-- Received: (qmail 20070 invoked from network); 5 Jan 1998 13:38:40 -0000 Received: from dux4.tcd.ie (134.226.1.194) by jess.oucs.ox.ac.uk with SMTP; 5 Jan 1998 13:38:40 -0000 Received: from [134.226.248.23] (law023.law.tcd.ie [134.226.248.23]) by dux4.tcd.ie (8.8.7/8.8.7) with SMTP id NAA01325 for ; Mon, 5 Jan 1998 13:38:38 GMT Date: Mon, 5 Jan 1998 13:38:38 GMT Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" To: restitution@maillist.ox.ac.uk From: eodell@tcd.ie (Eoin O' Dell) Subject: A footnote on philosophy Hello all, Almost as soon as I had sent my mischievous message asserting that Barclays Bank v O'Brien is not a restitution case, I moved house, so I rather dropped out of work for the last 3 or so weeks, but everything is getting back to normal now, and I can tune back into the quite volumninous correspondence which my message seems to have generated. The big question of "what is it all about ?" I leave to the philosopher kings; the not quite so big question of "how do we treat undue influence ?" will generate another message from me (quite soon, I hope). However, in the meantime, the process of drafting that threatened message produced a small footnote on the former discussion. In one of his messages on the structure of the subject, Steve Hedley posed the (rhetorical) question >How many judgements can you recall that even *name* any unjust factors, >let alone use them ? I can't resist reference to the Bricklayers' Hall case: Dublin Corporation v. Building and Allied Trade Union [1996] 2 IR 468; [1996] 2 ILRM 547 (members of the list may recall a long message on that case which I sent to the list some time ago and which became (1997) 113 L.Q.R. 245). In that case, Keane J in the Supreme Court described restitution as "separate from both contract and tort" ([1996] 2 IR 468, 483; [1996] 2 ILRM 547, 558). He went on expressly to separate out four "essential preconditions" (id) for recovery, ("while there is seldom any problem in ascertaining whether two essential preconditions for the application of the doctrine have been met - i.e. an enrichment of the defendant the expense of the plaintiff - considerably more difficulty has been experienced in determining when the enrichment should be regarded as 'unjust' and whether there are any reasons why, even where it can be regarded as 'unjust', restitution should nevertheless be denied to the plaintiff." ([1996] 2 IR 468, 483; [1996] 2 ILRM 547, 558)). Finally, for our purposes, and expressly to meet Steve's point, Keane J observed of that third enquiry as to whether the enrichment should be regarded as 'unjust', that, "the law, as it has been developed, has avoided the dangers of 'palm-tree justice' by identifying whether the case belongs in a specific category which justifies so describing the enrichment: possible instances are money paid under duress, or as a result of a mistake of fact or law or accompanied by a total failure of consideration" ([1996] 2 IR 468, 484; [1996] 2 ILRM 547, 558). Of course, none of this is new, a similar list for a similar purpose appears in Moses v. Macferlan (1760) 2 Burr 1005, 1012, but the point about the Bricklayer's Hall case is that it expressly lists unjust factors as unjust factors (accepting, it seems, Irish examples (e.g. (1993) 15 D.U.L.J. (n.s.) 27) of the modern scholarship with which Steve is in such disagreement). And if Steve replies that one swallow does not a summer make, the riposte has to be that the question was posed a rhetorical one to which the only possible answer was "none", and the fact that there is at least one case which says (without explanation or reinterpretation) what he did not expect any case to to say is a sufficient answer to the rhetorical question and to the point it embodied. Happy new year to all, Eoin. EOIN O'DELL BCL(NUI) BCL(Oxon) Barrister, Lecturer in Law Email: EODELL@mail.tcd.ie Trinity College ph (+ 353 - 1) 608 1178 Dublin 2 fax (+ 353 - 1) 677 0449 Ireland Live Long and Prosper !! (All opinions are personal; no legal responsibility whatsoever is accepted.) Received: (qmail 21567 invoked from network); 5 Jan 1998 15:28:34 -0000 Received: from dux4.tcd.ie (134.226.1.194) by jess.oucs.ox.ac.uk with SMTP; 5 Jan 1998 15:28:34 -0000 Received: from [134.226.248.23] (law023.law.tcd.ie [134.226.248.23]) by dux4.tcd.ie (8.8.7/8.8.7) with SMTP id PAA18745 for ; Mon, 5 Jan 1998 15:28:31 GMT Date: Mon, 5 Jan 1998 15:28:31 GMT Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" To: restitution@maillist.ox.ac.uk From: eodell@tcd.ie (Eoin O' Dell) Subject: Rescission for undue influence Hello all: I would like, as threatened, the return to the above topic. I think I need to establish two propositions. First, that there is an important structural separation determining the validity of a contract and determining appropriate remedial responses if the contract is invalid. And, second, that this important structural separation, whilst more difficult to achieve where a contract is voidable and avoided rather than where it is void, must nonetheless be achieved in that context as well. I do not understand the first proposition to have excited any great disagreement, but I will nonetheless attempt clarify my thoughts on that point again here. The second goes to the nature of rescission and to the nature of those matters which both generate a right or equity to rescind and also constitute unjust factors. It is here that the main disagreements with my original email lie, and I attempt to expand upon what I said then to meet those disagreement. Much of what I have to say is in response to various points made both to the list and privately. I hope that I have at least provided an answer to everyone's main points (even if I have not expressly named the person to whom the answer is directed or provided an answer which will satisfy the particular objection raised). (To meet a Steve Hedley point now, there is an important structural separation determining the validity of a contract and determining appropriate remedial responses if the contract is invalid, there are still two questions, whether the same body of law is applied to the two questions or whether two separate bodies of law are applied to them. I merely here want to insist upon that separation, and then to consider the terms of the second question). First, then, there is an important structural separation determining the validity of a contract and determining appropriate remedial responses if the contract is invalid. For example, when the doctrine of frustration says there is no contract, and the rules on failure of consideration say that there may consequently be restitution, it is quite clear that there are two separate doctrines in play, the contract doctrine (frustration) and the restitution doctrine (failure of consideration). When the doctrine of mistake in contract says there is no contract, and the rules on mistake in restitution say that there may consequently be restitution, though it may not be quite so clear, it is likewise the case that there are two separate doctrines in play, the contract doctrine and the restitution doctrine. In the case of mistake, this separation is at least implicitly acknowledged by the fact the two relevant tests are stated in two separate cases (mistake in contract: Bell v Lever Bros; mistake in restitution: Barclays' Bank v Simms). (Two points by way of qualification require to be made. First it was assumed in Bell v Lever Bros that if the contract was void, Lever Bros could recover their money back, but that is so because if they had successfully fulfilled the terms of the contract test for mistake, the same mistake would also have fulfilled the terms of the less restrictive restitution test for mistake. (Had they chosen to do so, they could also have argued that the mistaken belief in the existence of a valid contract, when it was void, was a sufficient mistake, (a la Rover v Canon); or they could have sought to rely on failure of consideration). Second, Lord Wright's language in Norwich Union v Price seems to have conflated the two separate tests, which seems rather against the essential point I am trying to make here, but this speech has been criticised for just this reason, Burrows 106-107, Burrows and McKendrick p 104, McMeel 53, and even if it was the case in 1934 in Price that that the test in contract for mistake was fundametality (as established two years before in Bell v Lever Bros) and the test in restitution for mistake was also fundamentality, the modern acceptance of the Simms causative mistake formulation has decisively altered the position to that stated above, viz: that there is, in the context of mistake - as elsewhere - a separation between the question of whether a contract is valid and whether if not there can be restitution). That separation makes it clear that there are two separate enquiries. Has the contract gone off ? If so, is there a consequent remedy in restitution (by the application of the four enquries) ? This separation is *the* pre-eminent lesson of the Westdeutche litigation and the enormous torrent of commentary thereon. In rejecting absence of contract as an unjust factor, the commentators have made it clear that the absence of the contract may be the occasion for restitution, but it is not the ground for restitution. Thus, when a contract goes off, the four enquiries must be answered in the affirmative before there can be a remedy in restitution. My