Mason & Carter's Restitution law in Australia [Third edition.] 9780409341621, 0409341622, 9780409341638, 0409341630

Citation preview

Mason & Carter’s

Restitution Law in Australia Third Edition __________________________________________

Keith Mason AC, QC BA, LLB (Syd), LLM (London) Formerly President, New South Wales Court of Appeal

J W Carter FAAL BA, LLB (Syd), Ph D (Cantab) Emeritus Professor of Law, University of Sydney General Editor, Journal of Contract Law Consultant, Herbert Smith Freehills

G J Tolhurst DipLaw SAB, LLM (Syd), Ph D (NSW) Professor of Commercial Law, University of Sydney Consultant, Herbert Smith Freehills

LexisNexis Butterworths

Australia 2016

AUSTRALIA

ARGENTINA AUSTRIA BRAZIL CANADA CHILE CHINA CZECH REPUBLIC FRANCE GERMANY HONG KONG HUNGARY INDIA ITALY JAPAN KOREA MALAYSIA NEW ZEALAND POLAND SINGAPORE SOUTH AFRICA SWITZERLAND TAIWAN UNITED KINGDOM USA

LexisNexis LexisNexis Butterworths 475–495 Victoria Avenue, CHATSWOOD NSW 2067 On the internet at: www.lexisnexis.com.au LexisNexis Argentina, BUENOS AIRES LexisNexis Verlag ARD Orac GmbH & Co KG, VIENNA LexisNexis Latin America, SAO PAULO LexisNexis Canada, Markham, ONTARIO LexisNexis Chile, SANTIAGO LexisNexis China, BEIJING, SHANGHAI Nakladatelství Orac sro, PRAGUE LexisNexis SA, PARIS LexisNexis Germany, FRANKFURT LexisNexis Hong Kong, HONG KONG HVG-Orac, BUDAPEST LexisNexis, NEW DELHI Dott A Giuffrè Editore SpA, MILAN LexisNexis Japan KK, TOKYO LexisNexis, SEOUL Malayan Law Journal Sdn Bhd, PETALING JAYA, SELANGOR LexisNexis, WELLINGTON Wydawnictwo Prawnicze LexisNexis, WARSAW LexisNexis, SINGAPORE LexisNexis Butterworths, DURBAN Staempfli Verlag AG, BERNE LexisNexis, TAIWAN LexisNexis UK, LONDON, EDINBURGH LexisNexis Group, New York, NEW YORK LexisNexis, Miamisburg, OHIO

National Library of Australia Cataloguing-in-Publication entry Author: Title: Edition: ISBN:

Notes: Subjects: Other Authors/Contributors: Dewey Number:

Mason, Keith. Mason & Carter’s Restitution Law in Australia. Third edition. 9780409341638 (hbk). 9780409341621 (pbk). 9780409343601 (ebk). Includes index. Restitution — Australia. Carter, J.W. (John W.); Tolhurst, Greg. 346.94029

© 2016 Reed International Books Australia Pty Limited trading as LexisNexis First edition 1995 (reprinted 1998), Second edition 2008. This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Plantin. Printed in China. Visit LexisNexis Butterworths at www.lexisnexis.com.au

Preface In its specifics, the Australian law of restitution has changed little since our second edition, published in 2008. But many recent cases and some statutory developments have been captured in this new edition. Chapter 3 (Want of Title) has been substantially and Chapter 24 (Change of Position) has been completely rewritten, in each instance reflecting both developments in the law and further consideration on our part. Our survey of the landscape remains as stated in the Preface to the previous edition and the revised opening two chapters of this edition. Sadly, the High Court continues to offer inconsistent and prevaricating guidance about the structure of the subject. We can happily record that none of the ground-breaking decisions of the Mason High Court have been overruled. But it is frustrating to see in the recent past the selective citation of particular passages from those decisions, sometimes out of context. More recently, the Court’s taxonomical guidance has switched back and forth with little or no acknowledgement of its earlier, even recent, precedents and a reluctance to engage with the jurisprudence of other leading common law jurisdictions. Since the 1980s, virtually no role has been seen for unjust enrichment in the exposition of any traditional ‘equitable principles’. Indeed, one reading of an extraordinary passage in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at [78] consigns the unjust enrichment concept to the waste-bin of history (in a traditional mistaken payment context!). In return, ‘equitable principles’ (as an amorphous undefined mass) are offered as the touchstone of ‘restitution’ as a whole. Then, as if nothing had happened, the Court reindorsed the unjust enrichment concept in Lavin v Toppi (2015) 254 CLR 459 (in the context of equitable contribution). We have grappled with these contortions, especially in para [123] of this work.

The authors thank Helen Saunders and Derek Wong for their research. Philippa Findlay did an excellent job in preparing the proofs, and our friends at LexisNexis, especially Eleanor O’Connor and Jennifer Burrows, have provided outstanding editorial support. This edition is based on the materials available to us on 1 January 2016. K Mason, J W Carter, G J Tolhurst Sydney March 2016

Preface to the Second Edition Restitution is one of the law’s few remaining commons, largely untouched by statute. Fifty years ago it was a wilderness, an apparent ‘miscellany of disparate categories’, through which litigant, judge and student trudged holding a compass marked ‘implied contract’ at its four points. English scholars, most notably Goff and Jones and later Birks, probably the greatest academic of the common law world in the twentieth century, re-examined the cases using a working hypothesis drawn from the American Restatement. They also looked beyond quasicontract and found much of interest in swathes of a parallel universe called Equity. The concept of unjust enrichment by the defendant at the plaintiff’s expense was a deduction they derived from the specific cases. Later scholarship was to unearth an English sighting of this theme in an 1803 summary of the decisions of Lord Mansfield (see [134]). Until shortly before his untimely death in 2004, Birks advocated unjust enrichment as the framework for explaining a messy past and guiding a future that would be marked by transparent analytical reasoning and receptiveness to comparative law. Very late in his life, he proposed a wider notion of failure of basis, derived from Roman and civil law. The concept of unjust enrichment was warmly received in Australia in 1987 by a High Court that assumed the vanguard in an era when the highest appellate courts across the common law world listened eagerly to each other’s views; and showed willingness to explain and develop doctrines and remedies by reference, among other things, to deduced but contestable theories. There was also readiness to explore the principled fusion of legal and equitable doctrines where they operated discordantly in the same sphere. Recent House of Lords decisions reflect this continuing spirit in the United Kingdom. The landscape of the modern Australian law of restitution is more complex. The unjust enrichment concept retains formal endorsement

as a framing tool for many areas, notably claims based on mistake, compulsion and arising out of ineffective contracts. But in these fields, a tight body of modern precedent means that the underlying theories will seldom resurface for discussion, let alone export. Unjust enrichment is a large topic worthy of exposition in its own right, so long as it is used as a concept and not a definitive legal principle according to its own terms and so long as calls for its universal hegemony over restitution are resisted. Unjust enrichment is only one of the bases for restitution. The topic of restitution that we address includes doctrines responding to additional policies, as well as gainbased remedies appurtenant to wrongs with their juridical source outside unjust enrichment. This now widely accepted post-1987 doctrinal adjustment explains some of the opposition to overblown advocacy for unjust enrichment and the caution that has descended upon judicial and academic discussion of the taxonomy of restitution in this country since the first edition of this book was published in 1995. But it does not explain the continuing hostility from the High Court to inductive (branded as ‘top-down’) reasoning in this area of the law. A balanced combination of both deductive and inductive reasoning is embedded in the common law: analogies uninformed by theory would be chaotic. The processes of top-down and bottom-up reasoning are complementary, not categorical alternatives. It also bears recording that restitution operates in the zones of failed contract, unintended transfer and improper pressure. The claims of stare decisis are at their weakest in the mouth of the fraudster, the unintended recipient of benefit derived from another, or their respective donees. Unjust enrichment analysis is overladen with moralistic discourse, but so too is much of tort law. The justice of any uncontracted or unintended receipt demands to be examined for its congruence with morality and widely accepted legal concepts operating in analogous fields. While these matters obviously call to be tested against the weight of authority in the particular area, modern courts must not overlook that many precedents in this field derive from the age of formalism when implied contract and other fictions ruled. This work stands squarely with the approach of the English scholars

and judges who see appropriate roles for equity in restitution and for unjust enrichment in equity. But we also expound enthusiastically an enduring tradition in Australian law (to which Birks was strangely hostile). Australia’s more nuanced law of restitution is comfortable with the proprietary remedies of the remedial constructive trust and lien, applied with discretion in both senses of that word. Our task is, of course, to survey the Australian landscape as it is. Since, however, arguments based on analytical (as well as historical) coherence will continue to be pressed in our appellate courts, supported with reference to academic scholarship and modern overseas precedents, we continue to draw attention to such matters in this second edition survey. This restitution common of the law will continue to be tended by judges holding a spectrum of views about what is meant by justice according to law and the methods of perceiving and attaining it. Many of them will be prepared to tear out weeds, however ancient, and their labours deserve encouragement. The first two chapters of this second edition are extensively rewritten. The third chapter (Want of Title) is new and illustrates much of the above. We have taken account of the published reports available to us at 1 August. We record our thanks for the secretarial and research assistance of Meg Orr, Lucy Hartland, Vivien Pollard, Myra Nikolich and Luke Taylor. Above all we are immensely in debt to Rosemary Peers for her painstaking and patient editorial assistance. Keith Mason, John Carter, Gregory Tolhurst Sydney September 2008

Table of Cases References are to paragraph numbers

A A v C [1981] …. 303 — v Hayden (1984) …. 1002, 1003, 2012 A & M Green Investments Pty Ltd v Progressive Pod Properties Pty Ltd [2011] …. 116 A E Goodwin Ltd v A G Healing Ltd (1979) …. 643, 647–649 A H McDonald & Co Pty Ltd v Wells (1931) …. 1318, 1331, 1437 A-Pak Plastics Pty Ltd v Merhone Pty Ltd (1995) …. 706 AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] …. 1713, 1715 AB Corporation v CD Company (The ‘Sine Nomine’) [2002] …. 1831 ABB Power Generation Ltd v Chapple (2001) …. 155, 158, 458, 933, 1027 Abbotts v Barry (1820) …. 1620, 1633 Abdurahman v Field (1987) …. 2640 Aberfoyle Plantations v Cheng [1960] …. 1018 Abigroup Ltd v Abignano (1992) …. 644 Abou-Rahmah v Abacha [2007] …. 2417 Abram SS Co Ltd v Westville Shipping Co Ltd [1923] …. 1310, 1319 Academy of Health and Fitness Pty Ltd v Power [1973] …. 1327 Accident Compensation Commission v Baltica General Insurance Co Ltd [1993] …. 618, 619 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia

Ltd (1993) …. 166, 910, 1148, 1838 ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] …. 2039, 2741, 2742, 2807 ACN 062 895 774 Pty Ltd v Tyndall [2007] …. 255, 1734 Acohs Pty Ltd v R A Bashford Consulting Pty Ltd (1997) …. 608 Actionstrength Ltd v International Glass Engineering IN.GL.EN Spa [2003] …. 1046 Adam v Newbigging (1888) …. 1331, 1434, 1437, 2326, 2330 Adamopoulos v Olympic Airways SA (1991) …. 2511 Adamson, Ex parte (1878) …. 1722, 1725 Adelfamar SA v Silos E Mangimi Martini SpA (The Adelfa) [1988] …. 1232 Adrenaline Pty Ltd v Bathurst Regional Council (2015) …. 123, 448, 2039, 2041, 2042, 2410 Adrian Alan Ltd v Fuglers (a firm) [2002] …. 2909 Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] …. 2309 AES Express, The see J Gadsden Pty Ltd v Strider 1 Ltd Aetna Insurance Co v Canadian Surety Co (1994) …. 635 Agathon, The see Kissavos Shipping Co SA v Empresa Cubana de Fletes AGC (Advances) Ltd v West (1984) …. 607, 612, 647 Agip (Africa) Ltd v Jackson [1990] …. 250, 440 — v — [1991] …. 440 Agnew v State (1982) …. 1704 Agricultural Land Management Ltd v Jackson (No 2) [2014] …. 1723 Aid/Watch Inc v Federal Commissioner of Taxation (2010) …. 2028 Aiken v Short (1856) …. 411, 412, 429, 46 Air Canada v British Columbia (1989) …. 413, 508, 2018, 2026, 2032 Air India v Commonwealth [1977] …. 413, 414, 513, 2007, 2034

Aitchison v Lohre (1879) …. 835 Akron Securities Ltd v Bernborough Breeding and Racing Ltd (unreported, 1994) …. 2608 — v Iliffe (1997) …. 247, 1305, 1315, 1434, 1437 Alati v Kruger (1955) …. 213, 243, 253, 1310, 1318, 1319, 1325, 1329, 1331, 1402, 1403, 1405, 1432, 1433, 1437, 1840, 2326, 2708, 2713, 2816, 2824 Albanis v Eleftheriou [2014] …. 2924 Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) …. 606, 610, 618, 619, 621, 623, 636, 643, 644 Alder v Drudis (1947) …. 1106, 1429, 1433 Alderton v The Prudential Assurance Co Ltd (1993) …. 1332 Alec Finlayson Pty Ltd v Armidale City Council (1994) …. 2718 Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1985] …. 2713 Alecos M, The see Sealace Shipping Co Ltd v Oceanvoice Ltd Alemite Lubrequip Pty Ltd v Adams (1997) …. 2814 Alev, The see Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC Alexander v Ajax Insurance Co Ltd [1956] …. 2922 — v Perpetual Trustees WA Ltd [2001] …. 623 — v Rayson [1936] …. 2605, 2635 — v Vane (1836) …. 116, 642, 843 Alexiadis v Zirpiadis (2013) …. 216, 841, 2601, 2603, 2606–2608, 2614, 2908, 2916 Alf Vaugan & Co Ltd (in rec) v Royscot Trust Plc [1999] …. 522 Allcard v Skinner (1887) …. 504, 2407 Alleyn v Thurecht [1983] …. 1144, 2707 Allied Air Conditioning Inc v British Columbia (1992) …. 2018 Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA [1985]

…. 2516 Allison v Jenkins [1904] …. 840 Alma Hill Constructions Pty Ltd v Onal (2007) …. 1027 Alpha Trading Ltd v Dunnshaw-Patten Ltd [1981] …. 1828 Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (2008) …. 2405, 2416, 2417 Alstom Ltd v Yokogawa Australia Pty Ltd [2012] …. 2721–2723 Aluminium Industrie Vaasen BV v Romalpa Aluminium Ltd [1976] …. 1169 Amadio Pty Ltd v Henderson (1998) …. 2304, 2307, 2608, 2627, 2639 Aman v Southern Railway Co [1926] …. 2307 Amatek Ltd v Googoorewon (1993) …. 458 Amatruda v Roberts [1938] …. 1002 Amax Potash Ltd v Government of Saskatchewan (1976) …. 2036 Ambassador Refrigeration Pty Ltd v Trocadero Building and Investment Co Pty Ltd [1968] …. 2629 Ambrose v Kerrison (1851) …. 849 Ambulance Service of New South wales v Worley (No 2) (2006) …. 710 Amec Developments Ltd v Jury’s Hotel Management (UK) Ltd (2001) …. 1821 AMEV-UDC Finance Ltd v Austin (1986) …. 1142, 1225, 1824 Amicable Insurance Society v Bolland (1830) …. 1926 Amministrazione delle Finanze delle Stato v SpA San Giorgio [1983] …. 2042 AMP General Insurance Ltd v Roads & Traffic Authority of NSW [2001] …. 710 AMP Workers’ Compensation Services (NSW) Ltd v QBE Insurance Ltd (2001) …. 606, 618

Ampol Ltd v Caltex Oil (Australia) Pty Ltd (unreported, 1982) …. 505, 1302 — v — (1986) …. 505, 1302 Amway of Australia Pty Ltd v Commonwealth (1998) …. 2042 Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd [1990] …. 1804 Anderson v Bowles (1951) …. 1615 — v Schultz (1975) …. 932 Andjelic v Marsland (1996) …. 2806, 2811 Andrabell Ltd, Re [1984] …. 1841 Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) …. 151, 158, 1027, 1417 Andrews v Australia and New Zealand Banking Group Ltd (2012) …. 1137, 1142, 2813 — v Parker [1973] …. 2627, 2638 Angel v Jay [1911] …. 2333 Angelopoulos v Sabatino (1995) …. 158, 1025, 1027, 1416 Anglia Television Ltd v Reed [1972] …. 1812 Anglo-Scottish Beet Sugar Corp Ltd v Spalding UDC [1937] …. 425 Annal v Commonwealth Hostels Ltd [1958] …. 130 Anniston Manufacturing Co v Davis (1937) …. 2036 Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] …. 1732 Ansett Transport Industries (Operations) Pty Ltd v Alenia Aeritalia & Selenia SpA (1991) …. 209, 909 — v Australian Federation of Air Pilots [1991] …. 530 Antaios Compania Naviera SA v Salen Rederierna AB [1983] …. 2707 — v — [1985] …. 2707 Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport (1955) …. 2028, 2029, 2036, 2039

— v — (1956) …. 2036 Aon Risk Services Australia Ltd v Australian National University (2009) …. 2905 Aotearoa International Ltd v Scancarriers A/S [1985] …. 517, 1005 Apand Pty Ltd v Kettle Chip Co Pty Ltd (1994) …. 1711, 1716 — v — (No 2) (1999) …. 1710, 1716 Appleby v Myers (1867) …. 908, 933, 1222, 1228, 1229, 1231, 1251, 1263 Aquaculture Corp v New Zealand Mussel Co Ltd [1990] …. 1724 Arab Monetary Fund v Hashim [1993] …. 1536, 1804 Aratra Potato Co Ltd v Taylor Joynson Garrett [1995] …. 2608, 2634 Arcedeckne, Re (1883) …. 649 Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) …. 2334 Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] …. 313, 453, 1612 Arklow Investments Ltd v Maclean [2000] …. 1705 Armitage v Nurse [1997] …. 2737 Armory v Delamirie (1722) …. 1528, 1608 Armstrong v Commissioner of Stamp Duties (1967) …. 604, 610, 613, 625, 628, 633 — v Jackson [1917] …. 1437, 2333 Armstrong GmbH v Winnington Networks Ltd [2013] …. 307, 309, 319, 320, 2410 Arrale v Costain Civil Engineering Ltd [1976] …. 2516 ASA Constructions Pty Ltd v Iwanov [1975] …. 1837 ASB Securities Ltd v Geurts [2005] …. 2405, 2419 Ascherson v Tredegar Dry Dock & Wharf Co Ltd [1909] …. 644 Ash Street Properties Pty Ltd v Pollnow (1987) …. 1046 Ashdown v Kirk [1999] …. 1130 Ashok Trading Pty Ltd v Kintay Pty Ltd [1983] …. 1126, 2811, 2824

Ashton v Pratt (2015) …. 2415 Asikas Investments Ltd v Tasker [1967] …. 1126, 1323 Aspect Contracts Ltd v Higgins Construction plc [2015] …. 2717 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) …. 1169, 1337 Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] …. 1008, 1332 Associated Midland Corp v Bank of New South Wales [1980] …. 435 Associated Newspapers Ltd v Bancks (1951) …. 1108 Astilleros Canarios SA v Cape Hatteras Shipping Co Inc (The Cape Hatteras) [1982] …. 1171 Astles v Morgan (1882) …. 851 Astley v Reynolds (1731) …. 522, 528, 1620, 1638 Astra Trust Ltd v Adams [1969] …. 1018 Atchison, Topeka and Sante Fe Railway Co v O’Connor (1912) …. 2019, 2032 Atco Controls Pty Ltd (in liq) v Stewart (2013) …. 639, 839 Athanasopoulos v Moseley (2001) …. 1629 Atlantic Baron, The see North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd Atlantic Civil Pty Ltd v Water Administration Ministerial Corporation (1992) …. 1171 Atlantic Coast Line Railroad Co v Macferlan (1935) …. 121 Atlantic Shipping & Trading Ltd v Louis Dreyfus & Co [1922] …. 2516 Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] …. 505, 531, 1312, 1321, 1327, 1328, 2320 Atlee v Backhouse (1838) …. 528 Attaleia Marine Co Ltd v Bimeh Iran (Iran Insurance Co) (The Zeus) [1993] …. 1302

Attorney-General v Blake [2001] …. 1509, 1523, 1525, 1629, 1637–1639, 1702, 1704, 1713, 1813, 1814, 1821, 1831, 1833, 1837, 1841 — v Gray [1977] …. 2104–2106, 2108, 2109 — v Guardian Newspapers Ltd [1987] …. 1724 — v Observer Ltd [1990] …. 1502, 1702, 1711, 1713, 1724 — v Quin (1990) …. 2106, 2611 — v Wilts United Dairies Ltd (1921) …. 2007 — v Wylde (1947) …. 706 Attorney-General for England and Wales v R [2002] …. 521, 1831 — v — [2004] …. 1831 Attorney-General for Hong Kong v Reid [1994] …. 222, 249, 251, 911, 1502, 1728, 1804 Attorney General for Nova Scotia v Christian (1974) …. 1536 Attorney-General for Ontario v Crompton (1976) …. 853 Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] …. 149, 1046 Auckland Harbour Board v R [1924] …. 308, 309, 413, 2025, 2101, 2103, 2104, 2107–2111, 2410 Aurel Forras Pty Ltd v Graham Karp Developments Pty Ltd [1975] …. 1217, 1241 Aussie Invest Corp Ltd v Pulcesia Pty Ltd (2005) …. 1148 Austin v Royal (1999) …. 639, 640 — v Zurich [1945] …. 642 Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) …. 209, 1033, 1042, 2213 Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) …. 605, 639 Australia and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] …. 1005

— v Karam (2005) …. 504, 518, 1312 — v Petrik [1996] …. 1332 — v Turnbull and Partners Ltd (1991) …. 608 — v Westpac Banking Corp (1988) …. 123, 131, 135, 136, 138, 141, 168, 208, 238, 239, 244, 251, 407, 409, 423, 426, 429, 434, 439–442, 448, 451, 453, 454, 524, 2202, 2204, 2404, 2408, 2419, 2819 Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] …. 1005 Australian Associated Motor Insurers Ltd v Wright (1997) …. 1909 Australian Aviation Underwriting Pty Ltd v Henry (1988) …. 1909 Australian Breeders Co-operative Society Ltd v Jones (1997) …. 2608 Australian Broadcasting Corp v Lenah Game Meats Pty Ltd (2001) …. 314 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) …. 518, 521, 1312, 1314 Australian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) …. 604, 645 Australian Eagle Insurance Co Ltd v Mutual Acceptance (Insurance) Pty Ltd [1983] …. 618 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) …. 104, 108, 110, 122, 123, 139, 141, 208, 256, 313, 402, 407, 409, 421, 444, 446, 454, 917, 2213, 2403, 2406, 2408, 2410–2413, 2415–2418, 2421, 2422, 2722, 2808, 2813 Australian Guarantee Corp Ltd v Ross [1983] …. 1121, 1124, 1156 Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd [1994] …. 2316, 2318 Australian Metal Co Ltd, Re (1923) …. 2810 Australian Postal Corp v Lutak (1991) …. 250, 314 Australian Provincial Assurance Ltd v Rogers (1943) …. 1615 Australian Real Estate Investment Co Ltd v Gillis [1935] …. 2625,

