamed Yusoof v Murugappa Chettiar (Mohamed Yusoof), Terrell CJ of the Federal Malay States Court of Appeal merely said: “Admittedly the section goes far beyond the English law”.Footnote 13 But it is unclear whether he had in mind a narrower English principle or whether he knew of no English equivalent. In Siow Wong Fatt v Susur Rotan Mining Ltd, an opportunity to have the Privy Council interpret section 71 arose following an appeal against the decision of the Federal Court of Malaysia.Footnote 14 Although the bench was constituted by three prominent Law Lords (Lord Hodson, Lord Guest, and Lord Upjohn), the court expressed neither familiarity nor surprise with section 71, merely applying it in accordance with its wording. Such an opportunity never arose again following the abolishment of the right to appeal to the Privy Council in 1988.

An important legal development, however, aided the quest of deciphering section 71. By the mid-twentieth century, Anglo-American scholars have come to accept that the bulk of quasi-contracts were based on the principle of unjust enrichment.Footnote 15 This influenced the First Law Commission of India, established post-independence in 1955, to express the view that Chapter V of the ICA 1872 is based on the same principle.Footnote 16 This suggestion also gained favour with the Indian courts. In State of West Bengal v M/S BK Mondal & Sons Footnote 17 and Mulamchand v State of Madhya Pradesh,Footnote 18 the Supreme Court of India said, albeit cursorily, that the purpose of section 70 of the ICA 1872, which is the equivalent of section 71 of the CA 1950, is to prevent unjust enrichment.Footnote 19

In Malaysia, the first case to mention both section 71 and the principle of unjust enrichment in the same judgment was New Kok Ann Realty Sdn Bhd v Development & Commercial Bank Ltd, New Hebrides (In Liquidation) (New Kok Ann).Footnote 20 However, the High Court merely alluded to the view in India that the equivalent Indian provision (ICA 1872, section 70) is based on the principle of unjust enrichment. Like in Siow Wong Fatt, the court focused instead on interpreting the wording of section 71. On appeal, the Supreme Court upheld the High Court’s decision but said nothing about the possible relationship between section 71 and the principle of unjust enrichment.Footnote 21 In subsequent cases, however, the courts demonstrated more willingness to push boundaries. Notably, in Sediperak Sdn Bhd v Baboo Chowdhury (Sediperak) the High Court said, albeit in obiter: “[T]he underlying principle governing s 71 of the 1950 Act is the prevention of unjust enrichment”.Footnote 22 Unfortunately, this development was impeded, at least indirectly, by the case of Dream Property Sdn Bhd v Atlas Housing Sdn Bhd (Dream Property).Footnote 23 There the purchaser of a piece of land failed to pay the full purchase price by the stipulated deadline and was ordered by the courts to return the land to the seller. By the time the dispute was conclusively determined in the seller’s favour, the purchaser had already constructed a fully operational shopping mall on the land. The purchaser succeeded in recovering for the improvement to the land. The High Court held that the right of recovery was based on the law of unjust enrichment but did not specify the unjust factor.Footnote 24 Interestingly, the court further said that the purchaser could also recover based on section 71, which sets out a cause of action “[s]eparate from and in addition to the common law of unjust enrichment”.Footnote 25 The Court of Appeal agreed with the High Court that the purchaser had two independent causes of action and noted that section 71 “is wider in scope than the doctrine of unjust enrichment”.Footnote 26 The Federal Court, however, allowed the purchaser’s recovery only on the ground of unjust enrichment and not section 71. The decision not to apply section 71 to the facts is arguably correct for reasons that will be explained later. The important point, for now, is the courts’ suggestion that section 71 has nothing to do with the principle of unjust enrichment. The Federal Court noted that in New Kok Ann the Supreme Court decided the dispute based on section 71 alone and not on the principle of unjust enrichment.Footnote 27

Ironically, Dream Property was the first case in which the apex court formally called for a principled development of the law of unjust enrichment.Footnote 28 With respect, the courts’ suggestion that section 71 is distinct from the law of unjust enrichment is unconvincing for two reasons. Firstly, in failing to articulate the specific ground for allowing the purchaser’s unjust enrichment claim, it was left unclear in what way(s) the two causes of action actually differ. Secondly, the courts underestimated the capacity for growth in the law of unjust enrichment. Although section 71 does not clearly point to an established category of unjust enrichment,Footnote 29 it is generally accepted that “the categories of unjust enrichment are not closed”.Footnote 30 This article takes the view that section 71 could be pegged to a principle which could legitimately be regarded as belonging to the law of unjust enrichment.

III. ALIGNING SECTION 71 WITH THE MODERN UNJUST ENRICHMENT FRAMEWORK

Following the Federal Court’s decision in Dream Property, it is now clear that liability in unjust enrichment is determined by four related inquiries:Footnote 31 Was the defendant enriched? Was it at the plaintiff’s expense? Was it unjust? Does the defendant have a defence? Upon answering the first three inquiries in the affirmative, the plaintiff will have a prima facie right to restitution. The burden then shifts to the defendant to raise a defence to either defeat or limit the plaintiff’s prima facie right.

This part of the article seeks to illustrate how this modern framework is helpful in understanding and developing section 71. Particular attention is paid to aligning the elements of section 71 with the relevant unjust enrichment inquiries. Although, as stated at the outset, this article suggests that section 71 should adopt free acceptance as its core case, the discussion of the different inquiries are kept at a sufficiently general level to allow for the possibility that the section could be concerned with other unjust factors.

A. The Enrichment Inquiry

1. What constitutes enrichment?

Under the modern law, anything that has monetary value constitutes enrichment.Footnote 32 The wording of section 71 is sufficiently wide to embrace this view. The delivery of something to the defendant is enriching if the thing has monetary value. A cash payment is the core example. Enrichments encompassed by the phrase “does anything” are mainly benefits in kind, e.g. discharge of a debt, receipt of a service, etc. The failure to understand this simple definition of enrichment has sometimes led the courts to adopt an unduly restrictive or even illogical approach to the enrichment issue. A good example is the case of Kerajaan Malaysia v Tanjung Teras Sdn Bhd (Tanjung Teras).Footnote 33 There a landowner appointed a contractor to develop its land. The contractor in turn appointed a subcontractor to do some of the work. The main contract was subsequently terminated due to delays. The subcontractor, who had already done some work on the land, sought remuneration from the landowner. The High Court rejected the subcontractor’s claim on the ground that the landowner did not benefit from the work. One reason the court gave was that the work was incomplete. But this ignores the obvious point that the subcontractor’s work has market value.