point is simply that the doctrine of undue influence is the doctrine which removes the contract (as did the doctrine of frustration or of mistake in contract in the above examples). The non-consensual nature of any transfer under the now avoided contract is that which justifies consequent restitution. Again, there are two different doctrines at play. Many consequnces flow from this separation. First, it becomes clear that cases like Barclays Bank v O'Brien and its progeny are about the first question, and are thus not restitution cases. Thus, when a contract is set aside for duress at law or for undue influence at equity, that is the relevant contract doctrine at work. When there is a consequential remedy in restitution, that is because the test for the unjust factor of coercion is independently satisfied. Second, if there are two different doctrines, considerations relevant to one need not be relevant to the other. For example, in the context of undue influence, cases and commentaries discern two different strands. In one, it is said to be concerned with the prevention of wicked exploitation (Bigwood); in another, it is said to be concerned with remedying vitiated consent (eg Birks and Chin). A possible reconciliation of these views is that the former states the test to be applied in determining whether a contract has gone off for unude influence; then latter then states the test to be applied in determining whether there ought consequently to be a remedy in restitution. Furthermore, if there is no contract, simply a transfer of benefit of which restitution is now sought on the basis of undue influence, that is simply a claim to restitution for which the (Birks and Chin) restitution test is appopriate. Though Andrew Tettenborn and Steve Hedley gratifyingly agreed with my last attempt to make this point, Lionel Smith and Peter Birks did not. Lionel agreed that the invalidity of a contract and a consequential restitutionary remedy are two separate matters, and that there may be a different test depending on whether one seeks to set aside a contract or an extracontractual transaction, but he nevertheless argued that >it does not follow that setting aside a contract is >not itself a matter of unjust enrichment. and Prof Birks, with his usual stridency, asserted that >Lionel must be right. ... Since the purpose and effect of >recognizing the right to rescind is to cause the bank to surrender a benefit >which it wants very much to hang on to but which the law evidently regards >as one which ought not to be retained, it does not seem incorrect to >attribute the right to rescind the security to unjust enrichment. However, I would still insist that the removal of the contract and the consequent remedy in restitution are two separate questions, and that this separation can be maintained even in the context of rescission. This, therefore, raises the second point mentioned at the outset: the nature of rescission and the nature of those matters which both generate a right or equity to rescind and also constitute unjust factors. Mistake at law or frustation will render a contract void. A right to rescind at law or an equity to rescind in equity, if exercised and not barred, will avoid a contract and allow restitution. However, in the context of the void contract, having so determined, we simply pose the four enquiries mandated by the principle against unjust enrichment. The matter is not quite so simple in the context of voidable contracts. Take, for example, the fact that in the traditional view, if a right or equity allowing for rescission has arisen, it may be exercised unless the plaintiff has delayed, the contract has been affirmed, third parties have become involved or restitutio in integrum is impossible. If any one of those four matters is made out, rescission is said to be barred. The first three seem to be united by the fact that they are related to the contract, in that they seem to bar rescission because the contract has been relied upon. The fourth seems to embody - albeit incohately - a restitutionary enquiry. In the context of rescission, to exercise a right or equity to rescind, benefit must be returned both ways, and if restitutio in integrum is impossible, rescission will not be ordered. In the law of restitution, the party seeking an order of restitution must be able to make counter-restitution where appropriate; if it is appropriate, and he cannot, then his claim will be barred: that is, if counter-restitution is impossible, a plaintiff will not get restitution. There are obvious similiarities between "counter-restitution impossible" and "restitutio in integrum impossible", so much so that Birks treats a leading case on the one (O'Sullivan v. Management Agency) as a leading case on the other. Furthermore, Cheese v. Thomas, a more recent example of similar flexbility on the issue of restitutio in integrum not only lends support to Birks attitude to the defence of "counter-restitution impossible" but also to the proposition that rescission is a technique to effect restitution. Indeed, Chen-Wishart's reading of that case has it that it embodies not restitution with counter-restitution but restitution with change of position. Thus, we can see the incohate four enquiries: the right or equity allowing rescission is the seems to give rise to the unjust factor, the right to have benefit returned is the consequent right to restitution, subject to the duty to return benefit or make allowances for failure to be able to have it returned, which are examples - respectively - of the defences of counter-restitution impossible and change of position. In which case, the fourth bar speaks to the nature of the remedy, and it says that if there is no remedy in restitution, there should be no remedy at all, and the contract should be kept on foot between the parties. This seems harsh, but recent case law suggests that we need not state it quite so harshly. In Mahoney v. Purnell, May J., in the name of not making restitutio in integrum impossible, allowed rescission with equitable compensation. Furthermore, the courts have always been prepared to allow rescission on terms. Which means that the fourth bar speaks to the nature of the remedy, and it says that if there is no remedy in restitution or compensation, there should be no remedy at all. Since, if restitution is not appropriate, compensation almost always will be, and the contract can in any event be set aside on terms, this seems much more rational. If the first three bars are seen as contract-related bars, this fourth bar may thus be seen as a remedy-related bar, though it is now probably merely the means by which the appropriate remedy is worked out. If no contract-related bar is made out, thereafter, the position from the perspective of restituiton is just as it would be with a void contract: simply pose the four enquiries and determine whether restituiton ought to be available. If not, consider whether equitable compensation ought to be available. If not, consider whether the contract may be set aside on terms. Thus, let a doctrine (mistake in contract at law, frustation, ultra vires) render a contract void. Let another (mistake in contract in equity, misrepresentation, duress, undue influence, unconscionability) generate a right or equity to rescind which is not barred for a contract-related reason. In either case, the position is now the same: for there to be a remedy in retitution, the four enquiries must be posed and answered. In the context of the void contract, the same facts may both be the reason why the contract is void and why there is an unjust factor grounding restitution (eg the same facts fulfill the definition of mistake in both contract at law and restitution), but the prior contract enquiry determining the contract to be void and the subsequent restitution enquiry are separate. In the context of the voidable contract, the same facts may generate both the right or equity to rescind and the unjust factor grounding restitution (eg the same facts fulfill the definition of a relevant contract doctrine and a related restitution doctrine) but the prior contract enquiry as to the existence and exercise of a right or equity to rescind and the subsequent restitution enquiry are as separable as in the void contract example. Thus, I disagree with Prof Birks characterisation of the purpose of recognizing the right to rescind. For him, >the purpose and effect of >recognizing the right to rescind is to cause the bank to surrender a benefit >which it wants very much to hang on to ... For me, on the above analysis, the purpose of recognizing a right or equity to rescind is simply to determine the validity of the contract. Of course, if I saw the purpose of a right or equity to rescind as Prof Birks sees it, then I would have to treat it as wholly an element of the law of restitution. In fact, it seems that rescission is one of the many elements of equity which restitution has not properly considered. Some commentators seem to have perceived restitution as swallowing it whole (Birks on the above analysis, McMeel on the basis of Steve Hedley's last email), others have analysed rescission from a restitutionary perspective without necessarily claiming it (I think this is an accurate characterisation of the chapter in Mason and Carter), yet others think that it does not matter a great deal whether rescission is regarded as restitutionary or not (I think this