2637 Australian Securities and Investments Commission v Edwards (2005) …. 1034 Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (rec & mgr apptd) (1994) …. 257, 303 Australian Tape Manufacturers Association Ltd v Commonwealth (1993) …. 2034 Australian Woollen Mills Pty Ltd v Commonwealth (1954) …. 149 Auto Group Ltd v England [2008] …. 1532 Autolook Pty Ltd, Re; O’Brien v Bills (1983) …. 1532 Automatic Fire Sprinklers Pty Ltd v Watson (1946) …. 905, 909, 918, 930, 1128, 1167, 1410, 1818 Autosel Pty Ltd v Franklins Selfserve Pty Ltd (1989) …. 939 Avery v Bowden (1856) …. 1213 Aviacion Colombiana Limitada Aviaco Ltd v Commonwealth of Australia (unreported, 1994) …. 138, 147, 166, 2601 Avon County Council v Howlett [1983] …. 409, 1302, 2408 Avon Products Pty Ltd v Commissioner of Taxation (2006) …. 2042 Avtex Airservices Pty Ltd v Bartsch (1992) …. 2308, 2516, 2517, 2712 Awwad v Geraghty (a firm) [2001] …. 2616 Ayerst v Jenkins (1873) …. 2605, 2713

B B v Medical Superintendent of Macquarie Hospital (1987) …. 1533 B & S Contracts and Design Ltd v Victor Green Publications Ltd [1984] …. 505, 511, 531, 1327 B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] …. 435, 640 B M Alliance Coal Operations Pty Ltd v B G C Contracting Pty Ltd [2013] …. 707, 710 Baburin v Baburin (No 2) [1991] …. 2713

Bahin v Hughes (1886) …. 615 Bailey v Namol Pty Ltd (1994) …. 1330, 1717, 1721, 1723, 1726, 1733 Bain v Fothergill (1874) …. 2811 — v Morabito (unreported, 1992) …. 1912 Baird v BCE Holdings Pty Ltd (1996) …. 419, 2333 Baker v Courage & Co [1910] …. 426, 2722, 2741 — v T E Hopkins Ltd [1958] …. 827 — v —[1959] …. 827 Balfour v Hollandia Ravensthorpe NL (1978) …. 1437 Balfour Beatty Power Construction Australia Pty Ltd v Kidston Goldmines Ltd (1986) …. 1171, 1416 Balgobin v South West Regional Health Authority [2012] …. 2302, 2304, 2305, 2318 Ballantyne v Phillott (1961) …. 2516 Ballett v Mingay [1943] …. 1043 Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) …. 123, 124, 129, 132, 135, 136, 138, 170, 175, 208, 209, 908, 909, 916, 917, 919, 920, 923, 926, 941, 1105, 1119–1121, 1123–1125, 1127, 1133, 1151, 1152, 1158, 1214, 1217, 1220, 1221, 1225, 1230, 1410, 1533, 1536, 1809, 1811, 1819, 1834, 2018, 2304, 2904, 2906 Bank Line Ltd v Arthur Capel & Co [1919] …. 2314 Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] …. 1128, 1130, 1221, 1224, 1225, 1228, 1237, 1240 Bank of Credit & Commerce International Ltd v Akindele [2001] …. 2410, 2419 Bank of Credit & Commerce International SA v Aboody [1990] …. 522 — v Ali [2002] …. 2516 Bank of Cyprus UK Ltd v Menelaou [2015] …. 2524

Bank of New South Wales v Commonwealth (1948) …. 2027 — v Laing [1954] …. 115 — v Murphett [1983] …. 128, 402, 428, 429, 435, 2404 Bank of New York v Simmons & Co (1921) …. 2421 Bank of New Zealand v Spedley Securities Ltd (in liq) (1992) …. 2737 — v Westpac Banking Corp (1991) …. 442 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck) [1992] …. 1111 Bank of Scotland v Bennett [2005] …. 518 Bank of South Australia Ltd v Ferguson (1998) …. 2326, 2333 Bankers Trust Ltd v Shapira [1980] …. 303 Banque Belge pour l’Etranger v Hambrouck [1921] …. 250, 303, 307, 1632 Banque des Marchands de Moscou, Re [1952] …. 835, 838 Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] …. 255, 257, 424, 429, 606, 638, 639, 847 Bans Pty Ltd v Ling (1995) …. 1147 Bant and Bryan; Levy v Watt (2014) …. 309 Barbagallo v J & F Catelan Pty Ltd [1986] …. 1720 Barber v NWS Bank Plc [1996] …. 1121 Barclay & Co v Malcolm & Co (1925) …. 423 Barclays Bank Ltd v W J Simms, Son & Cooke (Southern) Ltd [1980] …. 123, 308, 412, 419, 421, 423, 429, 435–438, 446–448, 2037, 2406, 2504, 2518, 2520 Barclays Bank Plc v O’Brien [1994] …. 251 Barnes v Addy (1874) …. 123, 251, 311, 321, 1703, 1705, 2410 — v Eastenders Cash & Carry [2015] …. 839, 916, 923, 928, 933, 1227 — v Nash [1922] …. 1612 Barnes & Co v Toye (1884) …. 1040

Barnstaple Boat Co Ltd v Jones [2008] …. 2742 Barros Mattos Junior v MacDaniels Ltd [2004] …. 308, 311, 319, 320 — v — [2005] …. 2420, 2601 Barrow v Isaacs & Son [1891] …. 421, 424 Barrow Lane and Ballard Ltd v Phillip Phillips & Co Ltd [1929] …. 1038 Barrowcliff, Re [1927] …. 1906, 1923, 1927 Bartels v Behm (1990) …. 613, 614 Bartlett v Barclays Bank Trust Co Ltd (No 1 and 2) [1980] …. 1723, 2742 Barton v Armstrong [1976] …. 504, 518, 521, 522, 527 — v Commissioner for Motor Transport (1957) …. 441, 524, 2029, 2036, 2039 Barton Thompson & Co Ltd v Stapling Machines Co [1966] …. 1142, 1145 Bassin v Standen (1945) …. 1608, 2605 Bater v Kare [1964] …. 634 Batey v Potts (2004) …. 1908, 1912, 1913, 1917, 1918, 1923, 1928 Bathurst City Council v PWC Properties Pty Ltd (1998) …. 247–249, 257, 1727 Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] …. 2416, 2417 Batis Maritime Corp v Petroleos Mediterraneo SA (The Batis) [1990] …. 1171 Baulkham Hills Shire Council v Wrights Road Pty Ltd (2007) …. 2034, 2039 Baumgartner v Baumgartner (1987) …. 135, 170, 249, 251, 256, 1729, 1731 Bavins Junr & Sims v London & South Western Bank Ltd [1900] …. 1534 Bayley v Williams (1864) …. 515

Baylis v Bishop of London [1913] …. 121, 122, 127, 442, 2404, 2406, 2417 Bayne v Stephens (1908) …. 2808, 2809, 2811, 2815, 2817, 2820 Bayview Gardens Pty Ltd v Mulgrave Shire Council [1989] …. 516, 517, 529 Bazeley v Forder (1868) …. 851 Beach Petroleum NL v Johnson (1993) …. 1124, 2318 Beale v Taylor [1967] …. 1409, 1819 Beaman v ARTS Ltd [1948] …. 1533, 2732 — v — [1949] …. 1533, 2728, 2741, 2742 Beard, Re; Ex parte the Trustee (1935) …. 2404 Beavan, Re [1912] …. 1040 Beck v Northern Natural Gas Co (1999) …. 1639 Beckingham v Port Jackson & Manly Steamship Co [1957] …. 806 Becton Dickinson UK Ltd v Zwebner [1989] …. 605, 627 Beerens v Bluescope Distribution Pty Ltd (2012) …. 511, 513, 516, 531, 532, 1312 Belan v Casey (2003) …. 2738 Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd [1984] …. 1836 Bell v Lever Bros Ltd [1932] …. 427, 1008, 1015–1017, 1320, 1324, 1332 Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale [1969] …. 416 — v — (1969) …. 416, 528, 529, 2007, 2011, 2023 Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) …. 2737 — v — (No 3) (2012) …. 2815 — v — (No 9) (2012) …. 1703, 1705 Bellgrove v Eldridge (1954) …. 1152, 1508, 1820 Belo Nominees Pty Ltd v Barellan Pty Ltd (1986) …. 2527

Belshaw v Bush (1851) …. 841 Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) …. 1625 Bendigo Central Freezing and Fertiliser Co Ltd v Cunningham [1919] …. 2333 Benedetti v Sawiris [2014] …. 158, 208, 902, 912, 928, 932, 933, 934, 1025, 1033, 1045, 1404, 1415–1418, 1434, 1438, 1626 Bennett v Minister of Community Welfare (1992) …. 1723, 1726 Beresford v Royal Insurance Co Ltd [1938] …. 1902, 1906, 1926 Berg v Sadler [1937] …. 2606, 2625, 2635 Berger v Boyles [1971] …. 1124, 1125, 1129, 1131, 1133, 1414 Berger & Co Inc v Gill & Duffus SA [1984] …. 1111, 1118 Bergougnan v British Motors Ltd (1929) …. 2525 Bernstein v Pamson Motors (Golders Green) Ltd [1987] …. 2709 Bernstone v Almack-Kelly [2014] …. 2418 Berry v Mahony [1933] …. 1143, 1414 Besser Industries (NT) Pty Ltd v Steelcon Constructions Pty Ltd (1995) …. 1153 Betts v Municipality of Manly (1923) …. 529 — v Receiver for the Metropolitan Police District [1932] …. 2732 BHP Petroleum (Bass Strait) Pty Ltd v Jenkins (1993) …. 2039 — v — (unreported, 1994) …. 2039 BHP Steel (JLA) Pty Ltd v Khan (No 2) [2001] …. 707 Biala Pty Ltd v Mallina Holdings Ltd (1993) …. 2814, 2815 Bialkower v Acohs Pty Ltd (1998) …. 607 Biberfield v Berens [1952] …. 850 BICC Plc v Burndy Corp [1985] …. 1139 Bigos v Bousted [1951] …. 2635 Bilambil-Terranora Pty Ltd v Tweed Shire Council [1980] …. 1624, 1626, 1629

Bilbie v Lumley (1802) …. 413, 415, 447, 2008 Bill Acceptance Corp Ltd v GWA Ltd (1983) …. 1821 Billson v Residential Apartments Ltd [1992] …. 1142 Bingham v Bingham (1748) …. 1320 Binstead v Buck (1776) …. 835, 837 Bird v Bird [2013] …. 2719 Birkbeck Permanent Benefit Building Society, Re [1915] …. 413 Birmingham and District Land Co v London and North Western Railway Co (1886) …. 626 Birtchnell v Equity Trustees, Executors & Agency Co Ltd (1929) …. 1703 Biscayne Partners Pty Ltd v Valance Corp Pty Ltd [2003] …. 1831 Bishopsgate Investment Management Ltd v Homan [1995] …. 454, 1734 Biviano v Natoli (1998) …. 1614, 1626 Bize v Dickason (1786) …. 446 Black v S Freedman & Co (1910) …. 250, 314, 316, 320, 454, 1632, 2820 Black Uhlans Inc v New South Wales Crime Commission [2002] …. 254 Black-Clawson International Ltd v Papierwerke WaldhofAschaffenburg AG [1981] …. 2409 Blackburn v Smith (1848) …. 916, 1319, 1433 — v YV Properties Pty Ltd [1980] …. 2624 Blackmagic Design Pty Ltd v Overliese (2011) …. 1723 Blackman v Thompson (unreported, 1993) …. 1704, 1712, 1726 Blackpool and Fleetwood Tramroad Co v Bispham with Norbreck UDC [1910] …. 2007 Blackpool and Flyde Aero Club v Blackpool Borough Council [1990] …. 1045

Blair v Canada Trust (1986) …. 615 Blake, Re [1932] …. 2722 Bland v Ingrams Estates Ltd [2001] …. 1139 — v — (No 2) [2002] …. 1139, 1439 Blankenstein, The see Damon Compania Naviera SA v Hapag-Lloyd International SA Blanks v Jiggetts (1951) …. 1918 Bliss v Southeast Thames Regional Health Authority [1987] …. 2318, 2708 Bloch v Bloch (1981) …. 2810 Blomley v Ryan (1956) …. 1310 Blue Haven Enterprises Ltd v Tully [2006] …. 910, 2530 Blythe v Northwood (2005) …. 1827 Boardman v Phipps [1967] …. 1711, 1712, 1714, 1715, 1717 Bofinger v Kingsway Group Ltd (2009) …. 108, 123, 135, 138, 139, 255, 606, 639 Bolot v Capper (1957) …. 1167, 1417 Bolton v Clutterbuck [1955] …. 458 — v Mahadeva [1972] …. 1151, 1152 Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006] …. 2302 Bolwell Fibreglass Pty Ltd v Foley [1984] …. 1168, 1818 Bond v Larobi Pty Ltd (1992) …. 610, 644, 645 Bonnard v Dott [1906] …. 2639 Bonner v Tottenham & Edmonton Permanent Investment Building Society [1899] …. 604, 617, 620, 621, 623, 633, 636 Bonython v Commonwealth (1948) …. 2810 Boomer v Muir (1933) …. 1106, 1428, 1429 Boone v Coe (1913) …. 938 — v Eyre (1777) …. 1152

Borders (UK) Ltd v Commissioner of Police of the Metropolis [2005] …. 1813 Borg Warner (Aust) Ltd v Switzerland General Insurance Co Ltd (1989) …. 610, 618, 621 Borrelli v Ting [2010] …. 1312 Bosaid v Andry [1963] …. 2306, 2320 Bosca Land Pty Ltd v Wruck [1982] …. 1168, 1170, 1414, 1438 Boscawen v Bajwa [1996] …. 303, 319, 639, 2407, 2410 Bostel Bros Ltd v Hurlock [1949] …. 1028, 2616 Bostock & Co Ltd v Nicholson & Sons Ltd [1904] …. 1407, 1409 Boston Deep Sea Fishing & Ice Co v Ansell (1888) …. 222, 932, 934, 1164, 1718 Bot v Ristevski [1981] …. 1126, 1130, 1413 Boucaut Bay Co Ltd v Commonwealth (1927) …. 1144 Boulter v Boulter (1898) …. 617 — v Peplow (1850) …. 613, 614 Boulton v Jones (1857) …. 1038 Boustany v Piggott (1993) …. 256, 533 Bovis Construction (South Eastern) Ltd v Greater London Council (1985) …. 1133, 1171 Bowen v Blair [1933] …. 1808 Bowmakers Ltd v Barnet Instruments Ltd [1945] …. 2605, 2608, 2621–2624 Bowman v Secular Society [1917] …. 1931 Bowtell v Commonwealth (1989) …. 2715 Boyagarra Pty Ltd, Re (1983) …. 2814 Boyd & Forrest v Glasgow and South-Western Railway Co 1915 …. 1168, 1205, 1426, 1430, 1433, 1437, 2326 BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] …. 118, 119, 137, 143, 147, 203, 916, 941, 1212, 1234, 1237, 1244,

1258–1265, 1268, 1415, 1416, 1418, 1419, 1422, 1427, 2409, 2410, 2724, 2914 — v — [1981] …. 118, 119, 137, 143, 147, 203, 1212, 1234, 1237, 1244, 1258–1265, 1268, 1415, 1416, 1418, 1419, 1422, 1427, 2409, 2410, 2914 — v — [1983] …. 118, 137, 143, 147, 203, 1212, 1234, 1237, 1242, 1244, 1258–1265, 1268, 1415, 1416, 1418, 1419, 1422, 1427, 2409, 2410, 2722, 2723, 2724, 2809, 2810, 2914 BP Petroleum Development Ltd v Esso Petroleum Co Ltd [1987] …. 623 Braben v Emap Images Ltd [1997] …. 2306 Bracewell v Appleby [1975] …. 1831 Bracken Partners Ltd v Gutteridge [2003] …. 303 Bradford Corp v Ferrand [1902] …. 121 Bradshaw v Beard (1862) …. 849 Brady v Stapleton (1952) …. 303, 1716 Brady Contracting Pty Ltd v Kellyville Christmas Tree Farm Pty Ltd [2005] …. 404 Brand v Chris Building Co Pty Ltd [1957] …. 458 Brasher v O’Hehir [2005] …. 151, 847 Bray v Ford [1896] …. 1711 Break Fast Investments Pty Ltd v Giannopoulos (No 5) [2011] …. 311 — v — (No 6) [2012] …. 303, 306, 311 — v PCH Melbourne Pty Ltd (2007) …. 1625 Breckenridge Speedway Ltd v R (1970) …. 2104, 2106 Breen v Williams (1996) …. 1703, 1707 Bremer Handelgesellschaft mbH v Vanden Avenne-Izegem PVBA [1978] …. 1207 Brennan, Re (1930) …. 2811 — v Bolt Burdon (a firm) [2005] …. 1332

Brenner v First Artists Management Pty Ltd [1993] …. 116, 138, 147, 148, 150, 155, 158, 174, 215, 908, 910, 935, 1025, 1027, 1034, 1035, 1045, 1168, 1415–1417, 1422, 2912 Brett, Ex parte; Howe, Re (1871) …. 649 Brew v Whitlock (No 2) [1967] …. 1018 Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] …. 938, 1035, 1046, 1233 Brickles v Snell [1916] …. 1143 Brickwood v Young (1905) …. 617 Bridger v Savage (1885) …. 1021 Bridgewater v Griffiths [2000] …. 1025, 1027 — v Leahy (1998) …. 504, 533, 1310, 1332, 1437 Briginshaw v Briginshaw (1938) …. 1915 Brisbane Board of Waterworks v Hudd [1910] …. 1126 Brisbane South Regional Health Authority v Taylor (1996) …. 2714 Brissette Estate v Westbury Life Insurance Co (1992) …. 1728, 1919, 1926 Bristol and West Building Society v Mothew [1998] …. 1310, 2528 Britain v Lloyd (1845) …. 116 Britannia Distribution Co Ltd v Factor Pace Ltd [1998] …. 1221 British American Continental Bank v British Bank of Foreign Trade [1926] …. 441 British American Tobacco Australia Ltd v Western Australia (2003) …. 1221, 2021, 2028–2030, 2032, 2106 British Bank for Foreign Trade Ltd v Novinex [1949] …. 1045 British Columbia v Cressey Development Corp (1992) …. 1263, 2812, 2824 British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1981) …. 913, 914, 1034, 1038, 1044, 1408, 1416, 1424 British Steel Plc v Customs and Excise Commissioners [1997] …. 2033

Brocklebank Ltd v R [1924] …. 2734 — v — [1925] …. 523, 1620, 1631, 2734 Brogden v Metropolitan Railway Co (1877) …. 1045 Brookes v Marshall (unreported, 1996) …. 647 Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] …. 129, 606, 625, 627, 633, 636 Brooks, Re (1903) …. 831, 1040 — v Beirnstein [1909] …. 1132 — v Burns Philp Trustee Co Ltd (1969) …. 1002 — v FCT (2000) …. 1018, 1137 — v Wyatt (1944) …. 1720 Brooks Robinson Pty v Rothfield [1951] …. 1032, 1167, 1428, 1429 Bropho v Western Australia (1990) …. 2810 Brotherton v Aseguradora Colseguros SA (No 2) [2003] …. 1310 Broughton, Re (1897) …. 413, 2023 Brown v Brown (1993) …. 254 — v Hodgson (1811) …. 630 — v Jam Factory Pty Ltd (1981) …. 1821 — v Sevrup Fisheries Pty Ltd [1970] …. 608 — v Smitt (1924) …. 1304, 1418, 1433, 1434, 1437, 2330, 2713, 2816, 2824 — v West (1990) …. 2102, 2104 Brownett v Newton (1941) …. 128, 1027, 1028, 1038, 1403, 2606, 2615 Browning v Morris (1778) …. 2639 Bruce David Realty Pty Ltd (in liq), Re [1969] …. 643 Bruton v London & Quadrant Housing Trust [2000] …. 1010 Bryant v Commonwealth Bank of Australia (1994) …. 2308 Bryson v Bryant (1992) …. 133, 135, 138, 142, 166, 170, 208, 259,

1501, 1731, 2904 Buckley v Tutty (1971) …. 1002 Buller v Harrison (1777) …. 442 Bulli Coal Mining Co v Osborne [1899] …. 2742 Bulun Bulun v R & T Textiles Pty Ltd (1998) …. 1729 Bunge (Australia) Pty Ltd v Ying Sing (1928) …. 423, 426, 441, 2404 Bunnings Group Ltd v CHEP Australia Ltd (2011) …. 1602, 1608, 1626, 1629, 1721, 1821, 1831, 2803, 2806, 2809, 2810 — v — (No 2) [2011] …. 710 Burger King Corp v Hungry Jack’s Pty Ltd [2001] …. 708, 709 Burke v Beatty [1928] …. 711 — v Gillett [1996] …. 711 — v LFOT Pty Ltd (2002) …. 138, 606, 607, 610, 621, 623, 647 Burmah Oil Co Ltd v Bank of England [1980] …. 518 Burn v Miller (1813) …. 1163 Burness (as liquidator of Denward Lane Pty Ltd (in liq)) v Supaproducts Pty Ltd (2010) …. 116, 842, 845, 847 Burns v Leda Holdings Pty Ltd (1987) …. 413 Burns-Anderson Independent Network Plc, The v Wheeler [2005] …. 2318 Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd (1947) …. 128, 812, 818, 821, 823, 838, 850 Burns Philp Trustee Co Ltd v Viney [1981] …. 1904 Burrows v Rhodes [1899] …. 2637 Burrup Fertilisers Pty Ltd v Oswal [2011] …. 311 Butler v Egg and Egg Pulp Marketing Board (1966) …. 1508, 1602 — v Fairclough (1917) …. 1328, 2516 — v Rice [1910] …. 622, 640, 847 Butterworth v Kingsway Motors Ltd [1954] …. 1121, 1156, 2530

Byers v Dorotea Pty Ltd (1986) …. 2334 Byrne, Re (1906) …. 617

C C E Heath Underwriting and Insurance (Australia) Pty Ltd v State Government Insurance Commission (1983) …. 642 Cadbury Schweppes Pty Ltd v ALHMWU (2000) …. 518 Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) …. 153, 158, 431, 458, 932, 1035, 1206, 2913 Cafferky v Nepean Co-operative Dairy & Refrigerating Society Ltd (1959) …. 520, 530, 531 Cairnbahn, The [1914] …. 609 Callaghan v O’Sullivan [1925] …. 2606, 2625, 2638 Calland v Lloyd (1840) …. 307 Callaway, Re [1956] …. 1924, 1928 Callisher v Bischoffsheim (1870) …. 447, 1328 Calverley v Green (1984) …. 650, 1734, 1737 Cam and Sons Pty Ltd v Ramsay (1960) …. 2038 Campbell v Hall (1774) …. 2007 — v Jones (1796) …. 919 — v Kitchen & Sons Ltd (1910) …. 120, 413, 415 — v Manly Municipal Council (1949) …. 1124 — v Ridgely (1887) …. 1043 Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) …. 408, 1221 Canas Property Co Ltd v K L Television Services Ltd [1970] …. 1132, 1614 Canon Australia Pty Ltd v Patton (2007) …. 504, 516, 518 Canson Enterprises Ltd v Boughton & Co (1991) …. 1726 Cantiare San Rocco SA v Clyde Shipbuilding & Engineering Co Ltd [1924] …. 129, 1223

