-- >From mcclean@law.ubc.ca Tue May 04 18:46:20 1999 Received: from curtis.law.ubc.ca ([137.82.108.220] helo=law.ubc.ca) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 10ejGt-0002k3-00 for restitution@maillist.ox.ac.uk; Tue, 4 May 1999 18:46:20 +0100 Received: from UBCLAW-Message_Server by law.ubc.ca with Novell_GroupWise; Tue, 04 May 1999 10:44:53 -0700 Message-Id: X-Mailer: Novell GroupWise 4.1 Date: Tue, 04 May 1999 10:45:38 -0700 From: Bertie McClean To: faye.woodman@dal.ca,lionel.smith@Law.oxford.ac.uk, restitution@maillist.ox.ac.uk, mgillen@uvic.ca Subject: trusts book Mime-Version: 1.0 Content-Type: text/plain Content-Disposition: inline Dear Mark, Having surfaced from marking, I thought I should get in touch with you about one aspect of the book. Many prvonces have now changed to the prudent investor criterion and dropped the legal list for investment. That shoiuld be reflected in the Chapter on administration if possible. There are also ancillary changes which it would be desirable to pick up. Having used it during the year I would alsi like to add Fox v. Fox Estate on the exeecise of powers. I take off for Australia on May 26th for a month. I could try to do somethig before Ieave. Could you let me know. With all good wishes. Bertie. >From mcclean@law.ubc.ca Tue May 04 18:53:22 1999 Received: from curtis.law.ubc.ca ([137.82.108.220] helo=law.ubc.ca) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 10ejNh-0002m5-00 for restitution@maillist.ox.ac.uk; Tue, 4 May 1999 18:53:22 +0100 Received: from UBCLAW-Message_Server by law.ubc.ca with Novell_GroupWise; Tue, 04 May 1999 10:51:54 -0700 Message-Id: X-Mailer: Novell GroupWise 4.1 Date: Tue, 04 May 1999 10:52:20 -0700 From: Bertie McClean To: faye.woodman@dal.ca,lionel.smith@Law.oxford.ac.uk, restitution@maillist.ox.ac.uk Subject: Trusts book Mime-Version: 1.0 Content-Type: text/plain Content-Disposition: inline Dear Faye, I sent what was intended as joint message to you and Mark I am not sure from what this machine tells me that yours got through. So I repeat (pehaps). Many provinces have replaced the legal list of investments with the prudent investor rule. This should be reflected in the book. I also think it would be a good idea if possible to add Fox v. Fox Estate , which I used this year and it seemed to be a good classroom case. I take off on May 26th for a month in Australia, but I could try to do something before I leave. With all good wishes, Bertie.i >From hwt20@hermes.cam.ac.uk Fri May 07 18:29:48 1999 Received: from violet.csi.cam.ac.uk ([131.111.8.58] ident=exim) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10foRY-0008Jr-00 for restitution@maillist.ox.ac.uk; Fri, 7 May 1999 18:29:48 +0100 Received: from dunedin.law.cam.ac.uk ([131.111.173.15]) by violet.csi.cam.ac.uk with smtp (Exim 2.05 #3) id 10foPC-0007Bn-00 for restitution@maillist.ox.ac.uk; Fri, 7 May 1999 18:27:22 +0100 Date: Fri, 07 May 1999 18:29:18 +0100 From: "hang wu tang" To: restitution@maillist.ox.ac.uk Subject: Lloyds Bank and Variation Claims- Some questions Message-ID: <2683789401.926101758@dunedin.law.cam.ac.uk> X-Mailer: Mulberry (Win32) [1.3.2.2, s/n S-100001] X-Authenticated: hwt20 by imap.hermes.cam.ac.uk X-Licensed-To: University of Cambridge MIME-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit I would be obliged if I could get some of the member's thoughts on the questions below. The first two questions relates to the recent case of Lloyds Bank v. Independent Insurance Co Ltd and the third relates to "variation" claims in building contracts. 1. As the members are no doubt well aware, the Independent Insurance Co Ltd case, reaffirmed the "payment made for good consideration" defence enunciated by Goff J (as he then was in WJ Simms). My question is this, if the bank loses due the payment made for good consideration defence does it automatically mean that the bank can invoke the B Liggett subrogation defence and debit the sum from the client (assuming that the bank is still solvent and the bank does not mind losing the client's business). If so, does it mean the wisest way to prosecute such an action is to bring the client in as second Defendant in any event, and ask for the appropriate costs order. Either way, the bank's position as to costs can be protected by a Sanderson/Bullock Order (or whatever they are called nowadays in the post Woolf days). 2. Is the B Liggett defence only confined to banking or can it extend elsewhere? Professor Ellinger and Ms. Lomnicka (Modern Banking Law 2nd Edition on page 376 ) have said that the B Liggett defence "can be more readily explained as an independent doctrine that precludes the customer from reaping the benefit of the payment involved whilst demanding a reversal of the debit entry made by the bank". It seems to me that they are referring to an autonomous unjust enrichment situation. If this is so, then why should the same be only confined in a banking situation and not used elsewhere or for that matter be confined to being a defence. In other words, can it be used to be the basis of a cause of action i.e. a declaration for a right of subrogation where one has discharged the debt of another subject to the officiousness rule of course? (3) My third question relates to building construction. As the members are no doubt well aware, contractors are very fond of claiming for "variations". To put it simply, the contractors argue that certain works are outside the scope of the contract and therefore the contract has been "varied". Usually, the whole litigation turns on whether the work is outside the scope or not. However, I have often wondered what is the basis of the claim. If the contract envisages a rate in which the variation is to be paid, I have no problems analysing it as purely a contractual claim. However, where the contract is silent on variations what exactly is the nature of the claim? The first possibility is of course contract. However, the problem with the contract analysis is finding the traditional elements of contract. Very often there are fierce letters shooting to and fro the parties stating "it is part of the contract - you have to do it" and "it is not part of the contract - if I do it I will charge you". In circumstances like these, I find it very hard to justify the same as a contract. Is it restitutionary in nature? What is the unjust factor? Duress? It has been suggested to me that it is a failure of consideration. Finally, most importantly does it matter to a litigant whether it is analysed as contract or restitution - is there any advantage to argue that it is one and not the other? I look forward to the members' response. Thank you Tang Hang Wu Hughes Hall Cambridge >From AXELRODA@wpgate.law3.georgetown.edu Sat May 08 14:05:32 1999 Received: from wpgate.law3.georgetown.edu ([141.161.16.100]) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 10g6nM-00029d-00 for restitution@maillist.ox.ac.uk; Sat, 8 May 1999 14:05:32 +0100 Received: from LAWCAMPUS-Message_Server by wpgate.law3.georgetown.edu with Novell_GroupWise; Sat, 08 May 1999 09:02:55 -0400 Message-Id: X-Mailer: Novell GroupWise 5.2 Date: Sat, 08 May 1999 09:02:50 -0400 From: "Alan Axelrod" To: hwt20@hermes.cam.ac.uk, restitution@maillist.ox.ac.uk Subject: Re: RDG: Lloyds Bank and Variation Claims- Some questions Mime-Version: 1.0 Content-Type: text/plain; charset=US-ASCII Content-Transfer-Encoding: quoted-printable Content-Disposition: inline >>> "hang wu tang" 05/07 1:29 PM >>> =20 ......(3) My third question relates to building construction. As the = members are no doubt well aware, contractors are very fond of claiming for = "variations". To put it simply, the contractors argue that certain works = are outside the scope of the contract and therefore the contract has been = "varied". Usually, the whole litigation turns on whether the work is = outside the scope or not. =20 However, I have often wondered what is the basis of the claim. If the = contract envisages a rate in which the variation is to be paid, I have no = problems analysing it as purely a contractual claim. However, where the = contract is silent on variations what exactly is the nature of the claim? = The first possibility is of course contract. However, the problem with = the contract analysis is finding the traditional elements of contract. = Very often there are fierce letters shooting to and fro the parties = stating "it is part of the contract - you have to do it" and "it is not = part of the contract - if I do it I will charge you". In circumstances = like these, I find it very hard to justify the same as a contract. .... =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D the bluster doesn't conceal that neither party is fully rejecting the = other's position? isn't there mutual intent that the work be performed = and if not covered by contract paid for at reasonable value?=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D . ... Finally, most importantly does it matter to a litigant whether it is = analysed as contract or restitution - is there any advantage to argue that = it is one and not the other? ... =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=20 suppose the disputed work is not completed and then found to be a = 'variation'? =20 ___________________________________________________________________________= _____ 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 . >From AXELRODA@wpgate.law3.georgetown.edu Sat May 08 17:01:23 1999 Received: from wpgate.law3.georgetown.edu ([141.161.16.100]) by bagpuss.oucs.ox.ac.uk with smtp (Exim 2.02 #2) id 10g9XX-000304-00 for restitution@maillist.ox.ac.uk; Sat, 8 May 1999 17:01:23 +0100 Received: from LAWCAMPUS-Message_Server by wpgate.law3.georgetown.edu with Novell_GroupWise; Sat, 08 May 1999 11:58:57 -0400 Message-Id: X-Mailer: Novell GroupWise 5.2 Date: Sat, 08 May 1999 11:58:55 -0400 From: "Alan Axelrod" To: restitution@maillist.ox.ac.uk Subject: >>> "hang wu tang" 05/07 1:29 PM >>> Mime-Version: 1.0 Content-Type: text/plain; charset=US-ASCII Content-Transfer-Encoding: quoted-printable Content-Disposition: inline >>> "hang wu tang" 05/07 1:29 PM >>> =20 ......(3) My third question relates to building construction. As the = members are no doubt well aware, contractors are very fond of claiming for = "variations". To put it simply, the contractors argue that certain works = are outside the scope of the contract and therefore the contract has been = "varied". Usually, the whole litigation turns on whether the work is = outside the scope or not. =20 However, I have often wondered what is the basis of the claim. If the = contract envisages a rate in which the variation is to be paid, I have no = problems analysing it as purely a contractual claim. However, where the = contract is silent on variations what exactly is the nature of the claim? = The first possibility is of course contract. However, the problem with = the contract analysis is finding the traditional elements of contract. = Very often there are fierce letters shooting to and fro the parties = stating "it is part of the contract - you have to do it" and "it is not = part of the contract - if I do it I will charge you". In circumstances = like these, I find it very hard to justify the same as a contract. .... =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D the bluster doesn't conceal that neither party is fully rejecting the = other's position? isn't there mutual intent that the work be performed = and if not covered by contract paid for at reasonable value?