is Prof Burrows' view). I see many aspects of the analysis of rescission as contract-related (the determination of the existence of the right or equity to rescind, and of the contract-related bars, are a matter for contract, for the they determine whether or not there is to be a contractual obligation or not); I see the restitution analysis in the remedy-related bar as restitutionary on the basis of the four enquiries. In which case, I do not think that restitution has claimed too much of rescission (pace Hedley), it does not claim it all (pace Birks), it has simply given a structure to one part of the analysis, so that (pace Burrows) I think it matters a great deal how it is to be regarded. Thus, in the contexts, first of void contracts, and, second voidable contracts to which there is no contract-related bar to rescission, there is an important structural separation determining the validity of a contract and determining appropriate remedial responses if the contract is invalid. In the case of void contracts, the doctrine determining the validity of the contract is discrete (mistake at law, ultra vires, frustration, and so on). In the case of voidable contracts, rather more questions have to be asked: in what does the right or equity to rescind consist and is it barred by a contract-related bar. Having decided that a contract is void, or that it is voidable and not barred by a contract-related bar, analysis have now reached the same stage. It has exhausted the the prior question of validity. The subsequent question of remedy can now be addressed; the apporpriateness of a remedy in restitution in either case can be examined on the basis of the same four enquiries. That, I think, is the proper way to regard the role of restitution in the context of rescission in general. Thus, in the context of undue influence, that supplies the equity to rescind, and thus goes to the prior question of validity rather than to the subsequent question of remedy. To the extent that Barclays Bank v O'Brien is simply about the unduly influenced party's equity to rescind a contract with a third party, it therefore goes to the prior question of validity rather than to the subsequent question of remedy. Happy new year to all, Eoin. EOIN O'DELL Barrister, Lecturer in Law Email: EODELL@mail.tcd.ie Trinity College ph (+ 353 - 1) 608 1178 Dublin 2 fax (+ 353 - 1) 677 0449 Ireland Live Long and Prosper !! (All opinions are personal; no legal responsibility whatsoever is accepted.) Received: (qmail 23070 invoked from network); 5 Jan 1998 17:46:25 -0000 Received: from oxmail4.ox.ac.uk (163.1.2.33) by jess.oucs.ox.ac.uk with SMTP; 5 Jan 1998 17:46:25 -0000 Received: from ermine.ox.ac.uk by oxmail4 with SMTP (PP) with ESMTP; Mon, 5 Jan 1998 17:46:18 +0000 Received: from platform.asc.ox.ac.uk (platform.asc.ox.ac.uk [163.1.128.124]) by ermine.ox.ac.uk (1.1/8.8.3) with SMTP id RAA20556 for ; Mon, 5 Jan 1998 17:46:17 GMT Message-Id: <1.5.4.32.19980105173856.008ee0ec@ermine.ox.ac.uk> X-Sender: birks@ermine.ox.ac.uk X-Mailer: Windows Eudora Light Version 1.5.4 (32) Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Mon, 05 Jan 1998 17:38:56 +0000 To: restitution@maillist.ox.ac.uk From: "Peter B. H. Birks" Subject: A Woolwich Story Governmental Respect for the Rule of Law Subscribers may not have seen this story under the name of George Parker, Political Correspondent,in the Financial Times on 31 December 1997. Actors and musicians have been incorrectly charged Class 1 National Insurance Contributions for six years. 38,000 actors and 34,000 musicians are now entitled to restitution of some 400 million pounds (c.5,500 per person if all were equally entitled). The F T says that Harriet Harman, the social security secretary, in her determination to cut the welfare bill, has been exploring ways of not making this refund. She had hoped to give herself power to withhold it by inserting a clause in the new Social Security Bill. A leaked letter from Minister Harman to the Chancellor of the Exchequer, Gordon Brown, says that she has had to step back from this plan. Her letter is reported as saying, 'Legal advice is that this cannot be achieved without contravening the European Convention on Human Rights.' It seems that she will now make the refund and will lawfully redistribute the burden by freezing thresholds for employers' NI contributions across the board. Her reforms will also reduce benefits to actors and musicians resting between jobs. Peter Birks Regius Professor of Civil Law University of Oxford Work 01865 279338 fax 279299 All Souls, Oxford, OX1 4 AL Home 01865 735625 Oak Trees, Sandy Lane, Boars Hill OX1 5HN Received: (qmail 23623 invoked from network); 5 Jan 1998 19:09:48 -0000 Received: from mail.kcl.ac.uk (root@137.73.66.6) by jess.oucs.ox.ac.uk with SMTP; 5 Jan 1998 19:09:48 -0000 Received: from [137.73.78.149] (pc149.law.kcl.ac.uk [137.73.78.149]) by mail.kcl.ac.uk (8.8.8/8.8.8) with SMTP id TAA23233 for ; Mon, 5 Jan 1998 19:04:11 GMT X-Sender: sttt2835@law-mail.kcl.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Mon, 5 Jan 1998 19:11:26 +0100 To: restitution@maillist.ox.ac.uk From: donal.nolan@kcl.ac.uk (donal nolan) Subject: contract and restitution Eoin O'Dell raises a number of interesting issues concerning the relationship between restitution and contract, but I wish to comment only on one aspect of what Eoin says, namely the operation of doctrines, such as undue influence, which are employed both by the law of contract and the law of restitution. I briefly addressed this issue in a review article in the 1996 MLR (603, at 610-12), in the course of commenting on the Birks and Chin piece 'On the Nature of Undue Influence'. Broadly speaking I think that what I said in the MLR fits with Eoin's analysis. The starting point is that there are a number of doctrines (eg mistake, duress, and undue influence) which operate both as vitiating factors in contract, and as unjust factors in restitution. The issue I addressed was whether the rules of these doctrines should differ according to whether the the person invoking the doctrine is seeking to set aside a contract or simply to recover a non-contractual benefit. One reason for drawing this distinction is, as Burrows points out (p. 107) that, in setting aside a contract, the court is 'disappointing bargained-for considerations'. I argued that another reason for differentiation was that while the restitutionary defendant who had relied on the validity of the payment should now be protected by the defence of change of position, the other party in a contract situation is not necessarily protected against the consequences of his or her reliance on the validity of the contract if the contract is struck down. Hence, it seemed right that the test for mistake in contract should be narrower than that in restitution (cp. Bell v Lever Bros and Barclays Bank v Simms; and see Waller J in Midland Bank v Brown Shipley & Co). What was equally clear, however, was that when it came to duress and undue influence, the distinction was not (at least not overtly) recognised. The rules seemed the same regardless of whether it was contract or restitution. This made sense if these doctrines were defendant-sided, for then the defendant had behaved badly, and so his or her contractual expectations/detrimental reliance did not merit protection (just as, in restitution, wrongdoers ought not to be able to invoke the change of position defence). My point was simply that if in fact undue influence was plaintiff-sided (as Birks and Chin argued) then, as in mistake, the contract doctrine ought to be narrower than the restitution doctrine, since in that case the other contract party could be completely innocent, and thus his or her expectations/reliance deserved more protection. Eoin arrives at a similar conclusion, when he says that the exploitation approach to undue influence might be used where the issue is setting aside a contract, whereas the Birks and Chin approach could be employed in restitution cases. On this analysis, Birks and Chin are correct in saying that undue influence is plaintiff-sided, but only in the context of non-contractual benefits, not where the doctrine is employed to set aside a contract. One thing I would add is that it seems to me to be rather unfortunate that in, for example, a contract mistake case, whether the contract is held to be void for mistake is determined by the contract doctrine of mistake, and that one then goes on to apply the restitutionary doctrine of mistake to determine whether benefits conferred under the void contract are recoverable. I would have thought that failure of consideration was a preferable unjust factor in this situation (see eg Rover v Cannon Film Sales), since the use of a different doctrine would highlight the distinction which Eoin emphasises between the validity of the contract and the appropriate remedial responses if the contract is invalid (cp. Eoin's example of frustration/failure of consideration). However, I take the point that in the past the total failure requirement has made mistake a more attractive option for many plaintiffs. Donal Nolan Lecturer in Law School of Law King's College London Strand London WC2R 2LS Tel 0171 836 5454 ext 1114 Fax 0171 873 2465 Email donal.nolan@kcl.ac.uk Secretary (Damaris Steele) tel 0171 836 5454 ext 1138 Received: (qmail 6938 invoked from network); 6 Jan 1998 17:18:57 -0000 Received: from mail.kcl.ac.uk (root@137.73.66.6) by jess.oucs.ox.ac.uk with SMTP; 6 Jan 1998 17:18:57 -0000 Received: from pc231.kcl.ac.uk (pc187.law.kcl.ac.uk [137.73.78.187]) by mail.kcl.ac.uk (8.8.8/8.8.8) with SMTP id RAA02748 for ; Tue, 6 Jan 1998 17:13:21 GMT Message-Id: <1.5.4.32.19980106171012.00665e70@law-mail.kcl.ac.uk> X-Sender: stty2277@law-mail.kcl.ac.uk (Unverified) X-Mailer: Windows Eudora Light Version 1.5.4 (32) Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Tue, 06 Jan 1998 17:10:12 +0000 To: restitution@maillist.ox.ac.uk From: Charles Mitchell Subrogation enthusiasts will be interested in the CA's recent (4th Dec 1997) decision in Halifax Mortgage Services Ltd v Muirhead. This was yet another of the husband/wife mortgage renegotiation cases of the kind I discuss in my book (The Law of Subrogation, Clarendon Press 1994, stocks still available) at pp 123-5: P building soc discharged valid mortgage over H and W co-owners' property at H's but not W's request, took new security executed by H but not W which therefore turned out to be void against W, and then sought to be subrogated to the original mortgage. In previous proceedings, P won an order for possession against H - these proceedings were concerned with its rights against W. At first instance, His Honour Judge Wakefield in the Clerkenwell County Court granted an order for possession against W on the basis that the original mortgagees would have been entitled to such an order and so P standing in their shoes should be similarly entitled. On appeal, W conceded that P was entitled to subrogation, but argued that the judge should not have made the order for possession without first establishing whether any and if so what sums were due under the original mortgage (the judge recognised that the figures had not been gone into, and directed an inquiry into them which was stayed (by a further order of the CA made when leave to appeal was granted) pending the appeal). P argued that he was entitled to make the order which he did, and further, by way of cross-appeal, that the order for sale was justified on another basis, namely, under s 30 of the Law of Property Act 1925, superseded on 1 January 1997 (ie. after judgment was given) by ss 14 and 15 of the Trusts of Land etc. Act 1996. The portion of Evans LJ's judgment which was concerned with the subrogation point follows: '(1) Subrogation The basis of the plaintiffs' claim to exercise rights under the Halifax [ie the original - CM] mortgage is the statement of principle by Lord Jenkins in Ghana Commercial Bank v Chandiram [1960] AC 732, [1960] 2 All ER 865 at 745 of the former report:- "It is not open to doubt that where a third party pays off a mortgage he is presumed, unless the contrary appears, to intend that the mortgage shall be kept alive for his own benefit : see Butler v. Rice [1910] 2 Ch. 277". The Ghana Commercial Bank claimed as legal mortgagees but their mortgage was held to have been null and void. It was taken, in part, as security for a payment made to discharge an equitable mortgage which had been created in favour of another bank by the deposit of title deeds. The presumption to which Lord Jenkins referred was supported by a term of the abortive legal mortgage to the effect that that mortgage was not to prejudice or affect any other security held by the bank, including an express reference to the title deeds (see pp. 736-7 and 745 of the former report). The principle extends to cases where the proceeds of a re-mortgage are used to discharge an existing mortgage, so that the maker of the new loan can obtain a first mortgage as his security. The relationship between the process of tracing the payment to the original mortgagee and the remedy of subrogation to that mortgagee's rights which then becomes available to the new mortgagee was analysed and explained by Millett LJ in Boscawen v Bajwa [1995] 4 All ER 769, [1996] 1 WLR 328 (see pp. 334-341 of the latter report). Miss Taylor accepts for the purposes of this appeal that the principle applies. I should add, however, that the presumed intention to keep the original mortgage alive which is attributed to the re-mortgagee - the "third party" who pays the sums due under it - cannot have been his intention in fact. He is concerned to ensure that the original mortgage is discharged rather than kept alive, so that he can obtain a first mortgage to secure his own advance. If he does have any actual intention to keep the original mortgage alive, this can only be conditional upon some failure of his own security, which he is unlikely to foresee or to recognise when the payment is made (as the present case demonstrates). It may be that the equitable jurisdiction to enforce a charge by way of subrogation rights derives partly from the third party's mistaken belief that his own new security is valid, coupled with the unjust enrichment of the borrower which might otherwise result : see Millett LJ's judgment at 335C of the latter report and for a general discussion. Mitchell (The Law of Subrogation Clarendon Press 1994). So it becomes necessary to consider what the plaintiffs' rights are, by reason of their discharge of the Halifax mortgage in 1987. The starting point in my judgment must be the actual rights which the Halifax released by reason of the discharge. The sum paid was slightly in excess of L30,000 and the mortgage period was 25 years from 1984. It is not entirely clear what the repayment terms were but we understand that by the time of discharge it had become a repayment, rather than an "interest only" mortgage. In general terms, the Halifax was entitled to receive monthly payments, the amounts varying with changes in interest rates, for the balance of the 25 year period and to be repaid in full at the end of the period or earlier in the event of default. It is clear also that a failure to pay the instalments over a two month period would amount to such a default. Clearly, the rights which are transferred, or are capable of transfer, to the third party who discharges the mortgage must be those which existed immediately before the discharge took place. But the extent to which they may be exercised by the third party thereafter by virtue of subrogation depends also upon the terms on which the money, which is used to discharge the original mortgage, is advanced to the borrower by the new lender. If he makes an unsecured loan, he cannot claim the benefit of a security which was available to the original mortgagee (Paul v Speirway Ltd [1976] Ch. 220, [1976] 2 All ER 587 at 232 of the latter report per Oliver J. ; see also Boscawen v Bajwa [1995] 4 All ER 769, [1996] 1 WLR 328 at 338G of the latter report per Millett LJ). Similarly, he cannot recover a greater rate of interest than he agreed to accept under the new mortgage (Chetwynd v Allen [1899] 1 Ch. 353 : see also Western Trust & Savings Ltd v Rock CA 26 February 1993, unreported, per Peter Gibson LJ at 9G). In my judgment, the extent to which the rights may be exercised by the subrogatee may also be affected by subsequent events. They are not simply fossilised and then revived in exactly the same form. Some account must be taken of later dealings which in fact take place between the borrower and the re-mortgagee, but which also affect or would have affected the rights of the original mortgagee under the notional mortgage, which has been "kept alive" for the purposes of subsequent enforcement by the subrogatee. First, it becomes necessary to determine to what extent any payments that have been made to the new mortgagee should be attributed to the original mortgage, if thereafter he claims relief by reference to the rights of the original mortgagee. Here L53,857 was paid up to July 1990, which was probably more than enough to discharge the whole amount due under the Halifax mortgage. One possibility is that these payments should be allocated to the original mortgage, in which case it would have been already discharged when the subrogation rights were claimed. This could be justified on the basis that, if the plaintiffs elect to rely upon the original mortgage, then they should give credit against that mortgage for all payments received. Moreover, the sum payable to discharge the original mortgage was in effect a first charge on the fresh advance, because the new mortgagee required that it should be paid off so that he could succeed to the rights of the original mortgagee. Alternatively, the payments in fact made under the new mortgage could be apportioned as between it and the original mortgage, in the proportion here of 30 : 130 approx. Further complications will arise from the fact that the Halifax mortgage called for capital repayments (as we understand the position) whereas the plaintiffs' mortgage called for interest payments only. A second aspect of the same problem is whether and if so the extent to which any subsequent events which affected or were believed to affect legal relations between the borrower and the new mortgagee should be assumed to affect, or to have affected, the notional rights of the original mortgagee. There could be an agreement to extend the time for repayment, or to vary the amount of monthly payments, or, as there was here, a two months' default under the new mortgage. Should this necessarily be attributed to the original mortgage, bearing in mind that if the borrower had had only the reduced obligation, then the default would or might not have occurred? These issues were not