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I wish to make a number of observations in relation to the debate initiated by Jason Neyer's posting on 12 July 2000. One is that the present debate provides unwitting support for Peter Birks' advocacy of an improved taxonomy of the common law of obligations. The juridical problems under review are fairly basic yet as we head towards the end of the first millennium of the common law we still have great difficulty in classifying, for example, a gift. However, in my view Birks' argument does not go far enough. His taxonomy model is Linnaen but it is now acknowledged in the biological sciences that an adequate taxonomy of biological organisms has to be grounded in the principles of other related sciences, and that taxonomy as such cannot have, ultimately, a useful independent existence.

If the logic of those propositions is carried across to legal science it follows that an adequate taxonomy of the (common) law of obligations needs to be based upon expressly-stated general principles, with those principles informing and structuring the classification and reclassification of the doctrines and rules within the conceptual structure of the (common) law. An example of something which comes close to providing such a principle is Neyer's Canadian-civilian notion of juristic cause. A more useful formulation of the principle which juristic cause tries to express can be developed through an analysis of the gift of an unencumbered chattel, and the principle thus developed can in turn be applied to a number of the issues raised in the present debate.

A gift occurs when an owner of a chattel delivers the chattel to another in circumstances where the owner indicates to the other that he may treat the chattel as his own. In examining that conduct it may be argued that the owner, by his conduct, manifested an intention to abandon irrevocably his ownership of the chattel in favour of the other person. It may be further argued that because the courts recognise and protect the interest in the chattel thereby acquired by the recipient the courts recognise and apply, impliedly, the principle that whenever an owner of an unencumbered chattel manifests by his conduct an irrevocable intention to abandon his ownership in favour of another that intention is binding (and enforceable). It may also be suggested that that principle is an instance of a general principle, namely that : Whenever a person manifests by his conduct an irrevocable intention to alter his rights and obligations that intention is legally binding (although it will not be enforceable in some cases unless proved pursuant to common law or statutory formal requirements).

How is that principle applied in a case where a donor would not have given his $1,000 to a particular charity if he had realised that an enemy of his was on the managing board of the charity? The answer is that such a donor is in much the same position as the buyer in Smith v Hughes who had it in mind to buy old oats but agreed to buy oats in accordance with a sample, in a situation where the oats in the sample were new oats. He was held to be bound by his manifested intention to buy new oats. It may be argued that the donor, in the case under review, manifested by his conduct an irrevocable, unconditional intention to abandon his ownership of the money in favour of the charity. Conversely, it may be noted that if he did not want to give money to charities who have board members unacceptable to him he had to check that out before he gave his money. Consideration also needs to be given to the case where, under duress, A purportedly gives money to B. In such a case a court could examine the whole of the surrounding circumstances and could conclude that because of the duress A did not manifest an irrevocable intention to make a gift to B. Then there is the case where a donor mistakenly gives $1,000 to a charity instead of the $100 he had in mind to give. If it could be established by reference to the surrounding circumstances that, for example, it was most improbable that a person such as the donor could have intended to make a gift of $1,000 rather than $100 it could be concluded that, in the circumstances, the donor did not by his conduct manifest an irrevocable intention to give $1,000.

In turning to another potential application of the general principle in question reference is made to a case where a payor mistakenly pays his gas bill a second time, in circumstances where the payee does not detect the mistake. Although such a payor may have had an ostensible intention to discharge an obligation, it can be argued by reference to the surrounding circumstances that he did not manifest by his conduct an irrevocable intention to discharge an obligation to the gas company because, as a matter of fact, he did not have one. Furthermore, if it is observed that because parties to an arm's length commercial transaction do not make substantial gifts to each other, the inference can be drawn that the payor in such a case could not have intended to abandon irrevocably, by gift, the money paid to the gas company. It can therefore be argued that the payee is under an obligation to repay the money because the payor was not under an obligation to pay, and could not have intended to make a gift.

This argument can then be developed with a Westdeutsche spin (or, rather, an anti-Westdeutsche spin). It may be noted that in a case where an owner of property forms an intention to create an express trust, and transfers the property to his trustee, and tells the trustee what he has in mind, such a transferor is under no legal obligation to transfer, nor does he have any intention to make a gift to the transferee. On the basis of these propositions it can be argued that what is essential in the formation of a trust (express or otherwise) is that the transferor is under no obligation to transfer, and the transferor does not intend to make a gift to the transferee. It can be further argued that while a conscious, positive intention to create a trust may be a defining characteristic of the sub-category "express trust" it is not part of the definition of the broader category of "the trust".

