-- >From swh10@cus.cam.ac.uk Tue Nov 03 11:49:09 1998 Received: from taurus.cus.cam.ac.uk ([131.111.8.48] ident=cusexim) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zaexR-0007Mo-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 11:49:09 +0000 Received: from swh10.christs.cam.ac.uk ([131.111.219.51] helo=swh10.cam.ac.uk) by taurus.cus.cam.ac.uk with smtp (Exim 2.051 #2) id 0zaex3-0000B0-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 11:48:45 +0000 Message-Id: <3.0.1.32.19981103114848.007cf5b0@pop.cus.cam.ac.uk> X-Sender: swh10@pop.cus.cam.ac.uk X-Mailer: Windows Eudora Light Version 3.0.1 (32) Date: Tue, 03 Nov 1998 11:48:48 +0000 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: Kleinwort Benson Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Now we've all had a chance to absorb this one, I thought I'd open the discussion with a few observations. I must apologise for the lack of page references, all I have is a transcript from the web. I have 4 points, which I'll summarise and then explain at slightly greater length. 1. The decision opens up a very broad and very vague head of liability, in complete disregard of principles of finality of transaction. 2. The justification given for allowing recovery is formalistic, not to say vacuous -- as indeed Lord Browne- Wilkinson points out, in somewhat politer language. 3. The new rule protects plaintiffs who should not need protection, and fails to protect those who do. 4. However, we needn't lose any sleep over the case, because it will probably in practice be interpreted in a restrictive fashion. 1. The opinions do not spell out what sort of mistakes will ground recovery. This is despite the lack of clarity over which mistakes will do. As liability for mistake of law is new, there is no body of case law to fall back on in defining the liability. Further, the only defences discussed by the Lords are ones they ultimately decided *not* to allow. We are left with vague and "undefined" (Lord Goff's word) defences such as compromise. Points of principle which remain for decision at a later stage : * What constitutes an actionable mistake of law; * How we distinguish a compromise based on mistake of law from any other sort of transaction; * How the defence of change of position is to apply in this context; * From what point the limitation period runs; when are "reasonable people" expected to recover from a mistake made by the entire legal profession and judiciary ? The neglect of the principle of finality of transaction is blatant. The decision could in principle be used to upset transactions effected even 200 years ago, given the rather bizarre interpretation of the Limitation Act approved by the majority. Lord Goff himself says that the effects of the decision are likely to engage the attention of judges and others "for some years to come"; he also admits it is obvious that changes in the common law can lead to injustice which the courts cannot correct : "... it should not be forgotten that legislation which has an impact on previous transactions can be so drafted as to prevent unjust consequences flowing from it. That option is not, of course, open in the case of judicial decisions". Yet having stated that "of course" this is so, he then ignores the point, with a confidence in the ability of the courts to develop defences which no litigant is likely to share. For myself, I think the main defect in the law the decision reveals is the absence of a power to surcharge Law Lords for the expense their decisions cause. Good or bad, this decision is going to cost a lot of people a lot of money in legal fees. And for what ? What great injustice is the decision designed to avoid ? 2. The ground of recovery is said to be "mistake". Yet there are obvious logical difficulties with this, ably expounded by the minority. If a payment is made in accordance with the law at the time, where is the "mistake" ? The answer seems to lie in the declaratory theory of law, and in the ancient fiction that when the courts decide a point of law, the law must be deemed always to have been as the courts now say it is. The majority say that they now recognise the fiction for what it is, and are no longer employing it. But what else justifies their decision ? Their lordships are vague in the extreme on this point. Lord Hoffmann says that it is "purely abstract" to point out that the fiction *is* a fiction, but he doesn't explain how that stops it being accurate, Lord Goff at least realises that there is an alternative -- prospective overruling -- but dismisses this with the observation that this has led to "controversial results", as if that settled the matter, Nor does he consider Lord Browne- Wilkinson's proposal, which is to leave retroactivity in place but to deny it can be used to ground recovery for "mistake". Lord Goff vaguely adds that presumably the rule he favours is the law elsewhere in the world too : "Since I regard it as an inevitable attribute of judicial law-making, some such theory must, I imagine, be applied in civil law countries, as in common law countries; indeed I understand that a declaratory theory of judicial decision applies in Germany, though I do not know its precise form." I am irresistably reminded of opinions of the privy council in the last century, which begin with the terse statement that the law of whatever country they are concerned with must surely be the same as that of England, and so the committee will resolve the dispute by reference to English cases alone. But at least those 19th century opinions confined themselves to the Empire, whereas Lord Goff, it seems, has designs on the whole world. In sum, then, the majority claim to understand that the common law develops over time, but have yet to admit that this should cut both ways. Parties who transacted on the basis of the law in 1930 were not "making a mistake" simply because a court in 2000 takes a different view of the law, and justice does not require us to apply the later law. Just as the law of 1930 is not fit for 2000, so the law of 2000 is not fit for transactions effected in 1930. 3. Like the recent Parc Battersea decision, the Lords disregard questions of fault, basing themselves no doubt on the dogma that unjust enrichment is a distinct concept from fault. The Parc Battersea decision, as others have pointed out, treats city banks as deserving the protection of the courts from the consequences of their own mistakes. They must be treated like vulnerable children, unversed in the ways of the world. This is more arguable on the facts in Kleinwort Benson, but the decision is obviously capable of being so used : it is no defence that the plaintiff was in as good or a better position than the defendant to notice the "mistake". Weaker parties, by contrast, who could see that a payment demanded of them was arguably unlawful but lacked the financial muscle to litigate, will no doubt be told that they cannot recover for mistake of law, because they passed up their chance to litigate, and compromised instead. 4. However, none of this matters much, in my view. Concerns over "floodgates" are usually self-limiting : the judges apply the disputed rule in a narrow manner precisely because of their fear of opening the floodgates, and the result is only a rather timid departure from the old law. "Parturient montes ......" There is so much air in the decision (see point 1), that a judge who wants to interpret it in a narrow spirit will have no difficulty in doing so. Steve Hedley =================================================== FACULTY OF LAW, UNIVERSITY OF CAMBRIDGE telephone and answering machine : (01223) 334931 e-mail : steve.hedley@law.cam.ac.uk messages : (01223) 334900 fax : (01223) 334967 Christ's College Cambridge CB2 3BU =================================================== >From duncan.sheehan@corpus-christi.oxford.ac.uk Tue Nov 03 15:07:20 1998 Received: from oxmail3.ox.ac.uk ([163.1.2.9] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zai3E-000886-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 15:07:20 +0000 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.02 #1) id 0zai2r-0000Sk-00; Tue, 3 Nov 1998 15:06:57 +0000 Received: from corp0380 (helo=localhost) by sable.ox.ac.uk with local-smtp (Exim 2.05 #4) id 0zai2q-0003ib-00; Tue, 3 Nov 1998 15:06:56 +0000 Date: Tue, 3 Nov 1998 15:06:56 +0000 (GMT) From: Duncan Sheehan To: Steve Hedley cc: restitution@maillist.ox.ac.uk Subject: Re: RDG: Kleinwort Benson In-Reply-To: <3.0.1.32.19981103114848.007cf5b0@pop.cus.cam.ac.uk> Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Dear All, There are a series of points that are probably quite worth making in reply to Steve Hedley. Firstly it is true, as he says that the judgements are vague in what they say. The only express statement that I can find as to which mistakes count comes in the speech of Lord Hope of Craighead where he says that where there is claim for rrstitution for mistake there are three questions to be answered. Firstly was there a mistake? Secondly Did that mistake cause the payment and thirdly was the payee entitled to the money anyway? While I can accept that there is a great deal of vacuity in the speeches it would seem to me that it is almost certainly this test that the judges are going to take and use. It is after all also the one that the High Court of Australia in David Securities v Commonwealth Bank of Australia proposed. Given though that willpower has no voltage, as Peter Birks is wont to say, how this test will fall to be interpreted is somewhat uncertain. Will it be any mistake that is a necessary condition of the payment? Or a mistake so fundamental, whatever that means that any reasonable person would be affected? I don't know the answer. Secondly in relation to the point that he makes about the reopening of transactions concluded 200 years ago we know that for the most part transactions concluded decades ago or years ago are not going to be reopened on the basis of this decision. The payee is almost certainly going to have changed his position in good faith in reliance on the payment so that the plaintiff payor cannot recover. I myself am uncertain that any more protection needs to be given to defendants than the defence of change of position is capable of providing. The problem with not allowing recovery on the basis of mistake of law where a Court of Appeal decision of 1930, say, is overruled by a House of Lords decision of 1998, simply this and is ably expounded by Lord Hoffmann. A