=20 =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D . ... Finally, most importantly does it matter to a litigant whether it is = analysed as contract or restitution - is there any advantage to argue that = it is one and not the other? ... =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=20 suppose the disputed work is not completed and then found to be a = 'variation'? =20 ___________________________________________________________________________= _____ 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 . >From eodell@dux4.tcd.ie Mon May 10 11:57:55 1999 Received: from dux4.tcd.ie ([134.226.1.194]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10gnkw-0000zO-00 for restitution@maillist.ox.ac.uk; Mon, 10 May 1999 11:57:55 +0100 Received: from [134.226.248.23] (law023.law.tcd.ie [134.226.248.23]) by dux4.tcd.ie (8.9.3/8.9.3) with SMTP id LAA09126 for ; Mon, 10 May 1999 11:55:25 +0100 (BST) Date: Mon, 10 May 1999 11:55:25 +0100 (BST) 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: Variation clauses Tang Hang Wu posed a number of interesting questions. I'd like to take up the query on variation clauses: >contractors are very fond of claiming for "variations". >To put it simply, the contractors argue that certain works are outside the >scope of the contract and therefore the contract has been "varied". >Usually, the whole litigation turns on whether the work is outside the scop= e >or not. > >However, I have often wondered what is the basis of the claim. If the >contract envisages a rate in which the variation is to be paid, I have no >problems analysing it as purely a contractual claim. However, where the >contract is silent on variations what exactly is the nature of the claim? >The first possibility is of course contract. However, the problem with the >contract analysis is finding the traditional elements of contract. Very >often there are fierce letters shooting to and fro the parties stating "it >is part of the contract - you have to do it" and "it is not part of the >contract - if I do it I will charge you". In circumstances like these, I >find it very hard to justify the same as a contract. Is it restitutionary >in nature? What is the unjust factor? Duress? It has been suggested to me >that it is a failure of consideration. Finally, most importantly does it >matter to a litigant whether it is analysed as contract or restitution - is >there any advantage to argue that it is one and not the other? This is an issue which has intrigued me too. Many building contracts -especially standard form contracts published by various institutes for various purposes - explicitly provide for a mechanism by which extras can be charged and paid for. Even where they do not, there will often be a contractual variation to cover the extra work, though it will often be difficult - pace Alan Axelrod, and Steve Hedley in Cornish et al eds Essays for Jones - to spell out the indicia of a contract in such circumstances. But where there is neither an express contractual mechanism nor a variation, then an obligation to pay for the work if done would arise, to adopt the language of the common counts,in a claim for a quantum meruit. To the extent that such a claim is directed to reversing the defendant's unjust enrichment (see McKendrick in Essays for Jones), the plaintiff would have to satisfy the terms of the principle of unjust enrichment, and demonstrate that there was an unjust factor (free acceptance, if it exists, is often deployed to justify such qm claims; failure of consideration, stripped of its confining requirment of totality and expanded to such a services count, is often presented as an alternative to free acceptance in situations such as the present), and an enrichment (the work, as accepted, or bargained for, or incontrovertibly beneficial) at the plaintiff's expense. Furthermore, since it is a bar to restitution that the benefit was conferred pursuant to a valid contract, the plaintiff would have to demonstrate that the building in the circumstances was outside the terms of the contract. Because there has relatively recently been a particularly bad Irish High Court decision on just this problem, I discuss these issues in a book review of RESTITUTION AND CONTRACT By Andrew Skelton (Mansfield Press, Oxford, 1998) forthcoming in the (1998) Dublin University Law Journal: ----- begin extract ----- Consider the Irish case of Cotter v Minister for Agriculture (High Court, unreported, 15 November 1999; Supreme Court, unreported, 1 April 1993). A group of farmers hired the plaintiff to drain a river, pursuant to a scheme whereby the Minister for Agriculture would pay up to 50 % of the estimated costs. The provisions of the written contract fixed a price for the work but also allowed the plaintiff to submit a claim for additional payment in respect of "physical conditions =8A which could not reasonably have been foreseen by an experienced contractor" to the farmers' "Engineer" who was to decide whether the physical condition was in fact so unforeseeable. No such "Engineer" was validly appointed. The plaintiff encountered rock in much greater quantities than had been foreseen. Although Murphy J in the High Court found "difficulty in accepting that rock in the bed of a river could not have been reasonably foreseen. The bed of a river must consist of something =8A" (at p 30 of the transcript), the rock which was encountered was in much greater quantities than foreseen at the outset by the various players in this drama. Thus, it was unforeseen for the purposes of the contract. Nevertheless, the plaintiff did the extra work required as a consequence of the extra rock, and sought remuneration for the extra work. In the High Court, Murphy J held that the plaintiff was entitled to a quantum meruit from the farmers; this was not disturbed on appeal to the Supreme Court, where O'Flaherty J (Egan and Denham JJ concurring) held that the Minister was liable in tort to the farmers for half of the amount which they therefore had to pay to the plaintiff on the quantum meruit. Murphy J had justified this as follows: "I am satisfied that the farmers are liable in Contract to the plaintiff in respect of the rock encountered in the course of the works to the extent to which the same was "unforeseen" =8A . Again I am satisfied that the plaintiff cannot be denied his right to paymen= t for the works done in respect of those unforeseen circumstances solely by reason of his failure to comply with the conditions which were rendered impossible due to the absence of any person acting as Engineer for the purposes of the contract. =8A It seems to me that all that can be done at the present stage is to compensate the plaintiff on a quantum meruit basis for the extra work which he did as a result of the unforeseen conditions. The liability under this heading is one of Contract or Quasi-Contract falling on the Farmers" (at pp 46-47 of the transcript). The basis of liability in contract is unclear: it was impossible to follow the contract procedures to claim the extra payment; hence, there could be no liability on the contract. Nor was there an effective variation of the terms of the contract to cover the extra work done (as there was held to be in the similar US case of Watkins v Carrig 21 A2d 591 (1941) where the excavator of a cellar encountered rock in the course of excavations and the parties consequently orally agreed a higher price for the work). As to the claim in quasi-contract or restitution, it seems to turn on the assumption that since the contract was inoperable (at least in respect of the extra work), the basis upon which the plaintiff had performed had failed; in other words, the claim in restitution turned upon failure of consideration. But the plaintiff had performed fully, and had been partly paid: he received at least some part of that for which he had bargained; in which case, the failure of consideration was partial and not total. On this reading, the quantum meruit was justified by a partial failure of consideration, illustrating that failure of consideration can be deployed to justify a quantum meruit, that such failure may be partial and need not be total, and that the quantum meruit cases provide excellent examples of partial failure of consideration as a ground for restitution. =46or the sake of completeness, a potential problem with a restitutionary reading of Cotter should be noted. It is a cardinal principle of the law of restitution that "a plaintiff's restitutionary claim will fail if it is shown that he was under a[n] =8A obligation to confer the benefit =8A [as where] he has contracted =8A to confer the benefit" (Goff and Jones The Law of Restitution (5th ed, Sweet & Maxwell, London, 1998) p 48 (emphasis in original); Pavey & Matthews v Paul (1987) 162 CLR 221 (HCA) 256 per Deane J; Pan Ocean Shipping v Creditcorp (The Trident Beauty) [1994] 1 WLR 161; [1994] 1 All ER 470 (HL)). Hence, "if the contract is not terminated, the parties to it must seek their remedy under the contract and not in restitution" (id). This principle has been deployed in Ireland to deny a restitutionary quantum meruit where a contract remained on foot (Galvin Estates v Hedigan [1985] ILRM 295 (HC) 302 per Costello J); and in Cotter, it is quite clear that whilst the contract may have been inoperable in respect of the matter of the extra work, it was nonetheless valid and on foot. For example, in the similar US case of US v Western States Mechanical Contractors 834 F2d 1533 (1987), the plaintiff did not recover under the contract for the value of the excavation of the extra rock because the contractual procedure for the claim had not been followed, but did recover on a restitutionary quantum meruit because the contract had been discharged by the defendant's breach (and though the plaintiff had underbid for the work, the quantum meruit was not limited by the contract price) Hence, it seems to follow that whilst the quantum meruit claim in Cotter might have satisfied the first three enquiries of the principle against unjust enrichment, it should have failed on the fourth; that the existence of a valid contract governing the particular relationship between the parties is a bar to restitution should have been an end to the matter. On the other hand, in Miles v Wakefield Metropolitan DC [1987] AC 539 (HL), the House of Lords gave a quantum meruit to an employee who, pursuant to limited industrial action, rendered only partial performance of his contractual obligations, in circumstances where the contract of employment remained on foot. Though, consistently with general principle, Goff and Jones comment that "[n]o restitutionary claim should succeed in such a case" (at p 49), nonetheless, cases like Cotter and Miles could force a reassessment of the strictness of the principle (on which see Mead "Restitution Within Contract ?" (1991) 11 LS 172; Birks p 464; Burrows "Solving the Problem of Concurrent Liability" (1995) 48(2) CLP 103). The result in Cotter is difficult to explain, but if it is to be accepted as a successful claim in restitution, then it provides an excellent example of partial failure of consideration grounding a quantum meruit, a result which would meet with Skelton's favour. ----- end extract ----- Best from Dublin Eoin EOIN O'DELL Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland (353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m); eodell@tcd.ie (All opinions are personal. No legal responsibility whatsoever is accepted.) >From swh10@cus.cam.ac.uk Mon May 10 23:12:20 1999 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 10gyHc-0003y8-00 for restitution@maillist.ox.ac.uk; Mon, 10 May 1999 23:12:20 +0100 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 2.953 #1) id 10gyFD-0004xT-00 for restitution@maillist.ox.ac.uk; Mon, 10 May 1999 23:09:52 +0100 Message-Id: <3.0.1.32.19990510230959.00808b70@pop.cus.cam.ac.uk> X-Sender: swh10@pop.cus.cam.ac.uk X-Mailer: Windows Eudora Light Version 3.0.1 (32) Date: Mon, 10 May 1999 23:09:59 +0100 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: Variation clauses In-Reply-To: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" At 11:55 10/05/99 +0100, Eoin O' Dell wrote: >Many building contracts >-especially standard form contracts published by various institutes for >various purposes - explicitly provide for a mechanism by which extras can >be charged and paid for. Even where they do not, there will often be a >contractual variation to cover the extra work, though it will often be >difficult - pace Alan Axelrod, and Steve Hedley in Cornish et al eds Essays >for Jones - to spell out the indicia of a contract in such circumstances. What is the difficulty ? The building contractors are not charities. Of course they are doing any additional work on the basis that that they will be paid for it. This satisfies the "reasonable bystander" test easily enough, surely. Or as Alan Axelrod has put it, >isn't there mutual intent that the work be performed and if not >covered by contract paid for at reasonable value? I am not sure what more Eoin wants, when he asks for the "indicia of a contract". Btu whatever it is, he would surely find it in the pre-contractual negotiations of the parties, a major function of which is to settle which items of work are to be paid for under the contract and which are extras. Talking about Cotter, Eoin added : >The basis of liability in contract is unclear: it was impossible to follow >the contract procedures to claim the extra payment; hence, there could be >no liability on the contract. But there were two aspects to the bargain : the bargain as to payment, that the contractor could expect extra for unforseen work, and the bargain as to procedures to be followed in the event of such a claim. Murphy J was perfectly clear that the claim for a quantum meruit for extra work was contractual -- "Under that Agreement, the Farmers are bound to remunerate the Contractor in respect of the rock encountered and excavated which had not been foreseen by the Contractor" -- and, he might have added, the Farmers knew very well that the Contractor would not have signed the contract had it omitted that clause. As to the procedural aspect, both sides had ignored it, so the judge thought that he should too. "It seems to me that the Plaintiff cannot be faulted for failing to invoke procedures prescribed by the Contract which involved the co-operation or at least the existence of an Engineer appointed on foot of the Contract when either no such Engineer existed or alternatively, he was declining to fulfil his functions thereunder". It is unfortunate that in a throw-away line, when discussing a quite different aspect of the case, Murphy refers to the claim as based on "Contract or Quasi Contract". But as he had already offered a satisfactory explanation of the contractual basis of the claim and suggested no restitutionary basis, I think we should let him off, noting merely that someone who never made a mistake probably never made anything else either ....... 