If the above propositions are correct it follows that because a mistaken payor has not, by his conduct, manifested an irrevocable intention to discharge an obligation, or make a gift, then he has inadvertently created a trust (in support of this argument it is noted that the defendant company in the Smokeball case was held, by reference to its conduct, to have made a contractual offer even though it had no (subjective) intention to make a contractual offer). However, if Swadling's argument is correct that trust is not a resulting trust because, on his argument, the resulting trust sub-category is defined by a conscious intention to create a trust. However, because it can be argued that the mistaken payor creates a trust, to that extent Swadling's argument is irrelevant and Westdeutsche stands for nothing more than the irrelevant proposition that a mistaken payor does not create a resulting trust, leaving open the question as to whether he creates an inadvertent trust. It may also be noted that Peter Birks' counter-intuitive argument on this issue was inherently sound, but was vulnerable because he tried to place his facts into the wrong sub-category of the trust.

The binding intentions principle also helps us to understand the void contract issue. If the principle is applied to an illegal gambling agreement it can be argued that the bettor can not have have manifested an intention, in his jurisdiction, to acquire a binding legal obligation to pay, and hence could not have discharged such an obligation by paying. Nevertheless, it can be inferred from the surrounding circumstances that the bettor manifested by his conduct an irrevocable (and lawful) intention to make a gift to his bookmaker, in a situation where he held a reasonable expectation that his bookmaker, if he were to stay in business, would make a reciprocal gift, at odds, should the bettor's horse come home. However, where a swaps contract is void because it is ultra vires, such as in Westdeutsche, it can be argued that the council did not manifest an intention to make a gift because such an intention would have constituted an attempt to circumvent an ultra vires contract, and hence the gift would also be ultra vires by necessary implication. Because the council did not manifest an intention to give, it follows that the bank, which can be presumed to have acted prudently, could not have manifested an intention, in the circumstances, to make a unilateral gift either.

The binding intentions principle also has a broad application beyond restitution cases. For example, it is relevant to the analysis of a case where a creditor has manifested an irrevocable intention to abandon his right to recover in circumstances where that intention is not evidenced by a deed under seal. The Earl of Selborne held in Foakes v Beer that such a release is not binding because it was not by deed under seal. Lord Blackburn was minded to dissent in that case, but did not state his reasons. However, if reference is made to Lord Blackburn's famous discussion of valid but unenforceable oral contracts in Maddison v Alderson, and if reference is also made to the binding intentions principle, it may be argued that the informally-evidenced intention of a creditor to release is binding, even though it is not enforceable at common law because the release was not evidenced by, and hence cannot be proved by, a deed under seal.

Indeed, it may be argued that the reason why the common law has not expressly-stated the binding intentions principle, or has not adopted the civilian concept of juristic purpose, is because, in the absence (until the mid-nineteenth century) of the oral testimony of the parties to a civil cause, it was not practicable to prove intentions to alter rights and obligations in cases where that intention was manifested by an oral statement, especially if there were no non-party witnesses (gifts were different because the jury could establish from non-party witnesses that the subject chattel was in the hands of the alleged donee in circumstances where the alleged donor had acted as if he had no objection to the donee treating the chattel as his own). Because such orally-stated intentions to alter rights and obligations could not be proved, and were therefore unenforceable, there would have been little point in setting up the theoretical proposition that an informally-evidenced intention to release a debt was, nevertheless, legally binding.

Strangely, what we have also lost sight of is that equity, in its role of tempering and mitigating the rigour of the law, was concerned with situations in which an informally-evidenced legally-binding intention to alter rights and obligations was unenforceable at common law. The Court of Chancery could play that role because it had adopted the Romano-canonical rules of evidence and procedure, and because, accordingly, the oral testimony of the parties was admissible in that Court. Furthermore, Chancery was not bound by the common law rule that a deed provided conclusive proof of the matters stated therein. Because of those differences, Chancery could mitigate the rigour of the law in a case where a debt which had been evidenced by a deed, or bond, was repaid, and the creditor had not executed a deed of acquittance. In such a case, the creditor could successfully sue at common law because the debtor could not prove the repayment because of the common law rule which provided that an unacquitted bond provided conclusive proof of the subsistence of the subject debt. In Chancery, however, the debtor could prove that the creditor, by accepting repayment, had manifested a binding irrevocable intention to abandon his right to recover. Although the Chancellor would then invoke the proposition that it would be contrary to conscience for the repaid creditor to sue for recovery at common law, and would then order the creditor to deliver-up the bond for cancellation, it may be suggested that the non-legal concept of conscience used in such a case should be explained in juridical terms. For example, the Court's order could be explained in terms of an implied finding that, because of the abandonment, the creditor fell under a duty to ensure that the documentary evidence of his rights was brought into conformity with his binding intention to abandon. It should be further noted that the Chancellor could also enjoin the creditor from pursuing his action at common law, and that the common law courts recognised such an injunction. Which indicates that the common law position in such cases was based on the maintenance, within the common law, of its idiosyncratic rules of evidence and procedure, and not on principle.