developed before the judge, and although he regarded the actual default under the plaintiffs' mortgage in October/November 1990 as an equivalent default under the Halifax mortgage, he expressly left open the question whether any and if so what sums were due in respect of that mortgage, whether in 1991 when proceedings were begun or in April 1996 when the appellant became a party to them or in December 1996 when judgment was given. Miss Taylor submits that the judge had no power to make an order for possession and sale unless first he established what sums were due under the security pursuant to which the order was made, and that the order is defective unless it states the amount. But it is not necessary in my judgment to say whether or not that submission is correct. This is because the judge made the order without first deciding the issues of allocation (possibly apportionment) and attribution which I have described above. This is more than a matter of form, because probably the amounts in fact paid between 1987 and October 1990 were more than sufficient to discharge the Halifax mortgage in full. On the other hand if some form of appropriation is necessary, and the payments were of interest only, then the Halifax mortgage has not been repaid. Nevertheless, there may have been no default, unless the actual 1990 default is attributed to it. It could also be relevant that the appellant upon becoming a party to the proceedings offered to pay more than the monthly amount due under that mortgage. It seems to me that the judge was wrong to order possession and sale by reference to the plaintiffs' subrogated rights under the Halifax mortgage without first determining what those rights are. These must be determined before any such order is made. It may also be necessary for the judge to consider whether or not he should exercise the Court's power under s 36(2)(a) of the Administration of Justice Act 1970 to adjourn the claim for possession rather than to make an order, execution of which he can then suspend. I therefore would allow the second defendant's appeal against the order for possession and sale insofar as it was based upon the plaintiffs' subrogation rights. Whether it nevertheless was justified under s 30, or can now be justified under ss 14 and 15 of the 1996 Act, is the second main issue raised by the appeal and cross-appeal. Before proceeding to consider this, I should add in relation to subrogation that the problems of allocation and attribution which the judge will have to resolve seem to me to be easier to grapple with if the notion of "keeping alive" the original ie. the Halifax mortgage is regarded for what it is, namely, a fiction or a presumed intention rather than the actual intention of the third party re-mortgagee ie the plaintiffs when the mortgage was discharged. The question for the Court is the extent of the re-mortgagee's rights in circumstances where he cannot enforce the new mortgage and relies instead on the fact that his money was used to repay the original mortgage advance on the borrower's behalf. The circumstances must be such as to "make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff" (per Millett LJ in Boscawen v Bajwa at 335D of the latter report). It seems to me that the task is made easier if emphasis is placed on the existing equitable rights of the plaintiff re-mortgagee, rather than regarding them simply as rights which he has inherited from the original mortgagee.' ____________________________________________________________________________ ________ Dr Charles Mitchell School of Law King's College London Strand LONDON WC2R 2LS tel: 0171 873 2290 fax: 0171 873 2465 e-mail: charles.mitchell@kcl.ac.uk Received: (qmail 10097 invoked from network); 6 Jan 1998 22:19:55 -0000 Received: from holyrood.ed.ac.uk (sfd@129.215.166.17) by jess.oucs.ox.ac.uk with SMTP; 6 Jan 1998 22:19:55 -0000 Received: from localhost (sfd@localhost) by holyrood.ed.ac.uk (8.8.7/8.8.7) with SMTP id WAA07542; Tue, 6 Jan 1998 22:19:52 GMT Date: Tue, 6 Jan 1998 22:19:51 +0000 (GMT) From: Scott Dickson To: "Eoin O' Dell" cc: restitution@maillist.ox.ac.uk Subject: Terminology; Failed contracts and O'Brien In-Reply-To: Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Although I would not want to whip-up the recent frenzy with O'Brien, which led in to the discussion about terminology, I would like to bring together two of the recent threads in the RDG and in doing that provide an excursion to post-O'Brien Scots law. Allan Axelrod questioned whether there was in English law anything worthy of the title "the law of restitution". Eoin O'Dell suggested that Barclays Bank v O'Brien was not a "restitution" case. On the first point, Allan Axelrod is probably right that there is no law OF restitution in English law. Of course, a great deal of the debate may be semantical. The problems would go away if we decided on a coherent structure for the law of obligations (in as much as that is a recognised category in English law). If we came down in favour of a response-based classification (the responses being (i) to perform, (ii) to pay and (iii) to restore) then it would be true to say that there was a law OF restitution. At present there is certainly law ON restitution in England (and for the purposes of differentiation and analysis it may be subdivided into autonomous unjust enrichment and restitution for wrongs). I understand that Dr Stapleton considers this in The Classification of Obligations (although it has not arrived in my library yet). The link between the first and second points is the question whether the law ON restitution is best subdivided into two for analytical purposes. Would it not be better subdivided into three? My query is prompted by a consideration of O'Brien. Members of the list will probably know that from 12 June 1997 Scots law was brought into line with O'Brien by the House of Lords in Smith v Bank of Scotland (because it is judicial law making it is therefore theoretically retrospective). Luckily the House of Lords did not impose the mechanics of the decision in O'Brien on Scots law. There is now a debate simmering up here on the meaning of the decision in Smith. The artificial concept of a vitiated "transaction" between the spouses was not used and consequently constructive notice was not adopted. The same outcome as O'Brien was achieved by utilising the long-standing but obscure principle of good faith in Scots contract law. Where the bank reasonably suspects that there is a risk of influence or misrepresentation as between guarantor and third party (usually the debtor) a duty is imposed on the bank to advise the potential guarantor of the effect of the transaction and the need to take of independent advice. Failure in that duty will open up the transaction to reduction. After Smith it was therefore reasonably clear that the approach in Scots law was to be horizontal - focusing on the main guarantee transaction and the factors which would vitiate that transaction (for this you will have to imagine a right-angled triangle: the horizontal side is the main guarantee transaction between the guarantor on the left and the bank on the right; vertically above the guarantor is the third party; and the third party is connected to the bank diagonally). This would contrast with (1) the vertical approach: vitiation of the guarantor's consent by the third party (perhaps the approach taken by John Mee in 1995 NILQ) and (2) the diagonal approach: transferring the vitiation onto the bank through constructive notice or taking a policy-motivated approach (the O'Brien approach). The vertical approach is plaintiff-sided (vitiation) whereas the diagonal approach appears to be defendant-sided (transferred vitiation/exploitation/unconscionability). The horizontal approach is arguably the least artificial, focusing as it does on the main transaction before the court. This was the understanding until the decision in the Outer House of the Court of Session in Braithwaite v Bank of Scotland (20 November). In this case the commercial judge held that as well as requiring to prove the failure to give advice the pursuer also has to prove actual misrepresentation or undue influence by the third party. This appears to me as a step back towards O'Brien, despite the House of Lords in Smith making it very clear that the mechanisms in O'Brien simply did not translate into Scots law. This brings me back to Eoin O'Dell's suggestion about O'Brien. In two senses O'Brien is not a restitution case. In the first place, no claim was made for the return of anything (unless one considers that the freedom not to be bound by the guarantee is a res - I do not think that legal scholarship has reached this level of sophistication/abstraction yet). Secondly, even if property had been transferred and was being claimed back, there is the strong argument that the return of the property would be made under the remedy of restitution in integrum. In this sense it might be better to claim that such cases are not "autonomous unjust enrichment" cases - they are clearly about restitution in the wider sense and the remedy of restitution in integrum/return of benefits after voidable contracts is correctly underpinned by the principle against unjust enrichment. As everyone might have expected, all of the discussion so far in Scots law has taken place within the four corners of contract law. The guarantees are voidable and require to be