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There are cases in every system where an enrichment may be in accordance with the law, in a sense at least, and still be unjustified. There is nothing unlawful about receiving a mistaken payment. But if the law goes beyond accepting that the enrichment was lawful, and stipulates that it is justified, no claim lies.

Jonathan is clearly correct that the plaintiffs had a claim in unjust enrichment against their contractual counterparties; they probably had a claim in breach of contract too; but the counterparties were bankrupt.

The civil law tradition will sometimes recognize that if A has a claim in unjust enrichment against B, and B has made a donative transfer of the substance of the enrichment to C, A can claim against C. See Civil Code of Quebec, art. 1496; BGB art. 816(1) sentence 2.

The difference between the common law and civil traditions is whether this logic can work against creditors of B. The common law tradition came rather late to this conclusion. It required two steps. First, that trust claims worked against creditors of the trustee. In some contexts at least, this was still controversial in the C18. Modern civil law systems which recognize a trust also contemplate that the trustee's personal creditors do not have access to the trust property. Secondly, that a trust may arise by operation of law and still impose the same logic of creditor priority. Even in the common law tradition, this second step remains controversial (AG Hong Kong v Reid).

So the difference is essentially in whether unjust enrichment can make a trust that will have this effect. Civil law systems that recognize a trust are generally not interested in trusts arising by operation of law. Martin Hogg has already referred to George Gretton's study of constructive trusts in Scots law.

Both sides of this debate are tenable, as the controversy about Reid shows. Creditors of a bankrupt trustee are not quite like donative transferees. In most cases they have given value.

The decision that a transaction (like an abortive land purchase) makes a constructive trust is often a decision on that very point, whether creditors can have the property or not. The answer cannot be found in the bilateral corrective justice relationship between the payor and the bankrupt payee. The required tools are more like those which lead us to say that if I make wine out of your grapes, the wine belongs to me (and is accessible to my creditors), even if I am personally liable to you.

Lionel

On 15 Mar 2004, at 16:41, Jonathon Moore wrote:

I am very grateful for Martin's posting, for I was quite unfamiliar with Scots Law.

A concluding comment (which was not the substance of Martin's positing) related to unjustified enrichment. Martin said:

Enrichment perhaps, but quite in accordance with the law and thus not unjustified.

At present, I have no firm view as to whether, in the circumstances being discussed, a claim in unjust enrichment ought to have been advanced. But I wonder whether it is correct to say that an enrichment cannot be unjustified whenever it is achieved 'in accordance with the law'. Could there be a subsequent absence of basis (that is, a failure of basis) for the enrichment if, though the purchase money was paid, the failure to register the purchaser's interest defeated the purchaser's ability to claim ownership?