Cape Hatteras, The see Astilleros Canarios SA v Cape Hatteras Shipping Co Inc Capita Financial Group Ltd v Rothwells Ltd (1993) …. 612, 619 Capital Duplicators Pty Ltd v Australian Capital Territory (No 2) (1993) …. 2042 Car and Universal Finance Co Ltd v Caldwell [1965] …. 1336, 2318, 2528 Cargill International SA v Bangladesh Sugar and Food Industries Corp [1996] …. 1302 — v — [1998] …. 1113, 1302 Carillion Constructions Ltd v Felix (UK) Ltd [2001] …. 531 Carlill v Carbolic Smoke Ball Co [1893] …. 149 Carney v Herbert [1985] …. 2619 Carosella v Ginos and Gilbert Pty Ltd (1982) …. 1820 Carpenter v McGrath (1996) …. 1414 Carr v Gilsenan [1946] …. 531, 1321 — v McDonald’s Australia Ltd (1994) …. 1035 — v Resource Equities Ltd (2010) …. 647 — v Thomas [2009] …. 621, 647 Carr-Saunders v Dick McNeill Associates Ltd [1986] …. 1625, 1638 Carson v Wood (1994) …. 1731, 1835 Carter v Carter (1829) …. 519 — v Scargill (1875) …. 2708 — v Thomas [1893] …. 817 Carter, in the matter of Damilock Pty Ltd (in liq) [2012] …. 847 Cartledge v E Jopling & Sons Ltd [1962] …. 2703 Cary v Webster (1721) …. 441 Cash, Re (1911) …. 1919, 1922, 1926 Cassidy v Canada Publishing Corp (1989) …. 1232, 1245, 2824

Castellain v Preston (1883) …. 640 Catt v Marac Australia Ltd (1986) …. 1723, 1726 Cavalier Insurance Co Ltd, Re [1989] …. 2639 CCC Films (London) Ltd v Impact Quadrant Films Ltd [1985] …. 1812 Celestial Aviation Trading 71 Ltd v Paramount Airways Private Ltd [2011] …. 1142 Central Electricity Board of Mauritius v Bata Shoe Co (Mauritius) Ltd [1983] …. 706, 710, 711 Central London Property Trust v High Trees House Ltd [1947] …. 2322 Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] …. 2530 Central Queensland Leather Industries Ltd, Re [1969] …. 2615 Century Homes Pty Ltd (in liq), Re (1984) …. 1705 CF Partners (UK) LLP v Barclays Bank PLC [2014] …. 1821, 1831 CGU Workers Compensation (NSW) Ltd v Garcia (2007) …. 1042, 1829, 1835 Chalie v Duke of York (1806) …. 2802 Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) …. 639 Chambers v Miller (1862) …. 438 Champaiporn Nagamwasusiri v Murray (unreported, 1993) …. 440 Champtaloup v Thomas [1976] …. 2708 Chan v Zacharia (1984) …. 1704, 1705, 1715, 1728 Chandler v Webster [1904] …. 916, 1213, 1217, 1220, 1222, 1225, 2327 Chandler Bros Ltd v Boswell [1936] …. 1168 Channel Island Ferries Ltd v Cenargo Navigation Ltd (The Rozel) [1994] …. 1820

Chanter v Leese (1838) …. 1163 — v — (1839) …. 1151, 1163 Chantler v Chantler (1906) …. 851 Chaplin v Leslie Frewin (Publishers) Ltd [1966] …. 308 Chapman v Greater Midwest Insurance Pty Ltd [1981] …. 1320 — v Hearse (1961) …. 806, 853 — v Wade [1939] …. 2605 Chapple v Cooper (1844) …. 849 — v Pagan (1909) …. 1233, 1818 Chappuis v Filo (1990) …. 135 Charaneka v Gallagher (unreported, 1993) …. 647 Chard v Willett [1933] …. 2824 Charles Terence Estates Ltd v Cornwall Council [2011] …. 2107 Charterhouse Credit Ltd v Tolly [1963] …. 1820 Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] …. 251, 257, 303, 308, 453, 454, 525 Chatterton v Maclean [1951] …. 1132 Cheall v Association of Professional Executive Clerical and Computer Staff [1983] …. 1502 Cheers v Pacific Acceptance Corp Ltd (1959) …. 1121, 1124, 1168, 1433, 2633, 2634, 2638 Cheese v Thomas [1994] …. 209, 1305, 1437, 2419 Cheeseman v Industries Assistance Board (1926) …. 847 Cheltenham & Gloucester plc v Appleyard [2004] …. 255 Chesworth v Farrar [1967] …. 1533, 1620, 1627, 2731, 2733 Chettiar v Chettiar [1962] …. 2605, 2620 Chetwynd v Allen [1899] …. 640 Chetwynd’s Estate, Re [1938] …. 843 Chidiac v Maatouk [2010] …. 166, 613, 645, 2904

Chief Constable of Greater Manchester Police v Athletic AFC Ltd [2008] …. 158 Chillingworth v Chambers [1896] …. 615 — v Esche [1924] …. 1018 China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama (The Mihalios Xilas) [1979] …. 1113, 2707 China-Pacific SA v Food Corp of India (The Winson) [1982] …. 128, 153, 636, 810, 811, 816, 817, 821–823, 836–838, 840 Chippendale v Commissioner of Taxation (1996) …. 2021 Chirnside v Keating (1889) …. 411, 1017, 1027, 2417 Chong v Channell [2009] …. 245, 313, 2415 — v Wu [2010] …. 307, 319 Chow v Yang [2010] …. 2807 Chowne v Baylis (1862) …. 1632 Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) …. 156, 158, 208, 458, 910, 2904, 2915 Christie v Robinson (1907) …. 1323 Ciavarella v Balmer (1983) …. 1139, 2304, 2306 CIBC Mortgages Plc v Pitt [1994] …. 504 Cigna Insurance Asia Pacific Ltd v Packer (2000) …. 2720 Citibank NA v Brown Shipley & Co Ltd [1991] …. 429 Citigroup Pty Ltd v National Australia Bank Ltd (2012) …. 424, 2408, 2418 City Bank of Sydney v McLaughlin (1909) …. 636, 810, 823, 842, 847, 1012, 1025, 1030, 1163 City of New York v Lead Industrues Association Inc (1993) …. 853 City of Rochester v Chiarella (1983) …. 2009, 2038 Civil Service Co-operative Society v General Steam Navigation Co [1903] …. 1222 Civil Service Co-operative Society of Victoria Ltd v Blyth (1914) ….

2528, 2708, 2713 Clabbon, Re [1904] …. 819 Clancy v Salienta (2000) …. 431, 458 Clark v Macourt (2013) …. 1407, 1508, 1809 Clarke v Abou-Samra [2010] …. 440, 446 — v Dickson (1858) …. 916, 1635, 2330, 2528 — v London General Omnibus Co Ltd [1906] …. 849 — v Shee (1774) …. 121, 307, 1634 Clay v Clay (2001) …. 2736 — v Yates (1856) …. 1174 Cleadon Trust Ltd, Re [1939] …. 126, 157, 640, 835, 840, 845–847 Cleaver v Mutual Reserve Fund Life Association [1892] …. 1902, 1904, 1906, 1919, 1922, 1926, 1928, 1929 Clegg v Andersson T/A Nordic Marine [2003] …. 1410 — v Wilson (1932) …. 2634, 2635, 2638 Cleveland Bridge UK Ltd v Multiplex Constructions (UK) Ltd [2010] …. 1161 Clift v Clift (1964) …. 1908, 1910 Clifton v Coffey (1924) …. 1219 Clough v London & North Western Railway Co (1871) …. 1319, 1336, 1337, 2528, 2708, 2713 Clout v Klein [2003] …. 640 Clunis v Camden & Islington Health Authority [1998] …. 1902 CMA CGM SA v Beteiligungs-KG MS ‘Northern Pioneer’ Schiffahretsgesselschaft mbH [2003] …. 2318 CMS Dolphin Ltd v Simonet [2001] …. 1831 Coad v Wellness Pursuit Pty Ltd (in liq) (2009) …. 839 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) …. 1042 Coast Securities No 9 Pty Ltd v Alabac Pty Ltd [1984] …. 1130, 1131, 1135, 2922

Coastal Estates Pty Ltd v Melevende [1965] …. 1325, 2318, 2528, 2708, 2713 Coates v Hewgley (1978) …. 650 — v Sarich [1964] …. 1106, 1122, 1138, 1140, 1143, 1144, 1414 Cobbe v Yeoman’s Row Management Ltd [2008] …. 928, 932, 933, 1035, 1036, 1046, 1416 Cobhold v Bakewell Management [2003] …. 416 Cochrane v Cochrane (1985) …. 255, 639, 847 Cockburn v GIO Finance Ltd (No 2) (2001) …. 606, 621, 623, 810, 1310 Cockerill v Westpac Banking Corp (1996) …. 2316 Cocking v Ward (1845) …. 2926 Cocks v Masterman (1829) …. 437 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) …. 1207, 1210, 1232, 2805, 2810, 2811, 2817, 2819 Cohen v Cohen (1929) …. 246, 2703, 2736 — v Kittell (1889) …. 1021 — v Sellar [1926] …. 171 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) …. 1517, 1639, 1713, 1715, 1716, 1739 Colchester Borough Council v Smith [1992] …. 2502 Coldingham Parish Council v Smith [1918] …. 851 Coleby v Coleby (1866) …. 819, 849 Coleman v Seaborne Pty Ltd [2007] …. 2914 Coles Myer Finance Ltd v Commissioner of Taxation (1993) …. 612 Collier v Creighton [1996] …. 2742 — v P & M J Wright (Holdings) Ltd [2008] …. 506 Collector of Customs v Gaylor Pty Ltd (1995) …. 2039, 2723, 2808, 2810, 2820 Collyear v CGU Insurance Ltd (2008) …. 618

Colonial Bank v Exchange Bank of Yarmouth (1886) …. 442 Colonial Insurance Co of New Zealand v Adelaide Marine Insurance Co (1886) …. 1174 Combet v Commonwealth (2005) …. 2102, 2104 Commercial & General Insurance Co Ltd v Government Insurance Office (NSW) (1973) …. 618, 648 Commercial Bank of Australia Ltd v Amadio (1983) …. 504, 533, 1312, 1314, 1332 — v Younis [1979] …. 402, 424, 428, 435, 2404 Commercial Banking Co of Sydney v Mann [1961] …. 1620 Commercial Travellers v Witte (1966) …. 1911 Commercial Union Assurance Co Ltd v Hayden [1977] …. 618 Commissioner for Railways (NSW) v Cavanough (1935) …. 702, 704, 706 Commissioner of Australian Federal Police v Butler (1989) …. 1917 Commissioner of Public Works v Hills [1906] …. 1144 Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) …. 419 Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) …. 2025 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) …. 131, 136, 141, 142, 160, 171, 414, 416, 431, 444, 451, 1017, 1501, 1531, 2009, 2012, 2014–2016, 2018, 2025, 2030, 2032, 2038–2040, 2042, 2717, 2722, 2807, 2810, 2919 Commissioner of State Taxation (WA) v Bayswater Hire Cars Pty Ltd (1989) …. 2039 Commonwealth v A E Goodwin Ltd (1961) …. 458 — v Boucaut Bay Co Ltd (1927) …. 1144 — v Burns [1971] …. 2103, 2106–2110 — v Crothall Hospital Services (Aust) Ltd (1981) …. 2034, 2104, 2108, 2109

— v Davis Samuel Pty Ltd (No 8) [2014] …. 321 — v Hamilton [1992] …. 2106, 2108 — v McCormack (1982) …. 411, 430 — v — (1984) …. 411, 430, 705–707, 710, 711 — v SCI Operations Pty Ltd (1998) …. 416, 2016, 2025, 2030, 2805, 2807, 2808, 2811, 2817, 2824 — v Thompson (1962) …. 2106 — v Verwayen (1990) …. 2213, 2308, 2322, 2403, 2409, 2712 — v Ware (unreported, 1992) …. 2104 Commonwealth Bank of Australia v Barker (2014) …. 913 — v Butterell (1994) …. 1627, 2922 — v Smith (1991) …. 1723, 1827, 1838 — v Szczurek (2006) …. 2405, 2741 Commonwealth Homes and Investment Co Ltd, Re [1943] …. 2627 — v Smith (1937) …. 1002, 1018, 1310, 2318, 2713, 2723 Commonwealth of Australia v Amann Aviation Pty Ltd (1991) …. 208, 213, 917, 926, 1127, 1408, 1410, 1508, 1802, 1804, 1806, 1809, 1810, 1812, 1819 — v Kerr [1919] …. 2404 Commonwealth Trading Co v Reno Auto Sales Ltd [1967] …. 423 Compagnie Francaise des Chemins de Fer Paris-Orleans v Leeston Shipping Co Ltd (1919) …. 1337 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] …. 1225 Comptoir d’Achat et de Vente du Boerenbond Belge SA v Luis de Ridder Limitada (The Julia) [1949] …. 1220, 1226 Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 2) (1991) …. 523, 2014, 2039 Connor v Stainton (1924) …. 1152 Conroy v Lowndes [1958] …. 1511, 1720

Consolidated Fertilisers Ltd v Commissioner of Taxation (1992) …. 2806, 2808 Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) …. 1710 Continental C & G Rubber Co Pty Ltd, Re (1919) …. 127, 413, 908, 1113, 1213, 1214, 1222, 1224, 1225, 1230, 1231, 1234, 2634 Continental Caoutchouc & Gutta Percha Co v Kleinwort, Sons & Co (1904) …. 441, 442 Cook v Deeks [1916] …. 251, 1728 — v Evatt (No 2) [1992] …. 1717 — v Italiano Family Fruit Company Pty Ltd (in liq) (2010) …. 847 — v Wright (1861) …. 447 Cooke v Dunn (1998) …. 158 Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (2009) …. 446, 1017, 1028, 1435 Cook’s Mortgage, Re [1896] …. 617 Coope v Twynam (1823) …. 621 Cooper v Australian Electric Co (1922) Ltd (1922) …. 1171 — v City of Derby (1910) …. 1035 — v Phibbs (1867) …. 1434 Copping v Commercial Flour and Oatmeal Milling Co Ltd (1933) …. 1302 Copyright Agency Ltd v Department of Education (1985) …. 1721 Coras v Webb [1942] …. 640, 1017 Corio Guarantee Corp v McCallum [1956] …. 1020, 1152 Cornfoot v Holdenson [1932] …. 621, 645 Corpe v Overton (1833) …. 1017 Corporate Management Services v Abi-Arraj [2000] …. 2410 Coshott v Lenin [2007] …. 208, 2722, 2904, 2912, 2915 — v Sakic (1998) …. 841, 2916 Costello v Chief Constable of Derbyshire Constabulary [2001] ….

2622 Cotnam v Wisdom (1907) …. 827 Cotronic (UK) Ltd v Dezonie [1991] …. 1027 Coulls v Bagot’s Executor & Trustee Co Ltd (1967) …. 613, 645, 1815, 1816 Council of the City of Sydney v Burns Philp Trustee Co Ltd (in liq) (unreported, 1992) …. 448 Country and Metropolitan Homes Surrey Ltd v Topclaim Ltd [1996] …. 1126 County of Carleton v City of Ottawa (1963) …. 840 — v — (1965) …. 456, 852 Cousins v Freeman (1957) …. 1320, 2333 Couturier v Hastie (1856) …. 1324 Cowan v Stanhill Estates Pty Ltd (No 2) [1967] …. 1125, 1414 Cowern v Nield [1912] …. 1017, 1020, 1040 Cowper v Godmond (1833) …. 2723 Cox v Hakes (1890) …. 706 — v Prentice (1815) …. 442 Crabb v Arun District Council [1976] …. 1046 — v Gleeson [1920] …. 1138 Craig v Marshall (1935) …. 1628 Crantrave Ltd (in liq) v Lloyds Bank Plc [2000] …. 446, 845, 847 Craven-Ellis v Canons Ltd [1936] …. 124, 128, 135, 457, 916, 932, 934, 1025, 1027, 1028, 1114, 2607 Craythorne v Swinburne (1807) …. 610, 612, 621, 640, 646 Creak v James Moore & Sons Pty Ltd (1912) …. 307, 321, 1632, 2820 Credit Suisse (Monaco) SA v Attar [2004] …. 2415 Crescendo Management Pty Ltd v Westpac Banking Corp (1988) …. 504, 506, 521, 522, 1312 Cressman v Coys of Kensington (Sales) Ltd [2004] …. 148, 158, 458,

909, 932, 934, 2417 Crippen, In the Estate of [1911] …. 1921 Criterion Theatres Ltd v Melbourne & Metropolitan Board of Works [1945] …. 528, 529 Crombie v Crombie [1903] …. 1019, 2723 Croskery v Gee [1957] …. 849 CSR Ltd v Amaca Pty Ltd [2007] …. 151, 648 CSS Investments Pty Ltd v Lopiron Pty Ltd (1987) …. 2321 CT Bowring Reinsurance Ltd v Baxter (The M Vatan and M Ceyhan) [1987] …. 1225 CTN Cash and Carry Ltd v Gallagher Ltd [1994] …. 516, 518, 531, 1312 Cullen v Trapell (1980) …. 2809 Cullinane v British ‘Rema’ Manufacturing Co Ltd [1954] …. 1811 Cummings v Lewis (1993) …. 610, 614, 616, 621, 623 Cundy v Lindsay (1878) …. 1009, 2527 Cureton v Blackshaw Services Pty Ltd [2002] …. 2813 Currier v Studley (1893) …. 2732 Curruth v Ern Moro & Amoco Enterprises Pty Ltd (1966) …. 1017 Curwen v Yan Yean Land Co Ltd (1891) …. 1437 Customs and Excise Commissioners v National Westminster Bank plc [2003] …. 2520 Cutter v Powell (1795) …. 908, 919, 933, 1151, 1229, 1231, 1265

D D & C Builders Ltd v Rees [1966] …. 506, 528, 531, 1328, 2322, 2516 D Owen & Co v Frank [1895] …. 524 Dagenham (Thames) Dock Co, Re; Ex parte Hulse (1873) …. 1141 Dahlia Mining Co Ltd v Collector of Customs (1989) …. 2039, 2820

Dakin v Oxley (1864) …. 1152 Dalecoast Pty Ltd v Guardian International Pty Ltd [2001] …. 1831 — v — [2003] …. 1831 Dalgety and New Zealand Loan Ltd v C Imeson Pty Ltd [1964] …. 1014 Dalkia Utilities Services Plc v Celtech International Ltd [2006] …. 1108 Dalma No 1 Pty Ltd (in liq), Re (2013) …. 847 Daly v Sydney Stock Exchange Ltd (1985) …. 454 — v — (1986) …. 110, 249, 253, 257, 303, 451, 1703, 2737 Damberg v Damberg (2001) …. 158, 415, 447, 934, 1025, 1026 Damon Compania Naviera SA v Hapag-Lloyd International SA (The Blankenstein) [1983] …. 1130 — v — [1985] …. 1145, 1413, 1823 Dandoroff v Rogozinoff [1988] …. 527 D’Angola v Rio Pioneer Gravel [1979] …. 1536 Daniell v Sinclair (1881) …. 1302 Daraydan Holding Ltd v Solland International Ltd [2005] …. 257 Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd [2010] …. 1027 Darlington Borough Council v Wiltshier Northern Ltd [1995] …. 1820 Dart Industries Inc v Decor Corp Pty Ltd (1993) …. 135, 138, 222, 1509, 1533, 1535, 1617, 1710, 1711, 1713, 1716, 2304, 2903 Davey v Rural Municipality of Cornwallis [1931] …. 849 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) …. 108, 123, 131, 135, 136, 138, 145, 164, 166, 167, 169, 170, 171, 208, 309, 403, 407–409, 411–416, 421, 423, 426, 429, 430, 432, 442, 444–448, 514, 524, 529, 916, 919, 1015–1017, 1121, 1133, 1221, 1302, 1311, 1434, 1438, 1631, 2008, 2015, 2018, 2029, 2037, 2038, 2106, 2107, 2204, 2331, 2404, 2406, 2408,

2410, 2412, 2413, 2415, 2417, 2502–2504, 2510, 2515, 2518–2522, 2601, 2639, 2721, 2723, 2904, 2908, 2909 Davies v Humphreys (1840) …. 621, 643 — v Littlejohn (1923) …. 1734 — v Messner (1975) …. 171 Davis, Re; Davis v Davis [1902] …. 2814 — v Commonwealth (1988) …. 2102 — v Federal Commissioner of Taxation (2000) …. 419 — v Hueber (1923) …. 630 — v Worthington [1978] …. 1922, 1923 Davis Contractors Ltd v Fareham UDC [1956] …. 1210, 1232 Davitt v Titcumb [1990] …. 1926 Dawson (dec’d), Re (1966) …. 1511, 1723, 1725, 1726, 2813, 2814 Dawson v Linton (1822) …. 636 Day v Singleton [1899] …. 2811 Day Ford Pty Ltd v Sciacca [1990] …. 2611 DCT v Hadidi (1994) …. 2516 De Bernales v Fuller (1810) …. 2802 — v Wood (1812) …. 2802, 2811 De Bernardy v Harding (1853) …. 118, 145, 1168, 1429 De Garis v Dalgety & Co Ltd [1915] …. 1012 De Havilland v Bowerbank (1807) …. 2802, 2811 Deacon v Transport Regulation Board [1958] …. 523 Dean v Ainley [1987] …. 1820 Dean-Willcocks v Nothintoohard Pty Ltd (in liq) [2005] …. 151 — v — [2006] …. 151, 153, 158, 175, 839 — v — (2007) …. 839 Deane v Brian Hickey Invention Research Pty Ltd (1988) …. 1334 Debenham v Sawbridge [1901] …. 2333

Debtor, Re [1937] …. 845 Deckert v Prudential Insurance Co [1943] …. 1926 Deemcope Pty Ltd v Cantown Pty Ltd [1995] …. 516, 517 Deglman v Guaranty Trust Co of Canada [1954] …. 131, 133, 819, 1030, 1416 Delbridge v Low [1990] …. 1125, 1137, 1140, 1143, 1414, 2812, 2814, 2824 Dellow’s Will Trusts, Re [1964] …. 1905, 1910, 1912 Demagogue Pty Ltd v Ramensky (1992) …. 1313, 1333, 1334, 1838, 2334 Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) …. 522, 1330, 1335, 1723 Denis Geary Motors Pty Ltd v Hunter Street Finance Ltd [1979] …. 2530 Denmeade v Stingray Boats [2003] …. 521 Denny Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] …. 1220, 2314 Dentists Supply Co v Cornelius (1953) …. 1533, 2731 Denton v Ryde Municipal Council (1953) …. 1025, 1028 Denton’s Estate, Re [1904] …. 612, 621 Denys v Shuckburgh (1840) …. 2730 Deposit & Investment Co Ltd v Kaye [1962] …. 130, 908, 909, 1003, 1019–1021, 1027, 1030, 1032, 2639 Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) …. 2039 — v Hadidi (1994) …. 1124 Dering v Earl of Winchelsea (1787) …. 605, 610, 612, 621, 647 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] …. 1039 Deutsche Bank v Beriro & Co (1895) …. 2408

Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] …. 107, 120, 165, 409, 416, 421, 429, 431, 432, 444, 446, 502, 528, 1533, 2002, 2008, 2018, 2034, 2039, 2728, 2733, 2741 Devaynes v Noble (Clayton’s Case) (1816) …. 441 Devenish Nutrition Ltd v Sanofi-Aventis SA [2007] …. 1821, 1831 — v — [2008] …. 1821, 1831 Dewar v Mintoft [1912] …. 1413 Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] …. 402, 429, 431, 2415, 2417, 2421 —; Cressman v Coys of Kensington [2004] …. 2417 —; Maersk Air Ltd v Expeditors International (UK) Ltd [2003] …. 2417 Di Mella v Rudaks (2008) …. 603 Dickson Elliot Lonergan Ltd v Plumbing World Ltd [1988] …. 1035 Didmore v Leventhal (1936) …. 610, 617, 620, 633, 643 Dies v British and International Mining and Finance Corp Ltd [1939] …. 930, 1125, 1127 Dillwyn v Llewellyn (1862) …. 1046 Dimond v Lovell [2002] …. 153, 1021 Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] …. 215, 503, 506, 509, 521, 522, 527, 530, 909, 1304, 1312, 1320, 1322, 1326 Dimurro v Charles Caplin & Co (1969) …. 818 Dingjan, Re; Ex parte Wagner (1995) …. 1129 Diplock, Re [1948] …. 129, 250, 303, 319, 2407, 2717, 2820 Director of Public Prosecutions, Re; Ex parte Lawler (1994) …. 1904 Director of Public Prosecutions for Northern Ireland v Lynch [1975] …. 521 Director of War Service Homes v Harris [1968] …. 1820

Director-General of Social Services v Hales (1983) …. 2110 Distillers Co (Biochemicals) Ltd v Thompson [1971] …. 2733 Divitkos, in the matter of ExDVD Pty Ltd (in liq) [2014] …. 640 Dixon v Barton [2011] …. 454, 456, 640, 847 DJE Constructions Pty Ltd v Maddocks [1982] …. 2605, 2619, 2638–2640 Do Carmo v Ford Excavations Pty Ltd (1984) …. 206 Docker v Somes (1834) …. 2813, 2815 Doe d Wittington v Hards (1851) …. 706 Dome Resources NL v Silver (2008) …. 2809 Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) …. 1334, 2334 Donaldson v Freeson (1934) …. 2603, 2632 Donis v Donis [2007] …. 2415 Doubikin Holdings Pty Ltd v Grail Pty Ltd (1991) …. 1122, 1414 Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) …. 2528 Douglass v Lawton Pty Ltd [2007] …. 1124 Doulton Potteries Pty Ltd v Bronotte [1971] …. 453, 1045, 1612 Dover Pty Ltd, Re (1981) …. 303 Dowson & Mason Ltd v Potter [1986] …. 1724, 1726 Dowthwaite Holdings Pty Ltd v Saliba [2006] …. 618 Doyle v White City Stadium Ltd [1935] …. 1030 Dr Drury’s Case (1610) …. 702 Dr Gregory Moore v The National Mutual Life Association of Australasia Ltd [2011] …. 2410, 2415, 2419 Dr Martins Australia Pty Ltd v BATA Shoe Co of Australia Pty Ltd (1997) …. 2306 Drager v Allison (1959) …. 644 Drayton v Martin (1996) …. 618

Dreger, Re (1976) …. 1922, 1927 Drennan v Star Paving Inc (1958) …. 149 Drew v Daniel [2005] …. 513, 532 Drexel Burnham Lambert UK Pension Plan, Re [1995] …. 1705, 1715 Driscoll v Burlington-Bristol Bridge Co (1952) …. 1704 Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile) [2012] …. 1171 — v — [2013] …. 1171 DSND Subsea Ltd v Petroleum Geo-Services AS [2000] …. 522 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) …. 1323 Dubai Aluminium Co Ltd v Salaam [2003] …. 250, 308 Dugan v Mirror Newspapers Ltd (1978) …. 1904 Duke de Cadaval v Collins (1836) …. 514, 527, 532 Duke Group Ltd (in liq), The v Alamein Investments Ltd [2003] …. 2736 Duke of St Albans, The v Shore (1789) …. 1152 Dunbar v Plant [1998] …. 1905, 1909, 1914, 1926 Duncan v Mell (1914) …. 1138, 1224 — v Prudential Assurance Co Ltd (1999) …. 409 — v Shrigley (1870) …. 1171 Duncan, Fox & Co v North and South Wales Bank (1880) …. 625, 640, 649 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] …. 1137 Dunton v Warnambool Waterworks Trust (1893) …. 1137 DWS, Re [2001] …. 1910, 1922, 1933 Dwyer v Kaljo (1992) …. 1233, 1819

E

E R Squibb & Sons v Chemical Foundations (1937) …. 2417 EG, Re [1914] …. 831 Eagle Star Insurance Co Ltd v Provincial Insurance Corp [1994] …. 618, 619 Earhart v William Low Co (1979) …. 938 Earl of Beauchamp v Winn (1873) …. 1437 Earl of Chesterfield v Janssen (1751) …. 1310 Earthworks and Quarries Ltd v FT Eastman & Sons Pty Ltd [1966] …. 1157, 1167, 2921 East v Maurer [1991] …. 213 Easterday v Western Australia [2005] …. 706 Eastern Distributors Ltd v Goldring [1957] …. 2530 Eastern Shipping Co Ltd v Quah Beng Kee [1924] …. 626, 627 Eastwood v Kenyon (1840) …. 116 Easyfind (NSW) Pty Ltd v Paterson (1987) …. 2515 Eddis v Chichester [1969] …. 2742 Eden Productions Pty Ltd v Southern Star Group Ltd [2002] …. 2416 Edgington v Fitzmaurice (1885) …. 429, 1325 Edler v Auerbach [1950] …. 1016, 1124, 2333, 2603, 2608, 2637 Edmonds v Dovovan (2005) …. 256 Edmunds v Pickering (2000) …. 2737 — v Wallingford (1885) …. 629, 633, 636 Edson v Hammon (1911) …. 828 Edwards, Re [2014] …. 1903, 1906, 1912, 1923 — v Australian Securities and Investments Commission (2009) …. 933, 1024, 1034, 1035, 1045, 1408 — v Lee’s Administrators (1936) …. 1639 — v Sydney Building Group Pty Ltd [2011] …. 123 — v Wallingford (1885) …. 604

Edwards, Ex parte; Re Chapman (1884) …. 2419 Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) …. 206, 2308 Egan v O’Brien [2006] …. 1923 — v State Transport Authority (1982) …. 1510, 1629 Ehrensperger v Anderson (1848) …. 909, 1105 Ekert v Mereider (1993) …. 1923, 1927 El-Mir v Risk [2005] …. 2516 Eldan Services Ltd v Chandag Motors Ltd [1990] …. 454 Elder Smith Goldsbrough Mort Ltd v McBride [1976] …. 1120 Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) …. 1310, 2318, 2703, 2707, 2812, 2824 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] …. 215, 506, 511, 518, 520–522, 531 — v — (2014) …. 506, 511, 518, 531 Electricity Supply Nominees Ltd v Thorn EMI Retail Ltd (1991) …. 621 Elkateb v Lawindi (1997) …. 1029 Elkington & Co Ltd v Amery [1936] …. 833, 1040 Ellesmere Brewery Co v Cooper [1896] …. 605, 621, 646 Elliot v Crutchley [1904] …. 1225 Ellis v Barker (1869) …. 530 — v Rowbotham [1900] …. 1147 Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) …. 1704, 1722, 1838, 2334 Elsinora Global Ltd v Commissioner of Taxation (2006) …. 2810 Elson v Prices Tailors Ltd [1963] …. 916, 1131, 1140 Elvin & Powell Ltd v Plummer Roddis Ltd (1933) …. 806 Emanuel (No 14) Pty Ltd (in liq), Re; Macks v Blacklaw & Shadforth

Pty Ltd (1997) …. 847 Emery v Day (1834) …. 2722 Emma Silver Mining Co v Grant (1880) …. 1532 Emmens v Elderton (1853) …. 1167 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) …. 1045 Employer’s Corporate Investments Pty Ltd v Cameron (1977) …. 608 ENE Kos 1 Ltd v Petroleo Brasileiro SA (The Kos) (No 2) [2012] …. 1171 English v Dedham Vale Properties Ltd [1978] …. 1726 — v Gibbs (1888) …. 1017 English, Scottish and Australian Bank Ltd v Beatty [1931] …. 2906 Enimont Overseas AG v RO Jugotanker Zadar (The Olib) [1991] …. 1312, 1322 Equalisation Committee Ltd v McCabe (1938) …. 2926 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) …. 511, 515, 517, 518, 520, 521 — v — (1993) …. 138, 511, 517, 518, 520, 521, 1312 Equiticorp Financial Services Ltd (NSW) v Equiticorp Financial Services Ltd (NZ) (1992) …. 138 Equiticorp Industries Group Ltd (in stat management) v R (No 47) [1998] …. 639, 2420 Equity Trustees Executors & Agency Co Ltd v New Zealand Loan & Mercantile Agency Co Ltd [1940] …. 640, 649 Equuscorp Pty Ltd v Haxton (2011) …. 104, 108–110, 123, 126, 135, 139, 169, 170, 231, 233, 449, 640, 908, 918, 2409, 2410, 2419, 2904 — v — (2012) …. 917, 923, 926, 1003, 1020, 1022, 1221, 1401, 1435, 1533, 1534, 2602, 2606, 2608, 2609, 2615, 2616, 2625, 2639, 2723 — v Wilmoth Field Warne (A Firm) (2007) …. 1028

Eric Gnapp Ltd v Petroleum Board [1949] …. 516 Erlanger v New Sombrero Phosphate Co (1878) …. 1331, 1433, 1437, 2326, 2713 Esanda Finance Corp Ltd v Plessnig (1989) …. 1139, 1140, 1142 — v Tong (1997) …. 1318 Esperance Cattle Co Pty Ltd v Granite Hill Pty Ltd (2014) …. 1614, 1639 Esso Australia Resources Ltd v Commissioner of Taxation (1999) …. 2030 — v Gas and Fuel Corp of Victoria [1993] …. 168, 516, 522, 2023, 2032, 2034 Esso Petroleum Co Ltd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] …. 633, 642 — v Niad Ltd [2001] …. 1831 Estate of Cleveland v Gordon (1992) …. 819 Estate of Luxton, Re (2008) …. 1917 Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (recs and mgrs apptd) (in liq) (No 3) (2006) …. 408, 1017, 1021, 2415 Ettridge v Vermin Board of the District of Murat Bay [1928] …. 1151, 1167, 1168 — v — [1930] …. 1167 Eugenia, The see Ocean Tramp Tankers Corp v V/O Sovfracht Euro-Diam Ltd v Bathurst [1990] …. 2609 Evans v Bartlam [1937] …. 2305 — v Benson & Co [1961] …. 1304 Evans Marshall & Co Ltd v Bertola SA [1973] …. 1836 Evda Nominees Pty Ltd v Victoria (1984) …. 2030 Everet v Williams (the Highwayman’s Case) (1725) …. 647, 2601 Evia Luck, The see Dimskal Shipping Co SA v International Transport Workers Federation

Exall v Partridge (1799) …. 116, 621, 627, 629, 633, 846, 849 Executor Trustee & Agency Co of South Australia Ltd v Thompson (1919) …. 2926 Experience Hendrix LLC v PPX Enterprises Inc [2003] …. 1821, 1831, 1833, 1837 Export Credits Department v Universal Oil Products Co [1983] …. 1824 Eyre v Woodfine (1592) …. 708

F F, Re [1990] …. 816, 826, 828 F J Richards Pty Ltd v Mills Pty Ltd (unreported, 1990) …. 1028 Fablo Pty Ltd v Bloore [1983] …. 1030, 1031 Facey v Rawsthorne (1925) …. 2310 Facton Ltd v Rifai Fashions Pty Ltd (2012) …. 1708 FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) …. 1301, 1437 Fairbanks v Snow (unreported) …. 504 Falcke v Scottish Imperial Insurance Co (1886) …. 157, 605, 623, 808, 810, 829, 834–836, 842, 845 Falkenberg v Allen (1907) …. 2634 Falkner v Bourke (1990) …. 2809 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) …. 108, 123, 135, 139, 141, 142, 166, 167, 169, 208, 248, 251, 309, 320, 407, 430, 503, 1639, 1705, 1912, 2504 Farmer v Arundel (1772) …. 413, 446 Farmers’ Co-operative Executors & Trustees Ltd v Perks (1989) …. 1313, 2713 Farquharson Brothers & Co v King & Co [1902] …. 308 Farrant v Leburn [1970] …. 1126, 1130, 1414

Farrell v Delaney (1952) …. 705 Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) (1997) …. 251 Farrow Mortgage Services Pty Ltd v Edgar (1993) …. 138, 208, 908, 1014, 1028, 1334, 1435, 2616, 2627, 2631, 2639 Farrow Mortgage Services Pty Ltd (in liq) v Slade (1996) …. 647 Farstad Supply AS v Enviroco Ltd [2010] …. 911 Fazzolari v Coucheron [2003] …. 2416 FCT v Orica Ltd (1998) …. 2516 FDIC v Bank One, Waukesha (1989) …. 2731 Federal Airports Corp v Aerolineas Argentinas (1997) …. 2014 — v Makucha Developments Pty Ltd (1993) …. 2321 Federal Commissioner of Taxation v Guy (1996) …. 1018, 1137 — v Myer Emporium Ltd (No 1) (1986) …. 703 — v Orica Ltd (1998) …. 636, 2516 — v Unilever Australia Securities Ltd (1995) …. 644 Federal Sugar Refining Co v United States Sugar Equalization Board (1920) …. 1520, 1633 Fehlberg v Stanton [1960] …. 926, 930, 1114, 1124, 1819 Fell v Whittaker (1871) …. 528 Feltham v Terry (1793) …. 1619 Fender v National Westminster Bank [2008] …. 421 Fensom v Cootamundra Race Course Reserve Trust [2000] …. 157 Ferguson, Re (1969) …. 2638, 2640 Ferrier v Civil Aviation Authority (1994) …. 2810 FHR European Ventures LLP v Cedar Capital Partners LLC [2014] …. 251, 1728 — v Mankarious [2014] …. 313 Fibrosa Societe Anonyme v Fairbairn Lawson Combe Barbour Ltd [1942] …. 1220

Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] …. 129, 130, 908, 911, 916, 917, 920, 922, 930, 941, 1124, 1133, 1202, 1213, 1214, 1217, 1220–1223, 1225, 1226, 1230, 1234, 1263 Field Common Ltd v Elmbridge Borough Council [2008] …. 1821, 1831 Financings Ltd v Baldock [1963] …. 1132 Finch Motors Ltd v Quinn (No 2) [1980] …. 1120 Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2002] …. 1831 Finlay v Chirney (1888) …. 1617 Finlayson v James [1986] …. 1152 Fire and All Risks Insurance Co Ltd v Powell [1966] …. 1926 First Federal Savings and Loan Association v A & M Towing & Road Service (1998) …. 837 Firth v Centrelink (2002) …. 839 Fischer & Copley Ltd v Bank of Adelaide [1938] …. 513, 514, 516, 522 Fisher v Automobile Finance Co of Australia Ltd (1928) …. 835, 2525 Fitt v Cassanet (1842) …. 916, 917, 1105 Fitter, Re [2005] …. 1908, 1916 Fitzgerald v F J Leonhardt Pty Ltd (1997) …. 1022, 1919, 2604, 2608, 2609, 2624, 2626, 2627, 2629, 2632, 2637, 2639 Fitznead v DJ Motors Ltd [1977] …. 2530 Fitzsimons v McBride, Minister for Liquor, Gaming and Racing (NSW) [2008] …. 2410, 2417 Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) …. 1510 Fleer Corp v Topps Chewing Gum Inc (1988) …. 708 Flett v Deniliquin Publishing Co Ltd [1964–65] …. 909, 1027, 1418, 1422

Floreani Bros Pty Ltd v Woolscourers (SA) Pty Ltd (1976) …. 618, 621 Flower v Sadler (1882) …. 515 Foakes v Beer (1884) …. 2516 Focus Metals Pty Ltd v Babicci [2014] …. 444, 448, 454 Foley v Classique Coaches Ltd [1934] …. 1045 Footersville Pty Ltd v Miles (1988) …. 2709 Footwear Design & Marketing (Aust) Pty Ltd v JAS Forwarding (Aust) Pty Ltd (1988) …. 531 Foran v Wight (1989) …. 138, 150, 174, 175, 208, 209, 222, 908, 909, 916, 917, 926, 1126, 1231, 1408, 2213 Force v Haines (1940) …. 807 Ford v Perpetual Trustees Victoria Ltd (2009) …. 123, 147 Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) …. 306, 310, 311, 424, 1016, 1020, 1040, 1316 Ford Motor Co of Australia Ltd v Arrowcrest Group Pty Ltd (2003) …. 522 Forde v Birmingham City Council [2009] …. 1021 Forestry Commission of NSW v Stefanetto (1976) …. 1139 Forgeard v Shanahan (1994) …. 617 Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] …. 908, 1161, 1163, 1164, 1167, 1171 Formosa v Secretary, Department of Social Security (1988) …. 2104, 2106 Fortex Group Ltd (in rec & liq) v MacIntosh [1998] …. 245, 249, 257 Foskett v McKeown [2001] …. 219, 257, 302, 303, 810 Foster v Redgrave (1867) …. 1040 — v Stewart (1814) …. 1520, 1619 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) …. 408, 1221 Fox v Royal Bank of Canada (1975) …. 612

Frankcombe v Foster Investments Pty Ltd [1978] …. 1125, 1148, 1414 Franklin v Giddins [1978] …. 1730 Franklins Self Serve Pty Ltd v Wyber (1999) …. 1739 Franknelly Nominees Pty Ltd v Abrugiato [2013] …. 419 Fraser v Pendlebury (1861) …. 528 Fraser Edmiston Pty Ltd v AGL (Qld) Pty Ltd [1988] …. 1703, 1829 Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] …. 1337 Freedom v AHR Constructions Pty Ltd [1987] …. 1019, 1125, 1137, 1140, 1144, 2632 Freeman v Jeffries (1869) …. 120, 426 French Marine v Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz [1921] …. 911, 1126 Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd [1994] …. 2302, 2315 Frey v Stangl (1910) …. 1019 Friend v Brooker (2009) …. 157, 158, 614, 623, 642, 643 Fruhling v Schroeder (1835) …. 2802, 2811, 2926 Frumar v Owners of Strata Plan 36957, The [2010] …. 706, 707 Fuller v Happy Shopper Markets Ltd [2001] …. 426, 909, 1319, 1322 Fullers’ Theatres Ltd v Musgrove (1923) …. 916, 2306 Furphy v Nixon (1925) …. 506, 511, 516, 522, 528, 531, 2808, 2813, 2816, 2817, 2820, 2824 Furs Ltd v Tomkies (1936) …. 1712 Futuretronics International Pty Ltd v Gadzhis (1990) …. 1821 — v — [1992] …. 1821 Fysh v Page (1956) …. 1310, 2713

G

G, Re (1946) …. 1921 GA Investments Pty Ltd v Standard Insurance Co Ltd [1964] …. 528 Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) …. 1612, 1628, 1629, 1702, 1726 Gadsden v Commissioner of Probate Duties [1978] …. 645 Gafford v Graham (1999) …. 1821 Gala v Preston (1991) …. 2601 Gamer’s Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia (1987) …. 2527 Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] …. 1210, 1259, 1266, 1268 Garcia v National Australia Bank Ltd (1998) …. 175, 1313, 1314 Gardiner v Wainfur (1919) …. 1020 Gardner v Brooke [1897] …. 2738 — v Moore [1984] …. 1911, 1926 Garland v Consumers’ Gas Co (2004) …. 107, 133, 2420 Garrard v Email Furniture Pty Ltd (1993) …. 705 Garriock v Walker (1873) …. 816, 823, 837, 838, 840, 852 Garske v Urquhart (1921) …. 1128 Gas Float Whitton No 2, The [1895] …. 835 Gasbourne Pty Ltd, Re [1984] …. 130, 642, 647 Gasparin v Federal Commissioner of Taxation (1994) …. 1129 Gates v City Mutual Life Assurance Society Ltd (1986) …. 213, 1802, 1838 Gaudet v Brown (Cargo ex Argos) (1873) …. 821, 1152 Gebhardt v Saunders [1892] …. 628, 633 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] …. 2318 Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) …. 930, 1121, 1125, 1128

Gemmell v Brienesse (1933) …. 528, 628, 633, 642 General & Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] …. 1612, 1628 General Communications Ltd v Development Finance Corp of New Zealand Ltd [1990] …. 2813, 2814 General Credits Ltd v Ebsworth [1986] …. 705, 2515 General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] …. 1726, 2810 George v Greater Adelaide Land Development Co Ltd (1929) …. 2608, 2625, 2633, 2634, 2637, 2638, 2640 — v Roach (1942) …. 916, 1018 Georgiadis v Australian & Overseas Telecommunications Corp (1994) …. 2036 Geraldton Building Co Pty Ltd v Woodmore (1992) …. 209 Gertsch v Atsas (1999) …. 303, 319, 2410, 2415, 2416 GFT Australia Pty Ltd v Collector of Customs (1995) …. 2806 Ghana Commercial Bank v Chandiram [1960] …. 639, 847 Giannarelli v Wraith (1988) …. 416 Gibbon v Mitchell [1990] …. 419, 421 Gibbons v Wright (1954) …. 1012 Gibson v Lees (1913) …. 1138 Giedo Van der Garde BV v Force India Formula One Team [2010] …. 1831 Gilbert v Healey Investments Pty Ltd [1975] …. 1216 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] …. 1153 Gilchrist v Logan [1927] …. 1625, 1626 Giles, Re [1972] …. 1906, 1909, 1922 Gill v Gill (1921) …. 854 — v Registrar General (1991) …. 640, 642

Giller v Procopets (2008) …. 1720 Gillett v Holt [2001] …. 2403 Gimson v Victorian Workcover Authority [1995] …. 1835 Gino D’Alessandro Constructions Pty Ltd v Powis [1987] …. 1024, 1030–1032, 1422 Giumelli v Giumelli (1999) …. 248, 250, 316, 1046, 1710, 1727 Glasgow Corp v Lord Advocate 1959 …. 2007 Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd [1994] …. 209 Glenmont Investments Pty Ltd v O’Loughlin (No 3) (2001) …. 607 Glenn v Savage (1887) …. 829 Global Finance Group Pty Ltd (in liq), Re; Ex parte Read (2002) …. 303, 320 Gludeau v Gludeau (2013) …. 707 Glynis Carrier v John Georges [2013] …. 515 Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] …. 707 Godfrey v Hennelly (1893) …. 612 Goldcorp Exchange Ltd, Re [1995] …. 238, 239, 249, 252, 257, 454, 1728 Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] …. 1213 Golden Victory, The see Golden Strait Corp v Nippon Yusen Kubishika Kaisha Goldie v Getley (No 3) [2011] …. 2736 Goldsbrough Mort & Co Ltd v Quinn (1910) …. 1017, 1325 Goldsmith v Rodger [1962] …. 1337, 2333 Gollan v Nugent (1987) …. 2608 — v — (1988) …. 1918, 2604, 2609, 2623 Golski v Kirk (1987) …. 206, 2733 Gompertz v Denton (1832) …. 916, 918

