1. The opinions do not spell out what sort of mistakes will ground recovery.

I'm not sure I agree with that. Certainly, in _David Securities_, the High Court of Australia replaced the narrow liability mistake test with the broader causative mistake test and then displaced the mistake of law rule in favour of the broader causative mistake test. In so doing, the High Court spelled out what sort of mistakes both of fact and of law will ground recovery. (Indeed, as I read the later Royal Insurance case, the later majority resiled from this by generating a new test for mistake in cases of mistakes of law, but again spelled out what sort of mistakes of law will ground recovery). The absence of a similar debate about liability mistakes versus causative mistakes as the test for mistakes of fact might suggest that the speeches do not spell out what sort of mistakes will ground recovery. That indeed was my first thought last Thursday as I speed read the speeches. But the chance to absorb the speeches has led to a second thought (which will no doubt be supplanted by a third, and so on ..). It is this: that a clear view of the kind of mistake which will ground restitution does emerge from _Kleinwort Benson_.

It is clearest is the speech of Lord Hope. As Duncan Sheehan points out, Lord Hope held that "a claim for restitution of money paid under a mistake raises three questions: (1) was there a mistake ? (2) did the mistake cause the payment ? [The payer] must prove that he would not have made the payment had he known of the his mistake at the time when it was made". Furthermore, Lord Browne-Wilkinson said that, as he understood it, there was "no dispute that in order to recover the plaintiff has to have been labour under the mistake at the date of the payment and to have made the payment because of the mistake". And Lord Hoffmann accepted that "in principle, a person who what paid because he held some mistaken belief should be entitled to recover". Lord Goff's speech seems to be predicated upon the assumption that the causative mistake test is (a) applicable to mistakes of fact, and if the mistake of law bar is abrogated, is (b) appropriate for application to mistakes of law. (Any other view from him would a shock, given that it was his judgment in _Barclays Bank v Simms_ which established the causative mistake test in the modern law). Predicated upon a similar assumption, though less clearly, is the speech of Lord Lloyd. Thus, as I read the speeches, they support the view that the test simply that it is sufficient that the mistake have caused the payment.

Of course, Steve's point may be that the notion of "mistake" in the rubric of a mistake causing payment is what is vague and unclear. It is not. Such a mistake is a belief as to facts (or law), which belief is untrue. After _Kleinwort Benson_, all such mistakes will ground restitution.

Second, my two questions unrelated to what Steve had to say are as follows:

(1) On the issue of closed swaps, Lord Hope wrote: "In my opinion the law of restitution should provide a remedy in these cases irrespective of the stage which the transactions had reached. In expressing his decision on the Sandwell case in _Westdeutsche_ Hobhouse J. said at p. 930F-G that it was irrelevant to the existence of a cause of action in connection with the payments made under the first Sandwell swap that the contract was fully performed. The Court of Appeal reached the same conclusion in the _Guinness Mahon case_. I agree with those decisions, and I have nothing to add to what my noble and learned friend Lord Goff has said about them." I think this is odd. I can find nothing in Lord Goff's discussion of closed swaps which mentions Hobhouse at first instance in _Westdeutsche_ and _Guinness Mahon_ in the Court of Appeal. Either that section is absent from the server, or Lord Goff deleted this discussion from the draft which he delivered, or Lord Goff does not have any such section, in which last case Lord Hope has made a slight error. If the first, it will be remedied in the official reports by the addition in Lord Goff's speech of the omitted section; if the third, it will probably be remedied in the official reports by the editing of Lord Hope's sentence; but if it is the second, that is unfortunate. My first question therefore is: can anyone shed any light on this (and will we see a CLP article on Lord Goff's unpublished opinion in _Kleinwort Benson_, as we have seen for _Donoghue v Stevenson_) ?

(2) Lord Browne-Wilkinson's speech is a puzzle. He begins "I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Goff of Chieveley. Were it not for one matter, I would be in full agreement with his views". That matter is not the abrogation of the mistake of law rule, which he condemned as based on "an artificial assumption" and was "convinced that the law should be changed so as to permit monies paid under a mistake of law to be recovered". Furthermore, he expressly indicates that he is prepared to hold that a mistake of law is a mistake for limitation purposes (32(1)(c) of the Limitation Act 1980), but ultimately does not do so: "it would be quite wrong for your Lordships to change the law so as to make money paid under a mistake of law recoverable since to do so would leave this gaping omission in the law. In my judgment the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period applicable to it". As I read his decision, therefore, although he condemned the mistake of law rule, he did not convert that condemnation into a vote against it. Similarly, Lord Lloyd. If that is correct, my second question is this: strictly on a headcounting basis, was I wrong last week to write that the House of Lords had unanimously held that the mistake of law rule no longer forms part of English law, and would it be more accurate to say that the rule was unanimously condemned, but that only a majority converted that condemnation into a holding abolishing it, the minority hesitant not out of any inherent value in the rule but because of the consequential difficulties to which that abolition gives rise ?

Many thanks for any light on the two questions.

Best from Dublin

Eoin

EOIN O'DELL
Barrister, Lecturer in Law

Trinity College
Dublin 2
Ireland

ph (+ 353 - 1) 608 1178
fax (+ 353 - 1) 677 0449

Live Long and Prosper !!
(All opinions are personal; no legal responsibility whatsoever is accepted.)