businessman, for instance, pays out money to another on the basis of the Court of Appeal decision, believing this to be a valid transaction. The House of Lords decides that type of transaction is in fact void. It is, I think, indisputable that the plaintiff in the actual case deciding the transactions are void can recover. To that extent the decision has to be retrospective. It is a bit odd then to deny everybody else restitution, who relied on the validity of the transaction, essenrtially on the basis of an accident of who litigated first. It seems that a lawyer advising his client would have to say that although the transaction was void and always had been void that those who relied on the Court of Appeal decision, now declared to be incorrect, and moreover incorrect at the time it was made were not mistaken, even though the transaction they believed to be valid was in fact void and had they tried to enforce it they ought to have failed to do so. I cannot in fact, if truth be known, see how logically you can get round that. If anybody can enlighten me I'd be most grateful.. Duncan Sheehan >From lionel.smith@law.oxford.ac.uk Tue Nov 03 16:26:31 1998 Received: from oxmail3.ox.ac.uk ([163.1.2.9] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zajHr-0008TM-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 16:26:31 +0000 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.02 #1) id 0zajHU-0004vb-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 16:26:08 +0000 Received: from ug28.sthughs.ox.ac.uk ([163.1.157.172]) by sable.ox.ac.uk with esmtp (Exim 2.05 #4) id 0zajHR-0008Gh-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 16:26:06 +0000 X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Tue, 3 Nov 1998 16:26:20 +0000 To: restitution@maillist.ox.ac.uk From: Lionel Smith Subject: Big Time Restitution Section 347 of the Canadian Criminal Code makes it an offence to enter an agreement to receive interest at a rate above 60% p.a., or actually to receive interest at such a rate. Lots of commercial lenders have inadvertently violated this section, with various holdings as to the restitutionary consquences (RLRs passim). On 30 Oct the Supreme Court of Canada released Garland v. Consumers' Gas Co. . >From the official headnote: The respondent gas utility, whose rates and payment policies are governed by the Ontario Energy Board, bills its customers on a monthly basis, and each bill includes a "due date" for the payment of current charges. Customers who do not pay by the due date incur a late payment penalty ("LPP") calculated at five percent of the unpaid charges for that month. The LPP is a one-time penalty which does not compound or increase over time. The appellant commenced proceedings alleging that the LPP violates s. 347 of the Criminal Code because -- for a significant number of customers each month -- it constitutes interest at a rate exceeding 60 percent per year. The appellant obtained leave to turn the action into a class proceeding on behalf of all customers who paid LPP charges after April 1, 1981, when s. 347 of the Code came into force. The Court has now allowed the appeal from the summary dismissal of the appellant's claim, holding that the LPP is covered by s. 347 and remitting the matter for trial. Can the utility argue that it has changed its position by adjusting its expenditures generally to meet the cash flow from LPPs? There is a companion case, Degelder Construction Co. v. Dancorp Developments Ltd. , involving a commercial loan but holding (perhaps unfortunately from our point of view) that the section was not violated and so restitution to the borrower (who had repaid at the agreed rate) was not on. Lionel >From self_growth@yahoo.com Tue Nov 03 17:07:47 1998 Received: from cs479540-b.edbd1.ab.wave.home.com ([24.64.121.124] helo=dipkpyl.bigfoot.com) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 0zajvk-0000Bg-00 for restitution@maillist.ox.ac.uk; Tue, 3 Nov 1998 17:07:47 +0000 X-Reply-To: ceo@executivebenefits.net To: restitution@cuxt.maillist.ox.ac.uk From: self_growth@cbrq.yahoo.com Message-ID: DATE: Tue, 03 Nov 1998 22:08:08 -0700 Subject: #1 Motivational Speaker -lowg MIME-Version: 1.0 Content-Type: text/html; charset=ISO-8859-1 Content-Transfer-Encoding: 7bit

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    they will be led to their chosen goals." (Earl Nightingale) >From eodell@dux4.tcd.ie Fri Nov 06 12:00:53 1998 Received: from dux4.tcd.ie ([134.226.1.194]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zbkZR-0005BT-00 for restitution@maillist.ox.ac.uk; Fri, 6 Nov 1998 12:00:53 +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 MAA26731 for ; Fri, 6 Nov 1998 12:00:27 GMT Date: Fri, 6 Nov 1998 12:00:27 GMT Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable To: restitution@maillist.ox.ac.uk From: eodell@tcd.ie (Eoin O' Dell) Subject: Hedley on Kleinwort Benson (1) Hello all This message is in two parts. First, I'd like to make an initial contribution to the debate begun by Steve Hedley and continued by Duncan Sheehan. Second, I'd like to pose two questions about the case unrelated to that debate. =46irst, on Hedley: >1. The decision opens up a very broad and very vague >head of liability, in complete disregard of principles of >finality of transaction. > >1. The opinions do not spell out what sort of mistakes >will ground recovery. I'm not sure I agree with that. Certainly, in _David Securities_, the High Court of Australia replaced the narrow liability mistake test with the broader causative mistake test and then displaced the mistake of law rule in favour of the broader causative mistake test. In so doing, the High Court spelled out what sort of mistakes both of fact and of law will ground recovery. (Indeed, as I read the later Royal Insurance case, the later majority resiled from this by generating a new test for mistake in cases of mistakes of law, but again spelled out what sort of mistakes of law will ground recovery). The absence of a similar debate about liability mistakes versus causative mistakes as the test for mistakes of fact might suggest that the speeches do not spell out what sort of mistakes will ground recovery. That indeed was my first thought last Thursday as I speed read the speeches. But the chance to absorb the speeches has led to a second thought (which will no doubt be supplanted by a third, and so on ..). It is this: that a clear view of the kind of mistake which will ground restitution does emerge from _Kleinwort Benson_. It is clearest is the speech of Lord Hope. As Duncan Sheehan points out, Lord Hope held that "a claim for restitution of money paid under a mistake raises three questions: (1) was there a mistake ? (2) did the mistake cause the payment ? =8A [The payer] must prove that he would not have made the payment had he known of the his mistake at the time when it was made =8A". Furthermore, Lord Browne-Wilkinson said that, as he understood it, there was "no dispute that in order to recover the plaintiff has to have been labour under the mistake at the date of the payment and to have made the payment because of the mistake". And Lord Hoffmann accepted that "in principle, a person who what paid because he held some mistaken belief should be entitled to recover". Lord Goff's speech seems to be predicated upon the assumption that the causative mistake test is (a) applicable to mistakes of fact, and if the mistake of law bar is abrogated, is (b) appropriate for application to mistakes of law. (Any other view from him would a shock, given that it was his judgment in _Barclays Bank v Simms_ which established the causative mistake test in the modern law). Predicated upon a similar assumption, though less clearly, is the speech of Lord Lloyd. Thus, as I read the speeches, they support the view that the test simply that it is sufficient that the mistake have caused the payment. Of course, Steve's point may be that the notion of "mistake" in the rubric of a mistake causing payment is what is vague and unclear. It is not. Such a mistake is a belief as to facts (or law), which belief is untrue. After _Kleinwort Benson_, all such mistakes will ground restitution. Second, my two questions unrelated to what Steve had to say are as follows: (1) On the issue of closed swaps, Lord Hope wrote: "In my opinion the law of restitution should provide a remedy in these cases irrespective of the stage which the transactions had reached. In expressing his decision on the Sandwell case in _Westdeutsche_ Hobhouse J. said at p. 930F-G that it was irrelevant to the existence of a cause of action in connection with the payments made under the first Sandwell swap that the contract was fully performed. The Court of Appeal reached the same conclusion in the _Guinness Mahon case_. I agree with those decisions, and I have nothing to add to what my noble and learned friend Lord Goff has said about them." I think this is odd. I can find nothing in Lord Goff's discussion of closed swaps which mentions Hobhouse at first instance in _Westdeutsche_ and _Guiness Mahon_ in the Court of Appeal. Either that section is absent from the server, or Lord Goff deleted this discussion from the draft which he delivered, or Lord Goff does not have any such section, in which last case Lord Hope has made a slight error. If the first, it will be remedied in the official reports by the addition in Lord Goff's speech of the omitted section; if the third, it will probably be remedied in the official reports by the editing of Lord Hope's sentence; but if it is the second, that is unfortunate. My first question therefore is: can anyone shed any light on this (and will we see a CLP article on Lord Goff's unpublished opinion in _Kleinwort Benson_, as we have seen for _Donoghue v Stevenson_) ? (2) Lord Browne-Wilkinson's speech is a puzzle. He begins "I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Goff of Chieveley =8A Were it not for one matter, I would be in full agreement with his views". That matter is not the abrogation of the mistake of law rule, which he condemned as based on "an artificial assumption" and was "convinced that the law should be changed so as to permit monies paid under a mistake of law to be recovered". Furthermore, he expressly indicates that he is prepared to hold that a mistake of law is a mistake for limitation purposes (32(1)(c) of the Limitation Act 1980), but ultimately does not do so: "it would be quite wrong for your Lordships to change the law so as to make money paid under a