Gondal v Dillon Newsagents Ltd [2001] …. 1821 Good Luck, The see Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd Goode v Thompson [2002] …. 710 Goodman v Pocock (1850) …. 1105, 1167, 1168, 1410 Goodwin v Duggan (1996) …. 615 Goodyere v Ince (1610) …. 709 Gordon v Roebuch (1992) …. 520 Gore v Gibson (1845) …. 832 Goring, The [1987] …. 807, 820, 836 Gormley & Co Pty Ltd v Cubit [1964–65] …. 2320 Goss v Chilcott [1996] …. 916, 1219, 1434 Gott v Commonwealth [2000] …. 2717 Gould, Re [1992] …. 2814 — v Vaggelas (1984) …. 213, 1403, 2528 Government of Newfoundland v Newfoundland Railway Co (1887) …. 1153, 1171 Government Insurance Office of New South Wales v Crowley [1975] …. 618 — v Healy (No 2) (1991) …. 711, 2808 Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] …. 441, 2408 Graf v Frame (1986) …. 1704 Graham v Freer (1980) …. 1337 — v Tate (1813) …. 1619 Grand Lodge AOUW of Minnesota v Towne (1917) …. 1016 Gray v Barr [1971] …. 1909, 1916, 1919, 1926 — v Gray (2004) …. 841, 2916 — v Motor Accident Commission (1998) …. 1510, 1813

— v Pastorelli [1987] …. 2608, 2632 — v Thames Trains Ltd [2009] …. 2604 GRE Insurance Ltd v QBE Insurance Ltd [1985] …. 618 Great Berlin Steamboat Co, Re (1884) …. 2627 Great City Pty Ltd v Kemayan Management Services (Australia) Pty Ltd (1999) …. 1028 Great Northern Railway v Swaffield (1874) …. 816, 822, 837, 838, 852 Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] …. 1301, 1311, 1332 Great Western Railway v Sutton (1869) …. 516, 520, 529, 530 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) …. 250, 253, 1329, 1330, 1332 Green v Bestobell Industries Pty Ltd (No 2) [1984] …. 1711, 1717 — v Parr (1870) …. 642 Greenmast Shipping Co SA v Jean Lion et Cie SA (The Saronikos) [1986] …. 1171, 1419 Greenspan v Slate (1953) …. 816, 827, 851, 852 Greenwood v Bennett [1973] …. 458, 1635 — v Francis [1899] …. 647 Greenwood County v Duke Power (1939) …. 708 Gregg v Tasmanian Trustees Ltd (1997) …. 1318 Greville v Parker [1910] …. 1439 Gribbon v Lutton [2002] …. 1018 Griffin v Wetherby (1868) …. 2926 Griffith v Brymer (1903) …. 916, 1017 — v Wade (1966) …. 647 Griffiths, In re [2009] …. 431 — v Commonwealth Bank of Australia (1994) …. 438, 446, 448, 2518 — v Kerkemeyer (1977) …. 829, 853

Griffon Shipping LLC v Firodi Shipping Ltd (The Griffon) [2014] …. 1130, 1413 Grimaldi v Chameleon Mining NL (2012) …. 247, 248, 1705, 1710, 1727, 1728, 1731, 2814 — v — (No 2) (2012) …. 251, 253, 257, 313, 314, 316, 1721 Grimwood v Smith (1880) …. 424 Grincelis v House (2000) …. 2809 Grundt v Great Boulder Pty Gold Mines Ltd (1937) …. 123, 2322, 2403, 2415 Guardian Ocean Cargoes Ltd v Banco do Brasil SA [1991] …. 847 — v — (Nos 1 and 3) [1994] …. 1018, 2723, 2817, 2824 — v — (No 3) [1992] …. 2813, 2814 Guerin v R (1984) …. 1723 Guildford Borough Council v Hein [2005] …. 837, 838 Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council [1999] …. 1010, 1017 Guinness Plc v Saunders [1990] …. 126, 253, 1020, 1028, 1435, 1437, 1717, 2335 Gull Petroleum (WA) Ltd v Tah Land Pty Ltd [2001] …. 1831 Guy v Churchill (1887) …. 839 Guy-Pell v Foster [1930] …. 1106 Gye v Davies (1995) …. 614

H H B Harvey Pty Ltd, Re (1972) …. 1532 H Dakin & Co Ltd v Lee [1916] …. 1152 H P Mercantile Pty Ltd v Dierickx [2013] …. 2725 Ha v State of New South Wales (1997) …. 416, 1221, 2027, 2029, 2030, 2031 Hagan v Waterhouse (1991) …. 2814

Haig v Minister Administering the National Parks & Wildlife Act 1974, The (1996) …. 710, 711 Hain SS Co Ltd v Tate & Lyle Ltd (1936) …. 1164 Haines v Bendall (1991) …. 1510 — v Carter [2001] …. 522 Halgido Pty Ltd v DG Capital Company Ltd (1996) …. 415, 633, 636 Halifax Building Society v Thomas [1996] …. 257, 1612, 1620, 1633, 2320 Halifax Mortgage Services Ltd v Muirhead (1997) …. 639 Halkett v Earl of Dudley [1907] …. 2310, 2708 Hall, Re [1914] …. 1905, 1906 — v Busst (1960) …. 1038 —, In the Estate of [1914] …. 1902 — v Poolman (2007) …. 616 — v Potter (1695) …. 2627 — v Wells [1962] …. 1038 Hallett’s Estate, Re (1880) …. 250 Halpern v Halpern (Nos 1 and 2) [2008] …. 524, 1326 Hambley v Trott (1776) …. 1524, 1629, 1639, 1902 Hamilton v Donovan Oates Hannaford Mortgage Corp Ltd [2007] …. 839 — v Geraghty (1901) …. 458 — v Kaljo (1989) …. 2742 — v Lethbridge (1912) …. 1040 Hampic Pty Ltd v Adams (2000) …. 607 Hampton v BHP Billiton Minerals Pty Ltd (No 2) [2012] …. 1626 Hancock Family Memorial Foundation Ltd v Porteous (2000) …. 251, 253, 1728 Hannah v Peel [1945] …. 1609

Hansen v Mayfair Trading Co Pty Ltd [1962] …. 1025, 1027, 1416, 1417 Harbutt’s ‘Plasticine’ Ltd v Wayne Tank and Pump Co Ltd [1970] …. 1820, 2806 Hardy v Griffiths [2015] …. 1413 — v Motor Insurers’ Bureau [1964] …. 1911, 1926, 2604 Harper v Gaynor (1893) …. 411, 447 Harpur v Levy [2011] …. 644 Harris v Digital Pulse Pty Ltd (2003) …. 215, 1501, 1535, 1711, 1712, 1715, 1717, 1723, 1724, 1733, 1739, 1813, 1831, 2811, 2817 — v Harris (1919) …. 615 — v Russell (1868) …. 2926 Harrison v Landau [2004] …. 518, 522 — v Schipp [2001] …. 2814, 2815 — v Walker (1972) …. 257 Harse v Pearl Life Assurance Co [1904] …. 1222, 2606, 2625, 2634, 2637, 2638, 2640 Hart v E P Dutton (1949) …. 1524 Hartigan v International Society for Krishna Consciousness Inc [2002] …. 2407 Hartogen Energy Ltd v Australian Gas Light Co (1992) …. 413, 451 — (in liq), Re (1992) …. 454 Harvey v Hinchinbrook Divisional Board [1903] …. 120, 1027, 1230 Haseldine v Hosken [1933] …. 1926 Hasham v Zenab [1960] …. 1836 Hastings v Village of Semans [1946] …. 852 Hatch, Re [1919] …. 414 Hatcher v White (1953) …. 2611, 2631, 2636, 2637, 2639, 2640 Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] …. 126, 1017, 1020, 1021, 1027

Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) …. 506, 508, 511, 528, 530, 531, 1312, 1327, 1328, 2315, 2320 Hawkins v Clayton (1986) …. 2714 — v — (1988) …. 149, 2714, 2719, 2733 Hawkinson v Johnston (1941) …. 211 Hawksford v Hawksford [2005] …. 821 Hawtayne v Bourne (1841) …. 844, 845 Hay v Carter [1935] …. 646 Haydon v Jackson (1988) …. 1334 Hayes, Re (1996) …. 642 HB Property Developments Ltd v Secretary of State for the Environment (1999) …. 2318 Head v Kelk (1961) …. 1019 Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) …. 1174, 1510, 2333 Health Services Union NSW v McMillan [2014] …. 1536 Healy v Law Book Co of Australasia Pty Ltd (1942) …. 1151 Heavener v Loomes (1924) …. 706, 1536 Heckenberg v Delaforce [2000] …. 919 Hedley Byrne & Co Pty Ltd v Heller & Partners Ltd [1964] …. 214 Helou v Nguyen [2014] …. 314, 316, 321, 2808 Helton v Allen (1940) …. 1902, 1904, 1915-1917, 1932 Henderson, Re (1916) …. 1038 — v Amadio Pty Ltd (No 1) (1996) …. 2608 — v — (No 2) (1996) …. 2627, 2639 — v Folkestone Waterworks Co (1885) …. 416 — v Merrett Syndicates Ltd [1994] …. 101 — v — [1995] …. 215 — v Young (1913) …. 1018

Henderson’s Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) …. 116, 215, 842, 933, 934 Hendry, Re [1905] …. 612 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) …. 1333, 1334, 2334, 2713 Hennessy v Craigmyle & Co Ltd [1986] …. 522 Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005] …. 1133 Heperu Pty Ltd v Belle (2009) …. 123, 135, 303, 306, 307, 310, 311, 313–315, 1633, 2410 — v — [2011] …. 310, 311 Hermann v Charlesworth [1905] …. 2609, 2627, 2634 Herrod v Johnston [2013] …. 2814 Hewett v Court (1983) …. 255, 1734 Heydon v NRMA Ltd (No 2) (2001) …. 252, 706, 708, 710–712, 2807, 2811, 2812, 2822 — v Perpetual Executors, Trustees and Agency Co (WA) Ltd (1930) …. 706, 842, 2603 Heyman v Darwins Ltd [1942] …. 1154, 1168, 1212, 1421 Heywood v Wellers [1976] …. 1120, 1411 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (1998) …. 1301 Hickey & Co Ltd v Roches Stores Dublin Ltd (No 1) [1993] …. 1833 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) …. 1033 Highland v Exception Holdings Pty Ltd (in liq) (2006) …. 255, 639 Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] …. 2904, 2908 HIH Claims Support Ltd v Insurance Australia Ltd (2011) …. 215, 605, 606, 610, 612, 619, 621, 623 Hill, Re (1974) …. 622

— v ANZ Banking Group Ltd (1974) …. 847 — v Hill [2013] …. 1908 — v Perrott (1810) …. 1620, 1633 — v Rose [1990] …. 1330, 1723, 1725, 1726, 1827 — v Terry (1990) …. 1139 — v Van Erp (1997) …. 139 — v Ziymack (1908) …. 810, 835 Hillas & Co Ltd v Arcos Ltd (1932) …. 1005 Hillesden Securities Ltd v Ryjack Ltd [1983] …. 1629 Hilliard v Westpac Banking Corp (2009) …. 430, 438 Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd [2012] …. 448 — v — (2014) …. 448 Hinton v Sparkes (1868) …. 1137 Hirachand Punamchand v Temple [1911] …. 847 Hirsch v The Zinc Corp Ltd (1917) …. 127, 1022, 1222, 1225, 1230, 2607 Hobbs v Boatwright (1906) …. 2634 — v Marlowe [1978] …. 638, 639 Hochster v De la Tour (1853) …. 1105 Hodder v Watters [1946] …. 1122, 1213, 1221, 1433 Hodgetts, Re (1949) …. 612 Hoenig v Isaacs [1952] …. 118, 1152, 1154, 1167, 1171, 1227, 1231, 1415 Hoffman, Re; Ex parte Worrell v Schilling (1989) …. 2318 — v Red Owl Stores Inc (1965) …. 149 Holborn Union v Vestry of St Leonard (1876) …. 852 Holdcroft v Market Garden Produce Pty Ltd [2001] …. 706, 707, 710 Holden v Black (1905) …. 644

Holiday v Sigil (1826) …. 308 Holland v Wiltshire (1954) …. 1106 Hollington v F Hewthorn & Co Ltd [1943] …. 1917 Hollis v Atherton Shire Council (2003) …. 2021, 2042 Holloway v Witham (1990) …. 910, 1838 Holman v Johnson (1775) …. 2604, 2611 Holmes v Burgess [1975] …. 1337 Holt v Biroka Pty Ltd (1988) …. 1821, 1838 — v Markham [1923] …. 122, 126, 414, 2408, 2415 Home and Colonial Insurance Co Ltd v London Guarantee Accident Co Ltd (1928) …. 430 Home Management Maintenance Pty Ltd v Doyle (1992) …. 135, 153, 1160, 1415 Honey v McLennan (1997) …. 2742 Hong Kong Bank of Australia Ltd v Larobi Pty Ltd (1991) …. 645 Hoobin, Re [1957] …. 1144, 1148 Hooker Corp Ltd v Darling Harbour Authority (unreported, 1987) …. 1033 Hookway v Racing Victoria Ltd (2005) …. 407, 430, 431, 444, 447 Hooper v Exeter Corp (1887) …. 2011 Hooper & Grass’ Contract, Re [1949] …. 506, 522, 523, 530 Horlock v Beal [1916] …. 1231, 1232 Horsford v Bird [2006] …. 1821, 1837, 1841 Horsley v Ramsay (1889) …. 1720 Horton v Jones (1934) …. 128, 145, 158, 909, 934, 1025, 1029, 1030, 1032, 1158, 1422 — v — (1935) …. 128, 145, 1025, 1029, 1030, 1032, 1158, 1422 — v — (No 2) (1939) …. 119, 128, 135, 215, 913, 1025, 1027, 1029, 1158, 1167, 2733, 2914 Horvath v Commonwealth Bank of Australia [1999] …. 640

Hospital Products Ltd v United States Surgical Corp (1984) …. 161, 252, 314, 1639, 1703, 1705, 1723, 1726, 1731, 1733, 1806, 1827, 1829, 1833, 1835 Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) …. 1507, 1510, 1520, 1525, 1602, 1616, 1626, 1633, 1639, 1708, 1831 Hotson v East Berks AHA [1987] …. 522 Houghton v Immer (No 155) Pty Ltd (1997) …. 617 Hounga v Allen [2014] …. 2609 Howe v Smith (1884) …. 1126, 1138, 1414 Hua Chiaos Commercial Bank Ltd v Chiaphua Industries Ltd [1987] …. 910 Hudson v Jope (1914) …. 2320, 2333 Huggins v Coates (1843) …. 2723 Hughes v Liverpool Victoria Legal Friendly Society [1916] …. 2522, 2628, 2637 — v Metropolitan Railway Co (1877) …. 2322 — v Molloy [2005] …. 157 Hughes & Vale Pty Ltd v New South Wales (1954) …. 2023 Humphrey v Fairweather [1993] …. 2703 Humphries v Proprietors ‘Surfers Palms North’ Group Titles Plan 1955 (1994) …. 2619 Hungerfords v Walker (1989) …. 2802, 2803, 2805, 2807, 2809–2811, 2813, 2814, 2817, 2819, 2922 Hunt v R M Douglas (Roofing) Ltd [1990] …. 2808 — v Silk (1804) …. 916, 1116, 1122, 1433 Hunter v Chief Constable of the West Midlands Police [1982] …. 1917 — v Council of the Municipality of West Maitland (1923) …. 1152, 1153 — v Vicario (1911) …. 1167

Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) …. 1627, 1840, 2327, 2527, 2528 Hurst v Vestcorp Ltd (1988) …. 135, 158, 209, 908, 1022, 1028, 2608, 2609, 2619 Hussein v Secretary, Department of Immigration and Multicultural Affairs (No 2) (2006) …. 2615 Hutchinson v Sydney (1854) …. 116 Huyton SA v Peter Cremer GmbH & Co [1999] …. 522, 1312 Hydro Electric Commission of the Township of Nepean v Ontario Hydro (1982) …. 407, 2414, 2415 Hynes v Byrne (1899) …. 1325, 1337 — v — (1899) …. 1325, 1337 Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] …. 916, 941, 1127, 1129–1131, 1133–1135, 1168, 1245 Hyundai Shipbuilding & Heavy Industries Co Ltd v Pournaras [1978] …. 1135

I Iannello v Sharpe (2007) …. 1140, 1145 IBM Australia Ltd v National Distribution Services Ltd (1991) …. 1301 Ibrahim v Barclays Bank plc [2013] …. 622, 636 Idameneo (No 123) Pty Ltd v Gross (2012) …. 608 Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] …. 708, 710 Iezzi Constructions Pty Ltd v Currumbin Crest Development Pty Ltd (1994) …. 138 — v — [1995] …. 209, 2206 — v Watkins Pacific (Qld) Pty Ltd [1995] …. 908, 910, 1019, 1129, 1167, 1168, 1422, 1428, 1430 Ikeuchi v Liu (2001) …. 251

Ilich v R (1986) …. 454 — v — (1987) …. 308, 312, 452 Imageview Management Pty Ltd v Jack [2009] …. 1711, 1717 Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) …. 2318 Imperial Bank of Canada v Bank of Hamilton [1903] …. 424, 437 Inca Ltd v Autoscript (New Zealand) Ltd [1979] …. 2742 Inchbald v Western Neilgherry Coffee Tea and Cinchona Plantation Co Ltd (1864) …. 1168 Independent Education Union of Australia v Canonical Administrators Barkly St Bendigo (1998) …. 1167 Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) …. 145, 148, 158, 935, 1027, 1035, 1168, 1228, 1231, 1233, 1416, 1417, 1427 Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] …. 313, 1318, 1434, 2528 Indian Grace, The see Republic of India v Indian Steamship Co Ltd Ingram v Little [1961] …. 1009 Inman v Ackroyd & Best Ltd [1901] …. 1147 Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd (1991) …. 412, 413 Insurers’ Guarantee Fund NEM General Insurance Association Ltd, The (in liq) v GIO General Ltd (1994) …. 618 Intercontinental Packers Pty Ltd v Harvey [1969] …. 523 Interfirm Comparison (Australia) Pty Ltd v Law Society of NSW (1975) …. 1726 International Corona Resources Ltd v LAC Minerals Ltd (1987) …. 1704 International Packers Pty Ltd v Harvey [1969] …. 514 Inverugie Investments Ltd v Hackett [1995] …. 1615, 1625, 1626, 1629

Investmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd (2002) …. 1028 Inwards v Baker [1965] …. 1046 Islamic Republic of Iran Shipping Lines v Denby [1987] …. 1718, 2628 Island Records Ltd v Tring International PLC [1996] …. 2306 Islington Metal & Plating Works Ltd, Re [1984] …. 1532 Ison v Australian Wheat Board (1967) …. 1047, 2605 Israel v Douglas (1789) …. 2926 — v Foreshore Properties Pty Ltd (in liq) (1980) …. 116, 627, 646, 2925 Issitch v Worrell (2000) …. 215, 909, 1422 Item Software (UK) Ltd v Fassihi [2005] …. 1173

J J, Re [1909] …. 833, 1040 J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) …. 414, 446, 447, 513, 514, 520, 528, 1630, 2514 J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1984] …. 161, 1030, 1409, 1818 J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) …. 147, 150, 153, 158, 818, 823, 836, 838, 840, 910 J Hutchinson Pty Ltd v Cada Formwork Pty Ltd [2014] …. 707 J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] …. 1255 Jack Clark (Rainham) Ltd v Clark [1946] …. 1632 Jackson v Harrison (1978) …. 1926 — v Richards [2005] …. 708 — v Spittall (1870) …. 2733 — v Sterling Industries Ltd (1987) …. 703

Jacob & Youngs Inc v Kent (1921) …. 1152 JAD International Pty Ltd v International Trucks Australia Ltd (1994) …. 1315, 1337, 1433, 1437, 2318, 2323, 2330, 2333, 2334, 2713, 2813, 2814, 2816, 2824 Jaensch v Coffey (1984) …. 806 Jaffer v Commonwealth Bank of Australia Ltd [2001] …. 2416 Jaffray v Marshall [1993] …. 1723 Jaggard v Sawyer [1995] …. 1625, 1821, 1831, 1837 Jagon v Vivian (1871) …. 1616 James, Ex parte (1874) …. 413 — v British General Insurance Co [1927] …. 1909 — v Commonwealth (1939) …. 2028 — v Oxley (1939) …. 305–307, 1633 — v Thomas H Kent & Co Ltd [1951] …. 129, 908, 1024, 1030, 1031, 1231 James Hardie & Co Pty Ltd v Wyong Shire Council (2000) …. 606, 648 Jameson v Central Electricity Generating Board [2000] …. 2516 Jans v Public Trustee [2002] …. 1914 Jax Tyres Pty Ltd v Commissioner of Taxation (1986) …. 2007, 2033 Je Maintiendrai Pty Ltd v Quaglia (1980) …. 2322 Jebara v Ottoman Bank [1927] …. 821, 822, 838 Jeffrey v Fitzroy Collingwood Rental Housing Association Ltd [1999] …. 2420 Jenkins v Tucker (1788) …. 849 — v Wynen [1992] …. 842, 1233 Jennings Construction Pty Ltd v Q H & M Birt Pty Ltd (unreported, 1988) …. 1416 Jessop v Lutwyche (1854) …. 116 JLW (Vic) Pty Ltd v Tsiloglou [1994] …. 710

Joaquin v Hall [1976] …. 842 Jobson v Johnson [1989] …. 1137, 1139 John v Dodwell & Co [1918] …. 2731 — v MGN Ltd [1997] …. 1639 — v Rawlings (1984) …. 618 John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) …. 257, 1727 John F Goulding Pty Ltd v The Victorian Railways Commissioners (1932) …. 1609 John Holland Pty Ltd v Roads & Traffic Authority (NSW) (2006) …. 702 Johns v Australian Securities Commission (1993) …. 2014 Johnson, Re (1880) …. 639 — v Agnew [1980] …. 916, 1106, 1508, 1511, 1720, 1837, 1841, 2302, 2304, 2310 — v Australian Guarantee Corp Ltd (1992) …. 645 — v Buttress (1936) …. 1313 — v Jones [1972] …. 1130 — v Leader Computers Pty Ltd (2014) …. 116 — v Perez (1988) …. 1508 — v R [1904] …. 2811 — v Royal Mail Steam Packet Co (1867) …. 621, 627, 628 — v Wild (1890) …. 620, 621 Johnson Matthey (Aust) Pty Ltd v Dascorp Pty Ltd (2003) …. 153, 458 Johnson’s Estate, Re [1950] …. 1908 Johnson’s Tyne Foundry Pty Ltd v Maffra Corporation (1948) …. 128, 1025, 1027 Johnston v Arnabold [1990] …. 635, 636, 842, 847 — v Nicholson (2003) …. 608