rescinded. As part of rescission, restitution in integrum will be necessary. In Scots law at present there is simply no way that these would be seen as autonomous unjust enrichment cases (that the pursuer could ignore the remedy of reduction/rescission and instead go straight for a condictio). Nevertheless, an interesting point might be: what if restitution in integrum is not possible and rescission is therefore barred? Will the pursuer/plaintiff then be able to claim an independent/autonomous remedy by means of the condictiones (in Scots law)/some unjust factor (in English law)? What about the non-rescinded contract - will it bar a pure restitutionary claim (Danie Visser in 1992 Acta Juridica appears to question whether an existing contract (and therefore causa dandi) will necessarily bar an enrichment claim, at least in South African law)? The only reason that I pose these (perhaps flawed) questions is that in Braithwaite v Bank of Scotland the guarantee was enforced and the pursuer is seeking the return of her portfolio of shares and unit trusts (which was transferred to the bank to secure the business debts of her husband and was subsequently sold by the bank). The restitutionary aspects are therefore in focus. This discussion of O'Brien is to allow me to ask whether it might now be time to exclude from autonomous unjust enrichment all those cases which are based on contract vitiation. This would give three subdivisions in the law on restitution: (i) restitution after failed contracts (the availability of rescission would be governed by contract law but the effect of rescission on the enrichment would be governed by the rules on restitution), (ii) autonomous unjust enrichment (no-contract cases, including of course void "contracts") and (iii) restitution for wrongs. If we accept that in the law of obligations there should be three main sources of obligations/causes of action (contract, autonomous unjust enrichment and tort/delict) is it not right that we should consider the restitutionary remedy (the law on restitution) in each of these three categories. Is it not time to accept that the enrichment-methods are important and recognise that the wide principle against unjust enrichment, for which the remedy is restitution of that enrichment, is best viewed in the context of enrichment-methods: (i) unjust enrichment through contracts (which fail); (ii) unjust enrichment through wrongs and (iii) unjust enrichment in any other way. Distinguishing autonomous unjust enrichment from unjust enrichment is just as important as distinguishing unjust enrichment from restitution. I apologise for any well-meant sloppiness of thought. Having the spirit of O'Brien in Scots law just appears to throw up a number of issues about the relationship between the law of contract and restitutionary remedies (and therefore about the scope of restitution given independently of contract or tort/delict). In any event, I think that I should reserve further comment until I have read The Classification of Obligations. Scott Dickson Intrant of the Faculty of Advocates Edinburgh Home: (01698) 375506 Work: (0141) 248 2484 Mobile, Messages and SMS: (0966) 163429 Received: (qmail 21385 invoked from network); 12 Jan 1998 08:31:12 -0000 Received: from yellow.csi.cam.ac.uk (exim@131.111.8.67) by jess.oucs.ox.ac.uk with SMTP; 12 Jan 1998 08:31:12 -0000 Received: from sgap2 by yellow.csi.cam.ac.uk with smtp (Exim 1.73 #1) id 0xrfH5-0006CT-00; Mon, 12 Jan 1998 08:31:11 +0000 Date: Mon, 12 Jan 1998 08:31:11 +0000 (GMT) From: "S.G.A. Pitel" X-Sender: sgap2@yellow.csi.cam.ac.uk To: restitution@maillist.ox.ac.uk Subject: Change of Position? Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII >From the Canadian Press over the holidays: "GAMBLER LOSES IN COURT Samir Anz must have thought he'd hit the jackpot. Mr. Anz, 47, won $800 at a Casino Niagara roulette table last February, but the dealer mistakenly dished out a stack of chips worth $3,200. By the time the dealer realized the mistake and alerted supervisors, Mr. Anz was in another part of the Niagara Falls casino. He wasn't found for three hours - by which time he'd lost the extra $2,400 at blackjack. Even though the extra chips weren't cashed in and were back in the casino's possession, management asked Mr. Anz to pay back the $2,400. When he failed to do so the next day, he was charged with theft. Mr. Anz pleaded guilty to theft and on Monday was fined $700 and ordered to repay the $2,400." Stephen Pitel Graduate Student University of Cambridge Received: (qmail 8698 invoked from network); 12 Jan 1998 19:03:52 -0000 Received: from ursa.cus.cam.ac.uk (cusexim@131.111.8.6) by jess.oucs.ox.ac.uk with SMTP; 12 Jan 1998 19:03:52 -0000 Received: from o3-tree.acad.cai.cam.ac.uk [131.111.138.60] by ursa.cus.cam.ac.uk with esmtp (Exim 1.82 #1) id 0xrp9J-00072H-00; Mon, 12 Jan 1998 19:03:49 +0000 From: "Craig Rotherham" To: "S.G.A. Pitel" , Subject: Re: Change of Position? Date: Mon, 12 Jan 1998 19:02:44 -0000 X-MSMail-Priority: Normal X-Priority: 3 X-Mailer: Microsoft Internet Mail 4.70.1155 MIME-Version: 1.0 Content-Type: text/plain; charset=ISO-8859-1 Content-Transfer-Encoding: 7bit Message-Id: Presumably theft could only have been an issue if Mr Anz was well aware that it was a mistaken payment. Given his knowledge, he couldn't have pleaded change of position. As the law stands, at least here, I would have thought that Mr Anz obtained a voidable title to the chips. This might make the charge of theft seem a little odd. Yet, while to hold that there can be theft in knowingly accepting a mistaken payment seems harsh, it might be thought consistent enough with the controversial English cases such as Gomez. ---------- > From: S.G.A. Pitel > To: restitution@maillist.ox.ac.uk > Subject: RDG: Change of Position? > Date: 12 January 1998 08:31 > > >From the Canadian Press over the holidays: > > "GAMBLER LOSES IN COURT > > Samir Anz must have thought he'd hit the jackpot. Mr. Anz, 47, won $800 > at a Casino Niagara roulette table last February, but the dealer > mistakenly dished out a stack of chips worth $3,200. By the time the > dealer realized the mistake and alerted supervisors, Mr. Anz was in > another part of the Niagara Falls casino. He wasn't found for three hours > - by which time he'd lost the extra $2,400 at blackjack. Even though the > extra chips weren't cashed in and were back in the casino's possession, > management asked Mr. Anz to pay back the $2,400. When he failed to do so > the next day, he was charged with theft. Mr. Anz pleaded guilty to theft > and on Monday was fined $700 and ordered to repay the $2,400." > > > Stephen Pitel > Graduate Student > University of Cambridge > > > ____________________________________________________________________________ ____ > This message was delivered through the Restitution Discussion Group, an > international internet LISTSERV devoted to all aspects of the law of unjust > enrichment. To subscribe, send "subscribe restitution" in the body of a > message to . To unsubscribe, send "unsubscribe > restitution" to the same address. To make a posting to all group members, > send to . The list is run by Lionel Smith of > St. Hugh's College, Oxford, U.K., tel. (0)1865 274 966, email > . Received: (qmail 9763 invoked from network); 12 Jan 1998 19:39:34 -0000 Received: from oxmail4.ox.ac.uk (163.1.2.33) by jess.oucs.ox.ac.uk with SMTP; 12 Jan 1998 19:39:34 -0000 Received: from sable.ox.ac.uk by oxmail4 with SMTP (PP) with ESMTP; Mon, 12 Jan 1998 19:39:27 +0000 Received: from [163.1.157.172] (ug28.sthughs.ox.ac.uk [163.1.157.172]) by sable.ox.ac.uk (1.2/8.8.3) with ESMTP id TAA00975 for ; Mon, 12 Jan 1998 19:39:24 GMT X-Sender: lawf0014@sable.ox.ac.uk Message-Id: In-Reply-To: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Mon, 12 Jan 1998 19:40:01 +0000 To: restitution@maillist.ox.ac.uk From: Lionel Smith Subject: RDG: Change of Position? Welcome to the new members who have joined following the excellent conference in Cambridge which paid tribute to the career and scholarship of Professor Gareth Jones. >As the law stands, at least here, I would have thought that Mr Anz obtained >a voidable title to the chips. This might make the charge of theft seem a >little odd. Yet, while to hold that there can be theft in knowingly >accepting a mistaken payment seems harsh, it might be thought consistent >enough >with the controversial English cases such as Gomez. I am not sure you can avoid a mistaken extracontractual payment. He may have obtained a secure (non-voidable) legal title. But in any event the Supreme Court of Canada has produced a judicial equivalent to s. 5(4) of the UK Theft Act 1968 in a case called R. v. Milne (1992) 70 Canadian Criminal Cases (3d) 481, noted (1992) 21 Canadian Business Law Journal 103, holding that the recipient of a mistaken payment commits theft if he knows the payment was mistaken and fraudulently converts it to his own use. And anyway, if Chase Manhattan is right, he is a thief for another reason ... Lionel Smith Received: (qmail 9939 invoked from network); 12 Jan 1998 19:47:18 -0000 Received: from mailserv.brunswickmicro.nb.ca (HELO brun-mail-fton.brunswickmicro.nb.ca) (198.164.187.2) by jess.oucs.ox.ac.uk with SMTP; 12 Jan 1998 19:47:18 -0000 Received: from [207.179.152.74] by brun-mail-fton.brunswickmicro.nb.ca (NTMail 3.02.13) with ESMTP id ia159128 for ; Mon, 12 Jan 1998 15:50:26 -0400 Comments: Authenticated sender