2. Was the particular defendant enriched?

Although the receipt of something that has monetary value is prima facie enriching, it is more important to consider whether the particular defendant is enriched. In respecting the defendant’s freedom of choice and subjectivity of value, the law allows him to subjectively devalue the benefit, e.g. by showing that he would not have paid, or would have paid less, for that benefit.Footnote 34 Subjective devaluation would, however, be disallowed if the defendant’s conduct shows that he in fact values the benefit (e.g. he requested for the benefit)Footnote 35 or where the circumstances demand that he be regarded as having been enriched (e.g. because the benefit is incontrovertible or because the defendant had freely accepted the benefit).Footnote 36

Although this aspect of the enrichment inquiry is not explicitly borne out in the wording of section 71, it is hinted at by the requirement that the defendant must have enjoyed the benefit. In principle, the defendant could receive a benefit and yet not enjoy it. An interesting case in which such an issue arose was Mohamed Yusoof v Murugappa Chettiar (Mohamed Yusoof).Footnote 37 There the plaintiff and the defendant were the owners of two adjoining pieces of lands. The plaintiff built a separating wall, half of which stood on the defendant’s land. The plaintiff then claimed from the defendant half of the construction costs. On the question of whether the defendant had enjoyed the benefit of the wall, the bench was divided in opinion. Mcelwaine and Aitken JJA held in the affirmative, going as far as to say that the defendant had “unquestionably” and “undoubtedly” benefitted. This hints at the concept of incontrovertible benefit, which denies subjective devaluation of benefits that are so obviously beneficial that no reasonable person will deny it.Footnote 38 However, unlike money, which is the core example of incontrovertible benefit, one cannot be as confident that every reasonable person would want a separating wall. This point was hinted by Terrell CJ, who held the defendant to have not enjoyed the benefit of the wall because “there was no certainty that [he] would ever make use of it”. This statement hints at the principle of subjective devaluation. Although the case was eventually decided in the defendant’s favour based on a different ground, one additional point on the issue of enrichment is worth noting. If there were evidence that the defendant’s land had increased in value due to the wall, the case for arguing that the wall constituted incontrovertible benefit would have been stronger. The wall could be converted into money by selling the land. The relevance of this “realisable benefit” test in determining whether a benefit is incontrovertible was recently hinted at by the Federal Court in Dream Property.Footnote 39

Where the defendant has freely accepted the benefit, he is regarded as having enjoyed the benefit and therefore enriched. The notions of acceptance, enjoyment, and enrichment are closely linked. In Sediperak, the Malaysian High Court said: “If an individual were to enjoy the doing of the act or delivery of the thing it presupposes that that individual has the choice … either to accept or to reject the act or delivery in question”.Footnote 40 Where the defendant overtly accepts the benefit, he should of course be disallowed from arguing that it is of no value to him. More debatable is acceptance in the passive form, e.g. the defendant is aware that a benefit is being conferred on him non-gratuitously, and, having an opportunity to reject it, forgoes that opportunity. It has been argued that such passive acceptance is not conclusive proof that the defendant values the benefit, for he could simply be indifferent.Footnote 41 While this may be true, a convincing reply is that the defendant should be deemed to have valued the benefit on the basis of his unconscientious conduct.Footnote 42 Although the courts have yet to recognize unconscionability as the underlying basis of free acceptance, the role of free acceptance as a factor barring subjective devaluation was recently confirmed.Footnote 43 More shall be said later about the role of free acceptance as an unjust factor.

3. Time for assessing enrichment

In Siow Wong Fatt, the Privy Council held that the requirements of section 71 are to be determined at the time the benefit is conferred (or received).Footnote 44 This is consistent with the modern law, which determines the enrichment inquiry at the time the defendant receives the benefit.Footnote 45 Any subsequent event that reduces or diminishes the defendant’s enrichment is only relevant at the defence stage, particularly in establishing change of position. Of course, one should be mindful that no such defence is provided for in section 71. This may motivate the courts to adopt a more restrictive approach towards finding enrichment so that any subsequent disenrichment could be taken into account. As shall be explained later, however, the courts have shown their willingness to import such defences. It would therefore be unnecessary to adopt an overly restrictive approach to the enrichment inquiry.

4. Was the benefit for the defendant?

In Siow Wong Fatt, the defendant obtained a prospecting licence in respect of a piece of land.Footnote 46 He then assigned the licence to a third party for consideration and agreed to grant a sub-lease once a mining lease was obtained. By a chain of subcontracts the plaintiff became the assignee of the prospecting licence. In anticipation of obtaining a sub-lease, the plaintiff constructed a road from the land to the nearest public road at a cost of $140,000. However, when the defendant obtained the mining lease, he refused to grant a sublease to the plaintiff. The plaintiff came to a settlement with its immediate assignor but claimed against the defendant for the cost of constructing the road. The Privy Council held that section 71 does not apply because the plaintiff built the road for himself, not for the defendant. The plaintiff built the road so that he could exploit the land. It was immaterial that eventually it was the defendant who was benefitted by the road. The Privy Council said:

It was argued before their Lordships—as, indeed, in the Federal Court—that doing the act means no more than that the act must be one which in fact benefits another. It was argued that the crucial point was that although you may do the act for your own benefit, yet if in the end ex post facto you do not obtain that benefit but another does, then you may claim against that other under section 71 as an act done for him. This seems to their Lordships a complete misreading of the section.Footnote 47

Unfortunately, the issue is not always clear-cut. In Mohamed Yusoof, which was discussed earlier, a separate issue was whether the plaintiff built the wall for the defendant.Footnote 48 While Mcelwaine and Aitken JJA were convinced that he did, Terrell CJ thought otherwise. A similar dilemma arose in the Indian case of Raja Viswanadha Vijia Kumara v RG Orr where the plaintiff carried out necessary repairs to a water tank in his land, which also irrigated the defendants’ lands.Footnote 49 The plaintiff demanded that the defendants contribute to the cost of the repairs but the latter refused. The High Court held that the section 70 of the ICA 1872 does not apply because the repairs were not carried out for the defendants. As the area of the plaintiff’s land irrigated by the water tank was three times as large as the defendants’, the natural inference was that the repairs were solely for the plaintiff, benefitting the defendants only incidentally. The burden lies on the plaintiff to show otherwise. Oldfield J, while finding it undesirable to state any general test, nonetheless went on to say: “[W]hat is done cannot be described as done by one person for another, unless it can be shown that, but for the existence of that other’s interest, it would not have been done”.Footnote 50 This statement is overly restrictive for at least two reasons. Firstly, it appears to assume that the repairs could only be performed for either party, but not for both. In two other similar cases, the Indian courts found that the repairs were carried out for both the plaintiff and the defendant.Footnote 51 Secondly, it may be that the plaintiff’s interest is itself sufficiently strong such that the repairs would have been carried out even if the defendant’s interest did not exist, thus not fulfilling the but-for causation requirement. Yet if the plaintiff’s action was indeed motivated in part by the defendant’s interest, however small it is, it is counter-intuitive to say that it was not also for the defendant. The majority in Mohamed Yusoof must have shared this sentiment, at least implicitly.

This aspect of section 71 hints at the notion of incidental benefit, which is sometimes thought to be the reason why an unjust enrichment claim does not arise in the following situations: (i) A cuts down a tree on his land, which incidentally improves the view of B’s land;Footnote 52 (ii) A builds a wall on his land, which happens to shield B’s house from the elements;Footnote 53 (iii) A drains his land, which has the effect of also draining and improving B’s adjoining land;Footnote 54 and (iv) A heats his flat, which happens to also heat B’s flat above.Footnote 55 However, in TFL Management Ltd v Lloyds TSB Bank Plc, the only English case to consider the notion of incidental benefit, Floyd and Beatson LJJ refused the invitation to recognize it due to the lack of clarity in both its formulation and conceptual basis.Footnote 56 Echoing the views of eminent scholars, the court was inclined to accept that the denial of restitution in the aforementioned cases are best explicable on other grounds, e.g. the benefit was not at the plaintiff’s expenseFootnote 57 or there was no unjust factor.Footnote 58

Given the obvious difficulties in formulating a workable principle of incidental benefit, perhaps it was never intended that section 71 should distinguish between an intended benefit and an incidental benefit. Instead, following the English suggestion, it may be simpler to understand the “for the defendant” requirement as equivalent to the “at the plaintiff’s expense” requirement. As for the case of Siow Wong Fatt, that decision is explicable on the ground that there was no unjust factor, specifically because the benefit was not freely accepted by the defendant.