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 WAN_Wai_Yee@supcourt.gov.sg Tue May 11 02:47:00 1999 Received: from medusa.internet.gov.sg ([160.96.179.7]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10h1dL-0004MH-00 for restitution@maillist.ox.ac.uk; Tue, 11 May 1999 02:46:59 +0100 Received: from LMS01.LMS.GOV.SG (lms01.gov.sg [10.247.1.20]) by medusa.internet.gov.sg (8.9.1/8.9.1) with SMTP id JAA02630 for ; Tue, 11 May 1999 09:37:35 +0800 (SGT) From: WAN_Wai_Yee@SUPCOURT.gov.sg Received: by LMS01.LMS.GOV.SG (Soft-Switch LMS 3.0) with snapi via NOTESAU02 id 0054100010627829; Tue, 11 May 1999 09:31:01 +0800 To: Subject: Mistake of Law, Breach of Fiduciary Duty and Proprietary Rem Message-ID: <0054100010627829000002L092*@MHS> Date: Tue, 11 May 1999 09:31:01 +0800 MIME-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Disposition: inline Members may be interested to note the decision of the Singapore High Court in PP v Intra Group (Holdings) Inc, reported in [1999] 1 SLR 303, which deals with the question of whether it is possible to obtain a proprietary remedy on either breach of directors' duties where no fraud is demonstrated, or mistake of law. This case arose, unusually, in the course of a disposal inquiry in a criminal revision. The brief facts: H was the managing director of Intra (a foreign company ). Under the Residential Properties Act (the Act), a foreigner cannot purchase a dwelling house (or landed property) save in specified circumstances e.g. obtaining the relevant approval. Both H and Intra were foreigners within the meaning of the Act. In 1979, H, on Intra's instructions, was to purchase a dwelling house at S$245,000 to hold on trust for Intra. The monies came from Intra. H obtained approval to purchase but did not disclose that he was holding it as a nominee for Intra. In 1994, H contracted to sell the house at over S$ 11 million, without informing Intra and Intra lodged a police report when discovered. H was convicted for acquiring the property with the intention of h olding it on trust for Intra (a foreigner), an offence under the Act, and was sentenced. About $7.8 million representing the proceeds of the sale were seized by the Commercial Affairs Department. Following H's conviction and sentence, a disposal inquiry was held to determine who was entitled to the $7.8 m. The competing claimants were H, Intra, and the State. The state argued that the sums should be forfeited under the Criminal Procedure Code. In the end, the High Court held that sums should be forfeited to the state. It was important to note that the court had to determine, between H and Intra, who was entitled to the proceeds. Only then can the court determine whether the sums should be forfeited under the Criminal Procedure Code. The Court held that Intra did not have a proprietary interest in the proceeds of sale. There was no express trust arising in 1979 when the property was acquired by H by virtue of the provisions of the Act which prohibit an express trust from arising. A constructive trust was not prohibited by the Act and a constructive trust in monies used to purchase residential property would survive the provisions of the Act. However the Court held that Intra had to show that, in 1979, the transfer of monies to H for the purpose of buying the property was induced by fraud. On the facts H did not fraudulently induce the company to purchase the property in his name. At the worst, H was negligent as to the legal consequences of the purchase. Accordingly there was no breach of fiduciary duty and hence no constructive trust arising in 1979. As Intra's claim in 1979 was limited to a personal action for negligence, or alternatively, the recovery of monies paid under a mistake of law (citing Kleinwort Benson v Lincoln CC), and, at that point, it had acquired no proprietary remedy which would afford it a claim in the disposal inquiry. More interestingly the court held that even if a constructive trust in the sale proceeds arose in 1994, the court could not recognise that interest because Intra had to assert the underlying illegality in order to establish its claim. The exception to the in pari delicto rule was not relevant to the case because there was no fraud in 1979 but only negligence. Furthermore, there was no fraud occurring in 1994 because H was entitled, legally and equitably, to the property. WAI YEE, WAN >From gordon.goldberg@buckingham.ac.uk Wed May 12 13:59:57 1999 Received: from gateway.buckingham.ac.uk ([194.83.163.1]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10hYc9-00038U-00 for restitution@maillist.ox.ac.uk; Wed, 12 May 1999 13:59:57 +0100 Received: from Law999.buckingham.ac.uk ([194.83.163.235]) by gateway.buckingham.ac.uk (8.8.5/8.8.5) with ESMTP id NAA21534 for ; Wed, 12 May 1999 13:58:14 +0100 (BST) Message-Id: <199905121258.NAA21534@gateway.buckingham.ac.uk> From: "Gordon Goldberg" To: Subject: Fw: Variation clauses Date: Wed, 12 May 1999 14:05:51 +0100 X-MSMail-Priority: Normal X-Priority: 3 X-Mailer: Microsoft Internet Mail 4.70.1161 MIME-Version: 1.0 Content-Type: text/plain; charset=ISO-8859-1 Content-Transfer-Encoding: 7bit Without having read Murphy, J.'s judgment, I answer respectfully (and I hope not rashly), "Hear! Hear!", to Mr Hedley's message. In so far as I have understood the correspondence, I respectfully submit there to be three possibilities all of which, not surprisingly, Chalmers may by analogy be seen to have covered in the Sale of Goods Act 1893: First, the farmers could not take advantage of their own wrongful failure to appoint an engineer by claiming that it constituted a frustration of the agreement to pay for the extra work; and so they were regarded as having repudiated the agreement and thus liable on a quantum meruit or in damages - cf. s. 9(1) and (2). Secondly, the failure was a genuine frustration, which the parties chose to ignore; and so the farmers were liable on a quantum meruit - cf. s.9(1). Thirdly, the failure was by mutual consent; accordingly, there was a variation of the agreement; but the price of the extra work was not fixed by the terms of the variation; and so an undertaking to pay on a quantum meruit was necessarily implied - cf. s. 8(2). ---------- From: Steve Hedley To: restitution@maillist.ox.ac.uk Subject: RDG: Variation clauses Date: 10 May 1999 23:09 At 11:55 10/05/99 +0100, Eoin O' Dell wrote: Many building contracts - especially standard form contracts published by various institutes for various purposes - explicitly provide for a mechanism by which extras can be charged and paid for. Even where they do not, there will often be a contractual variation to cover the extra work, though it will often be difficult - pace Alan Axelrod, and Steve Hedley in Cornish et al eds Essays for Jones - to spell out the indicia of a contract in such circumstances. What is the difficulty ? The building contractors are not charities. Of course they are doing any additional work on the basis that they will be paid for it. This satisfies the "reasonable bystander" test easily enough, surely. Or as Alan Axelrod has put it, isn't there mutual intent that the work be performed and if not covered by contract paid for at reasonable value? I am not sure what more Eoin wants, when he asks for the "indicia of a contract". But whatever it is, he would surely find it in the pre-contractual negotiations of the parties, a major function of which is to settle which items of work are to be paid for under the contract and which are extras. Talking about Cotter, Eoin added : The basis of liability in contract is unclear: it was impossible to follow the contract procedures to claim the extra payment; hence, there could be no liability on the contract. But there were two aspects to the bargain : the bargain as to payment, that the contractor could expect extra for unforseen work, and the bargain as to procedures to be followed in the event of such a claim. Murphy J was perfectly clear that the claim for a quantum meruit for extra work was contractual -- "Under that Agreement, the Farmers are bound to remunerate the Contractor in respect of the rock encountered and excavated which had not been foreseen by the Contractor" -- and, he might have added, the Farmers knew very well that the Contractor would not have signed the contract had it omitted that clause. As to the procedural aspect, both sides had ignored it, so the judge thought that he should too. "It seems to me that the Plaintiff cannot be faulted for failing to invoke procedures prescribed by the Contract which involved the co-operation or at least the existence of an Engineer appointed on foot of the Contract when either no such Engineer existed or alternatively, he was declining to fulfil his functions thereunder". It is unfortunate that in a throw-away line, when discussing a quite different aspect of the case, Murphy refers to the claim as based on "Contract or Quasi Contract". But as he had already offered a satisfactory explanation of the contractual basis of the claim and suggested no restitutionary basis, I think we should let him off, noting merely that someone who never made a mistake probably never made anything else either ....... 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 > > > > > > > > > > > > =================================================== > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > ____________________________________________________________________________ > > > > > > > > > > > > > > > > > > ____ > > > > > > 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 > > > > > > . >From eodell@dux4.tcd.ie Thu May 13 10:36:37 1999 Received: from dux4.tcd.ie ([134.226.1.194]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10hruv-0006zo-00 for restitution@maillist.ox.ac.uk; Thu, 13 May 1999 10:36:37 +0100 Received: from [134.226.248.23] (law023.law.tcd.ie [134.226.248.23]) by dux4.tcd.ie (8.9.3/8.9.3) with SMTP id KAA13498; Thu, 13 May 1999 10:34:06 +0100 (BST) Date: Thu, 13 May 1999 10:34:06 +0100 (BST) 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: RDG: Variation clauses Cc: swh10@cus.cam.ac.uk, gordon.goldberg@buck.ac.uk Hello all In his message in this thread, Steve Hedley, with the subsequent approval of Gordon Goldberg, took issue with my discussion of Cotter v Minister for Agriculture, a case in which a contractor had agreed to excavate the bed of a river for a group of farmers (pursuant to a Department of Agriculture scheme under which the Department paid half the costs). The contractor discovered rock at much greater quantities than foreseen, and sued for the value of the extra work done. He succeeded, according to Murphy J, "in contract, or quasi-contract". I argued that there could have been no liability in contract because it was impossible to follow the contract procedures to claim the extra payment. However, Steve objected that >What is the difficulty ? The building contractors are not charities. >Of course they are doing any additional work on the basis that that they >will be paid for it. This satisfies the "reasonable bystander" test >easily enough, surely. Or as Alan Axelrod has put it, > >>isn't there mutual intent that the work be performed and if not >>covered by contract paid for at reasonable value? In principle, I can see how this might apply in many situations (though in practice the courts seem most reluctant to imply terms even on the basis of the reasonable bystander test). However, a point I should have made abudantly clear in my summary of the case, but did not, was that, because there was only a finite amount of money which the Department would make available to them for the work, the farmers at all stages intended that the work - however much there was to be done - would be done for a fixed price. It was on this basis that they approached the contractor, and on this basis that the negotiations were conducted and concluded. Indeed, it was on this basis that the farmers at all times proceeded. In these circumstances, since the fixed price was the only basis upon which the farmers intended to contract, there would be no basis for a reasonable bystander to assume that the contractor expected payment above the fixed price. Complicating the matter somewhat, however, is the undoubted fact that the written contract, although it embodied the fixed price, also contained a clause with a mechanism for charging for extra work: an engineer could certify their necessity and price. No engineer was ever appointed, the mechanism was never operable or operated. Now, the reason why the contract contained the clause was because the contractor's solicitor dug out a standard form contract and had the parties sign it, and the standard form contract