In Dowman Imports Ltd v 2 Toobz Ltd  EWHC 291 (Comm), the English High Court recently held that the respondent was unjustly enriched and awarded restitution to a claimant who provided services where a contract was anticipated, but not concluded.
Restitution is a remedy which is available where there has been unjust enrichment of one party to the detriment of another. In a successful claim for restitution, the party who is has been unjustly enriched is ordered to pay a sum representing the amount by which he was enriched, to the other party. The purpose of restitution is to put a party back in the position they would have been in had certain representations not been made.
Briefly, the claimant, Dowman is a supplier and manufacturer of soft toys. The respondent, 2 Toobz, is a designer of soft toys. 2 Toobz engaged Dowman to obtain its assistance to create a range of patented toys.
Dowman’s case was that it had worked on the development of toys between 2014 and 2016 on the understanding that Dowman would be appointed as manufacturer once the toys were ready for mass production. At the end of the development process, 2 Toobz appointed a different party as manufacturer. Dowman sought restitution of the value of the development services it provided to 2 Toobz in anticipation that it would be awarded the contract.
In examining the claim, the court relied on the principles required to successfully maintain a claim of unjust enrichment namely: (1) was 2 Toobz enriched; (2) was this enrichment at Dowman’s expense; (3) was the enrichment unjust; and (4) does 2 Toobz have any defences.
The court held that a claim in restitution for services provided in anticipation of a contract, unless such services are provided gratuitously, may still succeed. The Court held: “this type of claim for restitution necessarily involves an acceptance that the parties were proceeding in a position of uncertainty, but that the situation was one where a contract was anticipated but not yet concluded”. Given the history of the business relationship it was clear that the claimant was not providing his services gratuitously.
2 Toobz submitted that that the services provided by Dowman needed to be an end in itself, not merely a means to an end. The court rejected this. It was the anticipation of the contract which was significant. The court also commented on 2 Toobz ’s behaviour and said that 2 Toobz had encouraged and accepted Dowman’s development services and was demanding of the claimant’s time. The court held that 2 Toobz behaved unconscionably in seeking to deny Dowman’s claim because there was no contract concluded between the parties. This was clearly not the intention of the parties.
In its judgment, the Court held “it is equally clear that Dowman should not be treated as having taken the risk of going largely unrewarded for its efforts simply because (and it now recognises) no production contract was agreed”.
The court held that it was clear that Dowman’s services were provided with a view to a contract. 2 Toobz had become unjustly enriched as a result at Dowman’s expense. Accordingly, the court held that 2 Toobz was under an obligation to make restitution to Dowman for the services provided from 2014 to 2016.
The principles required to establish unjust enrichment in Ireland are almost identical to those set out in Dowman (See HKR Missile East Architects Engineering LC & Ors v. English  IEHC 306).
While Dowman is a decision of the English High Court, the judgment provides a useful examination of unjust enrichment and the remedy of restitution where a party has carried out work in anticipation of a contract being entered into.
Back to Full News
Share this article:
About the Authors
Jeremy is a partner in the Commercial & Business team at Hayes solicitors. He practises predominately in insolvency, commercial litigation and dispute resolution, acting for a variety of companies and financial institutions in contract law cases and enforcement and recovery actions in the High Court. He also advises clients in high value complex Commercial Court proceedings.
Gill is a solicitor in the Commercial & Business team. Gill acts for a variety of private companies and financial institutions in the High Court and Commercial Court. Gill advises commercial clients on a broad range of topics including contract disputes, insolvency, enforcement and recovery actions.