Banque Financiere de la Cite v. Parc (Battersea) Ltd [1999] 1 AC 221 is a recent and important case in unjust enrichment

Unjust enrichment

Unjust enrichment is a legal term denoting a particular type of causative event in which one party is unjustly enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing.Definition:...

.

Facts

Parc Ltd had got a loan from a bank called RTB, and given charge over its Battersea land as security. Parc Ltd got a second loan from OOL, which got another charge. BFC, a Swiss bank, gave Parc Ltd a third loan of DM30m but got no charge. Instead it got a ‘postponement letter’ saying other companies in the group (including OOL) would not enforce their charges until BFC had been paid. Parc Ltd used the loan to pay off RTB. But OOL had given no authority to Parc Ltd to give that letter. When Parc Ltd went insolvent, BFC claimed subrogation to be paid in priority of OOL.

Judgment

The House of Lords held that BFC should be subrogated in priority to OOL.

In the course of his judgment, Lord Hoffmann said on the principles behind liability in unjust enrichment, (at 227),