contained that clause. One of the virtures of such standard form contracts is that, when the are approriate, they contain the wisdom of the industry on the proper balance to be struck between the parties (many charterparties and bills of lading are excellent examples of this; so too are standard form building contracts). One of the vices of such standard form contracts is that, when they are inappropriate but applied, they cause havoc between parties. That is what happened here. The contract was entirely inappropriate for the work being done. It was inappropriate not least because it contained a mechanism which was contrary to the intention and agreement of the parties. But their intention and agreement might be seen to come through, nonetheless, by virtue of the fact that they never took the steps necessary to activate that mechanism: they never appointed the engineer to make the determination as to the necessity and value of the extra work. In the end, therefore, I return to my point that, on the facts of the contract as between the farmers and the contractor, there was no basis for liability in contract for the extra work. Steve went on to comment that >I am not sure what more Eoin wants, when he asks for the "indicia of a >contract". Offer and acceptance, consideration, and intention to create legal relations. >Btu whatever it is, he would surely find it in the pre-contractual >negotiations of the parties, a major function of which is to settle which >items of work are to be paid for under the contract and which are >extras. Gordon Goldberg, writing in Steve's support commented to like effect: >the failure was by mutual consent; accordingly, there was a >variation of the agreement; but the price of the extra work was not >fixed by the terms of the variation; and so an undertaking to pay on a >quantum meruit was necessarily implied - cf. s. 8(2). In Cotter, neither the pre-contractual negotiations nor the parties execution of the contract would reach this result, because the negotiations settled that all the work would be paid for out of the fixed price. There could therefore have been no pre-contractual agreement as to extra payment for extra work, nor could there have mutual consent that the agreement be varied, since at all times the farmers intended and expected to pay no more than the agreed fixed price for any and all work done. Of course, Steve's analysis would be applicable in cases where negotiations were conducted under the shadow of a standard form contract which both parties intended to enter, since all of the standard form building contracts contain extras clauses. However, in those cases where the issue of extras is not dealt with at all in the precontractual negotiations and not included in a specially drawn up contract (either because it is too small for a stardard form, as was the case in Cotter, or because it is a case in which each issue is sought to be decided in advance but this issue is simply not considered), then a contract analysis based on what the parties actually agreed will not supply answer. In these circumsatance, a non-contractual might very well be appropriate, and that non-contractual quantum meruit could be directed to reversing an unjust enrichment. In which case, the analysis would follow along the lines sketched by Ewan McKendrick in his essay in Cornish et al eds Essays for Jones and discussed by me in my last email on the point. Finally, as to Gordon Goldberg's support of Steve's message, even though the Sale of Goods Act would not apply to building contract cases, the analogy is important if only because Chalmers was, to a very large extent, codifying a century's worth of common law, and many of the cases so codified contained principles which were not confined to the sale of goods context. The underlying common law principles could therefore be applicable to building contracts cases. However, even assuming that >the farmers could not take advantage of their own wrongful failure >to appoint an engineer by claiming that it constituted a frustration of >the agreement to pay for the extra work; and so they were regarded as >having repudiated the agreement and thus liable on a quantum meruit or in >damages - cf. s. 9(1) and (2). or that >the failure was a genuine frustration, which the parties chose >to ignore; and so the farmers were liable on a quantum meruit - cf. s.9(1) However, the issue between Steve and myself is not whether the farmers ought to have been liable on a quantum meruit (we both agree that the farmers ought to have been made liable to pay a reasonable price), but whether that quantum meruit is contractual (as Steve has it) or restitutionary (as I argue). Best from Dublin Eoin EOIN O'DELL Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland (353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m); eodell@tcd.ie (All opinions are personal. No legal responsibility whatsoever is accepted.) >From swh10@cus.cam.ac.uk Thu May 13 19:06:23 1999 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 10hzsF-0001VU-00 for restitution@maillist.ox.ac.uk; Thu, 13 May 1999 19:06:23 +0100 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 2.954 #1) id 10hzpo-0005Em-00 for restitution@maillist.ox.ac.uk; Thu, 13 May 1999 19:03:53 +0100 Message-Id: <3.0.1.32.19990513190342.007fb4f0@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, 13 May 1999 19:03:42 +0100 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: Variation clauses : How do we explain Cotter v Min of Ag ? In-Reply-To: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" I have often thought that enthusiasm for the more theoretical versions of "unjust enrichment" goes hand-in-hand with an overly simple view of what contract is, and how it works in commercial contexts. As it is, Cotter is a case where the parties signed a standard form contract, and the court held them to it. In its contractual aspects, the case is entirely straightforward. As I understand it, Eoin has two points which seem to him to discredit the reasoning, though not necessarily the result, of the case. Firstly, he says that the duty on the farmers to pay more than the flat rate for the work cannot be contractual, because the farmers made it clear throughout that they would pay no more than the flat rate. This can be answered in four words : the parol evidence rule. In the contractual negotiations, the farmers insisted that they would pay only a flat rate no matter what, but the contractor insisted that he could not take that risk, because of the unknowns as to how much rock had to be removed. In the end, the parties compromised by signing a standard form of Civil Engineering Contract, which was essentially a lump-sum arrangement but allowed for additional remuneration if the contractor encountered "physical conditions ... [which] could not reasonably have been foreseen". which is precisely what happened. That, it seems to me, is that. Eoin is very inventive with his arguments that the farmers are being hard done by if they are held to the form, but I don't see it. The farmers were advised by solicitors. There is no suggestion that anyone misled anyone else. It is nothing to the point that the farmers *orally* insisted on something different. Months of insistence on A, followed by signature to a document saying B, means that in law the parties agree to B, absent special circumstances. If loose talk of "the intentions of the parties" conceals this, then so much the worse for loose talk. As for whether we should feel sorry for the farmers, I don't know enough to say -- it is a complicated story. Eoin's second point is that the contract, in its literal terms, did not provide for payment of a reasonable sum, but said rather that "To the extent that the Engineer shall decide the ... physical conditions ... could not reasonably have been foreseen ... the Contractor shall ... be paid ... the reasonable cost of carrying out any additional work ... which would not otherwise have been done ... together with a reasonable percentage ... in respect of profit ... ". and so Eoin suggests that, no Engineer having been appointed, then either no sum is due, or if it is due then it cannot be contractual. But as I have already said, a clause of that sort has two aspects. First, that a reasonable sum must be paid. Second, that the procedure for claiming it is to appoint an Engineer and put a reasoned case to that Engineer. And the important point is that the second part is mere mechanism. If, as here, no Engineer is appointed, that does not mean that the claim is dead, but merely that another mechanism must be used. This is a common enough phenomenon in commercial law, in various contexts. Murphy J was not breaking new ground in building law. Gordon has given examples of the same technique being used in sale-of-goods law. And for an example in property law, see Sudbrook Estates v. Eggleton [1983] 1 AC 444, where an option over land provided for the appointment of valuers to assess the price. On Eoin's argument, failure to appoint valuers would have terminated the option. In fact, the Lords held that a contract to sell at a price set by valuers is in essence a contract to sell at a reasonable price -- and if necessary the court itself could set the price, with the help of expert evidence from valuers. I am therefore entirely unpersuaded that a non-contractual explanation of the case is called for. This avoids the need to consider the adequacy of Eoin's proposed solution. 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 lionel.smith@law.oxford.ac.uk Fri May 14 10:53:07 1999 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 10iEeR-00043p-00 for restitution@maillist.ox.ac.uk; Fri, 14 May 1999 10:53:07 +0100 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.10 #1) id 10iEc2-0002ok-00 for restitution@maillist.ox.ac.uk; Fri, 14 May 1999 10:50:38 +0100 Received: from fellow22.sthughs.ox.ac.uk ([163.1.228.82]) by sable.ox.ac.uk with esmtp (Exim 2.12 #1) id 10iEc1-0007qk-00 for restitution@maillist.ox.ac.uk; Fri, 14 May 1999 10:50:37 +0100 X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Fri, 14 May 1999 10:51:03 +0100 To: restitution@maillist.ox.ac.uk From: Lionel Smith Subject: Workshop on Estoppel Here is announcement which may be of interest. L. INTERNATIONAL WORKSHOP ON ESTOPPEL from 23rd to 25th August 1999 sponsored by International Islamic University Malaysia Universiti Kebangsaan Malaysia Universiti Malaya University of Hong Kong to be held at the Faculty of Law, Universiti Malaya Kuala Lumpur, Malaysia 1. The theme for the workshop will be ESTOPPEL, and the Malaysian decision, Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 where the Federal Court observed: The time has come for this court to recognize that the doctrine of estoppel is a flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been resorted to in varying fact patterns to achieve justice. Indeed the circumstances in which the doctrine may operate are endless. [at 344], will be used as the focus for papers and discussion. Suggested areas of law to be covered include: Contract Property Administrative Law Equity Trusts Tort Criminal Law Islamic Law Procedure. 2. Papers will be limited to 5 pages; and speeches to 15 minutes. This wil give time for iner-active discussion by those attending. 3. The title of the paper must be forwarded to the undersigned at the University of Hong Kong by 6th June 1999. This should include a precis -- of not more than 1/3rd page --- of the topic and the approach to be taken. 4. The paper is to be sent to the undersigned by 6th August 1999. 