mistake of law recoverable since to do so would leave this gaping omission in the law. In my judgment the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period applicable to it". As I read his decision, therefore, altough he condemned the mistake of law rule, he did not convert that condemnation into a vote against it. Similarly, Lord Lloyd. If that is correct, my second question is this: strictly on a headcounting basis, was I wrong last week to write that the House of Lords had unanimously held that the mistake of law rule no longer forms part of English law, and would it be more accurate to say that the rule was unanimously condenmed, but that only a majority convered that condemnation into a holding abolishing it, the minority hestiant not out of any inherent value in the rule but because of the consequential difficulties to which that abolition gives rise ? Many thanks for any light on the two questions. Best from Dublin 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.) >From eodell@dux4.tcd.ie Fri Nov 06 15:48:08 1998 Received: from dux4.tcd.ie ([134.226.1.194]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zbo7M-0006EO-00 for restitution@maillist.ox.ac.uk; Fri, 6 Nov 1998 15:48:08 +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 PAA19402 for ; Fri, 6 Nov 1998 15:47:41 GMT Date: Fri, 6 Nov 1998 15:47:41 GMT Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable To: restitution@maillist.ox.ac.uk From: eodell@tcd.ie (Eoin O' Dell) Subject: Hedley on Kleinwort Benson (2) Hello all In a previous message, I made what I described as an initial contribution to the debate begun by Steve Hedley and continued by Duncan Sheehan. I'd like in this message to turn to a different aspect of that debate. Steve in his initial message wrote: >2. The justification given for allowing recovery is >formalistic, not to say vacuous > >If a payment is >made in accordance with the law at the time, where >is the "mistake" ? This, I think, is at the heart of _Kleinwort Benson_. The decision came just in time to destroy my carefully planned Restitution course, as I was just about to come on to mistakes of law in last Monday's class. My notes on _Kleinwort Benson_ for that class ended up taking the form of a very rough case-note, which I might publish somewhere if I get around to polishing it up. But that draft turned out to be much more about whether the banks could be described as having been mistaken than it was about mistake of law. I found the following examples helpful. Pattern 1. Assume a contract by which Kevin and Katherine Bell (KB) agree to pay =A310,000 to Birmingham Climbers' Club (BCC) if the latter "successfully climb the highest mountain in the world". Assume further that, at the time the contract is made, everyone "knows" that Mount Everest is the highest mountain in the world. BCC duly climb Mount Everest, and KB duly pay the =A310,000. Assume finally that, after the successful climb, scientific advances allow scientists to determine that K2 is actually higher than Mount Everest. Our experience of these things suggests that K2 has therefore always been higher than Mount Everest, and was so both when the contract was made and when Everest was climbed. Were KB mistaken in their payment? I think they were. They paid in the belief that BCC had "successfully climb[ed] the highest mountain in the world"; since what they had climbed transpired to be only the second highest mountain in the world, KB's belief was mistaken. But this works because the fact - of K2 being higher than Everest - established subsequently was one which must always have existed. Pattern 2. Again, assume a contract by which Kevin and Katherine Bell (KB) agree to pay =A310,000 to Birmingham Climbers' Club (BCC) if the latter "successfully climb the highest mountain in the world". Assume further that, at the time the contract is made, scientific tests have established that Mount Everest is the highest mountain in the world (and is higher than K2). BCC duly climb Mount Everest, and KB duly pay the =A310,000. Assume finally that, after the successful climb, a seismological event occurs the result of which is that K2 becomes higher than Mount Everest. Were KB mistaken in their payment? I think they were not. They paid in the belief that BCC had "successfully climb[ed] the highest mountain in the world"; and at the time of BCC's climb, it was "the highest mountain in the world". KB's belief was not mistaken. The subsequent change did not alter this. The change in the facts, by which K2 subsequently becoming higher than Everest, is not something which must always have existed: it is a new fact. So, the obvious question arises: is the real _KB v BCC_ more like the first pattern or the second. There, KB paid in the belief that they had a duty to pay pursuant to a contract which they believed to be valid. With their Lordships, let us assume a Court of Appeal decision, (call it _Llezah_) to the effect that local authorities (and thus BCC) had capacity to make such contracts; on this view the contracts would be valid. Let us assume further a later House of Lords decision, (call it _Hazell_) to the effect that local authorities (and thus BCC) had no such contractual capacity (thus overuling _Llezah_); on this view the contracts would be void. Whether example 1 or example 2 applies might be thought to depend upon whether that story is viewed from the perspective of the capacity of the local authorities or the validity of the contracts. Take first the perspective of the validity of the contracts, and apply both patterns above. Applying the first pattern, the effect of the decision in _Hazell_ would be that the local authorities never had capacity and the contracts were therefore always void. On this view the prior contrary holding in _Llezah_ was irrelevant. The fact of the invalidity of the contracts, though established subsequently, is one which must always have existed. If so, then payment in the belief in the validity of the contractual duty which did not exist is a mistaken payment. Applying the second pattern, the effect of the decision in _Llezah_ would be that the local authorities had capacity, of that in _Hazell_ would be that the local authorities lacked such capacity and the contracts were thus void but only from the date of the decision in _Hazell_. Payments before that date on foot of the belief in the validity of the contract were not mistaken. The subsequent change in the law did not alter this: it created a new fact. =46rom the perspective of the validity of the contracts, the application of the first pattern makes sense, that of the second does not. This is so because of how we understand the consequences of voidness of contracts. If a contract is void, it has always been void. A valid contract might be voidable and avoided, or subsequently discharged for breach or frustration. But a void contract is always void. Voidness is in this sense indivisible. If the plaintiff's belief is as to the validity of the contract, and if that contract has always been void, then the plaintiff has made a mistake. It is exactly like the first pattern There, the plaintiff paid on foot of a belief that Mount Everest was the highest mountain in the world, whereas the highest mountain in the world was always K2: that plaintiff paid on foot of a mistake. Here, the plaintiff paid on foot of a belief that the contract was valid, where the contract was always void: this plaintiff too paid on foot of a mistake. Take now the perspective of the capacity of the local authorities, and apply both examples above. Applying the first pattern, the effect of the decision in _Hazell_ would be that the local authorities never had capacity and the contracts were therefore always void. On this view the prior contrary holding in _Llezah_ was irrelevant. The fact of the incapacity of the local authorities, though established subsequently, is one which must always have existed. If so, then payment in the belief in the capacity of the payee is a mistaken payment. Applying the second pattern, the effect of the decision in _Llezah_ would be that the local authorities had capacity, of that in _Hazell_ would be that the local authorities lacked such capacity but only from the date of the decision in _Hazell_. Payments before that date on foot of the belief in the capacity of the local authorities were not mistaken. The subsequent change in the law did not alter this: it created a new fact. From the perspective of the capacity of the local authorities, if capacity is indivisible, then the application of the first pattern makes sense, while that of the second pattern does not. If a finding of incapacity carries with it the necessary implication that a party could never have had that capacity, the the party has always been an incapax. If the plaintiff's belief is as to the defendant's capacity, and if that defendant has always been an incapax, then the plaintiff has made a mistake, just as much as he would if his belief had been as to the validity of an always void contract or as to the height of an always shorter mountain. On the other hand, if it is possible to conceive of a situation in which a party can intially be regarded as having capacity and subsequently be regarded as not without consequences for the earlier view, then the application of the second pattern can make sense. The plaintiff would then be correct in his belief in the defendant's capacity before the incapacity de futuro was declared just as much as he would be in the height of Mount Everest before the seismological event raised the height of K2. However, for so long as the law conceives of incapacity as indivisible, the application of the second pattern does not make sense. Thus, even from the perspective of capacity, it is exactly like the first pattern: the defendant has always been an incapax, and the plaintiff has made a mistake. There is however a third perspective from which the facts in KB might be viewed. It is that the plaintiffs might be understood to have made their payment in accordance with the law at the time; that is, that the law required their payment. A good example of this kind of thing is provided by facts analagous to _Brisbane v Dacres_, where the commander of a ship paid an admiral because he (the commander) believed that the law required him so to pay. But a later decision established that there was no such duty to pay as a matter of law. Let us assume that the commander's duty to pay was confirmed in our fictional Court of