B. At the Plaintiff’s Expense

Under the common law, the defendant is enriched at the plaintiff’s expense if there is a transfer of value from the latter to the former. The purpose of this requirement is to establish the necessary link between the plaintiff and the defendant, more specifically between the plaintiff’s loss and the defendant’s enrichment. Although this inquiry is not explicit from the wording of section 71, it could be inferred from the statutory requirement that the plaintiff must have delivered something to, or have done something for, the defendant, which appears to serve the same purpose.

One important issue which often arises in multi-party situations is whether the rule against leapfrogging should be assimilated within the “at the plaintiff’s expense” inquiry. For example, P mistakenly pays X, and X then pays an equivalent sum of his own money to D. The question of whether P may leapfrog X to recover from D becomes especially important where X is no longer to be found, is insolvent, or is protected by a defence. The traditional view is that P may not. As there is no direct transfer of value between P and D, D is not enriched at P’s expense.Footnote 59 This view could be accommodated within section 71. P’s claim is disallowed because there was no delivery of money from P to D.

Another situation where an issue of leapfrogging arises is where P, in fulfilment of a contractual obligation owed to X, confers a benefit on D. As it was X who contractually procures the benefit for D, D’s benefit is derived directly from X and only indirectly from P. Should P be allowed to leapfrog X and claim from D? In Hazama Corporation v KMS Builders Sdn Bhd (Hazama), the facts of which are similar to those of Tanjung Teras, the High Court held that although the landowner had enjoyed the benefit of the work by the subcontractor, section 71 did not apply as the work was performed not for the landowner but for the main contractor.Footnote 60 This was because the subcontractor was merely discharging its contractual obligation owed to the main contractor. Interestingly, the court further said that for the same reason the landowner was not enriched at the subcontractor’s expense. This supports the view that the rule against leapfrogging is part of the “at the plaintiff’s expense” inquiry as well as the “for the defendant” inquiry.Footnote 61 However, recent UK and Australian cases seemingly prefer the alternative view that the rule is external to the “at the plaintiff’s expense” inquiry. On this view, leapfrogging is disallowed not because the defendant was not enriched at the plaintiff’s expense but because there is a need to prevent the plaintiff from interfering with, or escaping from, assumed or allocated risks.Footnote 62 Despite the pronouncement in Hazama, it is not yet certain that the first view is to be preferred for purposes of interpreting section 71. In Tanjung Teras, the High Court similarly rejected the subcontractor’s claim against the landowner but said nothing about whether the landowner was enriched at the subcontractor’s expense.Footnote 63 In fact, the decisions in Hazama and Tanjung Teras could be explained by the second view. In both cases, allowing the subcontractor’s claim would permit it to escape risks it assumed under the subcontract and unduly interfere with the main contract between the landowner and the main contractor. This approach, however, requires the recognition of a rule against leapfrogging that is external to section 71, which is not impossible in light of the willingness of the Malaysian courts to apply common law defences even when a statutory provision is silent.

It is suggested that the first view of the rule against leapfrogging should be avoided insofar as section 71 is concerned. This is because the phrase “for the defendant” requires a broad interpretation. Consider the following scenarios in which P wishes to claim from D:

  1. (i) P, pursuant to a contract with X, delivers something to D.

  2. (ii) P, pursuant to a contract with X, performs a service that benefits D.

  3. (iii) P, pursuant to a contract with X, performs a service that benefits D. But the contract between P and X was void or is avoided due to a vitiating factor.

Although scenario (i) is a straightforward case where the rule against leapfrogging should apply, section 71 seemingly applies because the required link is satisfied by P’s delivery of the thing to D. Although scenario (ii) is essentially the same as scenario (i), it was held in Hazama and in Tanjung Teras that section 71 does not apply. As for scenario (iii), the rule against leapfrogging does not apply because the contract was legally non-existent. To allow P’s claim, it is necessary to regard the service as being provided for C (and X). If one accepts that there is no conceptual difference between the different modes of conferring benefit, it is difficult to justify scenario (ii) as an outlier. If the necessary link between P and D is satisfied in scenarios (i) and (iii), logically it should also be satisfied in scenario (ii). It is suggested that, consistent with the modern view of the “at the plaintiff’s expense” inquiry, the “for the defendant” inquiry is best determined by a simple but-for test: Would D have benefitted but for P’s action?Footnote 64 The test is clearly satisfied in all three scenarios. If this view of the “for the defendant” inquiry is accepted, then the rejection of P’s claim in scenario (ii) requires a different explanation. It could be that the decisions in Tanjung Teras and Hazama were simply wrong. Or it could be that the subcontractor’s claim was barred by a rule against leapfrogging that is external to section 71, as suggested earlier. If such an external rule is recognized, then P’s claim must also be denied in scenario (i) to ensure consistency in the section’s application.

C. Was the Plaintiff’s Enrichment Unjust?

Under the common law, the plaintiff who brings an unjust enrichment claim is required to show a specific unjust factor, e.g. mistake, duress, or failure of consideration. Although the courts have relied largely on an established list of unjust factors, it remains possible to admit new unjust factors.Footnote 65 In a bold move, the Federal Court in Dream Property abandoned the unjust factors approach in favour of the civilian absence of basis approach, under which the plaintiff is required only to show that there is no basis to benefit the defendant.Footnote 66 Given its operation at a high level of abstraction, which tends to oversimplify the unjust inquiry, the absence of basis approach is arguably unsuitable for the development of the Malaysian law of unjust enrichment, which is still in its formative stage.Footnote 67 Importantly, for the present purposes, the absence of basis approach does not in any way aid the effort to understand and develop section 71. Adhering to the traditional approach, this part of the article will examine a number of unjust factors that section 71 could possibly be concerned with.

1. Free acceptance

A free acceptance occurs where the defendant is aware that a benefit is being offered to him non-gratuitously and, having an opportunity to reject it, either accepts it or forgoes the opportunity to reject it, leaving the plaintiff to confer the benefit. Free acceptance is unique in that it has a dual function within the unjust enrichment framework. As explained earlier, within the enrichment inquiry, a defendant who freely accepts a benefit is barred from subsequently denying that the benefit is of value to him. Here, the focus is on the defendant’s unconscientious conduct, specifically his failure to reasonably avail himself of an opportunity to reject the benefit, as constituting the unjust factor. Although the recognition of free acceptance as an unjust factor has been met with objections,Footnote 68 it has begun to find footing within the law of unjust enrichment.Footnote 69 In Benedetti v Sawiris, the English High Court said:

The question of whether there has, properly speaking, been a free acceptance of the services is likely in practice to be the determining factor as to whether it is regarded as unjust for a defendant to retain the benefit of services without paying for them.Footnote 70

Interestingly, section 71 hints at the principle of free acceptance. Firstly, as explained earlier, the defendant’s enjoyment of the benefit could be established from his acceptance of it. Secondly, the benefit must have been conferred non-gratuitously. The Indian cases suggest that the defendant must have known, or at least have reason to believe, that the plaintiff was conferring the benefit non-gratuitously.Footnote 71 The resemblance may be coincidental since the English cases that were relied upon in support of the principle of free acceptance mostly post-dated the ICA 1872,Footnote 72 and they were not relied upon for this purpose until the latter half of the twentieth century.Footnote 73 Nonetheless, the resemblance makes it possible to draw from the materials on free acceptance to supply section 71 with the much-needed principle. The well-worked out rules on free acceptance will certainly be helpful in determining the kind of acceptance that should give rise to a claim and those that should not, thus preventing section 71 from applying too widely to the extent of forcing goods or services onto unwilling recipients.