is From: "Karl Dore" To: restitution@maillist.ox.ac.uk Date: Mon, 12 Jan 1998 15:45:06 +0000 MIME-Version: 1.0 Content-type: text/plain; charset=US-ASCII Content-transfer-encoding: 7BIT Subject: Re: RDG: Re: Change of Position? Priority: normal In-reply-to: X-mailer: Pegasus Mail for Win32 (v2.53/R1) X-Info: Brunswick Micro Systems, (800) 561-4124 Message-Id: <19502682808567@brunswickmicro.nb.ca> Craig makes a good point regarding change of position. Regarding theft -- in Canada -- the Supreme Court of Canada in R. v. Milne, [1992] 1 S.C.R. 697, rejected the void/voidable distinction for Criminal law purposes. Here is how Justice Gonthier explained it: ...The purpose of the distinction between void and voidable in the context of the law of property is largely (though perhaps not exclusively) to protect innocent third parties who have relied on the legitimacy of the transaction which has apparently taken place. Such a purpose has no analogue in the criminal law. The criminal law is concerned with the guilt or innocence of the accused, and to this end focuses on the actions and knowledge of the accused. The criminal law does not affect the interests of third parties in the way that the law of property can.... Where a transferor mistakenly transfers property to a recipient, and the recipient knows of the mistake, property does not pass for the purpose of the criminal law if the law of property creates a right of recovery, no matter whether the original transfer is said to be void or voidable. The distinction between void and voidable transfers has no purpose in the context of the criminal law. In either case, where the law of property provides at least a right of recovery, property does not pass for the purpose of the criminal law. If the recipient then converts the property to his own use fraudulently and without colour of right, and with intent to deprive the transferor of the property, he is guilty of theft. Cheers, Karl Dore. _________________________ > From: "Craig Rotherham" > To: "S.G.A. Pitel" , > Subject: RDG: Re: Change of Position? > Date: Mon, 12 Jan 1998 19:02:44 -0000 > Reply-to: "Craig Rotherham" > Presumably theft could only have been an issue if Mr Anz was well aware > that it was a mistaken payment. Given his knowledge, he couldn't have > pleaded change of position. > > As the law stands, at least here, I would have thought that Mr Anz obtained > a voidable title to the chips. This might make the charge of theft seem a > little odd. Yet, while to hold that there can be theft in knowingly > accepting a mistaken payment seems harsh, it might be thought consistent > enough > with the controversial English cases such as Gomez. > > ---------- > > From: S.G.A. Pitel > > To: restitution@maillist.ox.ac.uk > > Subject: RDG: Change of Position? > > Date: 12 January 1998 08:31 > > > > >From the Canadian Press over the holidays: > > > > "GAMBLER LOSES IN COURT > > > > Samir Anz must have thought he'd hit the jackpot. Mr. Anz, 47, won $800 > > at a Casino Niagara roulette table last February, but the dealer > > mistakenly dished out a stack of chips worth $3,200. By the time the > > dealer realized the mistake and alerted supervisors, Mr. Anz was in > > another part of the Niagara Falls casino. He wasn't found for three > hours > > - by which time he'd lost the extra $2,400 at blackjack. Even though the > > extra chips weren't cashed in and were back in the casino's possession, > > management asked Mr. Anz to pay back the $2,400. When he failed to do so > > the next day, he was charged with theft. Mr. Anz pleaded guilty to theft > > and on Monday was fined $700 and ordered to repay the $2,400." > > > > > > Stephen Pitel > > Graduate Student > > University of Cambridge _______________________________________________ _______________________________________________ Karl J. Dore, Q.C. http://www.unb.ca/web/law/Faculty/bio/Dore.html Received: (qmail 12546 invoked from network); 12 Jan 1998 22:52:21 -0000 Received: from mailer3.bham.ac.uk (147.188.128.54) by jess.oucs.ox.ac.uk with SMTP; 12 Jan 1998 22:52:21 -0000 Received: from bham.ac.uk by mailer3.bham.ac.uk with SMTP (XT-PP) with ESMTP; Mon, 12 Jan 1998 22:52:21 +0000 Received: from isdux1.bham.ac.uk (actually host isdugp.bham.ac.uk) by bham.ac.uk with SMTP (XT-PP); Mon, 12 Jan 1998 22:52:20 +0000 Received: by isdux1.bham.ac.uk; (5.65v3.2/1.1.8.2/14Aug95-0452PM) id AA17557; Mon, 12 Jan 1998 22:52:19 GMT Date: Mon, 12 Jan 1998 22:52:19 +0000 (GMT) From: AP Simester To: restitution@maillist.ox.ac.uk Subject: Re: Change of Position? In-Reply-To: <19502682808567@brunswickmicro.nb.ca> Message-Id: Mime-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Despite the allure of change of position for restitution lawyers, I am afraid that the criminal law has yet found no place for the concept. Nonetheless, I fear that Mr Anz 's lawyer, in advising his client to plead guilty, may not have covered himself entirely with glory. It is true that whether a transfer is void or voidable often makes no difference to the criminal law, but that does not quite dispose of the problem here, since there seems to be no question of Anz having received a voidable title. He either received title simpliciter, or no title at all. The case of voidable title arises (in this context) only if the mistake were induced by deception, etc; and that would be a different type of criminal offence. [Incidentally, s 5(4) of the UK Theft Act only applies - if I remember correctly - to theft of money proceeds from the oversupply. Hence it would not be available on these facts.] It appears that whether Anz received any title to the chips still depends on old cases regarding the type of mistake made. If the croupier handed over (say) 16 $200 chips, thinking that they were 16 $50 chips, the mistake would be regarding the identity of the property handed over, and title would not pass at all: R v Ashwell (1885 QBD, I think). On the other hand, if the croupier simply miscalculated the amount owing, s/he would have intended to transfer ownership of the $3200-worth of chips that was actually handed over. Hence title in the whole quantity would have passed to Anz: Moynes v Coopper [1956] QB; Ilich (1986) 162 CLR. In the former case, the excess chips were capable of being stolen, notwithstanding that they were an unascertained part of an ascertained whole. But in the latter case things are rather more complicated. Traditionally, it was thought (at least by criminal lawyers) that a mistake of this variety left P [the casino] a mere debtor, and that title would only be voidable if there had been fraud, duress, deception, etc, on the part of D. Merely taking silent advantage of another's mistake was not the stuff of the criminal law. If, pace Lord Browne-Wilkinson in Westdeutsche, Chase Manhatten Bank is to be believed, the casino would have retained an equitable proprietary interest in the chips. Here English and Canadian law part company. In England, that would certainly be a sufficient interest for theft under the Theft Act 1968. In Canada, however (unless the legislation has changed in the last couple of years?), theft requires either a taking or conversion, with intent to deprive the owner "or anyone with a special property or interest". Provided the Canadian legislation has been interpreted consistently with similar sections in other Commonwealth jurisdictions, a mere equitable proprietary interest would not qualify. A further complication would arise if there is an equivalent of the Gaming Act operating in Canada. In such case, Anz would have had a better right to the chips than anyone else, and surely could not have been guilty of theft (cf Morgan v Ashcroft, 1938 KB). In England, since Gomez, most of this would not matter since - incomprehensibly - a violation of property rights appears no longer to be required for a theft to be committed. All in all, however, in Canada pleading guilty would seem not to be the optimal strategy. Andrew Simester Received: (qmail 18011 invoked from network); 29 Jan 1998 21:32:49 -0000 Received: from arl-img-7.compuserve.com (149.174.217.137) by jess.oucs.ox.ac.uk with SMTP; 29 Jan 1998 21:32:49 -0000 Received: (from root@localhost) by arl-img-7.compuserve.com (8.8.6/8.8.6/2.10) id QAA03155 for restitution@maillist.ox.ac.uk; Thu, 29 Jan 1998 16:32:38 -0500 (EST) Date: Thu, 29 Jan 1998 16:31:32 -0500 From: John McLinden Subject: Undertakings to third parties, and fiduciary duties Sender: John McLinden To: Restitution Discussion Message-ID: <199801291632_MC2-312C-5A61@compuserve.com> MIME-Version: 1.0 Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset=ISO-8859-1 Content-Disposition: inline Is a solicitor who gives a deceptive undertaking to a third party liable for a breach of fiduciary duty if the third party suffers loss as a resul= t? = In Granville Savings & Mortgage Corp v Slevin (1992) 93 DLR 268 (a decisi= on of the Manitoba Court of Appeal) Huband JA suggests that the solicitor is= =2E = He says at 282 "It is argued that the breach of these specific undertakin= gs gives rise to liability both for breach of a fiduciary duty and breach of= the duty of care in negligence. If the solicitors agreed to specific undertakings, and then failed to abide by them, then one would not have t= o look for a breach of duty, fiduciary duty or otherwise. Liability would = be imposed on the simple basis that having accepted certain conditions, is solicitor warranted that