CLAIMS IN UNJUST ENRICHMENT AND QUANTUM MERUIT
In Ng Chee Tian and another v Ng Chee Pong and others [2024] SGHC 226 (“NCT v NCP”), the High Court made certain interesting observations in relation to the interaction between claims in unjust enrichment vis-à-vis other conventional causes of action.
Brief summary. At the expense of oversimplification, NCT v NCP concerned an appeal against a decision to strike out a claim in unjust enrichment (NCT v NCP [18] – [29]).
And a key part of the decision to strike out by the learned Assistant Registrar (the “AR”) was that the AR “did not see why a different position ought to be taken for different unjust factors such that proprietary remedies may be available for claims in unjust enrichment premised on certain factors but not necessarily for others” based on Esben Finance Ltd and others v Wong Hou-Lianq Neil [2022] 1 SLR 136 (“Esben Finance”) (see NCT v NCP [29]).
Unjust enrichment as an interstitial case of action. The High Court agreed with the AR’s finding. At [52], the High Court stated that “the law of unjust enrichment should only generally be allowed to operate in situations where other more established causes of action are unavailable.”
And importantly, at NCT v NCP [54], the High Court held as follows:
“… The thrust of Esben Finance is consonant with the logic advanced by numerous academic authors who have cautioned against an overly-expansive application of unjust enrichment in view of the doctrine’s relative recency and infancy. Such a conservative approach, in which unjust enrichment as a cause of action serves largely as a residual category that would be available only when no other causes of action exists, mirrors the approach taken in civil law where unjust enrichment is similarly only available where other causes of action do not exist. …”
The High Court also held at NCT v NCP [60] that there was no reason why the Court of Appeal’s observation in Esben Finance vis-à-vis lack of consent would not apply to other unjust factors in terms of concerns “about the possibility of unjust enrichment encroaching into the space of more established doctrines”. In doing so, the High Court suggested that the identity of the unjust factor in question would “appear to be of peripheral significance”.
Turning to the facts of the case, the High Court observed at NCT v NCP [62] that on the facts of the case, the “desire to seek recourse to the law of unjust enrichment was to overcome the fact that otherwise perfectly legitimate causes of action were rendered toothless as a result of the belated awareness of an applicable time bar.”
As such, the High Court held at NCT v NCP [69] that unjust enrichment ought not be allowed as a cause of action based on the facts of the case, because there were, in fact, alternative causes of action available.
The High Court at NCT v NCP [69] also made clear that in doing so, the Court did not give “significant weight to the fact that the other 2014 transfer claims would otherwise be time-barred … because… the tail cannot wag the dog: the absence of a limitation period for the claim in unjust enrichment cannot form the basis of denying a cause of action or proprietary right that should be applicable but for a time bar.”
Initial observations. At first blush, this discussion seems of little relevance to most construction disputes. This is because usually, when it comes to construction disputes, most claims would be claims under a contract, and it is not so usual to have to seek recourse to unjust enrichment.
However, we excerpt the following passages from an earlier decision of the High Court in Turms Advisors APAC Pte Ltd v Steppe Gold Ltd [2024] SGHC 174:
“120 There are two alternative approaches regarding the award of a reasonable sum for work done by a claimant: the first is contractual in nature and the second is premised on restitution or unjust enrichment. The difference between the two has been summarised in Rabiah Bee bte Mohamed Ibrahim v Salem Ibrahim [2007] 2 SLR(R) 655 (“Rabiah”) as follows (at [123]):
… Where there is an express or implied contract which is silent on the quantum of remuneration or where there is a contract which states that there should be remuneration but does not fix the quantum, the claim in quantum meruit will be contractual in nature. Where, however, the basis of the claim is to correct the otherwise unjust enrichment of the defendant, it is restitutionary in nature. …
121 A claim in contractual quantum meruit fails. As held in Eng Chiet Shoong and others v Cheong Soh Chin and others and another appeal [2016] 4 SLR 728 (“Eng Chiet Shoong”), a claim in contractual quantum meruit is generally premised on an implied contract – ie, there is no express contract (at [28]). This is unless the express contract “does not contain an express term with regard to the remuneration that ought to be paid for work done by the plaintiff” [emphasis in original] (Eng Chiet Shoong at [30]). It is in such a situation that the court would imply a term that a reasonable sum be paid by the defendant to the claimant, if the requirements of an implied term are satisfied (Eng Chiet Shoong at [30]).
122 In the present case, there is a valid express term in the Mandate Letter that governs the claimant’s remuneration for additional services (ie, services that do not relate to a Transaction). The defendant refers to cl 2.3 of the Mandate Letter. It is titled “Other Services” and provides that the defendant may “request in writing any services beyond those stated in the scope that [the claimant] at its discretion may offer and [the defendant] shall pay fees to be agreed between [them]”. In light of cl 2.3, there is no basis for this Court to imply a term that a reasonable sum be paid by the defendant to the claimant. As the claimant does not rely on cl 2.3, I need not consider its applicability further.
123 I also dismiss the claimant’s case on restitutionary quantum meruit. A claim in quantum meruit may be mounted where there is no express contract (Eng Chiet Shoong at [41]). In particular, there cannot be a claim in restitution which exists in parallel with an inconsistent contractual promise (Rabiah at [123]). The presence of cl 2.3 of the Mandate Letter, which provides that the quantum of fees to be paid would be agreed between the parties, suffices to dispose of this head of claim.”
In short, in this decision, a claim in quantum meruit failed because (1) there was no room for a claim in contractual quantum meruit because such a claim would contradict an express term of the contract, and (2) there was no room for a claim in restitutionary quantum meruit either because the existence of such a claim would be in parallel with an inconsistent contractual promise.
And if the phrase quantum meruit sounds familiar to our readers, this is because it is often raised in context of variations.
Food for thought. In construction contracts, it is not unusual to encounter conditions precedent to claims for variation orders under construction contracts. And a failure to comply with such conditions precedent could often mean that the claim for a variation is invalid under contract.
In such situations, parties may try to surmount this issue by pursuing an alternative claim based on quantum meruit.
With the above in mind, the case of NCT v NCP would appear to throw up issues for a claim in restitutionary quantum meruit. If such a claim is pleaded in the alternative to a contractual claim, would it risk being struck out on the premise that unjust enrichment is an interstitial cause of action?
This is in addition to the issues that are raised by the case of Turms Advisors APAC Pte Ltd v Steppe Gold Ltd [2024] SGHC 174: could it be said that if there is a valid, and operational, contractual mechanism for a variation, which the contractor had failed to comply with, the contractor could nonetheless mount a claim for a variation on the basis of quantum meruit?
We leave our readers with this food for thought.
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