A person can only be said to have freely accepted a benefit if he first had the choice of accepting or rejecting the benefit. If the benefit is forced onto him without him having the opportunity to reject it, it matters not that he subsequently enjoys the benefit. There is no acceptance in any meaningful sense. Whether such a choice exists must be determined at the very outset, specifically the time of receipt.Footnote 74 This is consistent with the timing for assessing the requirements of section 71.Footnote 75

As hinted earlier, acceptance could be overt or passive. Where the defendant overtly accepts a benefit knowing that it is offered to him non-gratuitously, there is every reason to require him to pay for it. In Aw Yong Wai Choo v Arief Trading Sdn Bhd, the plaintiff accepted the delivery of houses constructed by the defendant.Footnote 76 Similarly, in Kuan Leong Hin v The State of Johore, the defendant accepted the plaintiff’s service of cleaning the river.Footnote 77 In both cases the courts applied section 71 to allow the plaintiffs to claim from the defendants. Although the courts did not specifically mention free acceptance, the results are certainly explicable on this basis.

In the case of passive acceptance, i.e. failing to reject the benefit, it is necessary to identify if the defendant could be regarded as having acted unconscionably.Footnote 78 Suppose in Mohamed Yusoof the defendant knew, or had reason to believe, that the plaintiff intended to share the cost of building the wall. If the defendant was unwilling to pay, he could have easily informed the plaintiff so as to save the latter from the risk of non-payment. Failure to reject the benefit would normally render the defendant liable for free acceptance because his omission is regarded as unconscionable. However, if the defendant had reason to believe that the plaintiff would have proceeded with the construction of the wall even if the defendant expresses his intention not to pay, failure to reject the benefit does not amount to free acceptance. In such a case the defendant had no reasonable opportunity to reject the benefit. For the same reason, a miserly bystander who watches the performance of a busker but refuses to pay cannot be held liable on the basis of free acceptance. There is every reason to believe that the busker, while expecting payment for his performance, will continue to perform even if told that he will not be paid. He will continue to try his luck, hoping that some of the other audiences will pay. The decision in Siow Wong Fatt could be explained in the same way. As the plaintiff built the road on the understanding that it was entitled to conduct mining activities on the land, any objection raised by the plaintiff is likely to be ignored. Having no reasonable opportunity to reject the benefit, the defendant could not be said to have freely accepted the benefit.

2. Other unjust factors?

Given that the other provisions in Part VI are fairly clear and specific in their respective subject matters, it is unlikely that the drafters intended section 71 to address a variety of situations involving theoretically dissimilar unjust factors. If one were to insist that section 71 sets out only one unjust factor, for reasons that have been explained earlier the best candidate is obviously free acceptance. Curiously, however, the accompanying statutory illustrations appear to suggest two other unjust factors that section 71 could be concerned with: mistake and necessity. Although it is not strictly necessary to confine section 71 to only one unjust factor, to do so has the benefit of keeping it clear and simple. As shall be explained below, it is in fact possible to construe both statutory illustrations as concerning free acceptance.

(a) Mistake:

Statutory illustration (a) refers to a mistake on A’s part in delivering goods to B. The reference to mistake is odd because the right to recover for a mistaken enrichment is already provided for under section 73 of the CA 1950, which reads: “A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it”.Footnote 79 However, the phrase “anything delivered” tends to refer to tangible objects such that recovery under section 73 is not possible in the case of services rendered. If this is right, section 71 could play a supplementary role to section 73 by allowing a claim for mistakenly conferred services.

However, the distinguishing feature of section 71, i.e. the requirement of non-gratuitous intent, hints that it is really intended to deal with a different kind of situation. Take the simple example of a mistaken gift. While recovery is permitted under section 73, it is not possible under section 71 because a gift is a gratuitous conferral of benefit. Perhaps statutory illustration (a) is merely intended to illustrate the fact that a mistake could sometimes constitute evidence of non-gratuitous intent. For example, A could have mistaken B for C, who ordered the goods. That A intended to charge C for the goods shows that the delivery to B could not be gratuitous. As to whether A should be entitled to recover in respect of the non-gratuitous delivery of goods, that is perhaps best answered by applying the principle of free acceptance.

(b) Necessity:

It has been suggested that that section 71 “confers a right resembling that of the Roman negotiorum gestor”.Footnote 80 This doctrine of civilian origin confers on a person who manages the affairs of another a right of recovery in many situations. Insofar as the doctrine forms part of English law, however, it tends to be restricted to situations where the plaintiff conferred the benefit out of necessity, e.g. to save the defendant’s property from destruction or deterioration.Footnote 81 The reason for allowing the claim is said to be policy motivated—to encourage intervention in the preservation of health or property of others in situations of emergency.Footnote 82 That section 71 could be concerned with such a situation is reflected in statutory illustration (b), in which A saves B’s property from fire. Also pertinent is this illustration given by the Indian High Court in Gajapathi Kristna Chandra Deo Garu v P Srinivasa Charlu.Footnote 83 A piece of agricultural land was drying up when its owner was away. The owner of a neighbouring land irrigated the said land under a reasonable belief that he would be reimbursed. The High Court said that section 70 of the ICA 1872 could apply in such a case even though the absent owner had no option of accepting or rejecting the benefit.

It is possible, of course, to construe statutory illustration (b) narrowly so as to be concerned only with free acceptance. B will be liable to pay A only if B knew, or has reason to believe, that A intended to charge for the service of saving B’s property. If one is convinced that section 71 should be kept clear and simple, perhaps it would be best to leave the development of the less frequently encountered principle of necessitous intervention to the common law.

D. Defences

1. Illegality

Section 71 requires that the plaintiff’s conferral of benefit on the defendant must be in a lawful manner. Although the phrasing suggests a requirement on the plaintiff’s part, it is perhaps better understood as a defence for the defendant. The plaintiff is not under any positive duty to prove that his conduct is lawful. The issue of lawfulness is likely to arise only when the defendant raises it to resist the plaintiff’s claim.

The generality of the word “lawful” is bound to attract differing opinions, as demonstrated by the Indian case law on this topic.Footnote 84 However, the definition proposed by one Indian case is worthy of mention. In Rakurti Manikyam v Medidi Satyanarayana, the High Court explained that the word “lawful” is to be understood by reference to section 23 of the ICA 1872.Footnote 85 The Malaysian equivalent, section 24 of the CA 1950, reads:

The consideration or object of an agreement is lawful, unless–

  1. (a) it is forbidden by law; or

  2. (b) is of such nature that, if permitted it would defeat the provisions of any law; or

  3. (c) is fraudulent; or

  4. (d) involves or implies, injury to the person or property of another; or

  5. (e) the Court regards it as immoral, or opposed to public policy.

Although section 24 refers to an agreement, which section 71 is not concerned with, it is likely that its drafters intended some coherence in the use of terms. More importantly, the definition of unlawfulness set out by section 24 reflects the broad meaning of illegality adopted by modern scholars.Footnote 86 The only problem with section 24 is that it does not appear to leave any room for familiar common law exceptions, e.g. the non in pari delicto exception and the locus poenitentiae exception. However, since section 24 is not expressly referred to in section 71, the possibility of importing these exceptions remains open.