Appeal decision _Llezah_; let us further assume that the subsequent decision establishing that there was no such duty as a matter of law is our fictional House of Lords decision in _Hazell_. If _Hazell_ establishes the law as it has always been, nothwithstanding _Llezah_, then the cirumstances fall within the first pattern: there, the plaintiff paid on foot of a belief that Mount Everest was the highest mountain in the world, whereas the highest mountain in the world was always K2: that plaintiff paid on foot of a mistake. Here, the commander paid on foot of a belief that there was a duty to pay, whereas there never was such a duty: the commander too paid on foot of a mistake. On the other hand, if _Llezah_ was right, and _Hazell_ simply establishes the law for the future, then the circumstances fall within the second pattern: there, the plaintiff paid on foot of a belief that Mount Everest was the highest mountain in the world, and at the time it was, though it subsequently became K2: that plaintiff was not mistaken when he made the payment. Here, the commander paid on foot of a belief that there was a duty to pay, and at the time there was, though it was subsequently removed: the commander was not mistaken when he made the payment. On this third perspective, which effect _Hazell_ is to have depends upon the declaratory theory of judicial decision-making. By that theory, judges state what the law has always been. Applying it in _Kleinwort Benson_, the decision in _Hazell_ would have established a fact which must have always existed, which would bring the case within example 1 above. On the other hand, if the decision in _Hazell_ is understood to have changed the law, it would have established a new fact, which would bring the case within example 2 above. In the event, the majority sustained enough of the declaratory theory to come to the first conclusion: _Hazell_ did not change the law; it established a fact which must have always existed. On the other hand, the minority were prepared to abandon the declaratory theory as a fairy tale, and conclude that _Hazell_ did in fact change the law, establish a new fact, thereby bringing the case within the example 2 above. This is exalted territory; but I am not sure that it was necessary that the Law Lords traverse it in _Kleinwort Benson_, since I do not think that it was a case of this kind at all. In that case, their Lordships were concerned with the effects of the decision in _Hazell_ on the incapacity of the local authorities and thus the invalidity of the contracts. In principle, there were three effects which could have been considered (corresponding to the three perspectives developed here): first, whether the effects of a decision must in principle be retrospective (with which the House of Lords concerned themselves); second, assuming that the decision found that the local authorities did not have capacity (and whether or not the decision itself might be understood to be retrospective), whether that finding of incapcity is one of an always existing fact; and third; whether that finding of incapacity renders the contracts void. As the analysis above has demonstrated, considered from either of the latter two perspectives, because of the nature of incapacity and voidness, I think that it can properly be said that the plaintiffs had made a mistake. I also think that it is not sensible to consider _Kleinwort Benson_ from the first perspective, because it is not really a case analagous to the _Brisbane v Dacres_ scenario at all. It is not a case of payment pursuant to a supposed obligation imposed by law. It is, instead, a case of payment pursuant to a supposed obligation imposed by a void contract. In the former case, the House of Lords could discard the declaratory theory of judicial decision making, and sensibly hold that the law actually did impose the obligation at the time of the payment but was subsequently changed. In the latter case, however, if the House of Lords holds the contract void on the grounds of incapacity, the indivisible nature both of voidness and of incapacity are such that a court could not sensibly hold that the contract actually did impose the obligation at the time of the payment but was subsequently void. In the case of analysis from the perspective of voidness and incapacity, the decision in _Hazell_ is retrospective in the sense that it establishes facts which must have always existed. In that sense it does not falsify history; it establishes what the facts were, and to the extent that the parties' assumptions were at variance with those facts, it does falsify assumptions. Whether or not I develop this argument into a casenote, I'd still welcome comments. The consequence is that we do not have to come to a conclusion on the declaratory theory to conclude that the plaintiffs can properly be understood to be mistaken. 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.) >From swh10@cus.cam.ac.uk Fri Nov 06 17:33:29 1998 Received: from ursa.cus.cam.ac.uk ([131.111.8.6] ident=cusexim) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zbplJ-0006l0-00 for restitution@maillist.ox.ac.uk; Fri, 6 Nov 1998 17:33:29 +0000 Received: from swh10.christs.cam.ac.uk ([131.111.219.51] helo=swh10.cam.ac.uk) by ursa.cus.cam.ac.uk with smtp (Exim 2.051 #2) id 0zbpkt-000132-00 for restitution@maillist.ox.ac.uk; Fri, 6 Nov 1998 17:33:04 +0000 Message-Id: <3.0.1.32.19981106173307.007a55b0@pop.cus.cam.ac.uk> X-Sender: swh10@pop.cus.cam.ac.uk X-Mailer: Windows Eudora Light Version 3.0.1 (32) Date: Fri, 06 Nov 1998 17:33:07 +0000 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: Kleinwort Benson In-Reply-To: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" At 12:00 06/11/98 GMT, Eoin O' Dell wrote: >Thus, as I read the speeches, they support the view that the test >simply that it is sufficient that the mistake have caused the payment. > >Of course, Steve's point may be that the notion of "mistake" in the rubric >of a mistake causing payment is what is vague and unclear. It is not. Such >a mistake is a belief as to facts (or law), which belief is untrue. After >_Kleinwort Benson_, all such mistakes will ground restitution. > I think that the Law Lords you mention would be surprised to be told that their brief comments were supposed to be a comprehensive statement of the law. And did Lord Goff really think that the whole question of liablity can be disposed of just by rejecting the "supposed liablity" test, as if there were only one alternative to it ? I wonder. Consider : Example 1 Hedley enters into a business arrangement with Birks. As part of this arrangement, Hedley is to pay sums to Birks' nominee, O'Dell, with whom Hedley is not in direct contractual relations. Soon after the payment is made, Hedley demands his money back, saying that he considers the Irish to be unreliable people with whom one should never do business. Hedley is found by the trial judge to be hopelessly anti- Irish, and it is found as a fact that he would not have made the payments had he known O'Dell's nationality. The trial judge can give no clear account of why Hedley failed to realise O'Dell's nationality at first, though he suggests that Hedley's rather low intelligence may have something to do with it. Example 2 O'Dell starts a new political party with controversial aims. In an opinion poll, roughly one-tenth of one percent of the sample declared themselves in favour of this party. Hedley misreads the newspaper article reporting the poll. Thinking that in fact one-tenth of the electorate support O'Dell, he sends a contribution to what he supposes is a significant force in Irish politics. On discovering the truth, Hedley demands his money back. In both these examples, it would in my view be absurb if the claim succeeded, or if the defendant were driven to rely on defences such as change of position, which he might or might not be able to establish. And if Eoin knows of any cases -- English, Irish, Australian or whatever -- which support liability that broad, I'd be very interested to hear of them. That is why I object to the broad mistake view Eoin proposes, which is entirely subjective on the payor's side. English cases come nowhere near to establishing the broad proposition contended for, and this broader result is undesirable. There is no particular justice in allowing recovery merely because there was a mistake. It seems to me that there has to be a significant category of mistakes which are the payor's business alone, and which should not give rise to liability to refund the money. So while I would not want to go back to the "supposed liablity" test, nonetheless it is neither necessary nor desirable to sweep away *all* limits on the type of mistake. And it is certainly an extravagant way of justifying the result in Simms, where the payment was clearly made on the (false) basis that it fulfilled client instructions. To allow recovery on discovery that the basis is false is not quite "supposed liablity", but it is only one step beyond. The decision is not a licence to recover for any causative mistake, of any kind. Steve Hedley =================================================== FACULTY OF LAW, UNIVERSITY OF CAMBRIDGE telephone and answering machine : (01223) 334931 e-mail : steve.hedley@law.cam.ac.uk messages : (01223) 334900 fax : (01223) 334967 Christ's College Cambridge CB2 3BU =================================================== >From swh10@cus.cam.ac.uk Fri Nov 06 18:09:52 1998 Received: from ursa.cus.cam.ac.uk ([131.111.8.6] ident=cusexim) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zbqKW-0006vC-00 for restitution@maillist.ox.ac.uk; Fri, 6 Nov 1998 18:09:52 +0000 Received: from swh10.christs.cam.ac.uk ([131.111.219.51] helo=swh10.cam.ac.uk) by ursa.cus.cam.ac.uk with smtp (Exim 2.051 #2) id 0zbqK7-0002Gz-00 for restitution@maillist.ox.ac.uk; Fri, 6 Nov 1998 18:09:27 +0000 Message-Id: <3.0.1.32.19981106180928.007fc7d0@pop.cus.cam.ac.uk> X-Sender: swh10@pop.cus.cam.ac.uk X-Mailer: Windows Eudora Light Version 3.0.1 (32) Date: Fri, 06 Nov 1998 18:09:28 +0000 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: Kleinwort Benson In-Reply-To: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" At 15:47 06/11/98 GMT, Eoin O' Dell wrote: >The consequence is that we do not have to come to a conclusion on >the declaratory theory to conclude that the plaintiffs can properly be >understood to be mistaken. > >Eoin On the contrary. Eoin's different approaches take different attitudes to the declaratory