Restitution Discussion Group Archives
| Sender: |
Eoin O' Dell |
| Date: |
Sun, 12 May 1996 11:26:20 +0100 (BST) |
| Re: |
Warman v. Dwyer |
Hello, all.
Robert Chambers asks us for our opinions about Warman
v. Dwyer. He characterised the liability of the first defendant
as restitutionary and that of the second and third defendants as based
on knowing assistance. As to the liability of the first defendant, Robert
says that the High Court of Australia
gives Warman an election between compensation for loss
and account of profits and goes on to say at 569 that "It is arguable
that any order for an account of equitable compensation for the loss
sustained by Warman should have been made against Dwyer only", ie that
accessories should not be liable to compensate for losses. I find this puzzling, for it seems that the opposite
should be true: that the normal rule of compensating for harm caused
by wrongdoing should apply to the accessory and that there ought to
be a reason for allowing restitutionary recovery. The breach of the
fiduciary's obligation to subordinate his interests to the plaintiff
is sufficient basis for restitutionary recovery (disgorgement) in the
absence of loss to the plaintiff, but what is the basis for the same
measure of relief against the accessory? I'm not opposed to profit stripping
in this case, but find it odd that the HCA thinks that the normal rules
are reversed without much consideration of the point. I am puzzled by Warman for all sorts of reasons,
but I simply thought that this was a product of distance. Robert's questions,
and those from Simon Evans, are reassuring in that at least I am in good
company. But, for what it's worth this is my take on that aspect of the
case (it's hasty, ill-thought out, and probably wrong, but if I can't
run it up this particular flagpole, where can I discuss it; and anyway,
Robert, you asked for it (heh, heh, heh [evil laugh to fade ]).
I agree with you that we must distinguish between the
liability of the receiver and the liability of the dealer. That of the
receiver turns upon the fact of receipt, that of the dealer upon the fact
of his dishonesty.
However, it will not always be so clear whether a given
person must be characterised as a receiver or a dealer. For example, every
receiver is also a dealer, (or if you will, everyone who receives trust
funds is necessarily an accessory in the breach of trust) and could be
liable either a receiver or as a dealer, or as both (though usually the
issue does not arise and liability is imposed on the basis of receipt).
If one wants to go after receipts, one goes after him as a receiver. If
one wants to go after compensation, one goes after him as a dealer.
Now, what about (as in Warman v. Dwyer) going
after him for profits he made from the breach. Restitution lawyers will
say this is restitution for unjust enrichment by wrongdoing, and will
say that he is being made liable as a receiver. However, I think that
the High Court only saw receipt based liability as restitutionary,
and did not see profit-stripping as restitutionary, since they denied
that the basis of the liability here was "unjust enrichment". That being
so, they have to characterise his liability as that of a dealer, and characterise
the remedy as compensation. Since the liability of a dealer is based on
knowledge/dishonesty, that is why the Court speaks this language.
In other words, the Court thinks that it is dealing *only*
with dealers and not with any receivers.
A theme of recent academic work and case law has been
the need to develop a coherent statement of the principles of such dealer
(accessory) liability, issues such as causation, remoteness, calculation
of the measure of compensation, etc. If it is the case that the Court
thinks that it is dealing only with dealers, then it may be that the statement
puzzling Robert (that it "is arguable that any order for an account of
equitable compensation for the loss sustained by Warman should have been
made against Dwyer only") is simply an inchoate remoteness test in respect
of the point beyond which there will be no further liability for dealers.
Does this make any sense at all ?
Eoin.
EOIN O'DELL Trinity College ph (+ 353 - 1) 608 1178 (All opinions are personal; no legal responsibility whatsoever
is accepted.)
Barrister, Lecturer in Law
Dublin 2
Ireland
fax (+ 353 - 1) 677 0449
Live Long and Prosper !!
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