In practice, this defence is rarely invoked. There is only one local case where it was applied. In Mohamed Yusoof, the plaintiff’s claim was rejected because the act of constructing the wall on the defendant’s land without the latter’s consent amounted to trespass.Footnote 87

2. Change of position, bona fide purchase, etc?

Established restitutionary defences such as change of position and bona fide purchase are unlikely to apply in a case of free acceptance due to the unconscientiousness of the defendant’s conduct. However, if section 71 applies to a case of mistake, as statutory illustration (a) suggests, such defences could apply provided that the defendant acted in good faith. Although section 71 does not hint at such defences, either expressly or impliedly, their importation is sometimes necessary to balance the parties’ interests. In fact, the Malaysian courts have shown willingness to import restitutionary defences recognized under the common law even though the statute does not provide for them. Although the authorities supporting this approach were all concerned with section 73, the courts are likely to be equally willing to import these defences into section 71 if necessary.Footnote 88

E. Restitution

Upon satisfying the requirements of section 71, the defendant is required to make compensation in respect of, or to restore, the thing so done or delivered by the plaintiff. It is interesting that the word “restitution” does not appear anywhere in the CA 1950 and the ICA 1872. This is likely because the term did not gain currency in legal usage during the mid-nineteenth century.Footnote 89 The phrase “restore” clearly refers to restitution in the “giving back” sense. Given that “restore” and “compensation” are used as alternatives, “compensation” in this context is best understood to mean restitution. There are at least two local cases where the courts referred to “restitution” in describing the right of recovery under section 71.Footnote 90 Where the plaintiff claims monetary restitution, the amount recoverable correlates with the extent to which the defendant is enriched. The difficult issue of proprietary restitution appears to be sidestepped as the plaintiff is allowed to choose between monetary or proprietary restitution.

IV. DISCARDING UNNECESSARY BAGGAGE

An examination of the Malaysian case law reveals that section 71 is frequently applied or referred to in situations where ready solutions could be found in other established areas of the law. This part of the article identifies three categories of cases in which this practice is prevalent. It is argued that this practice should be halted for at least two reasons. Firstly, the principles underlying the different causes of actions are conceptually distinct. To apply section 71 in a situation which properly belongs to another area of the law may result in a solution that is unintuitive or confusing. It may even adversely affect the development of that other area of the law by allowing the sidestepping of established legal requirements. Secondly, if one is convinced of the importance of identifying a purpose which is unique to section 71, it would make sense to not divert attention from this endeavour by loading the section with unnecessary materials. Their existence is likely to cloud the section’s true utility.

A. A Matter of Contract Law

As alluded to at the outset, a section 71 claim may arise independently of any contract because it is in fact non-contractual in nature. Thus, if the obligations of the disputing parties were governed by a contract, section 71 should have no role to play. This limitation to the scope of section 71 was impliedly recognized by the High Court in Teras Kimia Sdn Bhd v Kerajaan Malaysia.Footnote 91 There the defendant appointed the plaintiff to provide fuel-marking services to prevent abuse of the fuel subsidy scheme. Upon expiry of the original contract, the plaintiff made an offer to renew the contract. The plaintiff continued to provide the services while the defendant took time to consider whether to accept the offer. Seven months later, the defendant rejected the offer and refused to pay for services provided during that period. The High Court held that the defendant’s conduct of accepting the services gave rise to an inference of acceptance and hence a new contract was created between the parties. However, the court also said that in case this finding was incorrect, the plaintiff could recover on the basis of section 71. Importantly, the court did not say that the same finding of facts gave rise to two concurrent claims. The two claims were alternatives. In principle, a claim based on section 71 is possible only if the facts do not support the finding of a contract.

Another interesting case is Kumpulan Teknik Sdn Bhd v Murad Hashim Communications Sdn Bhd.Footnote 92 There the second defendant, who obtained a contract for the construction of telecommunication towers, subcontracted the work to the first defendant. The first defendant entered into a joint venture agreement with the plaintiff, which assigned to the plaintiff the first defendant’s right to demand payment from the second defendant. The project ran into difficulties and was eventually called off altogether. The plaintiff, however, had already carried out substantial work. The High Court allowed the plaintiff to claim from the second defendant mainly because it had a right to payment by virtue of the contractual assignment. Interestingly, the court also held that the plaintiff could succeed under section 71 but qualified that this was possible only because the contract had been terminated for breach. This is arguably incorrect. As the defendant was contractually entitled to the work and the non-payment appeared to be unintentional, it could not be said to have acted unconscionably in accepting it. The kind of unconscionability that underlies the principle of free acceptance was absent due in large part to the existence of the contract. Moreover, the alternative claim is also inconsistent with the decisions of Tanjung Teras and Hazama discussed earlier.

Where it is possible to reasonably infer a contract from the facts of the case, a contractual solution should always be adopted for it is more intuitive. In Sediperak, the defendant obtained the necessary governmental approval to hire 100 foreign workers, subject to a levy amounting to RM126,000.Footnote 93 The plaintiff paid the levy on the defendant’s behalf and a receipt was issued in the defendant’s name. When the plaintiff demanded for reimbursement, the defendant refused to pay. The High Court held that the plaintiff’s claim succeeded based on section 71. However, as the court impliedly accepted that the payment was made at the defendant’s request, the plaintiff’s right to reimbursement is better seen as based on a contract inferred from the facts.

In two other cases, the courts applied section 71 to allow the recovery of a contractual debt. In New Kok Ann, the liquidators of the plaintiff company discovered in its account books that it had advanced a sum of $125,000 to the defendant.Footnote 94 The High Court was satisfied on the available evidence that the money was advanced as a loan. However, the court held that the defendant was obliged to repay the money on the basis of section 71, with the plaintiff’s non-gratuitous intent being inferred from the finding that the money was advanced as a loan. On appeal, the Supreme Court upheld the decision on the basis that section 71 was correctly applied. Similarly, in Multi-Purpose Credit Sdn Bhd v Tan Sri Dato’ Paduka (Dr) Ting Pek Khing, the High Court applied section 71 to allow recovery of a contractual debt despite the existence of a written loan agreement.Footnote 95 In both cases, the borrower’s obligation to repay was clearly grounded in contract either as an express or implied term, depending on the case. It was therefore unnecessary to apply section 71.

Finally, an example where the court unjustifiably ignored an obviously relevant contractual provision is Inch Kenneth Kajang Rubber Public Ltd Co v Tor Peng Sie.Footnote 96 The defendant appointed the plaintiff as its property agent. Under the letter of appointment, the defendant agreed to pay the plaintiff a fee if the latter successfully procured the sale of the property. Dispute later arose when the plaintiff managed to procure a sale of the land but the defendant refused to pay the agreed fee. The Court of Appeal found that the plaintiff was an effective cause of the sale and had therefore fulfilled its part of the contract. However, in allowing the plaintiff’s claim for the fee, the court relied instead on section 71. This is unnecessary as the plaintiff’s right to the fee was clearly provided for in the contract.

B. A Matter of Tort Law

Section 71 does not stipulate a duty not to accept a non-gratuitous benefit. It merely dictates that the recipient must either return the benefit or pay for it. In this respect section 71 is closer to the law of unjust enrichment than to the law of tort. Take, for example, the case of mistaken payment, which is the core case of unjust enrichment. There is no duty to not accept a mistaken payment.Footnote 97 Rather, a duty to repay arises upon receipt of the mistaken payment. In both cases, the obligation to return or repay the benefit is a primary duty. This is to be contrasted with a secondary duty arising from the breach of a primary duty, which is a hallmark of remedies in tort law. For example, a right to compensation for trespass arises from a breach of a duty not to trespass. The failure to appreciate this primary/secondary duty dichotomy in determining the scope of section 71 is apparent in at least two cases.