theory, and so it is necessary to decide on the status of the declaratory theory to decide between them. The short point is that Eoin's Pattern 1 embodies a fiction (because it pretends that the law always was as Hazell declared it to be), whereas Pattern 2 does not embody a fiction. The approach Eoin outlines amounts to allowing the fiction itself to determine its own application, which seems to me unacceptable. Hazell changed the law. Therefore, any approach which denies that is engaging in a fiction. And any approach which asserts that the parties were "mistaken" for not appreciating what the court in Hazell would do is repeating that fiction. This is not a point about which side should have won the case. It is a point about what language we should use to debate it. If we ask which is a better analogy for the effects of Hazell, Pattern 1 or Pattern 2, the answer has to be Pattern 2, and that this is *not* a matter of perspective -- the law *really did* change. But that alone does not tell us which way the Lords should have decided the appeal. What all 5 law lords did, but Eoin seem reluctant to do, is to abandon the fiction, and then argue about how we deal with the situation we find ourselves in, having abandoned it. The argument in the Lords is, it seems to me, trapped between two excellent points : Lord B-W's point that any attempt to deny that Hazell changed the law contains a fiction, and Lord G's point that changes in the law have to involve *some* element of retroactivity. The issue therefore is, whether *for the purpose of the rule permitting recovery for mistakes of law*, we admit the truth that the law changed or we pretend that it did not (and so anyone who acted on what was earlier understood to be the law was, by fiction, "mistaken"). Now this issue can be answered either way, using various arguments. But the one way in which it should *not* be answered is by treating the fiction involved in the declaratory theory as if it were true. Steve Hedley =================================================== FACULTY OF LAW, UNIVERSITY OF CAMBRIDGE telephone and answering machine : (01223) 334931 e-mail : steve.hedley@law.cam.ac.uk messages : (01223) 334900 fax : (01223) 334967 Christ's College Cambridge CB2 3BU =================================================== >From duncan.sheehan@corpus-christi.oxford.ac.uk Sun Nov 08 15:06:09 1998 Received: from oxmail1.ox.ac.uk ([129.67.1.1] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zcWPp-0001Hy-00 for restitution@maillist.ox.ac.uk; Sun, 8 Nov 1998 15:06:09 +0000 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.02 #3) id 0zcWPP-0000gQ-00; Sun, 8 Nov 1998 15:05:43 +0000 Received: from corp0380 (helo=localhost) by sable.ox.ac.uk with local-smtp (Exim 2.05 #4) id 0zcWPP-0001vK-00; Sun, 8 Nov 1998 15:05:43 +0000 Date: Sun, 8 Nov 1998 15:05:43 +0000 (GMT) From: Duncan Sheehan To: Steve Hedley cc: restitution@maillist.ox.ac.uk Subject: Re: RDG: Kleinwort Benson In-Reply-To: <3.0.1.32.19981106180928.007fc7d0@pop.cus.cam.ac.uk> Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Dear all I must confess to a certain amount of trepidation in embarking on this topic again. However,for what it's worth here is my latest offering for your delectation. Eoin O'Dell tells us that we can ignore the declaratory theory and concentrate on the fact that the contracts after Hazell were void ab initio. Unless I have misunderstood what he is saying, which is possible to say the least, I cannot agree. The fact that the contract is void ab initio rather than de futuro is simply that the local authority was incapax. It did not have capacity to enter into the contract with the bank. Whether it is incapax is surely a matter of law and therefore we cannot ignore the declaratory theory of law. But that's not actually what I wanted to talk about. My understanding is that some courts in the USA use a technique of prospective overruling that although rejected in the House of Lords in Kleinwort Benson could be of some use. Essentially it removes all the problems that I have with the need for retrospectivity. We need retrospectivity for two reasons. Firstly because the facts that give rise to the litigation happen before the litigation and therefore the judge is necessarily applying the law retrospectively. In my last missive to this discussion group I gave the example that was somewhat better expressed by Lord Hoffmann, that if the contract were void as the swaps contracts were after Hazell v Hammersmith then it would be hard on potential future claimants to say that because they were not first in the queue they could not recover. The contract was void; it had always been void and yet they had not been mistaken and couyld not recover. As Eoin points out the new decision while not falsifying history undoubtably falsifies everybody's assumptions about it. As I understand it the system of prospective overruling used in the USA would allow those claimants to recover, but would not allow anybody who had already as it were settled or litigated on the basis of the 'old law' to open the settlement and reclaim the money paid over. Previous cases would be safe and only new cases, although the facts giving rise to them had happened before the litigation 'altering the law' would ground recovery. It may be that the courts ought to say that for the purposes of the law on mistake of law in restitution that all decisions where they overruled a previous one would only operate prospectively for these purposes. However, I am yet to be convinced that it is necessary given that most defendants in cases that are to be reopened will have changed their position. Duncan Sheehan >From eodell@dux4.tcd.ie Mon Nov 09 09:32:27 1998 Received: from dux4.tcd.ie ([134.226.1.194]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zcngR-0003D0-00 for restitution@maillist.ox.ac.uk; Mon, 9 Nov 1998 09:32:27 +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 JAA09865 for ; Mon, 9 Nov 1998 09:31:59 GMT Date: Mon, 9 Nov 1998 09:31:59 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: Kleinwort Benson: Reply to Hedley and Sheehan Hello all In my last message, I argued that if the effects of Hazell are viewed simply from the perspective of the capacity of the local authorities to enter into the swaps and the consequent voidness of the swaps, then since incapacity and voidness are indivisible, the local authorities always lacked capacity and the contracts were always void. This follows from the nature of incapacity and voidness, not from the declaratory theory of judicial decision making. On this view, since the local authorities always lacked capacity and the contracts were always void, the banks were mistaken in their belief in the local authorities' capacity and the consequent validity of the contracts (analagous to my pattern 1 where the climbers discover that K2 has always been higher than Everest). If, however, we look at the effects of Hazell simply from the perspective that it had upset settled law, then, whether this constitutes a fact which has always existed (analagous to pattern 1) or whether it constitutes a new fact (analagous to my pattern 2, where a seismological event has subsequently raised K2 higher than Everest) does depend upon the declaratory theory of law making. From this perspective, I entirely agree with everything Steve Hedley wrote in his last message in reply to mine. In particular: >The argument in the Lords is, it seems to me, trapped between >two excellent points : Lord B-W's point that any attempt to deny that >Hazell changed the law contains a fiction, and Lord G's point that >changes in the law have to involve *some* element of retroactivity. >The issue therefore is, whether *for the purpose of the rule >permitting recovery for mistakes of law*, we admit the truth that >the law changed or we pretend that it did not (and so anyone who >acted on what was earlier understood to be the law was, by fiction, >"mistaken"). Now this issue can be answered either way, using >various arguments. But the one way in which it should *not* be >answered is by treating the fiction involved in the declaratory >theory as if it were true. My point was not that we need not look at the declaratory theory at all, but only that we need not look at it if we focus on the capacity of the local authorities and the consequent validity of the swaps. Whether Hazell declared the law to be that the authorities did not have capacity so that the contracts were consequently invalid, or changed the law to that effect, once it had been established as a matter of law that the local authorities did not have capacity and the contracts were consequently invalid, in my view it follows from the nature of incapacity and voidness that the local authorities never had that capacity and the contracts were always void. On the other hand, Steve Hedley argued >that this is *not* a matter of perspective -- the law *really did* >change. Furthermore, Duncan Sheehan, in his reply to my message, argued that, whether the local authorities lack capacity >is surely a matter of law and therefore we cannot ignore the declaratory >theory of law. I agree with Duncan and Steve that capacity is a matter of law, but my point is that once that legal fact is established, it carries certain legal consequences. One of them, as the law currently stands, is that incapacity is indivisible. If the constituent document never contained the relevant power, the incapax has always lacked capacity. We might of course change the way we think about capactity as a consequence of changing the way we think about the declaratory theory (and see the classic realist article Cohen "Transcendental Nonsense and the Functionalist Approach" for how that might happen) but if we do not change the way we think about it and continue to think of capacity (and voidness) as indivisible, then it follows that the local authorities always lacked incapacity, and a belief that they did would fall within my pattern 1. Finally, I'd like to make a contribution to what Duncan had to say about prospective overruling. First, we don't have to look to the US for the technique: the ECJ has also arrogated to itself the power to declare its decisions would only have prospective effect, the better to achieve legal certainty (Defrenne; Barber). But, as Henchy J pointed out in the Irish Supreme Court in Murphy v AG [1982] IR 241, restitution defences (there: change of position) can often achieve the same effect. Second, Duncan thought that the