5. For those attending, without presenting a paper, there will be a small charge of RGTT 150 for the three days of the workshop. There will be no charge for academics. Judith Sihombing Faculty of Law University of Hong Kong HONG KOGN CHINA Tel: 852 2858 2955 Fax: 852 2559 3543 [off] 852 2817 6858 [home] e-mail: sihomb@hkucc.hku.hk >From lproksch@kroner.ecel.uwa.edu.au Sat May 15 07:30:42 1999 Received: from kroner.ecel.uwa.edu.au ([130.95.4.2]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10iXy4-0007bI-00 for restitution@maillist.ox.ac.uk; Sat, 15 May 1999 07:30:41 +0100 Received: from lproksch.dialup.ecel.uwa.edu.au (lproksch.dialup.ecel.uwa.edu.au [130.95.248.57]) by kroner.ecel.uwa.edu.au (8.8.8+Sun/8.8.8) with SMTP id OAA04600 for ; Sat, 15 May 1999 14:27:59 +0800 (WST) Message-Id: <3.0.5.16.19990515142016.390757de@mailhost.ecel.uwa.edu.au> X-Sender: lproksch@mailhost.ecel.uwa.edu.au X-Mailer: QUALCOMM Windows Eudora Light Version 3.0.5 (16) Date: Sat, 15 May 1999 14:20:16 To: restitution@maillist.ox.ac.uk From: Louis Proksch Subject: Variations Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Tang Hang Wu's "third question" (5/7/99) for me had a relatively simple (contractual) answer. The issue between the parties seems to be whether the work is covered by the contract price, or will attract extra payment. The parties agree the work must be done. They must also be agreeing that, if the umpire says the work is not covered by the contract price, the builder will be paid extra. So far, so Alex Axelrod and Steve Hedley (5/10/99). It would be different if the owner said 'Don't do the work until we get the umpire's decision' and the builder did it anyway. Like Gordon Goldberg, I haven't read Cotter. (Can someone give me a Web address?) What happened? Eoin O'Dell's first account (5/10/99) says there was no "effective variation of the contract to cover the extra work done". So I assume the plaintiff went ahead and did the work anyway, without discussing it with the farmers. If that were so, it would seem to me not quite enough to say that the plaintiff did the work on the basis that he was to be paid. He would have answered 'Yes' to the officious bystander's question 'Is the work to attract extra pay?' but (particularly having regard to Eoin's disclosure about the finite amount of money - 5/13/99) the farmers might have answered 'No, not until you give us a chance to go back to the Minister and negotiate for extra funds'. They may even have added 'That's why we haven't yet appointed an Engineer'. But if the plaintiff did go ahead, what then? If he can get himself 'into' the contract, he will be paid. Steve Hedley (5/13/99) says the contract did contain an additional remuneration clause, and because of the parol evidence rule the farmers cannot say otherwise. But if we are to say the farmers are liable under that clause, its machinery would have to be followed, or otherwise dispensed with. I personally think it just complicates things to say the contract would terminate for breach or furstration (pace Gordon Goldberg) so I would go for some theory that the condition must be regarded as dispensed with (Mackay v Dick) or that the court would supply the deficiency (Steven Hedley 5/13/99 citing Sudbrook Estates). I would probably go for the latter, because I think someone ought at least to apply their mind to whether the physical conditions encountered could not reasonable have been foreseen. Further, if there were no way of dispensing with the machinery, I think I would have to say that the farmers are not liable. There is a contractual way (the machinery) for making them liable, there is (by hypothesis) no reason for dispensing with the machinery, and there seems to me no reason for ignoring the contract in favour of a restitution solution (accord Eoin 5/10/99 referring to denial of a restitution remedy where the contract already covers the field). What if the work was just not contemplated by the contract at all? For us in Australia, the leading recent case is Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251. Murphy J in Cotter may have stumbled into restitution (Steve Hedley 5/10/99) but no-one could say that of Kirby P (as he then was). Priestley JA (Samuels JA agreeing) found a contractual solution, using estoppel as the means for overcoming the failure to follow the contract machinery. Tang Hang Wu may find use in his comments (272-274) on what is 'in' or 'out' of the contract (including the variation clause) and on the comments in both judgments on Liebe v Molloy (1906) 4 CLR 347. I would be very interested in what others have to say about Update. Accepting Steve Hedley's point (5/13/99) about the resources available in contract analysis, it seems to me that the more remote we become from what the parties acutally agreed, the more use we might have for a restutitionary analysis that cuts to the heart of the matter of why we want to do what we end up doing. The contract technigues may have developed to meet needs at a time when we didn't think restitution. Does it make a difference? Not in Update. Alex Axelrod suggests the work might not be completed. I would have thought the outcome might turn on how that came about - did the builder down tools, or the owner kick him off site, or the building burn down? We already have restitution explanations for what happens in contract (breach by builder, etc.) so it hardly likely to be different outside contract. There might be a statute which must be construed as precluding even a restitutionary claim for variations unless, for example, in writing (Sevastopoulos v Spanos [1991] 2 VR 194) but we would probably want to construe such a provision as applying to all variations to the work (contractual or not) as opposed to variations to the contract. The contract might provide for variations to be paid for at other than a reasonable rate, but that would be unusual, and unless the contract were very clear ('you will be paid half the reasonable cost') we might end up using the contract as evidence of what ought to be paid by way of restitution. >From lionel.smith@law.oxford.ac.uk Sat May 15 10:02:18 1999 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 10iaKo-0007nI-00 for restitution@maillist.ox.ac.uk; Sat, 15 May 1999 10:02:18 +0100 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.10 #1) id 10iaIO-0004Mp-00 for restitution@maillist.ox.ac.uk; Sat, 15 May 1999 09:59:48 +0100 Received: from max90.public.ox.ac.uk ([192.76.27.90]) by sable.ox.ac.uk with smtp (Exim 2.12 #1) id 10iaIK-0006yB-00 for restitution@maillist.ox.ac.uk; Sat, 15 May 1999 09:59:45 +0100 Subject: Date: Sat, 15 May 99 10:00:18 +0100 x-sender: lawf0014@sable.ox.ac.uk x-mailer: Claris Emailer 1.1 From: Lionel Smith To: Mime-Version: 1.0 Content-Type: text/plain; charset="US-ASCII" Message-Id: approved:eregion Date: Sat, 15 May 1999 14:20:16 To: restitution@maillist.ox.ac.uk From: Louis Proksch Subject: Variations Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Tang Hang Wu's "third question" (5/7/99) for me had a relatively simple (contractual) answer. The issue between the parties seems to be whether the work is covered by the contract price, or will attract extra payment. The parties agree the work must be done. They must also be agreeing that, if the umpire says the work is not covered by the contract price, the builder will be paid extra. So far, so Alex Axelrod and Steve Hedley (5/10/99). It would be different if the owner said 'Don't do the work until we get the umpire's decision' and the builder did it anyway. Like Gordon Goldberg, I haven't read Cotter. (Can someone give me a Web address?) What happened? Eoin O'Dell's first account (5/10/99) says there was no "effective variation of the contract to cover the extra work done". So I assume the plaintiff went ahead and did the work anyway, without discussing it with the farmers. If that were so, it would seem to me not quite enough to say that the plaintiff did the work on the basis that he was to be paid. He would have answered 'Yes' to the officious bystander's question 'Is the work to attract extra pay?' but (particularly having regard to Eoin's disclosure about the finite amount of money - 5/13/99) the farmers might have answered 'No, not until you give us a chance to go back to the Minister and negotiate for extra funds'. They may even have added 'That's why we haven't yet appointed an Engineer'. But if the plaintiff did go ahead, what then? If he can get himself 'into' the contract, he will be paid. Steve Hedley (5/13/99) says the contract did contain an additional remuneration clause, and because of the parol evidence rule the farmers cannot say otherwise. But if we are to say the farmers are liable under that clause, its machinery would have to be followed, or otherwise dispensed with. I personally think it just complicates things to say the contract would terminate for breach or furstration (pace Gordon Goldberg) so I would go for some theory that the condition must be regarded as dispensed with (Mackay v Dick) or that the court would supply the deficiency (Steven Hedley 5/13/99 citing Sudbrook Estates). I would probably go for the latter, because I think someone ought at least to apply their mind to whether the physical conditions encountered could not reasonable have been foreseen. Further, if there were no way of dispensing with the machinery, I think I would have to say that the farmers are not liable. There is a contractual way (the machinery) for making them liable, there is (by hypothesis) no reason for dispensing with the machinery, and there seems to me no reason for ignoring the contract in favour of a restitution solution (accord Eoin 5/10/99 referring to denial of a restitution remedy where the contract already covers the field). What if the work was just not contemplated by the contract at all? For us in Australia, the leading recent case is Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251. Murphy J in Cotter may have stumbled into restitution (Steve Hedley 5/10/99) but no-one could say that of Kirby P (as he then was). Priestley JA (Samuels JA agreeing) found a contractual solution, using estoppel as the means for overcoming the failure to follow the contract machinery. Tang Hang Wu may find use in his comments (272-274) on what is 'in' or 'out' of the contract (including the variation clause) and on the comments in both judgments on Liebe v Molloy (1906) 4 CLR 347. I would be very interested in what others have to say about Update. Accepting Steve Hedley's point (5/13/99) about the resources available in contract analysis, it seems to me that the more remote we become from what the parties acutally agreed, the more use we might have for a restutitionary analysis that cuts to the heart of the matter of why we want to do what we end up doing. The contract technigues may have developed to meet needs at a time when we didn't think restitution. Does it make a difference? Not in Update. Alex Axelrod suggests the work might not be completed. I would have thought the outcome might turn on how that came about - did the builder down tools, or the owner kick him off site, or the building burn down? We already have restitution explanations for what happens in contract (breach by builder, etc.) so it hardly likely to be different outside contract. There might be a statute which must be construed as precluding even a restitutionary claim for variations unless, for example, in writing (Sevastopoulos v Spanos [1991] 2 VR 194) but we would probably want to construe such a provision as applying to all variations to the work (contractual or not) as opposed to variations to the contract. The contract might provide for variations to be paid for at other than a reasonable rate, but that would be unusual, and unless the contract were very clear ('you will be paid half the reasonable cost') we might end up using the contract as evidence of what ought to be paid by way of restitution. >From swh10@cus.cam.ac.uk Sat May 15 12:47:33 1999 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 10icuj-00082c-00 for restitution@maillist.ox.ac.uk; Sat, 15 May 1999 12:47:33 +0100 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 3.00 #1) id 10icsI-0002BA-00 for restitution@maillist.ox.ac.uk; Sat, 15 May 1999 12:45:02 +0100 Message-Id: <3.0.1.32.19990515124450.007f88c0@pop.cus.cam.ac.uk> X-Sender: swh10@pop.cus.cam.ac.uk X-Mailer: Windows Eudora Light Version 3.0.1 (32) Date: Sat, 15 May 1999 12:44:50 +0100 To: restitution@maillist.ox.ac.uk From: Steve Hedley Subject: Variations: Cotter In-Reply-To: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" At 14:20 15/05/99, Louis Proksch wrote: >Like Gordon Goldberg, I haven't read Cotter. (Can someone give >me a Web address?) What happened? Murphy J's judgement is on the web at http://www.law.cam.ac.uk/restitution/restitution.htm Click on Cases; Ireland. I don't believe that the Supreme Court opinion is yet on the web, if anyone knows different, please say. The facts are exceedingly convoluted ! Given the way in which the argument is developing, I would say that the original positions taken up by both Eoin and me are wrong here, inasmuch as neither of us noticed the extra-remuneration clause until rather late into the discussion. In the light of that clause, it seems obvious enough on the facts that there can be no restitutionary claim here : either the procedure for making claims was i merely directory, as Murphy J thought and I think, in which case the remedy is contractual or ii it was mandatory, as Eoin thinks, in which case the court should give no remedy at all, contractual or restitutionary. If the parties have made provision for extra payments, it will not be subverted by restitutionary reasoning. The only way out of that, it seems to me, is if the amount of work needing to be done was so huge that it was in some sense uncontemplated *even though* the contract plainly made provision for *some* extra work. That is interesting, but not an argument that anyone seems to have made on the facts of Cotter. It would take very strong facts indeed, as the courts will be afraid of encouraging people to plead frustration merely because a project turns out to be more expensive than the parties originally thought -- which of course happens all the time. 