the conditions would be met.... (283) A solicito= r who gives specific undertakings to a third party (even one who is separately represented) should be held liable for damages which flowed fr= om a failure to about to the undertakings. But I would think, in the absenc= e of dishonesty on the part of the solicitor, the action would be based upo= n breach of warranty rather than breach of a fiduciary duty." Assuming, for my purposes, that one would have to discard any remedy caug= ht by the normal six-year limitation period, is Huband JA right? If A lends= to B because B's solicitor gives deceptive/fraudulent undertakings, does= A have inter alia a cause of action which is not caught by the Limitation Act? Alternatively, for the purposes of section 21(1) of the Limitation Act, is there a trust created by the deceptive undertakings whereby A can= bring an action against the solicitor for restitution of the monies subsequently lost by B? There seems to be a dearth of cases on this issu= e. Is anyone aware of any other authority to the same or similar effect as Granville Savings? John McLinden Received: (qmail 26919 invoked from network); 30 Jan 1998 09:25:29 -0000 Received: from oxmail4.ox.ac.uk (163.1.2.33) by jess.oucs.ox.ac.uk with SMTP; 30 Jan 1998 09:25:29 -0000 Received: from sable.ox.ac.uk by oxmail4 with SMTP (PP) with ESMTP; Fri, 30 Jan 1998 09:25:24 +0000 Received: from [163.1.157.172] (ug28.sthughs.ox.ac.uk [163.1.157.172]) by sable.ox.ac.uk (1.2/8.8.3) with ESMTP id JAA28448 for ; Fri, 30 Jan 1998 09:25:21 GMT X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Fri, 30 Jan 1998 09:25:49 +0000 To: restitution@maillist.ox.ac.uk From: owner-restitution@maillist.ox.ac.uk approve: eregion Date: Thu, 29 Jan 1998 16:31:32 -0500 From: John McLinden Subject: Undertakings to third parties, and fiduciary duties Sender: John McLinden To: Restitution Discussion Message-ID: <199801291632_MC2-312C-5A61@compuserve.com> MIME-Version: 1.0 Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset=ISO-8859-1 Content-Disposition: inline Is a solicitor who gives a deceptive undertaking to a third party liable for a breach of fiduciary duty if the third party suffers loss as a result? In Granville Savings & Mortgage Corp v Slevin (1992) 93 DLR 268 (a decision of the Manitoba Court of Appeal) Huband JA suggests that the solicitor is. He says at 282 "It is argued that the breach of these specific undertakings gives rise to liability both for breach of a fiduciary duty and breach of the duty of care in negligence. If the solicitors agreed to specific undertakings, and then failed to abide by them, then one would not have to look for a breach of duty, fiduciary duty or otherwise. Liability would be imposed on the simple basis that having accepted certain conditions, is solicitor warranted that the conditions would be met.... (283) A solicitor who gives specific undertakings to a third party (even one who is separately represented) should be held liable for damages which flowed from a failure to about to the undertakings. But I would think, in the absence of dishonesty on the part of the solicitor, the action would be based upon breach of warranty rather than breach of a fiduciary duty." Assuming, for my purposes, that one would have to discard any remedy caught by the normal six-year limitation period, is Huband JA right? If A lends to B because B's solicitor gives deceptive/fraudulent undertakings, does A have inter alia a cause of action which is not caught by the Limitation Act? Alternatively, for the purposes of section 21(1) of the Limitation Act, is there a trust created by the deceptive undertakings whereby A can bring an action against the solicitor for restitution of the monies subsequently lost by B? There seems to be a dearth of cases on this issue. Is anyone aware of any other authority to the same or similar effect as Granville Savings? John McLinden Received: (qmail 26996 invoked from network); 30 Jan 1998 09:33:11 -0000 Received: from oxmail4.ox.ac.uk (163.1.2.33) by jess.oucs.ox.ac.uk with SMTP; 30 Jan 1998 09:33:11 -0000 Received: from sable.ox.ac.uk by oxmail4 with SMTP (PP) with ESMTP; Fri, 30 Jan 1998 09:33:06 +0000 Received: from [163.1.157.172] (ug28.sthughs.ox.ac.uk [163.1.157.172]) by sable.ox.ac.uk (1.2/8.8.3) with ESMTP id JAA03458 for ; Fri, 30 Jan 1998 09:33:03 GMT X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Fri, 30 Jan 1998 09:33:33 +0000 To: restitution@maillist.ox.ac.uk From: Lionel Smith approve: eregion Date: Thu, 29 Jan 1998 16:31:32 -0500 From: John McLinden Subject: Undertakings to third parties, and fiduciary duties Sender: John McLinden To: Restitution Discussion Message-ID: <199801291632_MC2-312C-5A61@compuserve.com> MIME-Version: 1.0 Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset=ISO-8859-1 Content-Disposition: inline Is a solicitor who gives a deceptive undertaking to a third party liable for a breach of fiduciary duty if the third party suffers loss as a result? In Granville Savings & Mortgage Corp v Slevin (1992) 93 DLR 268 (a decision of the Manitoba Court of Appeal) Huband JA suggests that the solicitor is. He says at 282 "It is argued that the breach of these specific undertakings gives rise to liability both for breach of a fiduciary duty and breach of the duty of care in negligence. If the solicitors agreed to specific undertakings, and then failed to abide by them, then one would not have to look for a breach of duty, fiduciary duty or otherwise. Liability would be imposed on the simple basis that having accepted certain conditions, is solicitor warranted that the conditions would be met.... (283) A solicitor who gives specific undertakings to a third party (even one who is separately represented) should be held liable for damages which flowed from a failure to about to the undertakings. But I would think, in the absence of dishonesty on the part of the solicitor, the action would be based upon breach of warranty rather than breach of a fiduciary duty." Assuming, for my purposes, that one would have to discard any remedy caught by the normal six-year limitation period, is Huband JA right? If A lends to B because B's solicitor gives deceptive/fraudulent undertakings, does A have inter alia a cause of action which is not caught by the Limitation Act? Alternatively, for the purposes of section 21(1) of the Limitation Act, is there a trust created by the deceptive undertakings whereby A can bring an action against the solicitor for restitution of the monies subsequently lost by B? There seems to be a dearth of cases on this issue. Is anyone aware of any other authority to the same or similar effect as Granville Savings? John McLinden Received: (qmail 2873 invoked from network); 30 Jan 1998 13:05:47 -0000 Received: from oxmail4.ox.ac.uk (163.1.2.33) by jess.oucs.ox.ac.uk with SMTP; 30 Jan 1998 13:05:47 -0000 Received: from sable.ox.ac.uk by oxmail4 with SMTP (PP) with ESMTP; Fri, 30 Jan 1998 13:05:31 +0000 Received: from [163.1.157.172] (ug28.sthughs.ox.ac.uk [163.1.157.172]) by sable.ox.ac.uk (1.2/8.8.3) with ESMTP id NAA31419 for ; Fri, 30 Jan 1998 13:05:28 GMT X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Fri, 30 Jan 1998 13:05:57 +0000 To: restitution@maillist.ox.ac.uk From: Lionel Smith approved: eregion From: John McLinden Subject: Undertakings to third parties, and fiduciary duties Sender: John McLinden To: Restitution Discussion Message-ID: <199801291632_MC2-312C-5A61@compuserve.com> MIME-Version: 1.0 Content-Transfer-Encoding: quoted-printable Content-Type: text/plain; charset=ISO-8859-1 Content-Disposition: inline Is a solicitor who gives a deceptive undertaking to a third party liable for a breach of fiduciary duty if the third party suffers loss as a result? In Granville Savings & Mortgage Corp v Slevin (1992) 93 DLR 268 (a decision of the Manitoba Court of Appeal) Huband JA suggests that the solicitor is. He says at 282 "It is argued that the breach of these specific undertakings gives rise to liability both for breach of a fiduciary duty and breach of the duty of care in negligence. If the solicitors agreed to specific undertakings, and then failed to abide by them, then one would not have to look for a breach of duty, fiduciary duty or otherwise. Liability would be imposed on the simple basis that having accepted certain conditions, is solicitor warranted that the conditions would be met.... (283) A solicitor who gives specific undertakings to a third party (even one who is separately represented) should be held liable for damages which flowed from a failure to about to the undertakings. But I would think, in the absence of dishonesty on the part of the solicitor, the action would be based upon breach of warranty rather than breach of a fiduciary duty." Assuming, for my purposes, that one would have to discard any remedy caught by the normal six-year limitation period, is Huband JA right? If A lends to B because B's solicitor gives deceptive/fraudulent undertakings, does A have inter alia a cause of action which is not caught by the Limitation Act? Alternatively, for the purposes of section 21(1) of the Limitation Act, is there a trust created by the deceptive undertakings whereby A can bring an action against the solicitor for restitution of the monies subsequently lost by B? There seems to be a dearth of cases on this issue. Is anyone aware of any other authority to the same or similar effect as Granville Savings? John McLinden