technique was necessary to ensure that "previous cases would be safe" and remain secure in what they had decided. I don't think we need the theory of prospective overruling for this. Res judicata will do just fine. [see, in a restitution context, The Bricklayer's Hall case (Dublin Corpn v BATU [[1996] 2 IR 468; [1996] 2 ILRM 547 (SC))]. This ensures that previously litigated cases remain safe, thus meeting Duncan's central case. However, the doctrine of res judicata does not reach cases where payments were made otherwise than pursuant to litigation. This surely is the crucial scenario from the perspective of the technique of prospective overruling. And the question suggested by Murphy is whether the established restitution defences can sufficiently fill this gap ? Lord Goff in Kleinwort Benson seemed prepared to accept so. Steve in his first message thought not. I'm not sure yet either way. What do others think ? Best from Dublin 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.) >From duncan.sheehan@corpus-christi.oxford.ac.uk Mon Nov 09 21:59:12 1998 Received: from oxmail3.ox.ac.uk ([163.1.2.9] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zczL6-00074i-00 for restitution@maillist.ox.ac.uk; Mon, 9 Nov 1998 21:59:12 +0000 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.02 #1) id 0zczKf-0004u3-00; Mon, 9 Nov 1998 21:58:45 +0000 Received: from corp0380 (helo=localhost) by sable.ox.ac.uk with local-smtp (Exim 2.05 #4) id 0zczKe-0001Ot-00; Mon, 9 Nov 1998 21:58:44 +0000 Date: Mon, 9 Nov 1998 21:58:44 +0000 (GMT) From: Duncan Sheehan To: Eoin O' Dell cc: restitution@maillist.ox.ac.uk Subject: Re: RDG: Kleinwort Benson In-Reply-To: Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Dear All, Firstly many thanks to Eoin for reminding me about res judicata; it's not something I think about a great deal. As for whether established restitutionary defences will be enough after Kleinwort Benson I don't know either, but I suspect that they will be. There is something that Steve Hedley said, that intially I had to agree with, but I'm not so sure now. He gave two examples in which he said that it would be absurd to give restitution even though the mistake in that case was in fact a cause of the payment. I confess I'm not entirely clear on whether I can draw down saved read mail while composing another so you'll have to forgive me for not repeating them. However, my point is this. If the mistake is a necessary condition of the payment, in the sense of being a sine qua non and possibly even a sufficient reason in that the payment would be made even if the mistake were the only reason for it, why not? Where do you draw the line? Cases in Australia, Commercial Bank of Australia v Younis, and England, Gibbon v Mitchell, say, have used the test that the mistake needs to be fundamental. This is also the test used in contract see Associated Japanese Bank v Credit du Nord. Even if we ignore Peter Birks' favourite assertion that willpower has no voltage, it seems a bit vague. I've heard it explained in terms of being material and essential to the heart of the transaction. It's not very helpful is it? And in any case should we not be more wary of allowing mistakes to avoid transactions in contract where ex hypothesi there is a bargain than in restitution? If Steve has a measurable bright line he'd like to explain to me I'd be grateful. If he has none then the law is becoming in essence very discrtetionary and up to what the judge happens to think on a particular day, so long as he uses the right words and we mighht as well throw away Goff and Jones and all the rest. Duncan >From rz@one.net.au Mon Nov 23 12:34:17 1998 Received: from darkblue.one.net.au ([203.17.224.215] helo=one.net.au) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 0zhvBt-0002pT-00 for restitution@maillist.ox.ac.uk; Mon, 23 Nov 1998 12:34:05 +0000 Received: (qmail 17352 invoked from network); 23 Nov 1998 12:33:08 -0000 Received: from unknown (HELO omnibook) (203.101.14.71) by puce.one.net.au with SMTP; 23 Nov 1998 12:33:08 -0000 Message-Id: <3.0.5.32.19981122223244.007a84a0@one.net.au> X-Sender: rz@one.net.au X-Mailer: QUALCOMM Windows Eudora Light Version 3.0.5 (32) Date: Sun, 22 Nov 1998 22:32:44 +1100 To: restitution@maillist.ox.ac.uk From: rz@one.net.au Subject: "at the expense of" Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Hi all, I have a question for the group. Generally, before a claim in restitution may be brought the defendant must be unjustly enriched "at the expense of" the plaintiff. This is usually taken to require that the defendant's enrichment must have caused a diminution in the plaintiff's wealth. The purpose of this requirement is to identify the proper plaintiff. I am wondering whether the incurring of a liability by the plaintiff will suffice or whether the plaintiff's wealth must "actually" be reduced before an action may be brought. To put the question in context, consider a variation of the situation considered in the Australian High Court case of Pavey & Mathews v Paul (1987) 162 CLR 221. Say a builder constructs a house under an ineffective contract and then sues the owner of the land for reasonable remuneration (ie. on a quantum meruit basis). If the builder did not perform the work personally but contracted with subcontractors who performed the work, would the builder have a claim against the owner for the value of all the work done BEFORE he expended any of his own funds by paying for the work? Does anyone know of any decisions in which this issue has been considered? The second question is whether there would still be a valid claim if the subcontractors released the builder from liability. Since the "passing on defence" has been rejected, I would assume that the builder's position vis-a-vis third parties would be irrelevant to his claim for the reasonable value of the benefit conferred on the owner. Regards Rafal >From A.M.Tettenborn@exeter.ac.uk Mon Nov 23 14:57:15 1998 Received: from hermes.ex.ac.uk ([144.173.6.14] helo=exeter.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zhxQR-0003c7-00 for restitution@maillist.ox.ac.uk; Mon, 23 Nov 1998 14:57:15 +0000 Received: from sc556 [144.173.96.46] by hermes via SMTP (OAA18216); Mon, 23 Nov 1998 14:56:34 GMT Date: Mon, 23 Nov 1998 14:56:34 GMT Message-Id: <199811231456.OAA18216@hermes> X-Sender: amtetten@pop.ex.ac.uk X-Mailer: Windows Eudora Version 1.4.4 Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" To: restitution@maillist.ox.ac.uk From: A.M.Tettenborn@exeter.ac.uk (Andrew Tettenborn) Subject: RDG: "at the expense of" Surely the answer to Rafal's point must be Yes. For the purpose of tort and breach of contract the incurring of a liability is a sufficient loss to enable you to claim damages: the fact that you haven't paid it (or even that some fairy godmother comes in and subs up for you) is irrelevant. There's no reason to think the rule in restitution should be different. You might think that this went against cases like Stirling [1911] 2 Ch 418 (holding that a surety can't sue the principal debtor till he's actually paid the debt): but it doesn't really. If someone owes X a sum of money, he's simply not benefited at all unless and until X is actually paid off. Equally I can't see why in the Pavey & Matthews counterfactual the release of the debt by your sub-contractor should make any difference. Your charm, merit and/or sweet-talking ability that caused the sub to release you should enure to your benefit, not some grasping householder's. Andrew Tettenborn >X-Sender: rz@one.net.au >Date: Sun, 22 Nov 1998 22:32:44 +1100 >To: restitution@maillist.ox.ac.uk >From: rz@one.net.au >Subject: RDG: "at the expense of" >Sender: owner-restitution@maillist.ox.ac.uk >Precedence: bulk >Reply-To: rz@one.net.au > >Hi all, > >I have a question for the group. > >Generally, before a claim in restitution may be brought the defendant must >be unjustly enriched "at the expense of" the plaintiff. This is usually >taken to require that the defendant's enrichment must have caused a >diminution in the plaintiff's wealth. The purpose of this requirement is >to identify the >proper plaintiff. > >I am wondering whether the incurring of a liability by the plaintiff will >suffice or whether the plaintiff's wealth must "actually" be reduced before >an action may be brought. > >To put the question in context, consider a variation of the situation >considered in the Australian High Court case of Pavey & Mathews v Paul >(1987) 162 CLR 221. Say a builder constructs a house under an ineffective >contract and then sues the owner of the land for reasonable remuneration >(ie. on a quantum meruit basis). If the builder did not perform the work >personally but contracted with subcontractors who performed the work, would >the builder have a claim against the owner for the value of all the work >done BEFORE he expended any of his own funds by paying for the work? > >Does anyone know of any decisions in which this issue has been considered? > >The second question is whether there would still be a valid claim if the >subcontractors released the builder from liability. Since the "passing on >defence" has been rejected, I would assume that the builder's position >vis-a-vis third parties would be irrelevant to his claim for the reasonable >value of the benefit conferred on the owner. > >Regards > >Rafal > > >___________________________________________________________________________ _____ >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 >. > Andrew Tettenborn Bracton Professor of Law >From gerard.mcmeel@bristol.ac.uk Mon Nov 23 16:44:54 1998 Received: from dirc.bris.ac.uk ([137.222.10.51]) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 0zhz6c-00043o-00 for restitution@maillist.ox.ac.uk; Mon, 23 Nov 1998 16:44:54 +0000 Received: from sis.bris.ac.uk by dirc.bris.ac.uk with SMTP-PRIV (PP) with ESMTP; Mon, 23 Nov 1998 16:44:11 +0000 Received: from law-brno.law.bris.ac.uk (brno.law.bris.ac.uk [137.222.84.104]) by sis.bris.ac.uk (8.8.8/8.8.7) with SMTP id QAA05427; Mon, 23 Nov 1998 16:41:41 GMT From: Gerard McMeel Sender: Gerard.McMeel@bristol.ac.uk Reply-To: gerard.mcmeel@bristol.ac.uk To: Andrew Tettenborn Cc: restitution@maillist.ox.ac.uk Subject: Re: RDG: Goff and Jones In-Reply-To: <199811231456.OAA18216@hermes> Message-ID: Date: Mon, 23 Nov 1998 16:50:11 +0000 (GMT) Priority: NORMAL X-Mailer: Simeon for Win32 Version 4.1.5 Build (43) X-Authentication: IMSP MIME-Version: 1.0 Content-Type: TEXT/PLAIN; CHARSET=US-ASCII Subscribers to the list, in particular those overseas, will be interested to learn that the 5th edn of Goff and Jones is now available (and has joined Chitty and Bowstead in the Common Law Library). It is edited solely by Professor Jones. Obviously it does not take account of Kleinwort Benson, although a supplement is planned for next year. ISBN 0-421-608-005; cost 165 sterling. ---------------------- Gerard McMeel gerard.mcmeel@bristol.ac.uk >From charles.mitchell@kcl.ac.uk Mon Nov 23 16:58:07 1998 Received: from mail.kcl.ac.uk ([137.73.66.6]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zhzJP-00046a-00 for restitution@maillist.ox.ac.uk; Mon, 23 Nov 1998 16:58:07 +0000 Received: from pc231.kcl.ac.uk (pc187.law.kcl.ac.uk [137.73.78.187]) by mail.kcl.ac.uk (8.9.1/8.9.1) with SMTP id QAA01515 for ; Mon, 23 Nov 1998 16:53:32 GMT Message-Id: <1.5.4.32.19981123165804.00687228@law-mail.kcl.ac.uk> X-Sender: stty2277@law-mail.kcl.