In Air Express International (M) Sdn Bhd v MISC Agencies Sdn Bhd, the plaintiff, who was liable to pay import duty for a consignment of imported goods, caused a banker’s cheque to be sent to the customs department.Footnote 98 However, a year later, the customs department wrote to the plaintiff to inform it that the import duty was still unpaid. Investigation revealed that the defendant had wrongfully obtained and used the banker’s cheque to pay the import duty of its own consignment of goods. This is clearly a case where the plaintiff’s right to be compensated arose because the defendant had committed a tort of conversion. Curiously, the High Court chose to explain the plaintiff’s claim as based on either section 71 or the law of unjust enrichment.

In Tenaga Nasional Bhd v Arkitek Urbanisma Sdn Bhd, the defendant tampered with two electric meters installed in its premises, which belonged to the plaintiff electric company.Footnote 99 This resulted in a false reading of the electricity usage, allowing the defendant to pay reduced charges. The High Court found that the defendant’s conduct amounted to a breach of section 37(3) of the Electric Supply Act 1990. In allowing the plaintiff’s claim for compensation, the court applied section 71, ignoring section 38(5) which clearly sets out the right to compensation in the case of such breach. As the duty to compensate arose from the breach of a statutory duty, the case properly belongs to the domain of statutory torts.

C. A Different Head of Unjust Enrichment

In Poomani v Associated Finance Corporation Sdn Bhd, the defendant moneylenders lent $7,000 to the plaintiff.Footnote 100 Although the loan agreement was earlier held to be unenforceable for failure to comply with certain provisions under the Moneylenders Ordinance 1951,Footnote 101 the High Court nonetheless allowed the defendant to recover the money from the plaintiff by virtue of section 71.Footnote 102 Although applying section 71 in such an instance is not wholly objectionable, it should be avoided because an obvious solution could be found in another part of the CA 1950. Section 2(g) states: “An agreement not enforceable by law is said to be void”.Footnote 103 Section 66 further states:

When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.Footnote 104

Although section 66 does not explicitly say why restitution is warranted where a contract is unenforceable, the commonly accepted explanation is that the basis for the conferral of the benefit has failed.Footnote 105 To use the more familiar albeit misleading expression, there is a failure of consideration. This is a head of unjust enrichment in its own right.

Finally, returning to the case of Dream Property, it was said earlier that the Federal Court was correct in not applying section 71.Footnote 106 The case is better understood as concerning a mistaken improvement to land. The purchaser proceeded with the construction of the mall under the false belief that it was entitled to the land. Since the right to recover a mistaken enrichment is already provided in section 73 of the CA 1950, there was no real need to invoke section 71, as the High Court and the Court of Appeal did.

V. CONCLUSION

Lord Wright once commented that Chapter V of the ICA 1872 dealt with its subject matter in an “unsatisfactory manner”.Footnote 107 His comment still holds true today, especially with regards to section 71 of the CA 1950. The section’s inherent ambiguity, coupled with the courts’ failure to identify a principle to which it could be pegged, has resulted in its arbitrary application to a wide variety of dissimilar situations. This article attempts to address these shortcomings. It suggests that section 71 should be understood as based on the principle of unjust enrichment, more specifically concerning the case of free acceptance. The importation of the common law method of analysing issues of unjust enrichment provides section 71 with much-needed certainty. More importantly, the identification of a purpose which is unique to section 71 allows the antique section to regain practical utility and relevance in the modern world.

Footnotes

*

BCL (Oxford); LLB (Leeds); Assistant Professor of Law, School of Law, Singapore Management University.

1. Contracts Act 1950 (Act 136) (Malaysia) [CA 1950].

2. In Mohamed Syedol Ariffin v Yeoh Ooi Gark [1916] 2 AC 575 (PC), the Privy Council held that in interpreting a statutory provision any accompanying illustration must be taken into account.

3. Perak Motor Co Sdn Bhd v Estate Pekebun Kecil Sdn Bhd [2006] 4 CLJ 603 at [10] (HC).

4. See e.g. Baylis v Bishop of London 1 [1913] 1 Ch 127 at 140, where Hamilton J said: “Whatever may have been the case 146 years ago, we are not now free in the twentieth century to administer that vague jurisprudence which is sometimes attractively styled ‘justice as between man and man”.

5. See Fong, CHEONG May, Civil Remedies in Malaysia (Petaling Jaya, Selangor: Sweet & Maxwell Asia, 2007) at c 7; David FUNG, “Restitution and Section 71 of the Contracts Act 1950” [1994] 2 MLJ lxxix.

6. Localized versions of the ICA 1872 are also presently in force in Bangladesh, Brunei, Myanmar, Pakistan, and Tanzania.

7. The Third Indian Law Commission was appointed in London in 1861.

8. Third Indian Law Commission, Second Report on the Substantive Law for India (1866) in Parliamentary Papers, House of Commons and Command, vol 49 (London: HMSO, 1868).

9. See AMES, JB, “The History of Assumpsit” (1888) 2 Harvard Law Review 53 ; JACKSON, RM, The History of Quasi-Contract in English Law (Cambridge: Cambridge University Press, 1936); BAKER, JH, “The Use of Assumpsit for Restitutionary Money Claims 1600–1800” in E JH SCHRAGE, ed, Unjust Enrichment: The Comparative Legal History of the Law of Restitution (Berlin: Duncker & Humblot, 1995), 31 .

10. The Latin phrase ex quasi contractu, which means “as though upon a contract”, is obviously less misleading. See BIRKS, Peter, An Introduction to the Law of Restitution (Oxford: Oxford University Press, 1985) at 34 [Birks, An Introduction].

11. See POTHIER, R, A Treatise on the Law of Obligations or Contracts, trans by William David EVANS, vol I (London: Joseph Butterworth, 1806) at 85 ; MAINE, Henry, Ancient Law (London: John Murray, 1861) at 343–344 ; LEAKE, Stephen Martin, Elements of the Law of Contracts (London: Stevens and Sons, 1867) at 39–40 ; POLLOCK, Frederick, Principles of Contract at Law and in Equity (London: Stevens and Sons, 1876) at 29 ; ANSON, William R, Principles of the English Law of Contract (Oxford: Clarendon Press, 1879) at 321 , 324; MAITLAND, FW, Equity, also the Forms of Action at Common Law, ed by AH CHAYTOR and WJ WHITTAKER (Cambridge: Cambridge University Press, 1910) at 364 .

12. See e.g. Leake, supra note 11; Jr, Joseph CHITTY, A Treatise on the Law of Contracts, and Upon The Defences to Actions Thereon, 6th edn ed by John A RUSSELL (London: S Sweet, 1857).

13. Mohamed Yusoof v Murugappa Chettiar [1941] MLJ 240 (FMSCA) [Mohamed Yusoof].

14. Siow Wong Fatt v Susur Rotan Mining Ltd [1967] 2 AC 269 (PC) [Siow Wong Fatt].

15. See particularly American Law Institute, Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts (St Paul: ALI Publishers, 1937). For an overview, see Alvin W-L SEE, “An Introduction to the Law of Unjust Enrichment” [2013] 5 MLJ I [See, “An Introduction”].

