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Re: Gertsch v Atsas, 1 Oct 99, NSW SC,

<http://www.austlii.edu.au/au/cases/nsw/supreme_ct/ 1999/ 898.html>

As concerns the lady who paid off her mortgage, comparativists will be interested to note that the reasoning is not far away from that adopted by the German Federal Court of Justice in BGH 17.6.1992, BGHZ 118, 383 = Markesinis, Lorenz and Dannemann, The German Law of Obligations Vol. I, case no. 131).

This was an overpayment of maintenance (rather than a Diplock type will), and the lady paid off her car (rather her mortgage), but the rest is rather similar. The following is a quote from the judgment (please note that "lapse of enrichment" denotes more or less the same as "change of position"):

"It is the enriched party which must prove the lapse of the enrichment, as this is a defence which destroys the claim (BGH NJW 1958, 1725 = LM §134 BGB Nr. 30). Court practice has created alleviations for this proof as regards overpayment of salaries and benefits owed to civil servants, which, by their nature and purpose, are similar to maintenance allowances. These alleviations operate if the overpayment has not been used during the time in question to build up specific savings, or other pecuniary advantages. Experience of life will argue in favour of recipients, in particular those on a low or average income, i.e. that they have spent the overpayment on improving their standard of life, without having to show specifically how this money was actually spent (RGZ 83, 161, at 163; BVerwGE 13, 107; other references omitted).

But even if a lasting pecuniary advantage has been created, this does not necessarily exclude such alleviations. The Bundesverwaltungsgericht (BVerwGE 15, 15, at 18) has also assumed a lapse of enrichment under §818 III BGB in a case where a civil servant used the overpaid amount for paying off debts which he would equally have paid off without the overpayment by restricting his standard of life. In that case, the Court argued that the overpayment had resulted in no more than that the civil servant, by adapting to the extra amount which was at his disposal, restricted his lifestyle less than he would have done if he had paid off his debts on the lower income to which he was entitled. According to these principles, to which this Senate subscribes, it does not matter for the purposes of proving lapse of enrichment whether the surviving pecuniary advantage has been acquired by using the excess amount which was paid without legal ground, or by using the basic sum which was paid with legal ground. In most cases, it will be impossible to establish which of the two amounts was used to pay off the debt, because usually the amount owed and the amount not owed are paid in one total sum, and because the recipient will not distinguish between the partial amounts he uses in order to cover his ongoing living expenses on the one hand, and to pay off debts or to acquire objects which become part of his assets on the other (Lieb, in: MünchKomm, 2nd ed. 1986, §818 no. 83). What is decisive is rather the proof that the enriched party would at any event, and without the overpayment, have acquired the pecuniary advantage in question, if necessary by restricting its lifestyle, with the result that the overpayment has not caused this pecuniary advantage to the enriched party.

It is without success that the appeal argues that stricter rules of evidence should operate for the protection of the maintenance debtor as regards overpayment of maintenance above the amount the maintenance debtor must be allowed to keep for his own subsistence. Rather, the rules on evidence which have been developed for the civil servants cases are also to be applied to wage or maintenance payments under private law. For this situation is comparable to that involving salaries for civil servants (reference omitted). This is in particular true for the present case. With DM 1,800 per month, the maintenance which the defendant received is within the area of a lower to middle civil servants' salary. There is nothing to show that civil servants demonstrate spending patterns which differ from those of a maintenance creditor. Equally, there are no other reasons which could justify a distinction. Nor do the interests of the enrichment creditor necessitate a presumption to the effect that any pecuniary advantage left with the enrichment debtor has been financed using the amount of the overpayment, with the consequence that such a presumption can be rebutted only by concrete proof that the amount in dispute has been spent otherwise. On the contrary, such a presumption would create too onerous a burden of proof, and contradict the statutory purpose which ties the duty of the enrichment debtor to provide compensation to a true increase of assets which stems from his having received something without legal ground (BGHZ 55, 128, at 134). This is even more so true because, in the income areas under consideration, larger acquisitions, e.g. of household goods or of a car, will, as a rule, be financed on a loan basis, whereby the necessary installments for capital repayment and interests are paid by making sacrifices on other expenditure. Otherwise, reliance on change of position would be excluded in nearly all of these cases. It is therefore sufficient for the defendant to prove that she would have repaid her debts even without the overpayment.

The defendant has proved this point. It is not disputed that she has continued to pay monthly installments of DM 267 since 1980 until very recently. This does include payments made by restricting her ongoing living expenses during those months in which, due to the temporary stay of execution, she had no more at her disposal than maintenance payments amounting to DM 1,000 per month. In addition, the Appeal Court has stated, without being challenged, that the defendant has not debited her accounts for any larger sums which could indicate any other savings she might have made. Likewise, the Appeal Court has stated that the defendant did not dispose of any other means which she could have used for her own subsistence. The Appeal Court was allowed to conclude from the above that the defendant had already previously planned the repayment of her loan as a fixed part of her monthly outgoings to be met in advance, and that any means which exceeded these outgoings, such as the overpayments, were used to improve her standard of living."

-- Gerhard Dannemann

Dr. Gerhard Dannemann
Erich Brost University Lecturer in German Civil and Commercial Law
University of Oxford

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