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 Andrew.Dickinson@cliffordchance.com Tue May 18 20:36:21 1999 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 10jpf3-0004lE-00 for restitution@maillist.ox.ac.uk; Tue, 18 May 1999 20:36:21 +0100 Received: from lon-msg-200 ([10.54.2.78]) by dee.cliffordchance.com with ESMTP id <40337>; Tue, 18 May 1999 20:32:12 +0100 Received: from lon-msg-2.cliffordchance.com (unverified) by lon-msg-200 (Content Technologies SMTPRS 2.0.15) with ESMTP id for ; Tue, 18 May 1999 20:33:25 +0100 Received: by lon-msg-2.cliffordchance.com with Internet Mail Service (5.0.1460.8) id ; Tue, 18 May 1999 20:35:34 +0100 Message-Id: <77017288B941D2118B770000F6AA1BD1013066B2@LON-MSG-14> From: Andrew.Dickinson@cliffordchance.com To: restitution@maillist.ox.ac.uk Subject: Change of position Date: Tue, 18 May 1999 20:33:12 +0100 X-Mailer: Internet Mail Service (5.0.1460.8) Does anybody know of an English case in which the change of position defence has been successfully raised other than Lipkin Gorman itself? I am sure that I have forgotten perfectly good examples (leaving to one side cases such as Cheese -v- Thomas which do not reason in terms of change of position but may be so analysed) but the other cases in which I recall that the defence was raised (Westdeutsche, South Tyneside, Gray -v- Richards Butler and Omar -v- Omar) have all rejected its application. If my current understanding is correct (i.e. that there is no other case), can anybody explain the lack of development of the defence since its inception some 8 years ago? Many thanks Andrew *********************************************************************** 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 ToddPN2@cardiff.ac.uk Wed May 19 10:55:07 1999 Received: from crane.cf.ac.uk ([131.251.0.45]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10k347-0006he-00 for restitution@maillist.ox.ac.uk; Wed, 19 May 1999 10:55:07 +0100 Received: from PARKCF2S.CF.AC.UK by crane.cf.ac.uk with SMTP-LOC (PP); Wed, 19 May 1999 10:52:20 +0100 Received: from PARKCF2S/SpoolDir by PARKCF2S.CF.AC.UK (Mercury 1.43); 19 May 99 10:52:19 GMT0BST Received: from SpoolDir by PARKCF2S (Mercury 1.43); 19 May 99 10:51:57 GMT0BST From: MR PAUL N TODD To: Andrew.Dickinson@cliffordchance.com Date: Wed, 19 May 1999 10:51:56 GMT0BST Subject: Re: RDG: Change of position CC: restitution@maillist.ox.ac.uk X-Confirm-Reading-To: "MR PAUL N TODD" X-pmrqc: 1 Return-receipt-to: MR PAUL N TODD Priority: normal In-reply-to: <77017288B941D2118B770000F6AA1BD1013066B2@LON-MSG-14> X-mailer: Pegasus Mail for Windows (v2.54) Message-ID: <2CB99D94A0A@PARKCF2S.CF.AC.UK> Results of LEXIS search attached (citations and quick search from ENGGEN CASES - I have not yet had a chance to look at these cases): > From: Andrew.Dickinson@cliffordchance.com > To: restitution@maillist.ox.ac.uk > Subject: RDG: Change of position > Date: Tue, 18 May 1999 20:33:12 +0100 > Reply-to: Andrew.Dickinson@cliffordchance.com > Does anybody know of an English case in which the change of position defence > has been successfully raised other than Lipkin Gorman itself? I am sure > that I have forgotten perfectly good examples (leaving to one side cases > such as Cheese -v- Thomas which do not reason in terms of change of position > but may be so analysed) but the other cases in which I recall that the > defence was raised (Westdeutsche, South Tyneside, Gray -v- Richards Butler > and Omar -v- Omar) have all rejected its application. > > If my current understanding is correct (i.e. that there is no other case), > can anybody explain the lack of development of the defence since its > inception some 8 years ago? > > Many thanks > Andrew > --------------------- CHANGE OF POSITION DEFENCE The following word is not searchable in LEXIS: OF. Your search request has found 18 CASES through Level 1. To DISPLAY these CASES press either the KWIC, FULL, CITE or SEGMTS key. To MODIFY your search request, press the M key (for MODFY) and then the ENTER key. For further explanation, press the H key (for HELP) and then the ENTER key. LEVEL 1 - 18 CASES 1. ROYAL BANK OF SCOTLAND v ETRIDGE (No 2), Court of Appeal (Civil Division), [1998] 2 FLR 843, [1998] Fam Law 665, 31 July 1998 2. Royal Bank of Scotland v Etridge (No 2) and other appeals, COURT OF APPEAL (CIVIL DIVISION), [1998] 4 All ER 705, 31 July 1998 3. Portman Building Society v Hamlyn Taylor Neck, COURT OF APPEAL (CIVIL DIVISION), [1998] 2 EGLR 113, [1998] 4 All ER 202, [1998] 31 EG 102, 77 P & CR 66, 22 April 1998 4. AEM (AVON) LTD v BRISTOL CITY COUNCIL, QUEEN'S BENCH DIVISION (CROWN OFFICE LIST), [1998] RA 89, [1999] LGR 93, 23 February 1998 5. Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council COURT OF APPEAL (CIVIL DIVISION), [1998] QB 215, [1998] 2 All ER 272, [1998] 3 WLR 829, 96 LGR 735, 19 February 1998 6. Rochester Upon Medway City Council v Kent County Council, QUEEN'S BENCH DIVISION, 96 LGR 697, The Times 5 March 1998, 142 SJ LB 102, (Transcript: V Wason), 9 FEBRUARY 1998 7. Amoco (UK) Exploration Company and Others v Teeside Gas Transportation Limited, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), (Transcript), 21 JANUARY 1998 8. Lloyds Bank plc v Simpson, QUEEN'S BENCH DIVISION, (Transcript), 23 NOVEMBER 1996 9. Kleinwort Benson Ltd v Birmingham City Council, COURT OF APPEAL (CIVIL DIVISION), The Times 20 May 1996, (Transcript: Smith Bernal), 9 MAY 1996 10. Kleinwort Benson Ltd v Birmingham City Council, COURT OF APPEAL, (CIVIL DIVISION), [1996] 4 All ER 733, [1996] 3 WLR 1139, 95 LGR 539, 9 May 1996 11. National Provincial Building Society v Ahmed, COURT OF APPEAL (CIVIL DIVISION), [1995] 38 EG 138, [1995] 2 EGLR 127, 5 May 1995 12. BOSCAWEN v BAJWA; ABBEY NATIONAL PLC v BOSCAWEN, COURT OF APPEAL (CIVIL DIVISION), [1995] 4 All ER 769, [1996] 2 WLR 328, 70 P & CR 391, 10 April 1995 13. Standard Bank London Ltd v The Bank of Tokyo Ltd; Sudwestdeutsche Landesbank Girozentrale v The Bank of Tokyo Ltd and another, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), (Transcript), 13 March 1995 14. STANDARD BANK LONDON LTD v THE BANK OF TOKYO LTD SUDWESTDEUTSCHE LANDESBANK GIROZENTRALE v THE BANK OF TOKYO LTD AND STANDARD BANK LONDON LTD, QUEENS'S BENCH DIVISION (COMMERCIAL COURT), [1995] 2 Lloyd's Rep 169, 13 March 1995 15. South Tyneside Metropolitan Borough Council v Svenska International plc, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), [1995] 1 All ER 545, 9 December 1994 16. Westdeutsche Landesbank Girozentrale v Islington London Borough Council; Kleinwort Benson Ltd v Sandwell Borough Council, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), [1994] 4 All ER 890, 12 February 1993 17. Re Interest Rate Swaps Litigation, Queen's Bench Division, (Transcript:Beverley Nunnery), 10 June 1992 18. BARCLAYS BANK PLC v GLASGOW CITY COUNCIL; KLEINWORT BENSON LTD v SAME, QUEENS' BENCH DIVISION, [1993] QB 429, [1994] 4 All ER 865, [1992] 3 WLR 827, 27 February 1992 LEVEL 1 - 14 OF 18 CASES STANDARD BANK LONDON LTD v THE BANK OF TOKYO LTD SUDWESTDEUTSCHE LANDESBANK GIROZENTRALE v THE BANK OF TOKYO LTD AND STANDARD BANK LONDON LTD QUEENS'S BENCH DIVISION (COMMERCIAL COURT) [1995] 2 Lloyd's Rep 169 13 March 1995 JUDGMENT-1: ... changed their position in good faith. That would have posed the question as to what should be meant by the words "good faith". In Goff and Jones, The Law of Restitution (4th ed), the authors at p 745 say this in relation to the change of position defence: In English law it has been held that beneficiaries of a trust were deemed to acquiesce in a breach of trust when they knew all the facts but did not appreciate their legal significance. It does not follow that the beneficiaries acted in ... LEVEL 1 - 15 OF 18 CASES South Tyneside Metropolitan Borough Council v Svenska International plc QUEEN'S BENCH DIVISION (COMMERCIAL COURT) [1995] 1 All ER 545 9 December 1994 HEADNOTE: ... defence of change of position, but what it could not do was to rely on the supposed validity of the transaction either in support of a plea of estoppel or in support of a defence of change of position because the transaction was and always had been void. It followed that if the change of position defence asserted by the net payee involved reliance on the validity of an interest rate swap transaction which was in fact void, the result would not be that events before the receipt could be taken into account but that neither events before nor ... JUDGMENT-1: ... court for the bank here to argue its case as to the correct legal principles at first instance. [1995] 1 All ER 545 While this case is close to the borderline I have reached the conclusion that I should not hold that it is an abuse of the process for the bank to argue its change of position defence at first instance. The facts are not identical to those in the earlier cases and wide ranging arguments as to the scope of the defence of change of position have been fully deployed on both sides. It appears that the arguments have been much more extensive than they were on this aspect of the ... ... not available at all in this type of case. For the reasons which I have given I do not think that the net receiver is entitled to rely upon the validity of a transaction which is in fact void, so that if in such circumstances the change of position defence involved such reliance the result would not be that events before the receipt can be taken into account but that neither events before nor after it can be relied upon. As I understand it, Mr Mann submits if necessary that that is the case, ... ... I have reached also makes it unnecessary to reach a firm conclusion upon a further submission made by Mr Mann, namely that the bank would not in any event be entitled to rely upon a change of position defence here because from the very beginning it took the risk that the swap would or might be void. I think that he makes that submission both on the basis that banks always take [1995] 1 All ER 545 such risks and on the particular facts here because he says that the bank knew that there was such a risk when it entered into the swap ... LEVEL 1 - 16 OF 18 CASES Westdeutsche Landesbank Girozentrale v Islington London Borough Council; Kleinwort Benson Ltd v Sandwell Borough Council QUEEN'S BENCH DIVISION (COMMERCIAL COURT) [1994] 4 All ER 890 12 February 1993 JUDGMENT-1: ... payments made, until the claim has been certified by the district auditor. The relevant claims on the basis adopted by Mr Stenning were never certified by the district auditor and I will have to revert to this aspect when considering the change of position defence which has been raised by Islington. Mr Stenning gave evidence at the trial. He was not an impressive witness and certain aspects of his evidence were clearly unsatisfactory. He demonstrably misunderstood the correct accounting approach in relation to the treatment of the sums ... [1994] 4 All ER 890 ... L275m was made, this argument would have not provided any defence to a claim for its repayment. It is only because subsequent accounting years have come and gone that the factual basis of the defence arises. That is why I discuss this argument under the heading of the change of position defence. The second argument is that it would be unjust to expect the charge payers for the current year, 1992/3, or the council tax payers for the year 1993/4 to pay for a benefit which was received by the council ... LEVEL 1 - 17 OF 18 CASES Re Interest Rate Swaps Litigation Queen's Bench Division (Transcript:Beverley Nunnery) 10 June 1992 JUDGMENT-1: ... submitted) the decision on this key point will constitute by far the most useful guideline for the general body of non-lead cases. Warburgs v Birmingham centres on this key point (together with a change of position defence) , and, since both sides are volunteers, is self-selecting as the lead case in the first tier of group one (the restitution group). West Deutsche Landesbank v Islington and Kleinwort v Sandwell also raise the key ... LEVEL 1 - 18 OF 18 CASES BARCLAYS BANK PLC v GLASGOW CITY COUNCIL; KLEINWORT BENSON LTD v SAME QUEENS' BENCH DIVISION [1993] QB 429, [1994] 4 All ER 865, [1992] 3 WLR 827 27 February 1992 JUDGMENT-1: ... in individual cases, eg, on change of position, since individual local authorities dealt with the money received under swap transactions in several different ways, which are variously relied upon as furnishing a change of position defence. The same is likely to apply to the second group. Mr Beazley invites me to give a very broad interpretation to paragraph 12 of the Kalfelis [1988] ECR 5565 judgment and to say that all these swap actions fall broadly within the ... -------- http://www.cf.ac.uk/uwcc/claws/pntodd/index.html http://ourworld.compuserve.com/homepages/pntodd/ >From lionel.smith@law.oxford.ac.uk Wed May 19 15:02:15 1999 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 10k6vH-0008FC-00 for restitution@maillist.ox.ac.uk; Wed, 19 May 1999 15:02:15 +0100 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.10 #1) id 10k6sp-0005Ck-00 for restitution@maillist.ox.ac.uk; Wed, 19 May 1999 14:59:43 +0100 Received: from fellow22.sthughs.ox.ac.uk ([163.1.228.82]) by sable.ox.ac.uk with esmtp (Exim 2.12 #1) id 10k6so-0001Ad-00 for restitution@maillist.ox.ac.uk; Wed, 19 May 1999 14:59:42 +0100 X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Wed, 19 