Johnstone v Marks (1887) …. 1040 — v Nicholson (2003) …. 608 Jones, Re (1997) …. 1923 — v Barkley (1781) …. 2609 — v Bouffier (1911) …. 2638, 2640 — v Commerzbank AG [2003] …. 2415, 2417, 2422 — v Hirst [2013] …. 219 — v Mortgage Acceptance Nominees Ltd (1996) …. 608 — v Roberts [1995] …. 1906 — v Walton [1966] …. 1219 — v Westcomb (1711) …. 1923 Jonton Pty Ltd, Re [1992] …. 257 Jorgensen v News Media (Auckland) Ltd [1969] …. 1917 Joseph Constantine SS Line Ltd v Imperial Smelting Corp Ltd [1942] …. 1013 Joseph Evans & Co Ltd v Heathcote [1918] …. 2926 Julia, The see Comptoir d’Achat et de Vente du Boerenbond Belge SA v Luis de Ridder Limitada Juul v Northey [2010] …. 117

K K, Re [1986] …. 1909 K & S Corporation Ltd v Sportingbet Australia (2003) …. 2410, 2416, 2522 K J Davies (1976) Ltd v Bank of New South Wales [1981] …. 435, 2415 Kadissi v Jankovic [1987] …. 1148 Kadner v Brune Holdings Pty Ltd [1973] …. 1325 Kais v Turvey (1994) …. 171, 251 Kakavas v Crown Melbourne Ltd (2013) …. 1314

Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] …. 2305 Kanchenjunga, The see Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India KAP Motors Pty Ltd v Commissioner of Taxation [2008] …. 444 Karacominakis v Big Country Developments Pty Ltd (2000) …. 625 Karin Vatis, The see Vagres Compania Maritima SA v Nissho-Iwai American Corp Kathopoulos v Bjelica Investments Pty Ltd (1979) …. 1130 Katingal Pty Ltd v Amor (1999) …. 257 Kaufman v Gerson [1904] …. 515, 527 Keach v Sandford (1726) …. 1711 Kearley v Thomson (1890) …. 2615, 2630, 2633 Keeley v State of Victoria [1964] …. 1027, 1028 Keen v Mear [1920] …. 2811 Keid, Re [1980] …. 1923 Keith Murphy Pty Ltd v Custom Credit Corp Ltd (1992) …. 448 Keitley, Re [1992] …. 1909 Kelly v R (1902) …. 2023 — v Solari (1841) …. 424, 426, 447 Kelsen v Imperial Tobacco Co [1957] …. 1625 Kemp v Public Curator of Queensland [1969] …. 1927 Kemperle v Public Trustee (unreported, 1985) …. 1906, 1908, 1929 Kendall v Hamilton (1879) …. 2305, 2318 Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) …. 916, 918, 1116, 1311, 1320, 1325, 1336, 1337, 1433, 2333 Kent v Brown (1942) …. 419 Kerridge v Simmonds (1906) …. 515, 2511 Kerrison v Glyn, Mills, Currie & Co (1911) …. 431

Keuker, Re (1984) …. 2110 Khoury v Government Insurance Office of NSW (1984) …. 2318 Kicks v State Bank of Lisbon (1904) …. 1121, 1438 Kilmer v British Columbia Orchard Lands Ltd [1913] …. 1141, 1143 King v Stewart (1892) …. 441 Kingston v Preston (1773) …. 919, 920 Kingstreet Investments Ltd v New Brunswick (Dept of Finance) (2007) …. 2004, 2018, 2019, 2026, 2040 Kiriri Cotton Co Ltd v Dewani [1960] …. 129, 449, 908, 2607, 2639 Kirk v Gregory (1876) …. 806 Kirkland v Archbold (1953) …. 1153, 1160, 1177 Kissavos Shipping Co SA v Empresa Cubana de Fletes (The Agathon) [1982] …. 1232 KL Tractors Ltd, Re (1961) …. 2104, 2109 Kleinwort Benson Ltd v Lincoln City Council [1999] …. 413, 414, 416, 426, 429, 430, 432, 444, 446, 1017, 2030, 2638 — v Sandwell Borough Council [1994] …. 2722 — v South Tyneside Metropolitan Borough Council [1994] …. 2722 Kleinwort Sons & Co v Dunlop Rubber Co (1907) …. 441 Kneebs’ Estate, Re; Chase v Morningside State Bank (1955) …. 849 Knight v Cambers (1855) …. 116 Knowles v Fuller (1947) …. 2603 — v Henderson (No 2) (1992) …. 1626 Kolmar Group AG v Traxpo Enterprises PVT Ltd [2010] …. 520, 1312, 1321, 1326 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] …. 712 Koster’s Premier Pottery Pty Ltd v Bank of Adelaide (1981) …. 441, 2408 Koufos v C Czarnikow Ltd [1969] …. 1508

Koutsonicolis v Principe (No 2) (1987) …. 2805 Krakowski v Eurolynx Properties Ltd (1995) …. 1437, 2333 Kramer v Duggan (1955) …. 2333 — v McMahon [1970] …. 1437, 2528 Kratzmann Holdings Pty Ltd v University of Queensland [1982] …. 174, 175 Kruger v Commonwealth (1997) …. 2028 Kuddus v Chief Constable of Leicestershire Constabulary [2002] …. 1831 Kuwait Airways Corp v Iraqi Airways Co (Nos 4 & 5) [2002] …. 1831 Kwei Tek Chao v British Traders and Shippers Ltd [1954] …. 1118, 1120, 1121, 2308, 2319, 2708 Kyd, Re; Hunter’s Executors 1992 …. 1923

L L Albert & Son v Armstrong Rubber Co (1949) …. 1810, 1819, 1841 La Rosa, Re; Ex parte Norgard (1991) …. 623 LAC Minerals Ltd v International Corona Resources Ltd (1989) …. 1704, 1727, 1730, 1737 Lach v Cahill (1951) …. 1219 Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] …. 528, 2904 Lady Hood of Avalon v Mackinnon [1909] …. 419, 430 Lagos v Grunwaldt [1910] …. 2922 Lagunas Nitrate Co v Lagunas Syndicate [1899] …. 1331, 2330 Lahoud v Lahoud [2010] …. 431, 2807 Lai v Minister for Immigration (1991) …. 1916, 1917 Laird v Pim (1841) …. 1118 Lamb v Bunce (1815) …. 157, 852 — v Cotogno (1987) …. 1510, 1533

Lamesa Holdings BV v Federal Commissioner of Taxation (1999) …. 409 Lamine v Dorrell (1706) …. 1619, 1620, 1639 Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] …. 117, 158 Lamru Pty Ltd v Kation Pty Ltd (1998) …. 1614, 1626, 1629 Landall Construction & Development Co Pty Ltd v Bogaers [1980] …. 1216, 1219, 2633 Landers v Schmidt [1983] …. 916, 1310, 1433 Lane v O’Brien [2004] …. 1821 Lang v Le Boursicot (1993) …. 2738 Lang Parade Pty Ltd v Peluso [2005] …. 1831 Lange v Australian Broadcasting Corporation (1997) …. 2028 Lapin v Abigail (1930) …. 622 Larner v London County Council [1949] …. 412, 420 Larratt v Bankers and Traders Insurance Co Ltd (1941) …. 1106, 1110, 1129, 1438, 2308 Larrikin Music Publishing Pty Ltd v EMI Songs Australia (No 2) (2010) …. 227 Laurence v Lexcourt Holdings Ltd [1978] …. 2713 Lavin v Toppi (2015) …. 123, 138, 606, 610, 612, 613, 621, 623, 643–645 Lazard Bros & Co v Midland Bank Ltd [1933] …. 413 Leach v Leach [1965] …. 703 Leading Edge Events Aust Pty Ltd v Kanawa [2007] …. 1035 Leaf v International Galleries [1950] …. 1337, 2323, 2333, 2708, 2709 Leasing Centre (Aust) Pty Ltd, The v Shepard [2011] …. 252 Leason Pty Ltd v Princes Farm Pty Ltd [1983] …. 1337, 2323, 2333 LED Builders Pty Ltd v Masterton Homes (NSW) Pty Ltd (1994) …. 1708, 1715

Ledger v Petagna Nominees Pty Ltd (1989) …. 2814 Lee v Blakeney (1887) …. 1614, 1626 — v Mallam (1910) …. 706, 707, 711 Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) …. 522, 910, 1028, 1030, 1046, 1135 Leedon v Skinner [1923] …. 411 Leeds Industrial Co-operative Society Ltd v Slack [1924] …. 1511, 1720, 1836 Legal & General Assurance Society Ltd v Drake Insurance Co Ltd [1992] …. 642 Legal Services Commissioner v Baker (No 2) [2006] …. 1151, 1167, 1230, 1231 Legette v Smith (1955) …. 1911 Legione v Hateley (1983) …. 222, 1137, 1139, 1141, 1143, 1169, 1170, 2213, 2322 Legune Land Pty Ltd v Northern Territory Land Corporation [2012] …. 1626 Leigh v Dickenson (1884) …. 157, 807 Leigh-Mardon Pty Ltd v Wawn (1995) …. 645 Lejo Holdings Pty Ltd v Deutsche Bank (Asia) AG [1988] …. 1019, 2627, 2639 Lemura v Coppola [1960] …. 1152 Lenaghan-Britton v Taylor (1998) …. 1914 Lentjes, Re [1990] …. 1912, 1922, 1923 Leonard v Booth (1954) …. 2605 Les Laboratoires Servier v Apotex Inc [2014] …. 2609 Leslie Shipping Co v Welstead [1921] …. 1132 Letang v Cooper [1965] …. 206, 2733, 2904 Levi v Stirling Brass Founders Pty Ltd (1997) …. 2717, 2737 Levy v Watt (2014) …. 2732, 2742

Lewis, Re [1995] …. 249 — v Alleyne (1888) …. 1020 — v Andrews (1956) …. 2525 — v Averay [1972] …. 1009, 2528 — v Combell Constructions Pty Ltd (1989) …. 2515 — v Lamb [2011] …. 2717, 2740, 2926 Lexane Pty Ltd v Highfern Pty Ltd [1985] …. 1125, 1143, 1170, 1402, 1414, 1438, 1439, 2808, 2812, 2824 Li Hai, The see Western Bulk Carriers K/S v Li Hai Maritime Inc Liberian Insurance Agency Inc v Mosse [1977] …. 527, 629, 633, 642 Libyan Arab Foreign Bank v Bankers Trust Co [1989] …. 1262 Liebe v Molloy (1906) …. 158, 1045, 1171 Life Insurance Co of Australia Ltd v Phillips (1925) …. 1008 Liggett v Kensington [1993] …. 303, 454 Lightly v Clouson (1808) …. 1520, 1617, 1619 Lilley v Elwin (1848) …. 905 Limit (No 3) Ltd v ACE Insurance Ltd (2009) …. 636 Lindon v Hooper (1776) …. 1523 Lindsay Petroleum Co v Hurd (1874) …. 2713 Ling v Commonwealth of Australia (1994) …. 1216 Linsley, Re [1904] …. 615 Linter Group Ltd (in liq) v Goldberg (1992) …. 1705, 2505, 2506, 2608, 2632 Lipkin Gorman (a firm) v Karpnale Ltd [1991] …. 123, 131, 144, 208, 219, 239, 303, 309–311, 319, 320, 407, 430, 437, 441, 448, 1021, 1632, 1634, 2204, 2406, 2408, 2410, 2413–2415, 2417, 2419, 2422, 2522, 2524, 2527, 2909, 2920 Lissenden v CAV Bosch Ltd [1940] …. 706, 713 Lister & Co v Stubbs (1890) …. 1731 Little v Law Institute (Vic) [1990] …. 513

Liverpool Marine Credit Co v Hunter (1868) …. 528 Livingstone v Rawyards Coal Co (1880) …. 1602 LJ Clarke, In re [1967] …. 847 LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) …. 1625, 1626 Lloyd v Tedesco (2002) …. 251, 256 Lloyds v Butler [1950] …. 2742 Lloyds and Scottish Finance Ltd v Williamson [1965] …. 2530 Lloyds Bank Ltd v Bundy [1975] …. 1313 Lloyds Bank plc v Independent Insurance Co Ltd [2000] …. 407, 435, 446, 2520 Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] …. 1217, 1259 Lodder v Slowey [1904] …. 1167, 1168, 1428 Logicrose Ltd v Southend United FC Ltd [1988] …. 1536 Logwon Pty Ltd v Warringah Shire Council (1993) …. 705 Lombard Australia v NRMA Insurance Ltd (1968) …. 1919 Lombard North Central Plc v Butterworth [1987] …. 1129 Lombok Pty Ltd v Supetina Pty Ltd (1987) …. 1323 London and River Plate Bank Ltd v Liverpool Ltd [1896] …. 437 London Chatham and Dover Rly Co v South Eastern Rly Co [1893] …. 2802, 2806, 2807, 2811 London Congregational Union Inc v Harriss [1988] …. 2703 London Holeproof Hosiery Co Ltd v Padmore (1928) …. 1017 Long v Lloyd [1958] …. 1337, 2323, 2708 Longchamp v Kenny (1779) …. 1520 Lonrho Plc v Fayed (No 2) [1992] …. 249 — v — (No 5) [1993] …. 206 Lord v Proctor [1923] …. 516, 529

Lord Elphinstone v Monkland Iron and Coal Co Ltd (1886) …. 1144 Lord Napier & Ettrick v Hunter [1993] …. 248, 251, 255, 256, 257, 618, 621, 639, 1734 Lorna I, The see Compania Naviera General SA v Kerametal Ltd Loughridge v Lavery [1969] …. 1414 Louinder v Leis (1982) …. 1108 Louth v Diprose (1992) …. 251, 525, 1313 Low v Bouverie [1891] …. 2422 Lowe v Hope [1970] …. 1130 Lowe & Sons v Dixon & Sons (1885) …. 646 Lowns v Woods (1996) …. 827 Lowson v Coombes [1999] …. 2624 Lucas v Borough of Drummoyne (1895) …. 1151, 1158, 1164 — v Smith [1926] …. 1126, 2530 — v Wilkinson (1856) …. 847 Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] …. 1148, 1414 Luke v Luke (1936) …. 617 Lumbers v W Cook Builders Pty Ltd (in liq) (2008) …. 104, 108, 116, 118, 135, 139, 141, 147, 151–153, 156–158, 215, 404, 457, 458, 810, 823, 835, 840, 842, 845, 909, 910, 917, 918, 930, 933, 934, 1155, 1156, 1158–1160, 1162, 1165, 2904 Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) …. 1152, 1411 Lundy v Lundy (1895) …. 1906, 1918 Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] …. 1821, 1831 Luxor (Eastbourne) Ltd v Cooper [1941] …. 909, 1167, 1168, 1233 Lym International Pty Ltd v Chen [2009] …. 1733 Lynch v Port Jackson Trading Corp Pty Ltd [1950] …. 1614

Lyon v Magnet Nominees Pty Ltd [1978] …. 1130

M M, Re [1993] …. 703 M R Hornibrook Pty Ltd v Eric Newham (Wallerawang) Pty Ltd (1971) …. 1025, 1030, 1422 Mabo v Queensland (No 2) (1992) …. 416 McBride v Christie’s Australia Pty Ltd [2014] …. 2323, 2333 Macclesfield Corp v Great Central Railway [1911] …. 640, 817, 835, 852 McClintock v Commonwealth (1947) …. 506, 529, 2007, 2010, 2038 McColl v Bright [1939] …. 413 McColl’s Wholesale Pty Ltd v State Bank of New South Wales [1984] …. 648, 649 McDermott v Black (1940) …. 2516 McDonald v Dennys Lascelles Ltd (1933) …. 910, 911, 916, 923, 930, 1019, 1106, 1111, 1114, 1118, 1121, 1125, 1126, 1128, 1129, 1131, 1133, 1135, 1136, 1138, 1143, 1144, 1170, 1217, 1225, 1414, 1430, 1439, 2331, 2808, 2812 MacDonald Dickens & Macklin (a firm) v Costello [2012] …. 910 McDougall v Aeromarine of Emsworth Ltd [1958] …. 1118, 1133, 1134, 1411 McEntire v Crossley Bros Ltd [1895] …. 916, 1133 McFarlan v Daniell (1938) …. 2619 McFee Engineering Pty Ltd v CBS Constructions Pty Ltd (1980) …. 2921 McFerran v Heroux (1954) …. 1837 McGuinness v Norwich and Peterborough Building Society [2012] …. 1135 McIntosh v Dalwood (No 4) (1930) …. 644 MacIntosh v Lobel (1993) …. 706

McIntyre v Nemesis DBK Ltd [2010] …. 511 McKain v RW Miller & Co (SA) Pty Ltd (1991) …. 2715 McKay v National Australia Bank Ltd [1998] …. 513, 522, 528 McKenna v Perecich [1973] …. 2605, 2620 McKenna & Armistead Pty Ltd v Excavations Pty Ltd [1957] …. 1629 McKenzie v McDonald [1927] …. 1536, 1739 MacKenzie v Royal Bank of Canada [1934] …. 1434, 1437 McKeown v Cavalier Yachts Pty Ltd (1988) …. 153, 158, 209, 1635 McKesson Corp v Division of Alcoholic Beverages & Tobacco (1990) …. 2019 — v Florida (1990) …. 2032 — v Florida Alcohol & Tobacco Division (1990) …. 2039 Mackintosh v Johnson (2013) …. 1313 Mackowik v Kansas City St J & CBR Co (1906) …. 254 McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) …. 1012 — v Freehill (1908) …. 127, 128, 819, 831, 1030 — v Nourse [1928] …. 1132, 1153, 1161 McLean v Discount & Finance Co Ltd (1939) …. 612, 621, 642, 643, 644, 646 McMahon v Ambrose [1987] …. 1816 — v Public Curator [1952] …. 617 Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] …. 2506 — v — [1996] …. 2506 McMillan v Singh (1984) …. 1639 McRae v Commonwealth Disposals Commission (1951) …. 1006–1008, 1010, 1017, 1121, 1319, 1324, 1410, 1411, 1810, 1819 McWilliams Wines Pty Ltd v L S Booth Wine Transport Pty Ltd

(1992) …. 1838 Macquarie Bank Ltd v Mutual Life Association of Australia Ltd (1996) …. 2733 Madden v Kevereski [1983] …. 1837 Magarey Farlam Lawyers Trust Accounts (No 3), Re (2006) …. 431, 446, 447 Magee v Pennine Insurance Co Ltd [1969] …. 1332 Magical Waters Fountains Ltd v City of Sarnia (1992) …. 1033, 1035 Magnacrete Ltd v Douglas-Hill (1988) …. 506, 522, 1312 Maguire v Makaronis (1997) …. 237, 247, 303, 504, 1310, 1332, 1434, 1437, 1710, 1735, 2326, 2814, 2816 — v Simpson (1977) …. 2104, 2108, 2715 Maher v Commonwealth Bank of Australia (No 2) (2004) …. 706 Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] …. 222, 1517, 1521, 1536, 1633, 1702, 1718, 1804 Mahmoud and Ispahani, Re [1921] …. 2603, 2611, 2630 Mahoney, Estate of (1966) …. 1911 — v McManus (1981) …. 605, 610, 612, 621, 623, 643, 646, 647, 810 Mainland Holdings Ltd v Szady [2002] …. 1831 Mainwaring, Re [1937] …. 613 Maio v Sacco (No 2) [2009] …. 648 Majesty Restaurant Pty Ltd (in liq) v Commonwealth Bank of Australia (1999) …. 435 Majik Markets Pty Ltd v S & M Motor Repairs Pty Ltd (No 1) (1987) …. 2708 Malette v Shulman (1990) …. 826, 828 Mallesons Stephen Jaques v Trenorth Ltd [1999] …. 710 Mallinson v Scottish Australia Investment Co Ltd (1920) …. 2016 Malone v Williams (1905) …. 413

Management 3 Group Pty Ltd (in liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2) …. 917 Mander v Evans [2001] …. 2742 Manifatture Tessile Laniera Wooltex v J B Ashley Ltd [1979] …. 2709 Manila, The see Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co Manser v Spry (1994) …. 1508 Maralinga Pty Ltd v Major Enterprises Pty Ltd [1972] …. 1148 — v — (1973) …. 1148 March v Stramare Pty Ltd (1991) …. 429 Maricopa County v Cities and Towns of Avondale (1970) …. 2421 Marine Board of Launceston v Minister for the Navy (1945) …. 2811 Marine Trade SA v Pioneer Freight Futures Co Ltd [2010] …. 432 Mario Salvo v New Tel Ltd [2005] …. 254 Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] …. 1255 Markham v Bernales (1906) …. 909, 1132, 1161 Marks v GIO Australia Holdings Ltd (1998) …. 1334 — v Jolly (1938) …. 2606, 2625, 2631, 2636, 2637 Marook Pty Ltd v Winston Gellard Pty Ltd (1994) …. 424 Marriott v Hampton (1797) …. 430, 447, 514 Marriott Industries Pty Ltd v Mercantile Credits Ltd (1990) …. 431, 1046, 2904 — v — (unreported, 1991) …. 458 Marsack v Webber (1860) …. 610 Marsh v Keating (1834) …. 303 — v Mackay [1948] …. 916, 1019, 1121, 1433 Marsh & McLennan Pty Ltd v Stanyers Transport Pty Ltd [1994] …. 1015 Marshall v Curry [1933] …. 827

— v Marshall [1999] …. 414, 429, 1016 Marston Construction Co Ltd v Kigass Ltd (1989) …. 153, 932, 1036, 1416 Martin v Andrews (1856) …. 171 — v Gale (1876) …. 1020 — v Hogan (1917) …. 119, 1128 — v Martin (1959) …. 2624, 2632 — v Pont [1993] …. 239, 923, 1632, 2204, 2422 Martindale v Smith (1841) …. 1841 Maskell v Horner [1915] …. 432, 514, 522, 523, 528, 1630, 2007, 2010, 2722 Mason, Re [1928] …. 2736 —, Re [1929] …. 2722 — v New South Wales (1959) …. 130, 148, 415, 441, 447, 511, 513, 514, 522–524, 528, 529, 1531, 2007, 2017, 2023, 2028–2030, 2032, 2038, 2042, 2515 Masters v Cameron (1954) …. 1018 Matheson v Smiley [1932] …. 827, 829 Mathew v T M Sutton Ltd [1994] …. 2810, 2811, 2814 Matthes v Carter (1955) …. 1030, 1032 Mattson (In the Estate of), deceased (1905) …. 831 Mavor v Pyne (1825) …. 1030, 1132 Mavromatic, Ex parte; Re Windsor (1956) …. 1917 May & Butcher Ltd v R (1929) …. 1038 Mayfair Trading Co Pty Ltd v Dreyer (1958) …. 222, 1002, 1015, 1017, 1021, 1435, 2627, 2639 Maynegrain Pty Ltd v Compafina Bank [1982] …. 1611 — v — (1984) …. 1611 Mayson v Clouet [1924] …. 1122, 1125, 1138 MBF Australia Ltd v Malouf [2008] …. 2529