It may also be noted that, in principle, the general form of relief provided in the repaid bond cases could also be provided in a case where there has been an oral release of a debt. A forgiven debtor would be permitted in equity to attempt to prove that his creditor manifested an irrevocable legally-binding intention to abandon his right to recover, and, if the evidence was there, a court exercising an equitable jurisdiction could find that such an intention was manifested. Such a court could also find that the creditor was in breach of his duty to ensure that the formal documentary evidence of his rights was brought into conformity with that intention. The court could then order the creditor to execute formal evidence of that intention which the creditor could then use in his defence at common law (in time, of course, a senior appellate court would presumably dispense with such formalism and would thereby abolish the common law rule).

If such equitable relief was provided in the debt release cases then both the detriment/benefit rule attached to the doctrine of consideration, and the doctrine of estoppel, would become redundant. A promise to provide some token (such as a beaver hat) in return for a promise not to sue upon a debt was only ever a crude, practical, common law response to the difficulty of proving, in circumstances where the oral testimony of the parties was inadmissible, that a creditor had manifested informally an irrevocable intention to abandon his right to recover. However, estoppel was never of much use to forgiven debtors, because generally they did not act in reliance upon the forgiveness (an exception was Jorden v Money but that is another, intellectually unfortunate, story). Rather, estoppel was developed for a different purpose, which can be understood if an examination is made of the first common law estoppel case Pickard v Sears. The plaintiff was the mortgagee/owner of farm machinery under an old system chattel mortgage used to secure a loan. A second unsecured creditor obtained judgment, and the sheriff who was unaware of the mortgage proposed to sell the goods to the defendant, who also had no notice of the mortgage. The mortgagee, who had knowledge of the proposed sale remained silent. After the sale had taken place he sued the buyer in trover at common law.

It may be argued that in that case the mortgagee made a gift of the goods to the mortgagor. The goods were in the hands of the mortgagor's agent, the sheriff, in circumstances where the mortgagee by his conduct manifested an irrevocable intention that the agent be free to treat the goods as the mortgagor's, by selling them and by using the proceeds to repay a debt owed to another. Although that gift was legally-binding it was nevertheless unenforceable at common law because the unacquitted deed of mortgage provided conclusive proof at common law of the mortgagee's ownership. However, if equitable relief had been sought a court of equity could have declared, impliedly if not expressly, that the mortgagee had abandoned his ownership, and that he was in breach of his consequential duty to acquit the deed. The court could then have ordered the delivery- up of the deed for cancellation.

By contrast the common law court in Pickard v Sears was bound by the common law rules of evidence. Hence it could not, for example, order the delivery-up of the deed. Nevertheless, by estopping the mortgagee the court held impliedly that the mortgagee was no longer the owner (by definition a legal right is an interest recognised and protected by the courts). In may therefore be argued that, in order to disguise that substantive decision, the doctrine of estoppel employs the fiction that the mortgagee has remained the owner all the way through, and that he made a false representation to the buyer that he was not the owner; and that the buyer relied detrimentally upon that purported false representation; and that, in order to prevent the detriment which the buyer would suffer if the mortgagee was allowed to assert his right, the mortgagee is estopped from the assertion of that right.

What this analysis suggests, amongst other things, is that if a party wants to argue his case at common law in estoppel he has to be able to demonstrate reliance, so that the fictional tort-like elements of that doctrine can be invoked. However, an alternative to estoppel is provided in equity by the general form of relief provided in the repaid bond cases. Under that form of relief all that has to be demonstrated is that the other party manifested an irrevocable intention to alter his rights and obligations, and that he was subsequently in breach of his duty to ensure that the formal documentary evidence of his rights and obligations was brought into conformity with his intention.

Fergus Farrow
Barrister, Melbourne

May I add a PS for Duncan Sheehan, and note that a traveller, although not a motorist, could travel from Oxford to Abingdon by travelling north. Of course, it would be a long journey, taking in both poles, but in principle it could be done. Perhaps this demonstrates that Antipodeans have an odd perspective.