May 1999 15:00:08 +0100 To: restitution@maillist.ox.ac.uk From: Lionel Smith approved:eregion From: MR PAUL N TODD Date: Wed, 19 May 1999 10:51:56 GMT0BST Subject: Re: RDG: Change of position Results of LEXIS search attached (citations and quick search from ENGGEN CASES - I have not yet had a chance to look at these cases): > From: Andrew.Dickinson@cliffordchance.com > To: restitution@maillist.ox.ac.uk > Subject: RDG: Change of position > Date: Tue, 18 May 1999 20:33:12 +0100 > Reply-to: Andrew.Dickinson@cliffordchance.com > Does anybody know of an English case in which the change of position defence > has been successfully raised other than Lipkin Gorman itself? I am sure > that I have forgotten perfectly good examples (leaving to one side cases > such as Cheese -v- Thomas which do not reason in terms of change of position > but may be so analysed) but the other cases in which I recall that the > defence was raised (Westdeutsche, South Tyneside, Gray -v- Richards Butler > and Omar -v- Omar) have all rejected its application. > > If my current understanding is correct (i.e. that there is no other case), > can anybody explain the lack of development of the defence since its > inception some 8 years ago? > > Many thanks > Andrew > --------------------- CHANGE OF POSITION DEFENCE The following word is not searchable in LEXIS: OF. Your search request has found 18 CASES through Level 1. To DISPLAY these CASES press either the KWIC, FULL, CITE or SEGMTS key. To MODIFY your search request, press the M key (for MODFY) and then the ENTER key. For further explanation, press the H key (for HELP) and then the ENTER key. LEVEL 1 - 18 CASES 1. ROYAL BANK OF SCOTLAND v ETRIDGE (No 2), Court of Appeal (Civil Division), [1998] 2 FLR 843, [1998] Fam Law 665, 31 July 1998 2. Royal Bank of Scotland v Etridge (No 2) and other appeals, COURT OF APPEAL (CIVIL DIVISION), [1998] 4 All ER 705, 31 July 1998 3. Portman Building Society v Hamlyn Taylor Neck, COURT OF APPEAL (CIVIL DIVISION), [1998] 2 EGLR 113, [1998] 4 All ER 202, [1998] 31 EG 102, 77 P & CR 66, 22 April 1998 4. AEM (AVON) LTD v BRISTOL CITY COUNCIL, QUEEN'S BENCH DIVISION (CROWN OFFICE LIST), [1998] RA 89, [1999] LGR 93, 23 February 1998 5. Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council COURT OF APPEAL (CIVIL DIVISION), [1998] QB 215, [1998] 2 All ER 272, [1998] 3 WLR 829, 96 LGR 735, 19 February 1998 6. Rochester Upon Medway City Council v Kent County Council, QUEEN'S BENCH DIVISION, 96 LGR 697, The Times 5 March 1998, 142 SJ LB 102, (Transcript: V Wason), 9 FEBRUARY 1998 7. Amoco (UK) Exploration Company and Others v Teeside Gas Transportation Limited, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), (Transcript), 21 JANUARY 1998 8. Lloyds Bank plc v Simpson, QUEEN'S BENCH DIVISION, (Transcript), 23 NOVEMBER 1996 9. Kleinwort Benson Ltd v Birmingham City Council, COURT OF APPEAL (CIVIL DIVISION), The Times 20 May 1996, (Transcript: Smith Bernal), 9 MAY 1996 10. Kleinwort Benson Ltd v Birmingham City Council, COURT OF APPEAL, (CIVIL DIVISION), [1996] 4 All ER 733, [1996] 3 WLR 1139, 95 LGR 539, 9 May 1996 11. National Provincial Building Society v Ahmed, COURT OF APPEAL (CIVIL DIVISION), [1995] 38 EG 138, [1995] 2 EGLR 127, 5 May 1995 12. BOSCAWEN v BAJWA; ABBEY NATIONAL PLC v BOSCAWEN, COURT OF APPEAL (CIVIL DIVISION), [1995] 4 All ER 769, [1996] 2 WLR 328, 70 P & CR 391, 10 April 1995 13. Standard Bank London Ltd v The Bank of Tokyo Ltd; Sudwestdeutsche Landesbank Girozentrale v The Bank of Tokyo Ltd and another, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), (Transcript), 13 March 1995 14. STANDARD BANK LONDON LTD v THE BANK OF TOKYO LTD SUDWESTDEUTSCHE LANDESBANK GIROZENTRALE v THE BANK OF TOKYO LTD AND STANDARD BANK LONDON LTD, QUEENS'S BENCH DIVISION (COMMERCIAL COURT), [1995] 2 Lloyd's Rep 169, 13 March 1995 15. South Tyneside Metropolitan Borough Council v Svenska International plc, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), [1995] 1 All ER 545, 9 December 1994 16. Westdeutsche Landesbank Girozentrale v Islington London Borough Council; Kleinwort Benson Ltd v Sandwell Borough Council, QUEEN'S BENCH DIVISION (COMMERCIAL COURT), [1994] 4 All ER 890, 12 February 1993 17. Re Interest Rate Swaps Litigation, Queen's Bench Division, (Transcript:Beverley Nunnery), 10 June 1992 18. BARCLAYS BANK PLC v GLASGOW CITY COUNCIL; KLEINWORT BENSON LTD v SAME, QUEENS' BENCH DIVISION, [1993] QB 429, [1994] 4 All ER 865, [1992] 3 WLR 827, 27 February 1992 LEVEL 1 - 14 OF 18 CASES STANDARD BANK LONDON LTD v THE BANK OF TOKYO LTD SUDWESTDEUTSCHE LANDESBANK GIROZENTRALE v THE BANK OF TOKYO LTD AND STANDARD BANK LONDON LTD QUEENS'S BENCH DIVISION (COMMERCIAL COURT) [1995] 2 Lloyd's Rep 169 13 March 1995 JUDGMENT-1: ... changed their position in good faith. That would have posed the question as to what should be meant by the words "good faith". In Goff and Jones, The Law of Restitution (4th ed), the authors at p 745 say this in relation to the change of position defence: In English law it has been held that beneficiaries of a trust were deemed to acquiesce in a breach of trust when they knew all the facts but did not appreciate their legal significance. It does not follow that the beneficiaries acted in ... LEVEL 1 - 15 OF 18 CASES South Tyneside Metropolitan Borough Council v Svenska International plc QUEEN'S BENCH DIVISION (COMMERCIAL COURT) [1995] 1 All ER 545 9 December 1994 HEADNOTE: ... defence of change of position, but what it could not do was to rely on the supposed validity of the transaction either in support of a plea of estoppel or in support of a defence of change of position because the transaction was and always had been void. It followed that if the change of position defence asserted by the net payee involved reliance on the validity of an interest rate swap transaction which was in fact void, the result would not be that events before the receipt could be taken into account but that neither events before nor ... JUDGMENT-1: ... court for the bank here to argue its case as to the correct legal principles at first instance. [1995] 1 All ER 545 While this case is close to the borderline I have reached the conclusion that I should not hold that it is an abuse of the process for the bank to argue its change of position defence at first instance. The facts are not identical to those in the earlier cases and wide ranging arguments as to the scope of the defence of change of position have been fully deployed on both sides. It appears that the arguments have been much more extensive than they were on this aspect of the ... ... not available at all in this type of case. For the reasons which I have given I do not think that the net receiver is entitled to rely upon the validity of a transaction which is in fact void, so that if in such circumstances the change of position defence involved such reliance the result would not be that events before the receipt can be taken into account but that neither events before nor after it can be relied upon. As I understand it, Mr Mann submits if necessary that that is the case, ... ... I have reached also makes it unnecessary to reach a firm conclusion upon a further submission made by Mr Mann, namely that the bank would not in any event be entitled to rely upon a change of position defence here because from the very beginning it took the risk that the swap would or might be void. I think that he makes that submission both on the basis that banks always take [1995] 1 All ER 545 such risks and on the particular facts here because he says that the bank knew that there was such a risk when it entered into the swap ... LEVEL 1 - 16 OF 18 CASES Westdeutsche Landesbank Girozentrale v Islington London Borough Council; Kleinwort Benson Ltd v Sandwell Borough Council QUEEN'S BENCH DIVISION (COMMERCIAL COURT) [1994] 4 All ER 890 12 February 1993 JUDGMENT-1: ... payments made, until the claim has been certified by the district auditor. The relevant claims on the basis adopted by Mr Stenning were never certified by the district auditor and I will have to revert to this aspect when considering the change of position defence which has been raised by Islington. Mr Stenning gave evidence at the trial. He was not an impressive witness and certain aspects of his evidence were clearly unsatisfactory. He demonstrably misunderstood the correct accounting approach in relation to the treatment of the sums ... [1994] 4 All ER 890 ... L275m was made, this argument would have not provided any defence to a claim for its repayment. It is only because subsequent accounting years have come and gone that the factual basis of the defence arises. That is why I discuss this argument under the heading of the change of position defence. The second argument is that it would be unjust to expect the charge payers for the current year, 1992/3, or the council tax payers for the year 1993/4 to pay for a benefit which was received by the council ... LEVEL 1 - 17 OF 18 CASES Re Interest Rate Swaps Litigation Queen's Bench Division (Transcript:Beverley Nunnery) 10 June 1992 JUDGMENT-1: ... submitted) the decision on this key point will constitute by far the most useful guideline for the general body of non-lead cases. Warburgs v Birmingham centres on this key point (together with a change of position defence) , and, since both sides are volunteers, is self-selecting as the lead case in the first tier of group one (the restitution group). West Deutsche Landesbank v Islington and Kleinwort v Sandwell also raise the key ... LEVEL 1 - 18 OF 18 CASES BARCLAYS BANK PLC v GLASGOW CITY COUNCIL; KLEINWORT BENSON LTD v SAME QUEENS' BENCH DIVISION [1993] QB 429, [1994] 4 All ER 865, [1992] 3 WLR 827 27 February 1992 JUDGMENT-1: ... in individual cases, eg, on change of position, since individual local authorities dealt with the money received under swap transactions in several different ways, which are variously relied upon as furnishing a change of position defence. The same is likely to apply to the second group. Mr Beazley invites me to give a very broad interpretation to paragraph 12 of the Kalfelis [1988] ECR 5565 judgment and to say that all these swap actions fall broadly within the ... -------- http://www.cf.ac.uk/uwcc/claws/pntodd/index.html http://ourworld.compuserve.com/homepages/pntodd/ >From lionel.smith@law.oxford.ac.uk Thu May 20 11:05:48 1999 Received: from oxmail2.ox.ac.uk ([163.1.2.1] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10kPi0-00040U-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 11:05:48 +0100 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.10 #1) id 10kPfX-00076G-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 11:03:15 +0100 Received: from fellow22.sthughs.ox.ac.uk ([163.1.228.82]) by sable.ox.ac.uk with esmtp (Exim 2.12 #1) id 10kPfW-0005P1-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 11:03:14 +0100 X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Date: Thu, 20 May 1999 11:03:40 +0100 To: restitution@maillist.ox.ac.uk From: Lionel Smith Subject: Illegality I am not sure whether it has been mentioned on the RDG that the Law Commission (England & Wales) published its Consultation Paper No 154, "Illegal Transactions: The Effect of Illegality on Contracts and Trusts" in January. You can download it from the Commission's site, at , or order the hard copy from the Stationery Office . Although it was apparently published last year, I have just seen announced Nelson Enonchong's book, "Illegal Transactions," from Lloyd's of London Press , ISBN 1-85978-874-2, carrying the rather imposing price tag of =A3100/US$170. Lionel >From scott.dickson@ed.ac.uk Thu May 20 23:44:06 1999 Received: from haymarket.ed.ac.uk ([129.215.128.53]) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10kbXq-0007aO-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 23:44:06 +0100 Received: from [129.215.38.69] (dialup-69.publab.ed.ac.uk [129.215.38.69]) by haymarket.ed.ac.uk (8.8.7/8.8.7) with ESMTP id XAA03089 for ; Thu, 20 May 1999 23:44:24 +0100 (BST) X-Sender: sfd@holyrood.ed.ac.uk Message-Id: In-Reply-To: <77017288B941D2118B770000F6AA1BD1013066B2@LON-MSG-14> Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Thu, 20 May 1999 23:45:02 +0100 To: restitution@maillist.ox.ac.uk From: Scott F Dickson Subject: Change of position This is a follow up to the mailings from Andrew Dickinson and Paul Todd. My Lexis research produced 44 cases from 1971 to 1999 in which change of position was discussed (my search term, in ALLCAS, was <"change of position" and enrichment>). Of those, a large number are the cases we would expect to see (Kleinwort Benson, Goss v Chilcott, Westdeutsche, Svenska, South Tyneside, Lipkin Gorman, Barclays v W J Simms). There are some others which are interesting and which do not appear in Paul Todd's list. One of those is Euroactividade AG v Moeller and others, CA, 1 February 1995 (unreported). The first and second defendants were Mr and Mrs Moeller, both of whom were directors of the Liechtenstein-registered plaintiff company (the main business of the company was developing golf