16. Law Commission of India, Thirteenth Report (Contract Act, 1872) (New Delhi: Ministry of Law, 1958) at 11–13 . In the same report, the Law Commission also said that section 70 of the ICA 1872, which is identical to section 71 of the CA 1950, goes beyond English law in that it would cover situations that are not covered under the common law (Ibid at 42). Unfortunately, the Law Commission did not hint at any similar English principle.

17. State of West Bengal v M/S BK Mondal & Sons (1962) AIR SC 779 at 789 (Indian SC) [Mondal & Sons].

18. Mulamchand v State of Madhya Pradesh (1968) AIR SC 1218 at 1222–1223 (Indian SC) [Mulamchand].

19. For an examination of section 70 of the ICA 1872, see SEE, Alvin W-L, “Recovery of Non-Gratuitously Conferred Benefit Under Section 70 of the India’s Contract Act 1872” in Andrew ROBERTSON and Michael TILBURY, eds, Divergences in Private Law (Oxford: Hart, 2016), 201 .

20. New Kok Ann Realty Sdn Bhd v Development & Commercial Bank Ltd, New Hebrides [1987] 2 MLJ 57 (HC, CA) [New Kok Ann Realty].

21. Ibid.

22. Sediperak Sdn Bhd v Baboo Chowdhury [1999] 5 MLJ 229 at 249 (HC) [Sediperak]. See also Kumpulan Teknik Sdn Bhd v Murad Hashim Communications Sdn Bhd [2012] 8 MLJ 573 at 581–582 (HC) [Kumpulan Teknik]; Air Express International (M) Sdn Bhd v MISC Agencies Sdn Bhd [2014] 4 MLJ 59 at 70 (CA) [Air Express]; Hazama Corporation v KMS Builders Sdn Bhd [2004] 2 AMR 612 at 617 (HC) [Hazama].

23. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 CLJ 453 (FC) [Dream Property (FC)]; Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] 7 CLJ 969 (CA) [Dream Property (CA)]; Atlas Housing Sdn Bhd v Dream Property Sdn Bhd [2012] 1 LNS 1355 (HC) [Dream Property (HC)].

24. Dream Property (HC), supra note 23 at [125]–[129].

25. Ibid at [130].

26. Dream Property (CA), supra note 23 at [44].

27. Dream Property (FC), supra note 23 at [101].

28. For an analysis of the Federal court’s judgment, see Alvin SEE, “Restitution for the Mistaken Improver of Land” [2016] The Conveyancer and Property Lawyer 61 [See, “Mistaken Improver”].

29. Although statutory illustration (a) points to a case of mistake.

30. CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 at 720 (EWCA) [Cash and Carry].

31. Dream Property (FC), supra note 23 at [117], [119].

32. Ibid at [121] (FC); Peter v Beblow [1993] 1 SCR 980 at 990 (Canadian SC). See also BIRKS, Peter, Unjust Enrichment, 2nd edn (Oxford: Oxford University Press, 2005) at 50–52 [Birks, Unjust Enrichment].

33. Kerajaan Malaysia v Tanjung Teras Sdn Bhd (Tanjung Teras) [2014] 8 MLJ 259 (HC) [Tanjung Teras].

34. Sempra Metals Ltd v IRC [2008] 1 AC 56 (UKHL); Benedetti v Sawiris [2013] 3 WLR 351 (UKSC) [Benedetti].

35. An example is Tanjung Teras, supra note 33.

36. Discussed in the next two paragraphs.

37. Mohamed Yusoof, supra note 13.

38. Peter BIRKS, An Introduction, supra note 10 at 116.

39. Dream Property (FC), supra note 23. The Federal Court said that the shopping mall was an “indisputable benefit” (Ibid at [123]), thus hinting at the realizable benefit test. See also Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775 at [34]–[37] (EWCA); Harrison v Madejski,Coys of Kensington (A Firm) [2014] EWCA Civ 361 at [58]–[59] (EWCA).

40. Sediperak, supra note 22. See also Yogambal Boyee Ammani Ammal v Naina Pillai Markayar (1909) 3 Ind Cas 110 at 112 (Indian HC), followed in Challa Appayya v Desetti Chandra Ayya (1950) AIR Mad 817 (Indian HC) [Challa Appayya].

41. BURROWS, Andrew, “Free Acceptance and the Law of Restitution” (1988) 104 Law Quarterly Review 576 [Burrows, “Free Acceptance”].

42. BIRKS, Peter, “In Defence of Free Acceptance” in Andrew BURROWS, ed, Essays on the Law of Restitution (Oxford: Oxford University Press, 1991), 105 [Birks, “Free Acceptance”]; GOFF, Robert and JONES, Gareth, The Law of Unjust Enrichment, 8th edn ed by Charles MITCHELL, Paul MITCHELL, and Stephen WATTERSON (London: Sweet & Maxwell, 2011) at [4-29] [Goff and Jones, Unjust Enrichment (8th edn)].

43. Littlewoods Ltd v Revenue and Customs Commissioners [2015] 3 WLR 1748 (EWCA).

44. Siow Wong Fatt, supra note 14 at 276, cited with approval in Sediperak, supra note 22 at 248.

45. See Benedetti, supra note 34 at [14]; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 386 (UKHL). See also Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at [4-34]–[4–42].

46. Siow Wong Fatt, supra note 14.

47. Ibid at 276–277.

48. Mohamed Yusoof, supra note 13.

49. Raja Viswanadha Vijia Kumara v RG Orr (1918) 45 Ind Cas 786 (Indian HC).

50. Ibid.

51. Damodara Mudaliar v Secretary of State for India (1895) ILR 18 Mad 88 (Indian HC); Saptharishi Reddiar (Now Minor) v The Secretary of State for India (1915) 28 Mad LJ 384 (Indian HC).

52. Ruabon Steamship Co v The London Assurance [1900] AC 6 at 12 (UKHL) [Ruabon Steamship] (cited in Suchand Ghosal vs Balaram Mardana (1911) ILR 38 Cal 1 at [19] (Indian HC)).

53. Ruabon Steamship, supra note 52 at 12.

54. Ulmer v Farnsworth 15 A 65 (Me 1888) (Maine SC, USA).

55. Edinburgh and District Tramways Co Ltd v James Watts Courtenay (1909) SC 99 at 105 (Scottish Court of Session). See also Birks, Unjust Enrichment, supra note 32 at 158.

56. TFL Management Ltd v Lloyds TSB Bank Plc [2014] 1 WLR 2006 (EWCA), noted in VIRGO, Graham, “Incidental Benefit: Charting the Outer Limits of Unjust Enrichment” (2014) 73 Cambridge Law Journal 21 .

57. See e.g. Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at [4–52].

58. VIRGO, Graham, The Principles of the Law of Restitution, 3rd edn (Oxford: Oxford University Press, 2015) at 114–115 ; BURROWS, Andrew, The Law of Restitution, 3rd edn (Oxford: Oxford University Press, 2011) at 108 [Burrows, Restitution].

59. Burrows, Restitution, supra note 58 at 69–85; EDELMAN, James and BANT, Elise, Unjust Enrichment in Australia (Melbourne: Oxford University Press, 2006) at 138–141 . Cf MITCHELL, Charles, “Liability Chains” in Simone DEGELING and James EDELMAN, eds, Unjust Enrichment in Commercial Law (Sydney: Lawbook Co, 2008), 131 at 135–138.