MBP (SA) Pty Ltd v Gogic (1991) …. 1508, 2806, 2808 Meah v McCreamer (No 2) [1986] …. 1926 Mediana, The [1900] …. 1629, 1637 Mediservices International Pty Ltd v Stocks & Realty (Security Finance) Pty Ltd [1982] …. 1021, 2639 Meehan v Jones (1982) …. 1207 Meem Haskins Coal Corp v Pratt (1945) …. 1045 Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] …. 708, 710, 2805, 2811 Meinhard v Salmon (1928) …. 1703 Melbourne Tramway & Omnibus Co Ltd v Melbourne City Corporation (1903) …. 120, 127, 2011, 2018, 2023, 2032 Melesco Manufacturing Pty Ltd v Thompson (1996) …. 706, 711, 712 Menelaou v Bank of Cyprus Plc [2015] …. 159, 237, 245, 255, 639, 640, 650 Meng Leong Development Pty Ltd v Jip Hong Trading Co Personal Pty Ltd [1985] …. 2306 Menzies v Perkins [2001] …. 303 Mercantile Credit Ltd v Spinks [1968] …. 1020 Mercantile Mutual Health Ltd v Commissioner of Stamp Duties [2003] …. 415, 419, 430 Mercedes-Benz (NSW) Pty Ltd v ANZ and National Mutual Royal Savings Bank Ltd (unreported, 1992) …. 208, 442, 2419 — v — (unreported, 1996) …. 2419 Mercury Machine Importing Corp v City of New York (1957) …. 2019, 2026 Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (2011) …. 1705, 1728, 1729 Merry v Green (1841) …. 308 Merryweather v Nixon (1799) …. 608

Mersey Steel and Iron Co Ltd v Naylor Benzon & Co (1884) …. 1132 Messner v County of Union (1961) …. 2421 Metcalfe v Britannia Ironworks Co (1877) …. 934, 1151, 1163, 1164, 1171 Metropolitan Asylum District v Hill (1881) …. 827 Metropolitan Bank, The v Heiron (1880) …. 2737 Metropolitan Police District Receiver v Croydon Corporation [1956] …. 621 — v — [1957] …. 853 Michael Gerson (Finance) Plc v On Demand Information Plc [2003] …. 1142 Mickelberg v Director of Perth Mint [1986] …. 1917 Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) …. 2505 Middleton v Cavenett [1923] …. 1021 Midill (97PL) Ltd v Park Lane Estates Ltd [2009] …. 1148 Midland Junction Municipality v Kent (1931) …. 413, 1017 Midland Montague Australia Ltd v Harness (1994) …. 1536, 1738, 1739 Mihalios Xilas, The see China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama Mikhail Lermontov, The see Baltic Shipping Co v Dillon Miles v New Zealand Alford Estate Co (1886) …. 507, 528 — v Wakefield Metropolitan District Council [1987] …. 909 Milgun Pty Ltd v Austco Pty Ltd [1988] …. 145 Miliangos v George Frank (Textiles) Ltd (No 2) [1977] …. 2810 Miliankos v Miliankos (unreported, 1994) …. 1909, 1911 Miller v Atlee (1849) …. 121 — v CSR Timber Products Pty Ltd (1993) …. 429, 1533 — v Miller (2011) …. 2604, 2608

— v Race (1758) …. 320 Millichamp v Jones [1982] …. 1130 Minh v Minister for Immigration and Multicultural Affairs (1998) …. 1917 Minister v Mathieson (1903) …. 1615 Minister Administering the Environmental Planning & Assessment Act 1979 v Carson (1994) …. 2808 Minister for Ethnic Affairs v Gungor (1982) …. 1917 Minister for Immigration & Ethnic Affairs v Kurtovic (1990) …. 2106 Minister for Lands and Forests v McPherson (1991) …. 2817 Ministry of Defence v Ashman [1993] …. 1614, 1625, 1626, 1639 — v Thompson [1993] …. 1626, 1639 Ministry of Health v Simpson [1951] …. 2407, 2722 Minter v Geraghty (1981) …. 1720 Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) …. 1334, 1821 M’Leod v Artola Brothers (1889) …. 1168 Moffatt v Kazana [1969] …. 308 Mohamed v Alaga & Co (a firm) [2000] …. 2616 Moks v Poynice (1987) …. 839 Mollgaard v Accident Rehabilitation and Compensation Insurance Corp [1999] …. 811, 819, 831, 849, 852 Molson’s Bank v Kovinsky [1924] …. 612, 621, 647 Mondel v Steel (1841) …. 113, 119, 916, 1152, 1174, 2333 Mondock v Gennrich (1941) …. 850 Money v Money (No 2) [1966] …. 2627 Monk v Smith (1893) …. 647 Monks v Poynice Pty Ltd (1987) …. 153, 912 Monmouthshire County Council v Smith [1956] …. 630

— v —[1957] …. 630 Moore v Vestry of Fulham [1895] …. 447 Moorehead v Canley (1991) …. 827 Moorgate Co Ltd v Twitchings [1977] …. 2530 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) …. 1707 Mordecai v Mordecai (1988) …. 1726 Morgan v Ashcroft [1938] …. 122, 126, 419, 421, 449, 1021, 2615 — v Palmer (1824) …. 529 — v S & S Constructions Pty Ltd [1967] …. 1152 Morgan Equipment Co v Rodgers (1993) …. 634, 645, 648, 2814 Morgan Guaranty Trust Co of New York v Lothian Regional Council [1999] …. 413 — v Outerbridge (1990) …. 2415 Morganite Ceramic Fibres Pty Ltd v Sola Basic Australia Ltd (1987) …. 639 Moriarty v Regent’s Garage and Engineering Co Ltd [1921] …. 1173 Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) …. 2737 Morris v Ford Motor Co Ltd [1973] …. 639, 640 — v Morris [1982] …. 249 Morrison v Grovenor (1884) …. 1158, 1165 Mortensen v New South Wales (unreported, 1991) …. 1923 Mortgage Express Ltd v Robson [2001] …. 2624 Mortimer v Gell (1847) …. 116 Morton v Lamb (1797) …. 919 — v Smith (1912) …. 423, 2404 Moschi v Lep Air Services Ltd [1973] …. 211, 1106, 1129, 1133, 1135 Moses v Macferlan (1760) …. 115, 117, 120–124, 130, 132–134, 139, 166, 175, 222, 446, 502, 504, 1633, 2406, 2639

Mostia Constructions Pty Ltd v Cox [1994] …. 1028, 1030 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] …. 2318 Moule v Garrett (1870) …. 635 — v —(1872) …. 604, 605, 625, 627, 633, 635, 636 Moulton v Roberts [1977] …. 610, 642, 644 Mount Gambier Co-operative Milling Society Ltd v Williams [1921] …. 1617 Moyes & Groves Ltd v Radiation New Zealand Ltd [1982] …. 517 Mrs Eaton’s Car Sales Ltd v Thomason [1973] …. 1629 MSU Management Pty Ltd, Re [2011] …. 215 Mulcahy v Curramore Pty Ltd [1974] …. 2703 — v Hoyne (1925) …. 2308, 2322, 2712 Mulholland v Australian Electoral Commission (2004) …. 2028 Mulloy v Hop Sang [1935] …. 828 Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd [2001] …. 1831 Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) …. 1137 Multo Pty Ltd v Craddock (unreported, 1988) …. 1028 Munchies Management Pty Ltd v Belperio (1988) …. 1331, 1333, 1334, 1838, 2330, 2334, 2335, 2713 Mundy, Re (1963) …. 1012 Munro v Butt (1858) …. 119, 934, 1158, 1165, 1171, 1174 — v Morrison [1980] …. 2620, 2624 — v Perry (1874) …. 520 Murphy v Attorney-General [1982] …. 2040 — v Brown (1985) …. 1820 — v Mitchell (1925) …. 1027 Murray v Baxter (1914) …. 413

— v Mann (1848) …. 1325, 1337 Musca v Astle Corp Pty Ltd (1988) …. 1334, 2713 Muschinski v Dodds (1985) …. 110, 121, 123, 249, 250, 251, 257, 613, 645, 650, 1202, 1214, 1217, 1219, 1227, 1233, 1727, 1734, 1737, 2737 Mussen v Van Diemen’s Land Co [1938] …. 1114, 1141, 1142 Musumeci v Winadell Pty Ltd (1994) …. 447, 506, 531 Mutual Finance Co Ltd v John Wetton & Sons Ltd [1937] …. 504, 511, 515, 518 Mutual Pools & Staff Pty Ltd v Commonwealth (1994) …. 441, 2012, 2036, 2042 — v Federal Commissioner of Taxation (1992) …. 2036 Myer Stores Ltd v Soo [1991] …. 1510 Myers v Hurley Motor Co (1927) …. 121

N Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] …. 1129, 1135 Nash v Inman [1908] …. 833, 1040 Nassif v Caminer (2009) …. 1148 National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] …. 703, 706–710, 2808 — v Budget Stationery Supplies Pty Ltd (1997) …. 909, 1016, 2807 — v Nobile (1988) …. 1332, 1334 — v Pollak (2001) …. 2516 National Bank of New Zealand Ltd v Waitaki International Processing (NI) Ltd [1999] …. 2405, 2421, 2422 National Carriers Ltd v Panalpina (Northern) Ltd [1981] …. 1231 National Commercial Bank v Wimborne (No 2) (unreported, 1978) …. 644 National Commercial Banking Corp of Australia Ltd v Batty (1986) ….

110, 306, 1633 National Motor Mail-Coach Co Ltd, Re [1908] …. 845 National Mutual Life Association of Australasia Ltd v Walsh (1987) …. 127, 448, 1302, 2404, 2408, 2417, 2521 National Pari-Mutuel Assoc Ltd v R (1930) …. 2007 National Westminster Bank Ltd v Barclays Bank International Ltd [1975] …. 437, 2408 National Westminster Bank Plc v Somer International (UK) Ltd [2002] …. 2408 Nattrass v Nattrass [1999] …. 2820 Natural Extracts Pty Ltd v Stotter (1997) …. 1716, 1727 Neal, Re; Ex parte Neal v Duncan Properties Pty Ltd (1994) …. 2308 Neate v Harding (1851) …. 308, 309, 1619, 1630 Nelson v Kimberley Homes Pty Ltd (1988) …. 1242, 1244, 1247 — v Larholt [1948] …. 307, 313, 1632, 1634 — v Leitch (No 2) [2006] …. 254 — v Nelson (1995) …. 1003, 1022, 1919, 2604, 2609, 2624, 2626–2629, 2632, 2637, 2639, 2640 Nemeth v Bayswater Road Pty Ltd [1988] …. 1235 Nepean District Tennis Association Inc v Council of the City of Penrith (1988) …. 135, 175 Neste Oy v Lloyds Bank Plc (The Tiiskeri, Nestegas and Enskeri) [1983] …. 244 New South Wales v Bardolph (1934) …. 2104, 2109 — v Kable (2013) …. 2027 — v McCloy Hutcherson Pty Ltd (1993) …. 208, 2742, 2904 New South Wales Cancer Council v Sarfaty (1992) …. 2805 New South Wales State Brickworks v Abi-Arraj (1995) …. 711 New York Star, The see Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd

New Zealand Loan and Mercantile Agency Co v Howes (1888) …. 1325 New Zealand Refining Co Ltd, The v Attorney-General (1993) …. 415 New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] …. 517 New Zealand Society of Accountants v ANZ Banking Group (New Zealand) Ltd [1996] …. 640 Newall v Tomlinson (1871) …. 441 Newberry v Harrop [1986] …. 646 Newbigging v Adam (1886) …. 1437 Newcastle District Fishermen’s Co-operative Society v Neal (1950) …. 2605, 2616 Newdigate v Davy (1694) …. 527 Newitt v Leitch (1997) …. 215, 404, 430 News Ltd v Australian Rugby Football League Ltd (1996) …. 522 Newton v Brownett (1940) …. 128, 1027, 1028, 1038, 2606, 2615 — v Grand Junction Railway Co (1846) …. 2808 NIAA Corp Ltd, Re (1993) …. 1217 Nichimen Corp v Gatoil Overseas Inc [1987] …. 2707, 2708 Nicholas v Bantick (1993) …. 1917 Nicholls v Michael Wilson & Partners [2012] …. 1723, 1725 — v Stanton (1915) …. 2637 Nichols v Scottish Union and National Insurance Co (1885) …. 618 Nicholson v Burnett (1922) …. 1160, 1161, 1164 — v Chapman (1793) …. 807, 829, 835–837 Nikolic v Oladaily Pty Ltd [2007] …. 215 Ninety Five Pty Ltd v Banque Nationale de Paris [1988] …. 2814, 2815 Niru Battery Manufacturing Co v Milestone Trading Ltd (No 1) [2002] …. 440

— v — (No 2) [2004] …. 311, 639, 2408, 2417 Nixon v Furphy (1925) …. 506, 511, 516, 528, 531, 2808, 2813, 2816, 2817, 2820, 2824 — v — (1926) …. 2808, 2809, 2811, 2813, 2816, 2817, 2820, 2824 Nizam of Hyderabad v Jung [1957] …. 442 NLS Pty Ltd v Hughes (1966) …. 1137, 1138, 1414 Noble v Maddison (1912) …. 2603, 2615, 2619 Noble County v Niemann (1938) …. 852 Nocton v Lord Ashburton [1914] …. 1330, 1722, 1726 Noranda Australia Ltd v Lachlan Resources NL (1988) …. 1829 Nordenstrom v Pitt (1845) …. 2804 Norilya Minerals Pty Ltd v Commissioner of State Taxation (1995) …. 249 Norman v Federal Commissioner of Taxation (1963) …. 2804 Norreys v Zeffert [1939] …. 515 Norris v Sibberas [1990] …. 149 North v Marra Developments Ltd (1981) …. 2603 — v Walthamstowe Urban Council (1898) …. 633, 642 North British & Mercantile Insurance Co v London, Liverpool and Globe Insurance Co (1876) …. 618 North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] …. 506, 518, 528, 530, 531, 1312, 1326, 1337, 1403, 2320, 2708 North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] …. 2603 Northern Assurance Co Ltd v Coal Miners Insurance Pty Ltd (1970) …. 618 Northern Suburbs General Cemetery Reserve Trust v Commonwealth (1993) …. 2102 Northern Territory of Australia v Mengel (1995) …. 511, 513, 529,

2028 Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord) [1988] …. 936 Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) …. 2811 Norwich Union Fire Insurance Society Ltd v William H Price Ltd [1934] …. 402, 411, 446 Nott and Corp of Cardiff, Re an Arbitration between [1918] …. 642 Nottingham Permanent Benefit Building Soc v Thurstan [1903] …. 255, 1020 Noyes v Ellis (1877) …. 629, 636 — v Pugin (1891) …. 938, 1167, 1168, 1410 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) …. 1118 Nu Line Construction Group Pty Ltd v Fowler (2012) …. 2723, 2808 — v — [2014] …. 2808 — v — (No 3) [2014] …. 2808 Nund v McWaters [1982] …. 1414 Nunkuwarrin Yunti v A L Seeley Constructions Pty Ltd (1998) …. 1028 Nurdin & Peacock Plc v D B Ramsden & Co Ltd [1999] …. 414, 429, 530 Nutting v Baldwin [1995] …. 1137 Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd [1997] …. 710

O O’Connor v Isaacs [1956] …. 503 — v Leaw Pty Ltd (formerly known as Mal-Corp Pty Ltd) (1997) …. 1028, 1029 — v S P Bray Ltd (1936) …. 1521, 2307, 2318, 2713

— v — (1937) …. 1521, 2307, 2318, 2713 O’Day v Commercial Bank of Australia Ltd (1933) …. 640 O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) …. 1124, 1136, 1139, 1142, 1824 — v Commercial Bank of Australia (1933) …. 645 O’Halloran v R T Thomas & Family Pty Ltd (1998) …. 1723, 1725 O’Neill v Mincher [1926] …. 423, 447, 2522 O’Sullivan v Commissioner of Stamp Duties [1984] …. 2039 — v Management Agency and Music Ltd [1985] …. 1028, 1305, 1313, 1325, 1329–1331, 1433, 1437, 1736, 1827, 2326 Oakacre Ltd v Claire Cleaners (Holdings) Ltd [1982] …. 1836 Oakleigh Acquisitions Pty Ltd (in liq) v Steinochr [2005] …. 842 Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd [2010] …. 425, 458 Oates v Hudson (1851) …. 524 Oberth, Re [1936] …. 833 OBG Ltd v Allan [2008] …. 1608 Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] …. 506, 517, 518, 927, 1312, 1321, 1326, 1806 Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] …. 1232 Ochberg v Commissioner of Stamp Duties (1943) …. 520, 529, 530 Office of Personnel Management v Richmond (1990) …. 2106 Official Assignee of Collier v Creighton [1993] …. 2742 Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) …. 116, 612, 627, 634, 645 — v Tooheys Ltd (1993) …. 141, 1433, 1434, 1635, 2322, 2326 Ogilvie v Allen (1899) …. 421 — v Littleboy (1897) …. 421

Ogle v Comboyuro Investments Pty Ltd (1976) …. 2304, 2310 Old Colony Trust Co v Wood (1947) …. 2415 Oldfield v Transamerica Life Insurance Co of Canada (2002) …. 1902 Olga Investments Pty Ltd v Citipower [1998] …. 1045 Olib, The see Enimont Overseas AG v RO Jugotanker Zadar Oliver v Campbell (1954) …. 1106, 1152, 1205 — v Lakeside Property Trust Pty Ltd [2005] …. 158 Olwell v Nye & Nissen (1946) …. 1639 On Demand Information Plc v Michael Gerson (Finance) Plc [2001] …. 1142 Oom v Bruce (1810) …. 2629 Opus Productions Pty Ltd v Popwing Pty Ltd (unreported, 1995) …. 451 Orakpo v Manson Investments Ltd [1978] …. 639, 640 Orix Australia Corp Ltd v M Wright Hotel Refrigeration Pty Ltd (2000) …. 2417, 2418 Orr v Ford (1989) …. 2712, 2713 — v Lane (1951) …. 453 Osborne v McDermott [1998] …. 2516 Osenton v Johnston [1942] …. 711 OTM Ltd v Hydranautics [1981] …. 1035 Oughton v Seppings (1830) …. 1619, 1627 Overstone Ltd v Shipway [1962] …. 1132 Overton v Banister (1844) …. 1043 Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2004] …. 2417 — v — [2006] …. 446, 448, 520, 524, 1831, 2417, 2520 Owen v Tate [1976] …. 635, 640, 647, 847 Owen & Co v Cronk [1895] …. 2419

Owners of SS Kalibia v Wilson (1910) …. 705 Owners of Strata Plan 62930 v Kell and Rigby Holdings Pty Ltd [2010] …. 2736 Oxendale v Wetherell (1829) …. 1174 Oxenham v Clapp (1832) …. 840

P P & O Nedlloyd BV v Arab Metals Co (No 2) [2007] …. 2713 P C Developments Pty Ltd v Revell (1991) …. 1148, 1170, 1335, 1438 Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] …. 2527 Paconowski v Wygoda (unreported, 1992) …. 645 Page v Newman (1829) …. 2802 Palimport v Ziba Geigi (1975) …. 708 Palmdale Insurance Ltd, Re [1982] …. 1217, 1221 Palmer v Blue Circle Southern Cement Ltd (1999) …. 2415 — v Permanent Trustee Co (1915) …. 615 — v Stear (1962) …. 837 — v Temple (1839) …. 916, 917, 1114, 1121, 1125, 1129 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] …. 1325, 1433 Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1993] …. 446 — v — [1994] …. 215, 446, 910, 915, 917, 1015, 1113, 1205 Panorama Plant Hire Pty Ltd v Mercantile Mutual Insurance Co Ltd [1980] …. 645 Pantalone v Alaouie (1989) …. 1820 Pao On v Lau Yiu Long [1980] …. 506, 517, 518, 521–523, 529, 531, 1312 Papamichael v National Westminster Bank plc [2003] …. 2523

Papas v Grave [2013] …. 703 Pape v Federal Commissioner of Taxation (2009) …. 1202, 1204 Pappis, Re (1984) …. 2110 Papps v Mahon [1966] …. 2733 Paragon Finance plc v D B Thakerar & Co [1999] …. 250, 256 Parij v Parij (1998) …. 251, 256 Park Oh Ho v Minister for Immigration & Ethnic Affairs (1988) …. 529, 2014 Parker v British Airways Board [1982] …. 1608 — v Norton (1796) …. 1532 — v R (1997) …. 303 Parkes Rural Distributions Pty Ltd v Glasson (1986) …. 2026 Parkinson v College of Ambulance [1925] …. 2606, 2614, 2630 Parramatta City Council v Lutz (1988) …. 1820 Parsons v McBain (2001) …. 257 Parsons Bros Ltd v Shea (1965) …. 1263 Pasley v Freeman (1789) …. 1620 Patel v Mirza [2014] …. 2632, 2635 — v W H Smith (Eziot) Ltd [1987] …. 1625 Patten v Thomas Motors Pty Ltd (1965) …. 1121, 2530 Paul v Pavey & Matthews Pty Ltd (1985) …. 132, 1024 — v Speirway Ltd [1976] …. 640 Paul A Davies (Australia) Pty Ltd (in liq) v Davies [1983] …. 1711, 1717 Pavey & Matthews Pty Ltd v Paul (1987) …. 106, 110, 118, 119, 121, 123, 131, 132, 135–138, 142, 145, 150, 158, 170, 204, 205, 207–209, 215, 216, 240, 250, 403, 407, 625, 808, 908, 909, 912, 913, 934, 1001, 1002, 1019, 1024, 1025, 1027–1032, 1034, 1165, 1202, 1214, 1227, 1230, 1403, 1415–1417, 1422, 1425, 1426,

1533, 1635, 2609, 2720, 2722, 2723, 2808, 2904, 2914, 2922, 2923, 2925 Payne v McDonald (1908) …. 2632 — v R (1901) …. 530, 2023 — v Roe [2012] …. 2737 — v Rowe (2012) …. 1202, 1233 Paynter v Williams (1833) …. 116, 118 Peacock, Re [1957] …. 1922 Peanut Marketing Board v Cuda (1984) …. 516, 521, 522 Pearce v Brain [1929] …. 927, 1017, 1020 — v Button (1986) …. 2014 — v Diensthuber (1977) …. 849 — v R (1998) …. 135 Pearl Assurance Co Ltd v Government of the Union of South Africa [1934] …. 1144 Pechar, Re [1969] …. 1927 Peck v Mayor of Hawthorn (1892) …. 408, 426 Peco Arts Inc v Hazlitt Gallery Ltd [1983] …. 2741 Pedashenko v Blacktown City Council (1996) …. 2333 Pederson v Young (1964) …. 2715 Peel Rumsey v North Eastern Railway Co (1863) …. 147 Peet Ltd v Richmond (2011) …. 1417, 1419, 1422, 2807, 2808 Peeters v Opie (1671) …. 919 Peevyhouse v Garland Coal & Mining Co (1963) …. 1820 Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] …. 1821 Penarth Dock Engineering Co Ltd v Pounds [1963] …. 1626, 1637 Pendergrast v Chapman [1988] …. 1130 Pendlebury v Walker (1841) …. 621, 645

Penfolds Wines Pty Ltd v Elliott (1946) …. 1607, 1608, 1628 Peninsular & Oriental Steam Navigation Co v Overseas Oil Carriers Inc (1977) …. 824, 827, 829, 852 Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) …. 1508 Pennicott v Pennicott (1936) …. 2708 Permanent Trustee Co Ltd v Freedom from Hunger Campaign (1991) …. 1905, 1910, 1912 — v Gillett (2004) …. 1908, 1916, 1917, 1918 Perpetual Executors and Trustees Association of Australia Ltd v Russell (1931) …. 1019 — v Wright (1917) …. 2632, 2634 Perpetual Trustees Australia Ltd v Heperu Pty Ltd (2009) …. 2417, 2418 Perri v Coolangatta Investments Ptd Ltd (1982) …. 1207 Perrin v Reynolds (1886) …. 1819 Perry v Sidney Phillips & Son [1982] …. 1818 Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] …. 1304, 1437, 1633, 1718, 1739, 2302, 2304–2306, 2313 Peter Kiewit Sons’ Co of Canada Ltd v Eakins Constructions Ltd (1960) …. 519 Peter Lind & Co Ltd v Mersey Docks and Harbour Board [1972] …. 1034, 1045, 1419 Peter Pan Manufacturing Corp v Corsets Silhouette Ltd [1964] …. 1713, 1715 Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) …. 1213 Peters v Attorney-General (NSW) (1988) …. 2027 — v C W McFarling Floor Surfacing Ltd [1959] …. 1045 — v Fleming (1840) …. 1040

