Restitution Discussion Group Archives
| Sender: |
Andrew Tettenborn |
| Date: |
Mon, 16 Oct 2006 10:58:05 +0100 |
| Re: |
Charter plc v City Index Ltd [2006] EWHC 2508 (Ch) |
Charles Mitchell wrote:
Do claims for knowing receipt fall
within the scope of the Civil Liability (Contribution) Act 1978: i.e.
will a contribution claim lie under the statute between a defaulting
fiduciary and a knowing recipient of misdirected trust funds? If claims
for knowing receipt belong to the law of unjust enrichment, then Royal
Brompton NHS Trust v Hammond [2002] 1 WLR 1397 suggests that
they do not fall within the scope of the 1978 Act, as Lord Steyn held
there that restitutionary claims in UE do not count as claims in respect
of 'damage' as required by s 6. Although Lord Steyn does not say so,
this is borne out by Hansard, a study of which reveals that Parliament
(following the Law Commission's recommendations) intended not to bring
claims in 'quasi-contract' within the scope of the 1978 legislation.
One could get around this by saying
that claims for knowing receipt are in fact wrong-based and not grounded
in UE at all. However, in Charter
plc v City Index Ltd [2006] EWHC 2508 (Ch), Morritt C more
doubtfully holds that Lord Steyn's comments are obiter, and holds that
even though claims in KR are 'restitutionary' they are also 'compensatory'
in the sense that they are claims in respect of 'damage' as required
by s 6.
In principle, allowing contribution
claims between knowing recipients and other classes of defendant liable
for breach of trust is obviously desirable, but I doubt whether it is
open to the courts to do this by allowing claims under the 1978 Act,
rather than by developing the common law (cf Niru
(No 2)).
Morritt C also holds (rightly in my
view) that as between a knowing recipient and a defaulting fiduciary,
it will always be the recipient who should bear the burden of making
good the beneficiaries' loss as he is the one who has personally benefited
from the transaction. I can't see the problem about City
Index. Admittedly this is partly because I've always had difficulties
with the idea that knowing receipt is about UE rather than wrongs. But
even discounting this point, I don't think there's any doubt that a beneficiary
suffering loss as a result of knowing receipt can recover that loss from
the receiver. And if this is right, whyever not say that this is a liability
for "damage?" The undeserving contribution claimant can always
be dealt with as Morritt dealt with the claimant in City Index:
but there may be situations where a receiver ought to get contribution
(e.g. where there is a technical receipt but the receiver is then defrauded
of whatever he received without having a chance to benefit from it).
Andrew
-- Tel: 01392-263189 / +44-392-263189 (outside UK) Snailmail: School of Law, Exeter Law School homepage: http://www.law.ex.ac.uk
LAWYER, n. One skilled in circumvention of the law (Ambrose
Bierce, 1906).
Andrew Tettenborn MA LLB
Bracton Professor of Law
University of Exeter, England
Cellphone: 07870-130528 / +44-7870-130528 (outside UK)
Fax: 01392-263196 / +44-392-263196 (outside UK)
University of Exeter,
Amory Building,
Rennes Drive,
Exeter EX4 4RJ
England
My homepage: http://www.law.ex.ac.uk/staff/tettenborn.shtml
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