Keith Mack
Restitution is a legal concept that can be applied in both civil and criminal cases. In civil cases, it is a remedy for unjust enrichment, where the recovery amount is based on the defendant's gain rather than the plaintiff's loss. In criminal cases, it involves compensation for loss paid by a criminal to a victim, either as part of a sentence or as a condition of probation. Restitution can be used as an alternative to tort or contract damages and can provide a remedy when tort and contract law do not offer one. For example, in a breach of contract, the innocent party may seek damages equal to what was expected under the contract terms (benefit of the bargain). Restitution can also be awarded when one party has provided benefits to another under a contract that is ordinarily unenforceable.
| Characteristics | Values |
|---|---|
| Type of law | Civil, criminal, tort, contract |
| Basis | Unjust enrichment, unjustified enrichment |
| Purpose | Recovery, compensation for loss |
| Applicability | When contract law and tort law do not provide a remedy |
| Calculation | Based on defendant's gain |
| Remedy | Personal money award, proprietary remedy |
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What You'll Learn
Restitution as a tort alternative
Restitution is based on unjust enrichment, which is a form of civil liability. It is distinct from tort and contract law, which are the more traditional areas of the law of obligations. Tort law deals with unlawful harm to one's person or property, and contract law deals with the breach of a contract. Restitution, on the other hand, asks whether the defendant's conduct caused them to be enriched—and whether that enrichment was unjust.
Restitution can be an alternative to tort damages in certain cases. For example, if someone steals your car, you may have the choice to bring a tort suit to recover compensatory damages or to bring a restitution case to recover the wrongdoer's unjust enrichment. Restitution could be advantageous for several reasons, including obtaining a larger recovery, gaining a longer statute of limitations, avoiding governmental tort immunity, and overcoming a lack of standing to recover damages.
In the case of Ministry of Defence v Ashman, the defendants lived in an apartment owned by the claimant, which was rented only to families of employees of the Royal Air Force. When the husband moved out, the claimant tried to evict the rest of the family, but they had nowhere else to go so they stayed in the apartment. The court held that the defendants were enriched through the perpetration of the tort of trespass to land, as they were paying rent that was far below the market rate. The claimant sought to recover mesne profits for the time after the contract had elapsed. This case was described as "one of the clearest judicial acceptances of restitution as an appropriate remedy for a property tort".
Another example is Wright v Genesee County, 504 Mich 410 (2019), where restitution triumphed independently of tort and contract law. In this case, Wright, Genesee County's Drain Commissioner, sued Genesee County for failing to share group health insurance premium refunds. Tort claims for fraud and conversion were dismissed on the ground of governmental tort immunity. However, the Court of Appeals held that governmental tort immunity does not bar restitution because it is based on an implied contract, not a tort.
In civil cases, restitution is typically based on the defendant's gain rather than the plaintiff's loss. This is in line with the guiding maxim from Roman law: "Let no one be made richer through another's loss."
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![[Principles of the Law of Restitution] [By: Virgo, Graham] [October, 2015]](https://m.media-amazon.com/images/I/61-ZjPB75-L._AC_UY218_.jpg)
Restitution as a contract alternative
Restitution is a remedy available to a party who has suffered a breach of contract after having conferred a benefit on the defaulting party. In other words, it is a means of recovering losses resulting from a breach of contract. Restitution is based on unjust enrichment, i.e., whether the defendant's conduct caused them to be enriched and whether that enrichment was unjust relative to the plaintiff.
Upon breach of a contract, the innocent party is entitled to damages equal to what was expected under the contract terms, also known as "benefit of the bargain" damages. However, in some cases, a claim for restitution may provide an advantageous alternative to traditional contract damages. For example, restitution may result in a larger recovery for the innocent party, as it is measured by the extent of the defendant's gain rather than the amount of the plaintiff's loss.
Restitution can also be advantageous in avoiding certain legal barriers, such as the Statute of Frauds or prohibitions on lawsuits by contract breachers. Additionally, restitution may be the only available remedy in certain situations where tort and contract law do not provide a remedy, such as in cases of mistake, misplaced trust, impossibility, or other mishaps.
It is important to note that the availability of restitution as a remedy may vary depending on the jurisdiction and the specific circumstances of the case. Restitution is not always an option, and in some cases, the plaintiff may only have the option to sue for damages on the contract.
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Unjust enrichment
To succeed in a claim of unjust enrichment, the plaintiff must prove that the defendant was unjustly enriched at their expense. This typically occurs when there is no contract between the parties or when a contract is invalid. In some cases, a claim of unjust enrichment may be successful even when a valid contract exists if the claim arises from facts independent of the contract.
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Proprietary remedies
A proprietary remedy enables the claimant to assert proprietary rights against property that is in the defendant's possession. It is a remedy that can be awarded when a claimant demonstrates what has happened to their property, identifies its proceeds and the individuals who have handled or received them, and justifies their claim that the proceeds can be regarded as representing their property.
A claimant can demonstrate the above through a process called 'tracing'. Tracing is not a remedy in itself, but it can lead to the award of a personal remedy where a proprietary remedy is not appropriate. For example, in the case of AG for Hong Kong v Reid, the claimants sought to enforce their rights against a third party, and the law of tracing allowed them to recover a greater amount than their original loss.
In the context of a breach of trust or fiduciary duty by a trustee or fiduciary, a proprietary remedy may be relevant. A proprietary claim in Equity requires the claimant to show that the defendant has received an asset in which the claimant has an equitable proprietary interest.
Different types of proprietary remedies include the recognition that property is held on a constructive trust, the equitable lien, and the remedy of subrogation.
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Civil cases
Restitution is a remedy available in civil lawsuits and some criminal cases. It is a type of solution that restores the injured party to their original position by requiring the breaching party to forfeit any benefits gained. In other words, the defendant is required to give up any gains they obtained to the plaintiff. The goal is to put the injured party in the same position they were in before suffering the damages caused by the defendant.
Restitution is often calculated by evaluating the gains of the defendant, and it is capped by the defendant's gain. It is important to note that restitution is different from compensation, which is calculated based on the plaintiff's losses. Restitution is also distinct from reliance damages, which are awarded to put the promisee in the position they would have been in had the promise not been made.
In civil law systems, restitution is often referred to as unjust enrichment or enrichment without cause. This principle derives from late Roman law, as stated in the Latin maxim attributed to Sextus Pomponius: "By natural law, it is just that no one should be enriched by another's loss or injury." In systems of law derived from English common law, the historical core of the law of unjust enrichment lies in quasi-contract, which creates a personal liability to pay the money value of a benefit received from another.
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Frequently asked questions
Restitution is a legal concept that refers to compensation for loss or harm caused by a criminal or civil wrong. In criminal cases, it is ordered as part of a sentence or probation, while in civil cases, it is based on the concept of unjust enrichment, where the recovery amount is based on the defendant's gain rather than the plaintiff's loss.
Restitution can be used as an alternative to contract damages upon the breach of a contract. Instead of focusing on the harm caused to the plaintiff, restitution asks whether the defendant's conduct resulted in unjust enrichment. In other words, it seeks to recover the reasonable value of any benefits gained through the contract rather than compensatory damages.
Seeking restitution can offer several advantages over traditional contract damages. It may allow for a larger recovery, a longer statute of limitations, and the ability to overcome governmental tort immunity or lack of standing to recover damages.
Yes, restitution can be claimed in situations where contract law does not provide a remedy, such as in cases of mistake, misplaced trust, impossibility, or other mishaps. In these cases, restitution may be the only avenue for recovery, as it is based on unjust enrichment rather than traditional contract law principles.