courses around the world). The claim against the first defendant (Mr Moeller) was for misappropriation of company funds. There were allegations that funds of the company had been transferred to a joint bank account no 968 held by the first defendant and second defendant (Mrs Moeller). It appears that the claim against the second defendant was mainly one for money had and received (based on the fact that she was the joint holder of the bank account). Summary judgment for recovery of the money was given in favour of the plaintiffs by Jacob J; various grounds of appeal were made out before the Court of Appeal. The second defendant raised a change of position defence. It appears that there had been a number of payments made from account 968 back to the company. The explanation given was that the payments to and from account 968 were part of a scheme to minimise the company's tax liability. An incidental argument was raised to the effect that the payments back should be deducted from the amount of the judgment given by the court in favour of the plaintiffs. The position of the judge at first instance, supported by Simon Brown LJ, was that the payments back should not be accounted for in the instant claim. Instead, the defendants should seek to recover them in a separate action, based on the *flexible doctrine of unjust enrichment ... such a cause of action is available whenever payments are made without consideration, there being no intention to make a gift* (no comment! I think this is arguably obiter). The argument for the second defendant was that the payments back could in any case be the basis for a change of position defence. The payments were made out of the joint account by the first defendant. The Court of Appeal seems to have accepted that *the second defendant's husband changed her [the second defendant's] position by making payment to the plaintiffs of substantial sums that had initially been paid into account 968*. Simon Brown LJ continues: *Let me for present purposes assume that to be a sufficient change of position in law to satisfy that aspect of the matter*. The practical difficulty for the second defendant was the absence of evidence of good faith on her part. On that basis the defence was rejected. The analysis of the Court of Appeal is interesting. There are two points. First, the Court of Appeal sees the defence as having two distinct elements - the (factual) change of position, and the element of good faith. The question perhaps remains as to whether the requirement of good faith relates to the initial receipt or the change of position. Distinguishing between them may be difficult. The second point is that the Court of Appeal appears to recognise constructive change of position, or perhaps change of position by proxy (that D2's position may be changed by the actings of D1 operating on the joint bank account). Other interesting cases are: Lloyds Bank v Independent Insurance, CA, [1999] 2 WLR 986 Lloyds Bank v Simpson, QBD, 23 November 1996 (unreported) Friend's Provident v Hillier Parker, CA, [1995] 4 All ER 260 Home Office v Ayres, EAT, [1992] ICR 175, [1992] IRLR 59 The last case is quite an interesting and novel one (or at least appears to be from a cursory reading of the Kwic print from Lexis). In the course of the decision of the appeal tribunal it is noted that *I fear that the mistaken assumption that mere expenditure of money may be regarded as amounting to a change of position for present purposes has led in the past to opposition by some to recognition of a defence which in fact is likely to be available only on comparatively rare occasions*. This leads nicely to Andrew's question about the lack of development of the defence. There may be a number of reasons for the paucity of authority, none of which may be particularly satisfying. The requirement of good faith may be, quite correctly, the main problem for defendants. If the defendant's receipt is tainted by bad faith (or lack of good faith, which may relate to the quality of the knowledge possessed by the defendant relating to the receipt), that element of bad faith may colour the subsequent change of position. I suspect that the advice given to the majority of defendants in that position is that the defence is not worth running. The simple question may be: did you reasonably believe that you were entitled to the payment received? This may admittedly be easier to answer in the affirmative in relation to claims based on plaintiff-sided unjust factors (where the conduct or knowledge of the defendant is not so much in focus). The other reason why the defence may be difficult to establish is that plaintiffs may be much quicker these days in putting potential defendants on notice that the transfer (and therefore the enrichment) will be subject to challenge. This may not give the defendant time to change their position. As I have noted, these may not be wholly satisfying reasons. I am also bound to note that the old Scots case of Credit Lyonnais v George Stevenson & Co Ltd, 1901, 9 SLT 93, provides authority for the existence of the defence (although there was no detailed exposition of it there). Scott Solicitor, Glasgow Office tel: 0141 248 2484 Personal fax: 07977 435616 scott.dickson@ed.ac.uk >From lionel.smith@law.oxford.ac.uk Thu May 20 23:56:36 1999 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 10kbjw-0007cg-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 23:56:36 +0100 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.10 #1) id 10kbkG-0002EQ-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 23:56:56 +0100 Received: from max20.public.ox.ac.uk ([192.76.27.20]) by sable.ox.ac.uk with smtp (Exim 2.12 #1) id 10kbkC-00047O-00 for restitution@maillist.ox.ac.uk; Thu, 20 May 1999 23:56:53 +0100 Subject: Date: Thu, 20 May 99 23:57:35 +0100 x-sender: lawf0014@sable.ox.ac.uk x-mailer: Claris Emailer 1.1 From: Lionel Smith To: Mime-Version: 1.0 Content-Type: text/plain; charset="US-ASCII" Message-Id: approved:eregion Date: Thu, 20 May 1999 23:45:02 +0100 To: restitution@maillist.ox.ac.uk From: Scott F Dickson Subject: Change of position This is a follow up to the mailings from Andrew Dickinson and Paul Todd. My Lexis research produced 44 cases from 1971 to 1999 in which change of position was discussed (my search term, in ALLCAS, was <"change of position" and enrichment>). Of those, a large number are the cases we would expect to see (Kleinwort Benson, Goss v Chilcott, Westdeutsche, Svenska, South Tyneside, Lipkin Gorman, Barclays v W J Simms). There are some others which are interesting and which do not appear in Paul Todd's list. One of those is Euroactividade AG v Moeller and others, CA, 1 February 1995 (unreported). The first and second defendants were Mr and Mrs Moeller, both of whom were directors of the Liechtenstein-registered plaintiff company (the main business of the company was developing golf courses around the world). The claim against the first defendant (Mr Moeller) was for misappropriation of company funds. There were allegations that funds of the company had been transferred to a joint bank account no 968 held by the first defendant and second defendant (Mrs Moeller). It appears that the claim against the second defendant was mainly one for money had and received (based on the fact that she was the joint holder of the bank account). Summary judgment for recovery of the money was given in favour of the plaintiffs by Jacob J; various grounds of appeal were made out before the Court of Appeal. The second defendant raised a change of position defence. It appears that there had been a number of payments made from account 968 back to the company. The explanation given was that the payments to and from account 968 were part of a scheme to minimise the company's tax liability. An incidental argument was raised to the effect that the payments back should be deducted from the amount of the judgment given by the court in favour of the plaintiffs. The position of the judge at first instance, supported by Simon Brown LJ, was that the payments back should not be accounted for in the instant claim. Instead, the defendants should seek to recover them in a separate action, based on the *flexible doctrine of unjust enrichment ... such a cause of action is available whenever payments are made without consideration, there being no intention to make a gift* (no comment! I think this is arguably obiter). The argument for the second defendant was that the payments back could in any case be the basis for a change of position defence. The payments were made out of the joint account by the first defendant. The Court of Appeal seems to have accepted that *the second defendant's husband changed her [the second defendant's] position by making payment to the plaintiffs of substantial sums that had initially been paid into account 968*. Simon Brown LJ continues: *Let me for present purposes assume that to be a sufficient change of position in law to satisfy that aspect of the matter*. The practical difficulty for the second defendant was the absence of evidence of good faith on her part. On that basis the defence was rejected. The analysis of the Court of Appeal is interesting. There are two points. First, the Court of Appeal sees the defence as having two distinct elements - the (factual) change of position, and the element of good faith. The question perhaps remains as to whether the requirement of good faith relates to the initial receipt or the change of position. Distinguishing between them may be difficult. The second point is that the Court of Appeal appears to recognise constructive change of position, or perhaps change of position by proxy (that D2's position may be changed by the actings of D1 operating on the joint bank account). Other interesting cases are: Lloyds Bank v Independent Insurance, CA, [1999] 2 WLR 986 Lloyds Bank v Simpson, QBD, 23 November 1996 (unreported) Friend's Provident v Hillier Parker, CA, [1995] 4 All ER 260 Home Office v Ayres, EAT, [1992] ICR 175, [1992] IRLR 59 The last case is quite an interesting and novel one (or at least appears to be from a cursory reading of the Kwic print from Lexis). In the course of the decision of the appeal tribunal it is noted that *I fear that the mistaken assumption that mere expenditure of money may be regarded as amounting to a change of position for present purposes has led in the past to opposition by some to recognition of a defence which in fact is likely to be available only on comparatively rare occasions*. This leads nicely to Andrew's question about the lack of development of the defence. There may be a number of reasons for the paucity of authority, none of which may be particularly satisfying. The requirement of good faith may be, quite correctly, the main problem for defendants. If the defendant's receipt is tainted by bad faith (or lack of good faith, which may relate to the quality of the knowledge possessed by the defendant relating to the receipt), that element of bad faith may colour the subsequent change of position. I suspect that the advice given to the majority of defendants in that position is that the defence is not worth running. The simple question may be: did you reasonably believe that you were entitled to the payment received? This may admittedly be easier to answer in the affirmative in relation to claims based on plaintiff-sided unjust factors (where the conduct or knowledge of the defendant is not so much in focus). The other reason why the defence may be difficult to establish is that plaintiffs may be much quicker these days in putting potential defendants on notice that the transfer (and therefore the enrichment) will be subject to challenge. This may not give the defendant time to change their position. As I have noted, these may not be wholly satisfying reasons. I am also bound to note that the old Scots case of Credit Lyonnais v George Stevenson & Co Ltd, 1901, 9 SLT 93, provides authority for the existence of the defence (although there was no detailed exposition of it there). Scott Solicitor, Glasgow Office tel: 0141 248 2484 Personal fax: 07977 435616 scott.dickson@ed.ac.uk >From lionel.smith@law.oxford.ac.uk Fri May 21 09:38:31 1999 Received: from oxmail2.ox.ac.uk ([163.1.2.1] helo=oxmail.ox.ac.uk) by bagpuss.oucs.ox.ac.uk with esmtp (Exim 2.02 #2) id 10kkp5-0008Od-00 for restitution@maillist.ox.ac.uk; Fri, 21 May 1999 09:38:31 +0100 Received: from sable.ox.ac.uk ([163.1.2.4]) by oxmail.ox.ac.uk with esmtp (Exim 2.10 #1) id 10kkpP-0004F6-00 for restitution@maillist.ox.ac.uk; Fri, 21 May 1999 09:38:51 +0100 Received: from fellow22.sthughs.ox.ac.uk ([163.1.228.82]) by sable.ox.ac.uk with esmtp (Exim 2.12 #1) id 10kkpP-0005Wc-00 for restitution@maillist.ox.ac.uk; Fri, 21 May 1999 09:38:51 +0100 X-Sender: lawf0014@sable.ox.ac.uk Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Fri, 21 May 1999 09:39:14 +0100 To: restitution@maillist.ox.ac.uk From: Lionel Smith Subject: Legal Studies In the new Legal Studies (1999) 19 Part 1, a review by David Oughton of A. Burrows, Understanding the Law of Obligations. L