60. Hazama, supra note 22.

61. See also Burrows, Restitution, supra note 58 at c 4.

62. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 (Australian HC); MacDonald, Dickens & Macklin v Costello [2011] 3 WLR 1341 (EWCA). See also WILLIAMS, Robert, “Three Quarrelling Parties, Two Oral Contracts and a Claim in Restitution” [2010] Restitution Law Review 51 ; EDELMAN, James, “Unjust Enrichment and Contract” [2008] Lloyd’s Maritime and Commercial Law Quarterly 444 ; YIP, Man, “Suing the Third Party for Improvements to Land: Costello v Macdonald [2011] EWCA Civ 930, [2011] 3 WLR 1341” (2011) 11 Oxford University Commonwealth Law Journal 217 ; DAVIES, Paul, “No Leapfrogging of Contract in Unjust Enrichment” (2012) 71 Cambridge Law Journal 37 ; SEE, Alvin W-L, “Contract, Unjust Enrichment and Leapfrogging” [2012] Restitution Law Review 125 .

63. Tanjung Teras, supra note 33.

64. For a but-for analysis of the “at the plaintiff’s expense” inquiry, see Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at [6–25]–[6–27], [6–35]; BIRKS, Peter, “‘At the Expense of the Claimant’: Direct and Indirect Enrichment in English Law” in David JOHNSTON and Reinhard ZIMMERMANN, eds, Unjustified Enrichment: Key Issues in Comparative Perspective (Cambridge: Cambridge University Press, 2002), 493 at 524 .

65. See Cash and Carry, supra note 30 at 720.

66. Dream Property (FC), supra note 23 at [129]. Contra Deutsche Morgan Grenfell v IRC [2007] 1 AC 558, where the UK House of Lords resisted the invitation to change direction.

67. The Federal Court itself acknowledged the underdevelopment of Malaysian law on this area: Dream Property (FC), supra note 23 at [118], approving the observation of See, “An Introduction”, supra note 15. For discussion of the Federal court’s decision, see See “Mistaken Improver”, supra note 28.

68. Burrows, “Free Acceptance”, supra note 41; MEAD, Geofrey, “Free Acceptance: Some Further Considerations” (1989) 105 Law Quarterly Review 460 .

69. Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at c 17. See also Birks, An Introduction, supra note 10 at c VIII; Birks, “Free Acceptance”, supra note 42 at 105.

70. Benedetti v Sawiris [2009] EWHC 1330 at [574] (EWHC). See also Rowe v Vale of White Horse DC [2003] 1 Lloyd ’ s Rep 418 (EWHC).

71. AV Palinivelu Mudaliar v Neelavathi Ammal (1937) 39 Bomb LR 720 (PC); Mondal & Sons, supra note 17 at 793.

72. See Leigh v Dickeson (1884) 15 QBD 60 (EWCA); Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 (EWCA); Re Cleadon Trust Ltd [1939] 1 Ch 286 (EWCA).

73. The term “free acceptance” was coined by Goff and Jones: GOFF, Robert and JONES, Gareth, The Law of Restitution (London: Sweet & Maxwell, 1966) at 4 .

74. Sediperak, supra note 22 at 248.

75. Siow Wong Fatt, supra note 14.

76. Aw Yong Wai Choo v Arief Trading Sdn Bhd [1992] 1 MLJ 166 (HC).

77. Kuan Leong Hin v The State of Johore [1941] MLJ 190 (FMSSC).

78. Peter Birks, “Free Acceptance”, supra note 42 at 105.

79. CA 1950, supra note 1. See also generally See SEE, Alvin W-L, “Restitution of Mistaken Enrichment under Section 73 of Malaysia’s Contracts Act 1950” (2014) 31 Journal of Contract Law 206 .

80. STOKES, Whitley, The Anglo-Indian Codes, vol I (Oxford: Clarendon Press, 1887) at 533 .

81. See generally Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at c 18; Burrows, Restitution, supra note 58 at c 18; KORTMANN, Jeroen, Altruism in Private Law: Liability for Nonfeasance and Negotiorum Gestio (Oxford: Oxford University Press, 2005); SHEEHAN, Duncan, “ Negotiorum Gestio: A Civilian Concept in the Common Law?” (2006) 55 International and Comparative Law Quarterly 253 .

82. Burrows, Restitution, supra note 58 at 480–483.

83. Gajapathi Kristna Chandra Deo Garu v P Srinivasa Charlu (1913) 25 Mad LJ 433 (Indian SC).

84. See Mondal & Sons, supra note 17; KRSV Muthayya Chetti v Narayanan Chetti (1928) AIR Mad 317 (Indian HC); Challa Appayya, supra note 40; Venkatakrishnamacharlu v Arunachala Pillai [1919] MWN 244 (Indian HC).

85. Rakurti Manikyam v Medidi Satyanarayana (1972) AIR AP 367 (Indian HC).

86. Burrows, Restitution, supra note 58 at 488; Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at 35.

87. Mohamed Yusoof, supra note 13.

88. Bank Bumiputra (M) Bhd v Hashbudin bin Hashim [1998] 3 MLJ 262 (HC); Green Continental Furniture (M) Sdn Bhd lwn Tenaga Nasional Bhd [2011] 8 MLJ 394 (HC); The Royal Bank of Scotland Bhd v Seng Huah Hua [2013] 9 MLJ 681 (HC). See also Sri Sri Shiba Prasad Singh v Maharaja Srish Chandra Nandi (1949) AIR PC 297 (PC); Mafatlal Industries v Union of India (1997) 5 SCC 536 (Indian SC).

89. The term “restitution” was first referred to extensively in Abbot’s review of Keener’s treatise: ABBOT, EV, “Keener on Quasi-Contracts. II.” (1897) 10 Harvard Law Review 479 .

90. Sediperak, supra note 22 at 248–249; Hazama, supra note 22 at 617. See also Mulamchand, supra note 18; Govindarajulu Naidu v SS Naidu (1958) 2 Mad LJ 148 (Indian HC).

91. Teras Kimia Sdn Bhd v Kerajaan Malaysia [2013] 6 CLJ 219 (HC).

92. Kumpulan Teknik, supra note 22.

93. Sediperak, supra note 22.

94. New Kok Ann Realty, supra note 20.

95. Multi-Purpose Credit Sdn Bhd v Tan Sri Dato’ Paduka (Dr) Ting Pek Khing [2006] 5 MLJ 589 (HC).

96. Inch Kenneth Kajang Rubber Public Ltd Co v Tor Peng Sie [2014] 1 MLJ 118 (CA).

97. See Birks, Unjust Enrichment, supra note 32 at 5.

98. Air Express, supra note 22.

99. Tenaga Nasional Bhd v Arkitek Urbanisma Sdn Bhd [2011] 10 CLJ 796 (HC).

100. Poomani v Associated Finance Corporation Sdn Bhd [1974] 1 LNS 115 (HC) [Poomani].

101. Associated Finance Corporation Ltd v Poomani [1971] 1 LNS 8 (HC).

102. Poomani, supra note 100.

103. CA 1950, supra note 1.

104. Ibid.

105. See Burrows, Restitution, supra note 58 at 381–385.

106. Dream Property (FC), supra note 23, noted in See, “Mistaken Improver”, supra note 28.

107. Wright, Lord, “Restatement of the Law of Restitution” (1937) 51 Harvard Law Review 369 .

* BCL (Oxford); LLB (Leeds); Assistant Professor of Law, School of Law, Singapore Management University.