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, 23 Nov 1998 16:58:04 +0000 To: restitution@maillist.ox.ac.uk From: Charles Mitchell Subject: Fairy godmothers I would like to place a gloss on Prof Tettenborn's assertion that: 'For the purpose of tort and breach of contract the incurring of a liability is a sufficient loss to enable you to claim damages: the fact that you haven't paid it (or even that some fairy godmother comes in and subs up for you) is irrelevant.' As the Law Commission's Consultation Paper on Collateral Benefits discusses in considerable detail, fairy godmothers come in different shapes and sizes. When some of them pay eg the victim of a tort in respect of his loss, the effect of their payments is to leave him with a live right of action against the tortfeasor which he may then pursue for himself, and the interesting question then arises whether he should be allowed to keep both the fairy godmother's payment and the proceeds of his action against the tortfeasor. When other types of fairy godmother pay the victim in respect of his loss, however, the cases say that the effect of their payment is to extinguish his right of action against the tortfeasor - and in this situation we cannot say that the fact that the tortfeasor wasn't the person who paid the victim is 'irrelevant', if what we want to know is whether the victim can then go ahead and sue the tortfeasor. On the contrary, it is highly 'relevant', because the cases tell us very precisely that the answer is 'no' - though the interesting question still remains to be answered whether the provider of the collateral benefit should be allowed to recover from the tortfeasor via an action for money paid. Charles ________________________________________________________________________ Dr Charles Mitchell Lecturer in Law 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 >From Andrew.Dickinson@CliffordChance.com Mon Nov 23 18:32:50 1998 Received: from dee.cliffordchance.com ([194.133.109.2] helo=cliffordchance.com) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zi0n4-0004Vn-00 for restitution@maillist.ox.ac.uk; Mon, 23 Nov 1998 18:32:50 +0000 Received: from lon-msg-100.cliffordchance.com ([10.54.2.78]) by dee.cliffordchance.com with ESMTP id <17938>; Mon, 23 Nov 1998 19:30:29 +0000 Received: from lon-msg-2.cliffordchance.com (unverified [10.54.2.25]) by lon-msg-100.cliffordchance.com (Integralis SMTPRS 2.04) with ESMTP id ; Mon, 23 Nov 1998 18:29:38 +0000 Received: by lon-msg-2.cliffordchance.com with Internet Mail Service (5.0.1460.8) id ; Mon, 23 Nov 1998 18:32:44 -0000 Message-Id: <77017288B941D2118B770000F6AA1BD129BA00@LON-MSG-14> From: Andrew.Dickinson@CliffordChance.com To: rz@one.net.au, restitution@maillist.ox.ac.uk Subject: RE: "at the expense of" Date: Mon, 23 Nov 1998 18:32:54 +0000 X-Mailer: Internet Mail Service (5.0.1460.8) My initial reaction is that the payment/ liability to the sub-contractors ought not to matter. In the example, the relevant "transfer or resources" is the performance by the sub-contractor on behalf of the main contractor. As far as the landowner is concerned, he has requested performance, at least in the first instance, not from the sub-contractor but from the main contractor. As far as the main contractor is concerned, performance by the sub-contractor has resulted in a reduction in his assets/ resources in that he no longer has any right of action against the sub-contractor to compel performance nor, perhaps, any right to allocate resources elsewhere. Whether he is now liable to pay the sub-contractor is neither here nor there. As far as the sub-contractor is concerned, his performance was requested by the main contractor and has discharged an obligation under his contract with the main contractor. In view of the above, the landowner's enrichment, it is submitted, should be regarded as having been "at the expense of" the main contractor. Whether it should also be regarded as having been at the expense of the sub-contractor is, in my opinion, open to doubt. I am not convinced that the sub-contractor could maintain a restitutionary claim against the landowner in the event, for example, of the main contractor becoming insolvent (The Trident Beauty; Brennan -v- Brighton BC and Henderson -v- Merrett would all seem to be relevant in this regard). Any views Andrew > -----Original Message----- > From: rz@one.net.au [SMTP:rz@one.net.au] > Sent: Sunday, November 22, 1998 11:33 AM > To: restitution@maillist.ox.ac.uk > Subject: RDG: "at the expense of" > > Hi all, > > I have a question for the group. > > Generally, before a claim in restitution may be brought the defendant must > be unjustly enriched "at the expense of" the plaintiff. This is usually > taken to require that the defendant's enrichment must have caused a > diminution in the plaintiff's wealth. The purpose of this requirement is > to identify the > proper plaintiff. > > I am wondering whether the incurring of a liability by the plaintiff will > suffice or whether the plaintiff's wealth must "actually" be reduced > before > an action may be brought. > > To put the question in context, consider a variation of the situation > considered in the Australian High Court case of Pavey & Mathews v Paul > (1987) 162 CLR 221. Say a builder constructs a house under an ineffective > contract and then sues the owner of the land for reasonable remuneration > (ie. on a quantum meruit basis). If the builder did not perform the work > personally but contracted with subcontractors who performed the work, > would > the builder have a claim against the owner for the value of all the work > done BEFORE he expended any of his own funds by paying for the work? > > Does anyone know of any decisions in which this issue has been considered? > > The second question is whether there would still be a valid claim if the > subcontractors released the builder from liability. Since the "passing on > defence" has been rejected, I would assume that the builder's position > vis-a-vis third parties would be irrelevant to his claim for the > reasonable > value of the benefit conferred on the owner. > > Regards > > Rafal > > > __________________________________________________________________________ > ______ > 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 > . *********************************************************************** The information in this email and in any attachments is confidential and intended solely for the attention and use of the named addressee(s). This information may be subject to legal professional or other privilege or may otherwise be protected by work product immunity or other legal rules. It must not be disclosed to any person without our authority. If you are not the intended recipient, or a person responsible for delivering it to the intended recipient, you are not authorised to and must not disclose, copy, distribute, or retain this message or any part of it. >From duncan.sheehan@corpus-christi.oxford.ac.uk Mon Nov 23 19:20:51 1998 Received: from oxmail3.ox.ac.uk ([163.1.2.9] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zi1XX-0004fM-00 for restitution@maillist.ox.ac.uk; Mon, 23 Nov 1998 19:20:51 +0000 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.02 #1) id 0zi1Wo-0001qX-00; Mon, 23 Nov 1998 19:20:06 +0000 Received: from corp0380 (helo=localhost) by sable.ox.ac.uk with local-smtp (Exim 2.053 #1) id 0zi1Wo-0000Rn-00; Mon, 23 Nov 1998 19:20:06 +0000 Date: Mon, 23 Nov 1998 19:20:06 +0000 (GMT) From: Duncan Sheehan To: rz@one.net.au cc: restitution@maillist.ox.ac.uk Subject: Re: RDG: "at the expense of" In-Reply-To: <3.0.5.32.19981122223244.007a84a0@one.net.au> Message-ID: MIME-Version: 1.0 Content-Type: TEXT/PLAIN; charset=US-ASCII Dear All, The debate seems to have moved on slightly from Rafal's initial query. I have three things to say. 1) Firstly I don't see Rafal's problem. We know from restitution for wrongs cases, for instance patent or trademark infringements, that there does not have to be any loss to the plaintiff to enable him to sue; we also know that the whole point of restitutionary claims is unjust enrichment, not unjust sacrifice. Why then should the plaintff's wealth have to be reduced at all? 2) Charles Mitchell mentions cases of where fairy godmother payments still allow clains against the tortfeasor and cases where they do not. I would be interested in knowing how he can justify a distinction between the two sets of cases. Surely a tort is a tort, or maybe I'm missing something vitally important here. If so I'd appreciate enlightenment. 