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Reference is made to Christoph Coen's posting of 13 July and more specifically to his question as to what people think about the argument in the Meir and Zimmerman note at 115 LQR 556. As my position as expressed in recent postings has an implied juristic cause basis I offer the following comments on the Meir and Zimmerman argument.

What is of particular interest about their argument is that it demonstrates indirectly the deep differences which exist between the intellectual culture of the common law, with its roots in the technical college environment of the inns of court, and the intellectual culture of the civil law, with its roots going back to the scholasticism of the early medieval university. The civilian side of that dichotomy is exemplified by the ease with which Meir and Zimmermann's argument is based on a logical analysis of the problem in hand, starting with an examination of what causes a transfer, legally, of property rights from A to B, and then proceeding to the logical point that if a transfer is made in the absence of conduct which causes a transfer of property rights then the recipient has no basis for the retention of the transferred property and must therefore submit to a claim in restitution from the transferor.

As Meir and Zimmerman point out, the common law, by contrast, has developed in a piecemeal case-by case basis, producing what I would call practical rules of thumb rather than a set of rules based upon an exploration of the logical implications of basic principles. More particularly Meir and Zimmerman expressed a concern that if restitution is based on [a practical rule of thumb grounded in] mistake, then the problem arises that, as they state at 563: "If … not every causal mistake leads to restitution, one has to distinguish between mistakes that can found an action to recover and those that cannot. This is not possible without, at some stage of enquiry, reverting to a legal ground analysis".

Although I support the broad argument thus advanced by Meir and Zimmerman I nevertheless consider that they have not developed the details of their argument as well as they should. In summary, their position is that if a person has transferred property in the absence of a legal obligation owed to the transferor, and in the absence of an intention to make a gift, there is no juristic cause for the transfer, and hence the transferee is obliged in restitution to the transferor. The problem with that formulation, however, is that it does not contain sufficient content to enable us to determine which of two possible - and contrary - intentions manifested by a transferor is legally causative. That is a major problem because much of the theoretical difficulty in restitution arises in respect of such ambiguous intention cases.

I attempted to address that problem in my earlier postings when I sought to define the process involved in establishing when a party had manifested by his or her conduct a binding intention to acquire a legal obligation (we need to establish whether a party held a legal obligation before we can establish whether, as transferor, he has discharged a legal obligation) and I also sought to define the process involved in determining whether a party by his or her conduct had manifested a binding intention to make a gift.

In my earlier postings I sought to demonstrate what that process entails by reference to a range of cases, including for example Smith v Hughes, and I thus suggest that if Meir and Zimmerman had developed their argument down to that level of detail they would have been able to deal more effectively with a number of cases mentioned by them. One such case is Larner v LCC, where the employer council promised to pay employees on war service the difference between their service pay and their civilian pay, with the employees being required to inform the employer if their service pay was increased from time to time so that an adjustment could be made of the amount paid by the employer. Larner failed to inform of a change in his pay and was thus overpaid by reference to the employer's promise. However, as Meir and Zimmerman point out the promise was unenforceable, and thus even though there was a mistake, there was not a liability mistake.

What they (and indeed Denning J) could have then done, but did not, was to consider the other possible juristic cause of a transfer, and they thus failed to ask whether, generally, the employer had made a gift of its payments, and whether, more particularly, the employer had manifested a binding intention to make a gift of the whole amount paid to the employee in the instant case. If that approach had been adopted an objective observer could have concluded that, in the absence of a legal obligation to pay, the employer nevertheless manifested a binding intention to make a series of periodic gifts, subject to the qualification that the quantum of the gift in any particular period was to be determined by the difference, in that period, between the employee's civilian pay and his pay entitlement in the services. On the basis of that conclusion it could have been further argued that, because the amount paid to the employee in Larner was greater than the amount of the intended gift, the employer had a basis for a claim in restitution for that overpayment. It is noted that the employee also raised a change of position defence, on the basis that acting in reliance upon the payment he had spent the money. If, however, the change of position defence was correctly characterised as resting upon a counterclaim in tort it would be simple to note that such a payee knew or ought to have known that there was an overpayment in his case, and that he should have returned the overpayment and not spent it.

Another case referred to by Meir and Zimmerman is Morgan v Ashcroft, where a bookmaker's clerk, in settling an account, paid more than was indicated by the transactions with the client. The bookmaker failed to recover the overpayment. However, in my view, the bookmaker could have argued that, in the circumstances, he had manifested an irrevocable binding intention to pay to his client a gift calculable by reference to the arrangement between the parties. He could then have argued that the amount paid to the client was greater than the amount of his intended gift, and that accordingly he could not have intended to make a gift of the difference. He could also have argued that the law dealing with wagers is silent on the recovery of such mistaken overpayments. On that basis the bookmaker could have argued that, on the gift issue, the instant case was in parallel with Lady Hood of Avalon. By contrast, it can be suggested that Ogilvie v Littleboy is distinguishable from Lady Hood of Avalon because the donor in Ogilvie v Littleboy had received extensive legal advice before executing relevant deeds and hence was unable later to argue that she had manifested by her conduct an intention to make gifts in terms other than those contained in the deeds.

Meir and Zimmermann's discussion of void contracts, in the context of the swaps cases, was also inconclusive. It could have been more effective if they had noted that a swaps contract of the sort in question was void because it was ultra vires the contracting council; and if they had noted that, by implication, the council could not seek to circumvent the statutory bar on the making of such a contract by attempting to make a gift in the terms of the void contract. If they had adopted that analysis they could have concluded that there was no juristic cause for the council's payments. They could also have developed the argument that any intention by the contracting financial institution would, of necessity, be in the form of a unilateral gift, leading to the conclusion that the financial institution could not have intended to make a gift of its payments either. They could then have concluded that in the absence of juristic cause on both sides a claim in restitution could be raised in relation to all of the payments made under the void because ultra vires contract. Of course, a different conclusion would be reached if a contracting financial institution had made its payments in circumstances where it knew that the contract was void, in that an objective observer could conclude that such a party manifested thereby an irrevocable binding intention to make a gift of its payments.

I hope that these comments may persuade Christoph to remain faithful to the rationality of his civilian background.

Fergus Farrow