3) Can you allow the fairy godmother to recover by an analogy with subrogation, in those cases where a live claim seems to continue in existence? It's obviously not the same as the typical subrogation case where a surety who pays the creditor is subrogated to the creditor's security interest against the debtor, but it's not far off. The third party who pays the tort creditor is subrogated to the tort creditor's rights against the tort debtor, the tortfeasor? Duncan >From francis.rose@buck.ac.uk Wed Nov 25 10:20:28 1998 Received: from gateway.buckingham.ac.uk ([194.83.163.1]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zic3f-0001rl-00 for restitution@maillist.ox.ac.uk; Wed, 25 Nov 1998 10:20:28 +0000 Received: from LAW_6.buckingham.ac.uk ([194.83.163.186]) by gateway.buckingham.ac.uk (8.8.5/8.8.5) with ESMTP id KAA20846; Wed, 25 Nov 1998 10:26:14 GMT Message-Id: <199811251026.KAA20846@gateway.buckingham.ac.uk> From: "Francis Rose" To: Cc: Subject: Transitional Justice Date: Wed, 25 Nov 1998 10:26:50 -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 Will anyone who knows of anyone doing work in English on lustration, restitution or retroactive justice in the Baltic States (Estonia, Latvia, Lithuania) please contact Leslie Powell. Ph.D. Candidate, Department of Political Science, Columbia University From lionel.smith@law.oxford.ac.uk Wed Nov 25 10:28:48 1998 Received: from oxmail4.ox.ac.uk ([163.1.2.33] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zicBk-0001tI-00 for restitution@maillist.ox.ac.uk; Wed, 25 Nov 1998 10:28:48 +0000 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.02 #3) id 0zicB9-0006e6-00 for restitution@maillist.ox.ac.uk; Wed, 25 Nov 1998 10:28:11 +0000 Received: from ug28.sthughs.ox.ac.uk ([163.1.157.172]) by sable.ox.ac.uk with esmtp (Exim 2.053 #1) id 0zicB8-00018o-00 for restitution@maillist.ox.ac.uk; Wed, 25 Nov 1998 10:28:10 +0000 X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Wed, 25 Nov 1998 10:28:22 +0000 To: restitution@maillist.ox.ac.uk From: Lionel Smith approved: eregion From: "Francis Rose" Subject: Transitional Justice Date: Wed, 25 Nov 1998 10:26:50 -0000 Will anyone who knows of anyone doing work in English on lustration, restitution or retroactive justice in the Baltic States (Estonia, Latvia, Lithuania) please contact Leslie Powell. Ph.D. Candidate, Department of Political Science, Columbia University From charles.mitchell@kcl.ac.uk Wed Nov 25 16:09:52 1998 Received: from mail.kcl.ac.uk ([137.73.66.6]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zihVo-0003eA-00 for restitution@maillist.ox.ac.uk; Wed, 25 Nov 1998 16:09:52 +0000 Received: from pc231.kcl.ac.uk (pc187.law.kcl.ac.uk [137.73.78.187]) by mail.kcl.ac.uk (8.9.1/8.9.1) with SMTP id QAA19961 for ; Wed, 25 Nov 1998 16:05:12 GMT Message-Id: <1.5.4.32.19981125160943.006643a8@law-mail.kcl.ac.uk> X-Sender: stty2277@law-mail.kcl.ac.uk X-Mailer: Windows Eudora Light Version 1.5.4 (32) Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Wed, 25 Nov 1998 16:09:43 +0000 To: restitution@maillist.ox.ac.uk From: Charles Mitchell In his last message to the group, Duncan Sheehan wrote: 'Charles Mitchell mentions cases of where fairy godmother payments still allow clains against the tortfeasor and cases where they do not. I would be interested in knowing how he can justify a distinction between the two sets of cases.' I'm not sure I would particularly want to 'justify' this distinction. I simply wished to make the point that it exists in the case law which we've got. I would personally prefer a system under which all third party payments to tort victims operate to discharge the tortfeasor's liability, except those which have expressly been made on the basis that the third party wishes the victim to keep his payment over and above anything he might additionally recover from the tortfeasor. But I am aware that there are problems with this position - eg wastefulness and also evidential problems where the third party would have thought this if he had turned his mind to the question but actually he didn't. These and other problems are all usefully discussed in the LCCP on Collateral Benefits, in Peter Cane's book, Tort Law and Economic Interests, and in Prof Atiyah's Accidents, Compensation and the Law. He also askes: 'Can you allow the fairy godmother to recover by an analogy with subrogation, in those cases where a live claim seems to continue in existence?' The short answer to this is: Yes, if you want to. I would add that it follows from this that although the rules about when a third party payment does and does not discharge a tortfeasor's liability to his victim are in a mess, this ultimately doesn't really matter, since the law has sufficient mechanisms at its disposal to shift the burden of paying for the loss around in any case. To illustrate this point, imagine the following situations: 1) FG pays V in respect of a loss caused to V by T's tort. The rules say that T's liability is thereby discharged. If the view is taken that FG rather than T is the 'right person' to bear the burden of paying for V's loss, then we can just leave things at that, and refuse to give FG any right to recover from T. On the other hand, if we think that it should be T rather than FG who winds up paying at the end of the story, then we let FG sue him for money paid. 2) FG pays V in respect of a loss caused to V by T's tort. The rules say that T's liability is not thereby discharged. If we think that it should be T rather than FG who winds up paying at the end of the story, and also that we don't want V to let recover twice over, then we can let FG take over his right of action against V via subrogation and enforce it for his own benefit. Both these examples are obviously premissed on the view that V shouldn't be allowed to recover twice over for himself. In example (1), he can't do this because the rules say his action against V is extinguished by FG's payment - and indeed, we might even say that it is precisely because it is thought undesirable to let V recover twice over that FG's payment is deemed to have this effect. In example (2), he could potentially recover twice over, and if we decided to let him, then we wouldn't award FG subrogation, but would leave V to sue T for himself. I discuss all this at slightly greater length in my chapter in Restitution and Banking Law. Charles ________________________________________________________________________ Dr Charles Mitchell Lecturer in Law 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 >From swh10@cus.cam.ac.uk Thu Nov 26 22:21:12 1998 Received: from taurus.cus.cam.ac.uk ([131.111.8.48] ident=cusexim) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 0zj9mi-0000lR-00 for restitution@maillist.ox.ac.uk; Thu, 26 Nov 1998 22:21:12 +0000 Received: from swh10.christs.cam.ac.uk ([131.111.219.51] helo=swh10.cam.ac.uk) by taurus.cus.cam.ac.uk with smtp (Exim 2.054 #1) id 0zj9m4-0002Px-00 for restitution@maillist.ox.ac.uk; Thu, 26 Nov 1998 22:20:32 +0000 Message-Id: <3.0.1.32.19981126222038.007d7580@pop.cus.cam.ac.uk> X-Sender: swh10@pop.cus.cam.ac.uk X-Mailer: Windows Eudora Light Version 3.0.1 (32) Date: Thu, 26 Nov 1998 22:20:38 +0000 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: RDG: "at the expense of" Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Rafal's question is an important one, because of the pervasiveness of vicarious performance in modern contracts. A company doesn't have arms or legs; it has directors, employees, agents, sub-contractors. So while we can usually get away with talking about a company "performing" its undertakings, in reality that cannot happen in any literal sense. In a case like Pavey v Paul, essentially the situation is contractual - Pavey are doing work in exchange for money after agreement with Paul to that effect - but because of the illegality the claim can't be advanced on a contractual basis. Rafal's question raises interesting issues on how this restitutionary liability can be defined, particularly in the light of the requirement that the benefit gained must be "at the expense of" the plaintiff. Essentially, the unjust enrichment theory is here re-inventing the wheel - trying to develop a theory of when and how we should enforce commercial agreements, when we already have a law (of contract) to do that. But how well does restitution do it ? We really have 3 suggestions from various contributors. Each of them reveal how complex this liability really has to be, if it to do the job it is meant to in Rafal's hypothetical. 1. Firstly, some are arguing that, as a matter of fact, there probably was some "expense" involved somewhere. So Andrew Dickinson says that >performance by the sub-contractor has resulted in a >reduction in his assets/ resources in that he no longer has >any right of action against the sub-contractor to compel >performance nor, perhaps, any right to allocate resources >elsewhere. Whether he is now liable to pay the sub- >contractor is neither here nor there. As far as the sub- >contractor is concerned, his performance was requested >by the main contractor and has discharged an obligation >under his contract with the main contractor. But this brings in all sorts of factual complications. If the contract between Paul and Pavey is invalid, it really isn't too far-fetched to consider the possibility that the contract between Pavey and the sub-contractor is invalid too - what then ? Andrew may well be right in any particular case, but he won't *always* be right. Are we to say that the case turns on some unspoken assumptions about how the plaintiff arranged for the work to be done ? If so, what assumptions ? This approach makes Pavey turn on a raft of factual findings which were hitherto thought irrelevant. 2. Secondly, some are arguing for a fairy-godmother rule, in effect that we should *pretend* that the plaintiff did it all itself, because the truth is not the defendant's business. Or as Andrew Tettenborn put it : >Your charm, merit and/or sweet-talking ability >that caused the sub to release you should >enure to your benefit, not some grasping householder's. I would be interested to see a statement of the rule supposedly at work there. The complications of the rules in contract and tort, alluded to by Charles Mitchell, hardly encourage us to adopt the same approach in restitution. 3. Thirdly, no doubt some will suggest that if the benefit wasn't really at the plaintiff's expense it must have been at *someone's* expense, and we should give a right of action to the someone. No-one has argued that here, but no-one has given a clear reason why it would be wrong, either. Views, anyone ? It seems to me therefore that there are wheels within wheels when we try to explain the remedy here. The contractual analysis of the case has at least the merit of simplicity - it is the plaintiff who must be paid because it was the plaintiff that the defendant undertook to pay. The suggested criterion for picking out the plaintiff in restitution - "at the expense of" - seems highly complex in its application here - perhaps, as I say, because it is trying to re-invent the wheel. I appreciate that this leaves me siding with Brennan J in Pavey v. Paul. Steve Hedley =================================================== FACULTY OF LAW, UNIVERSITY OF CAMBRIDGE telephone and answering machine : (01223) 334931 e-mail : steve.hedley@law.cam.ac.uk messages : (01223) 334900 fax : (01223) 334967 Christ's College Cambridge CB2 3BU ===================================================