— v Tuck (1915) …. 1020 Petherpermal Chetty v Muniandi Servai (1908) …. 2633 Petra v Duncombe (1851) …. 2811 Pettit v Pettit [1970] …. 810 Pettkus v Becker (1980) …. 1728 Peyman v Lanjani [1985] …. 2318 Phetteplace v Bucklin (1893) …. 2415 Philip Collins Ltd v Davis [2000] …. 2408, 2412, 2415 Philip Morris Ltd v Commissioner of Business Franchises (Vic) (1989) …. 2030 Phillip-Higgins v Harper [1954] …. 2741 Phillips v Brooks Ltd [1919] …. 1009, 2528 — v Ellinson Bros Pty Ltd (1941) …. 128, 145, 158, 908, 909, 934, 1025, 1027, 1029–1032, 1151, 1157, 1158, 1422 — v Eyre (1870–71) …. 530 — v Homfray (1883) …. 1523, 1524, 1619, 1625, 2735, 2742 — v — (No 1) (1871) …. 1616, 1617, 1626, 1639 — v — (No 2) (1883) …. 1617 Phipps v Boardman [1965] …. 1713, 1717 Photo Production Ltd v Securicor Transport Ltd [1980] …. 161, 1129, 1171, 1430, 1808, 1820, 2806 Picturesque Atlas Publishing Co Ltd v Phillipson (1890) …. 119, 1325, 1336, 1337 Pike, Re (1888) …. 840 Pilmer v Duke Group Pty Ltd (in liq) (2001) …. 1703, 1705, 1723 Pindaros, The [1983] …. 625, 629 Pioneer Homes Pty Ltd v Liverpool City Council (1992) …. 516, 517, 529 Pirwinski v Corporate Trustees of the Diocese of Armidale [1977] …. 2737

Pitt v Coomes (1835) …. 520, 527 — v Curotta (1931) …. 1143, 1439, 2824 — v Holt [2013] …. 404, 421, 430–432, 450 Pitts v Hunt [1990] …. 2606 Pizzino v Finance Brokers (WA) Pty Ltd (1982) …. 1414 Placer Development Ltd v Commonwealth (1969) …. 1005 Plaister, Re (1934) …. 1908, 1915, 1932 Planché v Colburn (1831) …. 118, 908, 935, 941, 1027, 1168, 1404, 1408, 1409, 2723 Platemaster Pty Ltd v M & T Investments Pty Ltd [1973] …. 423, 425, 428, 446 Platt v Bromage (1854) …. 446 Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] …. 842, 847 Plimmer v The Mayor, Councillors and Citizens of the City of Wellington (1884) …. 458, 1046 Polak v Kramer (1933) …. 1167 Pollard v Bank of England (1871) …. 438 Pollock, Re [1941] …. 1908 Polly Peck, Re (No 2) [1998] …. 249 Polly Peck International Plc v Nadir (No 2) [1992] …. 2506 — (in admin) (No 2), Re [1998] …. 257, 313, 545 Polwood Pty Ltd v Foxworth Pty Ltd (2008) …. 1730 Polygram Pty Ltd v Golden Editions Pty Ltd (1997) …. 1721 Pontypridd Union v Drew [1927] …. 819, 833, 1040 Poort v Development Underwriting (Victoria) Pty Ltd [1976] …. 1148 — v — [1977] …. 1148 Pordage v Cole (1669) …. 919, 920, 1128 Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] …. 245, 309, 311, 318, 319, 441, 2417, 2418

Port of Melbourne Authority v Anshun Pty Ltd (1981) …. 2304, 2306 Port Victor, The (Cargo ex) [1901] …. 829 Porter v Board of Land and Works (1870) …. 1138 — v Latec Finance (Qld) Pty Ltd (1964) …. 402, 411, 412, 423, 428, 429, 440, 446, 452, 622, 1007 Portman Building Society v Hamlyn Taylor Neck (a firm) [1998] …. 441, 909, 2408, 2723 Poulton v Commonwealth (1953) …. 1534 Powell v Rees (1837) …. 1619, 1624 Pownal v Ferrand (1827) …. 116, 627, 636 Pozniak v Smith (1982) …. 2715 Prager v Blatspiel, Stamp and Heacock Ltd [1924] …. 822 Prasad v Sangha [2012] …. 409 Pratt v Hawkins (1991) …. 1414 Precision Pools Pty Ltd v Commissioner of Taxation (1992) …. 2012 Prell v Burrell [1975] …. 2809 President of India v La Pintada Compania Navigacion SA [1985] …. 2802, 2814 Price v Neal (1762) …. 437 — v Roberts (unreported, 1992) …. 1929 Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co (The Manila) [1988] …. 153, 816, 840, 932 Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) …. 707, 708, 710–712 Programmed Total Marine Services Pty Ltd v Ship ‘Hako Endeavour’ (2014) …. 933, 1045, 1232 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) …. 1118, 1614 Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] …. 116, 849, 934

Prothonotary of the Supreme Court of NSW v Pangallo (1993) …. 1917 Prudential Assurance Co Ltd v C M Breedon Pty Ltd [1994] …. 402, 411, 448, 1332, 2516 Psaltis v Schutz (1948) …. 2611 PT Garuda Indonesia Ltd v Grellman (1992) …. 2511 Public Service Employees Credit Union Co-op Ltd v Campion (1984) …. 515 Public Trustee v Evans (1985) …. 1909, 1911, 1916, 1929 — v Fraser (1987) …. 1909, 1914, 1917, 1922, 1924 — v Hayles (1993) …. 1910, 1923, 1933 Public Trustee of Queensland as a Corporation Sole, The v Public Trustee of Queensland as manager of the Estate of Nielsen, The [2014] …. 1912 Pulkownik v Public Trustee [1979] …. 2524 Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] …. 2703 Puma Australia Pty Ltd v Sportsman’s Australia Ltd (No 2) [1994] …. 303, 1632, 2819, 2820 Pym v Campbell (1856) …. 1209 Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd (1996) …. 411, 2808 — v — [1999] …. 2808

Q Qantas Airways Ltd v Commissioner of Taxation (2001) …. 2808, 2826 QBE Insurance (Australia) Ltd v CGU Workers Compensation (NSW) Ltd (2012) …. 618 Quality Excelsior Coal Co v Reeves (1944) …. 1616 Queensland Alumina Ltd v Alinta DQP Pty Ltd [2007] …. 432 Queensland Trustees Ltd v Fowles (1910) …. 2012

Quek v Beggs (1990) …. 2407 Quin v Mutual Acceptance Co Ltd (1967) …. 1044 Qurante Pty Ltd v Owners Strata Plan No 67212 [2008] …. 933

R R v Attorney-General for England and Wales [2003] …. 527 — v Board of Inland Revenue; Ex parte MFK Ltd [1990] …. 2012 — v Brisbane Licensing Court; Ex parte Daniell (1920) …. 2027 — v Brown (1912) …. 120, 925, 1126 — v Chief National Insurance Commissioner; Ex parte Connor [1981] …. 1909, 1929 — v Elliott [1955] …. 706 — v Hellier (1851) …. 706, 707 — v Henrickson (1911) …. 626 — v Her Majesty’s Attorney-General for England and Wales [2004] …. 521 — v Howson (1966) …. 840 — v Inland Revenue Commissioners; Ex parte Federation of SelfEmployed and Small Businesses Ltd [1982] …. 2012 — v —; Ex parte Woolwich Equitable Building Society [1990] …. 2018 — v Ireland (1970) …. 703 — v Lewisham London LBC; Ex parte Shell UK Ltd [1988] …. 516 — v McNeil (1922) …. 2736 — v Magistrates Court at Mount Isa [1951] …. 2723 — v Oregan; Ex parte Oregan (1957) …. 2715 — v R (unreported, 1997) …. 1914 — v Seery (1914) …. 1916 — v Stewart (1840) …. 849 — v Toronto Terminals Railway Co [1948] …. 2104

— v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] …. 2007, 2009, 2017, 2037, 2038, 2040, 2511 — v Vann (1851) …. 849 R & W Paul Ltd v Wheat Commission [1937] …. 2722 R E Jones Ltd v Waring & Gillow Ltd [1925] …. 423 — v — [1926] …. 402, 408, 423, 446, 2408 R Leslie Ltd v Sheill [1914] …. 126, 127, 449, 1020, 1043 R S Howard & Sons Ltd v Brunton (1916) …. 2511 R v Ward Ltd v Bignall [1967] …. 1118 R W Cameron & Co v L Slutzkin Pty Ltd (1923) …. 1008 R W Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1992) …. 608 — v The Ship Patris [1975] …. 2803 Radford v De Froberville [1978] …. 1820 — v Ferguson (1947) …. 2522, 2527, 2637 Raffle v AGC (Advances) Ltd (1989) …. 612 Raffles v Wichelhaus (1864) …. 1008 Ralena Pty Ltd v VCAT (No 2) (2007) …. 709 Rambal v The Griffin Coal Mining Co NL [2015] …. 2808 Ramsay v Lowther (1912) …. 610 Ramsden v Dyson (1866) …. 458, 1046 Ramskill v Edwards (1885) …. 616 Ramzan v Brookwide Ltd [2012] …. 1536 Ranger v Great Western Railway Co (1854) …. 1205 Rap Industries Ltd v Royal Insurance Aust Ltd (1988) …. 608 Rasmanis v Jurewitsch (1968) …. 1906, 1909, 1910, 1918, 1924, 1925, 1927 — v — (1969) …. 1927 Rasmussen v Rasmussen [1995] …. 2737 Ravinder Rohini Pty Ltd v Krizaic (1991) …. 1806, 1829

Rawson v Hobbs (1961) …. 1227, 1438 RBC Dominion Securities Inc v Dawson (1994) …. 2408, 2412 Read v Anderson (1882) …. 1021 — v — (1884) …. 1021 Reading v Attorney-General [1951] …. 911, 1629, 1704, 1714, 1715, 1718, 1829, 1839, 2609, 2628 — v R [1949] …. 1703, 1714 Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] …. 916, 1121, 1143, 1170, 1414, 1438, 1439 Redgrave v Hurd (1881) …. 1337, 2713 Redmond v Wynne (1892) …. 1028, 2614 Redwood Music Ltd v Chappell & Co Ltd [1982] …. 1717 Reed v Sheehan (1982) …. 2322 Rees v Hughes [1946] …. 849 Refuge Assurance Co Ltd v Kettlewell [1909] …. 1633 Regal (Hastings) Ltd v Gulliver [1967] …. 1711, 1712, 1715 Regalian Properties Plc v London Docklands Development Corp [1995] …. 1035, 1036 Regent’s Garage and Engineering Co Ltd v Moriarty [1921] …. 1173 Regional Municipality of Peel v Canada (1992) …. 147, 151, 153, 160, 166, 809, 840, 910, 932, 1639, 2026 Registrar-General (NSW) v Behn (1981) …. 1536 Reid v Macbeth [1904] …. 1133 Reid Motors Ltd v Wood [1978] …. 1125, 1138, 1142, 1145 Remon v Hayward (1835) …. 121 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) …. 138, 908, 1108, 1166–1168, 1416, 1422, 1428–1430 Rendell v Associated Finance Pty Ltd [1957] …. 2525 Republic of India v Indian Steamship Co Ltd (The Indian Grace) [1993] …. 206, 2307

Reynolds v Davies (1911) …. 1143 — v Fury [1921] …. 1131 — v McGregor [1973] …. 1027 Rhodes, Re (1890) …. 120, 126, 817–819, 829–831, 833, 1040 Richard Brady Franks Ltd v Price (1937) …. 1705 Richard Buxton (a firm) v Mills-Owens (Law Society intervening) [2010] …. 1167, 1233 Richardson v White (1891) …. 2722, 2741 Riches v Hogben [1985] …. 250 — v Westminster Bank Ltd [1947] …. 2809 Riddiford v Warren (1901) …. 1337 Riess v Murchison (1974) …. 1106 Riessen v South Australia (2001) …. 415, 447, 515 Rigby v Chief Constable of Northamptonshire [1985] …. 635, 806 Riggs v Palmer (1889) …. 1904, 1926 Riley v Melrose Advertisers (1915) …. 1025, 1032 Rinbar Pty Ltd (in liq) v Nichevich (1987) …. 1521, 1639 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) …. 1142 Ritchie v Atkinson (1808) …. 1132 Riverina Transport Pty Ltd v Victoria (1937) …. 2027 Rivers v Rivers (2002) …. 1916, 1922 Riverside Motors Pty Ltd v Abrahams [1945] …. 1152, 1171 Riverwood Legion and Community Club Ltd v Repaja & Co Pty Ltd [2015] …. 311 Roach v Bickle (1915) …. 2611 Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) …. 250, 303, 305, 314, 316, 318, 441, 442 Robert A Munro & Co Ltd v Meyer [1930] …. 1337 Robert J Zupanovich Pty Ltd v B & N Neale Nominees Pty Ltd (1985)

…. 1708, 1711 Roberts, Re (1976) …. 413 —, Re; Roberts v Roberts [1905] …. 1332 — v Gray [1913] …. 1030, 1040 — v Repatriation Commission (1992) …. 2106, 2611 — v Rodney District Council [2001] …. 1621 Robertson, Estate of (1963) …. 1923 — v Robertson [1930] …. 518 Robins v Incentive Dynamics Pty Ltd (in liq) (2003) …. 251, 253, 257, 1705, 1728 Robinson, Re [1911] …. 2736 — v Abbott (1893) …. 1511 — v Campbell (No 2) (1992) …. 634, 645, 647 — v Harkin [1896] …. 615, 2738 — v Harman (1848) …. 213, 1508 Robinson Motors Pty Ltd v Fowler [1982] …. 2506 Robophone Facilities Ltd v Blank [1966] …. 1137 Roche, Re; Allen v Helton [1939] …. 1921, 1922 Rodger v Comptoir D’Escompte de Paris, The (1871) …. 706, 708, 710 Rodgers v Maw (1846) …. 1627 Rogers v Price (1829) …. 849 — v Resi-Statewide (1991) …. 847 — v Whitaker (1992) …. 826 Romanos v Pentagold Investments Pty Ltd (2003) …. 1139, 1148 Roper v Holland (1835) …. 121 Rose v Delaney (unreported, 1929) …. 1921 — v Poulton (1831) …. 919 Rosemac Pty Ltd’s Caveat, Re (1992) …. 2611

Rosenfeldt v Olson (1986) …. 1528, 1930 Rosewarne v Billing (1863) …. 116 Ross Systems v Linden Dari Delite Inc (1961) …. 1321, 1828 Rotea v Izuel (1939) …. 851, 938 Rothwells Ltd v Nommack (No 100) Pty Ltd [1990] …. 2926 Routtu v Routtu [1955] …. 849 Rover International Ltd v Cannon Film Sales Ltd [1989] …. 170, 408, 411, 424, 911, 917, 919, 927, 1015–1017, 1027, 1121, 1122, 1131, 1133, 1134, 1424, 2410 Rowe, Re [1904] …. 847 — v Vale of White Horse District Council [2003] …. 157, 174, 932, 934, 1025, 1027 Rowland v Divall [1923] …. 215, 1121, 1122, 1126, 1156, 2309 Roxborough v Rothmans of Pall Mall Australia Ltd (1999) …. 251, 404, 408, 409, 415, 416, 429, 1221 — v — (2001) …. 104, 110, 113, 117, 121, 123, 131, 132, 138, 139, 141, 156, 160, 164, 166, 170, 171, 204, 209, 215, 216, 248, 251, 256, 257, 309, 404, 408, 409, 415, 429, 444, 514, 610, 909, 917, 923, 926, 941, 1015, 1205, 1217, 1221, 1222, 2028, 2042, 2319, 2422 Roy v Lagona [2010] …. 458 Royal Bank of Scotland Plc v Etridge (No 2) [2002] …. 504, 510, 1313 Royal Commission into Certain Crown Leaseholds, Re [1956] …. 1916 Royal Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) …. 424 Royall v R (1991) …. 429 Royle v Trafford Borough Council [1984] …. 1171 Royse, Re [1985] …. 1906, 1909, 1929 Rozel, The see Channel Island Ferries Ltd v Cenargo Navigation Ltd RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG

(UK Production) [2010] …. 1044 Ruabon Steamship Co v London Assurance [1900] …. 605, 623 Ruddenklau v Charlesworth [1925] …. 1128 Rumsey v Nerly (1863) …. 1633 Russell v Adwan Pty Ltd (2000) …. 1128 Russell Gould Pty Ltd v Ramangkura (2014) …. 303, 305 Rutherglen Shire v Kelly (1878) …. 120 Ruxley Electronics and Constructions Ltd v Forsyth [1996] …. 1152, 1806, 1816, 1820 Ryan, Re (1992) …. 706 — v Textile Clothing & Footwear Union of Australia [1996] …. 2516 Ryder v Wombwell (1868) …. 1040

S S v State Administrative Tribunal of Western Australia (No 2) [2012] …. 708 S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) …. 1919, 1926 S H Lock (Australia) Ltd v Kennedy (1988) …. 1335 Sabemo Pty Ltd v North Sydney Municipal Council [1977] …. 148, 209, 813, 1026, 1027, 1035, 1046, 1416 Saccardo Constructions Pty Ltd v Gammon (1991) …. 618 Sachs v Miklos [1948] …. 816, 818, 821, 829, 836, 838, 840 Sadler v Evans (1766) …. 121, 136 Salcedo v Mawarie Mining Co Pty Ltd (1991) …. 644 Sali v SPC Ltd (1993) …. 2308, 2712 Salib v Gakas [2010] …. 415, 432, 2741 Salmon, Re (1889) …. 646 Samilo v Phillips (1968) …. 831 Samrein Pty Ltd v Metropolitan Water Sewerage & Drainage Board

(1982) …. 415, 429 Sandeman v Wilson (1880) …. 1439, 2824 Sanders v Cooper [1974] …. 1615 Sanderson Motors (Sales) Pty Ltd v Yorkstar Motors Pty Ltd [1983] …. 1836 Sandtara Pty Ltd v Abigroup (1996) …. 1135 Sandvik Australia Pty Ltd v Commonwealth (1989) …. 2104 Sangal, Re [1921] …. 1922, 1929 Sargent v ASL Developments Ltd (1974) …. 2318 — v Campbell [1972–73] …. 2320, 2330 Sargood Brothers v Commonwealth (1910) …. 120, 127, 522, 523, 524, 528, 2006, 2007, 2009, 2023, 2032, 2037 Saronikos, The see Greenmast Shipping Co SA v Jean Lion et Cie SA Saunders v Anglia Building Society [1971] …. 2528 — v Edwards [1987] …. 2609 Saunders & Co (a firm) v Hague [2004] …. 2416, 2421 Saywell v Yiu (1976) …. 851 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana [1983] …. 1142 Scanlan’s New Neon Ltd v Tooheys Ltd (1943) …. 2314 Scapinello v Scapinello [1968] …. 613, 617 Scarf v Jardine (1882) …. 2307 Scarisbrick v Parkinson (1869) …. 1030, 1422, 1425 SCEGS Redlands Ltd v Barbour [2008] …. 306 Schipp v Cameron [1999] …. 522 Schloendorff v Society of New York Hospital (1914) …. 826 Schmierer v Taouk (2004) …. 842, 2722 Schobelt v Barber (1967) …. 1927 Scholefield Goodman & Sons Ltd v Zyngier [1986] …. 612, 621, 645

Schwarstein v Watson (1985) …. 1024, 1030, 2923 Schwartz v Syver (1953) …. 1019 Schwennen v Abell (1991) …. 706 SCI Operations Pty Ltd v Commonwealth (1996) …. 2021, 2807 Scolio Pty Ltd v Cote (1992) …. 515, 520, 1312 Scotland v Bargen (1982) …. 2715 Scott v Pattison [1923] …. 1025, 1030, 1031, 1416 — v Scott (1963) …. 1733 — v Surman (1743) …. 257, 309 Scottish Equitable Plc v Derby [2000] …. 424 — v — [2001] …. 2408, 2412, 2414, 2415, 2417, 2422 Scottish Halls Ltd v The Minister (1915) …. 1222 Seager, Re; Seeley v Briggs (1889) …. 1020 — v Copydex Ltd (No 1) [1967] …. 1715, 1726 — v — (No 2) [1969] …. 1724, 1726 Sealace Shipping Co Ltd v Oceanvoice Ltd (The Alecos M) [1990] …. 1820 Sebel Products Ltd v Commissioners for Customs & Excise [1949] …. 2012, 2017 Secretary, Department of Health & Community Services v JWB & SMB (Marion’s Case) (1992) …. 812, 826–828 Secretary, Department of Social Security v Agnew (2000) …. 257 — v Alvaro (1994) …. 2110 Secure Parking (WA) Pty Ltd v Wilson (2008) …. 709 Seddon v North Eastern Salt Co Ltd [1905] …. 1310, 1319, 2301, 2333 Sedgwick v Daniell (1857) …. 614 Segur v Franklin (1934) …. 935, 1167, 1168, 1408 Seidler v Schallhofer [1982] …. 1533

Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] …. 250 Sellars v Adelaide Petroleum NL (1994) …. 1838 Sellin v Scott (1901) …. 1012, 1030 Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] …. 208, 238, 246, 710, 1504, 1509, 1523, 1626, 1629, 1637, 1702, 1802, 2018, 2417, 2802, 2803, 2805, 2807–2809, 2810, 2811, 2813, 2814, 2817, 2826 Senanayake v Cheng [1966] …. 1434, 1437, 2333 Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) …. 208 Sevastoploulos v Spanos [1991] …. 1028 Seven Network (Operations) Ltd v CEPU (2001) …. 530 Severn Trent Water Ltd v Barnes [2004] …. 1821 Seymour v Seymour (1996) …. 2742 Shallcross v Wright (1850) …. 819, 827, 849 Shalson v Russo [2005] …. 303, 314, 1043, 1310, 1318, 1437 Shamia v Joory [1958] …. 2926 Shapiro v Solomon (1956) …. 908, 1027 Sharland v Mildon (1846) …. 2419 Sharma v Simposh Ltd [2013] …. 901, 916, 1018 Sharp v Thomson (1915) …. 1008 Sharpe Bros & Knight v Chant [1917] …. 414 Shaw v Ball (1962) …. 1122, 1124, 1134 Shaw Savill and Albion Co Ltd v Commonwealth (1953) …. 2803 Sheahan v Carrier Air Conditioning Pty Ltd (1997) …. 636, 847 Sheffield Corp v Barclay [1905] …. 626 Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [1996] …. 2742 Shell Co of Australia Ltd v Esso Australia Ltd [1987] …. 135, 205, 2904

Shelley v Paddock [1980] …. 447 Shephard v ANZ Banking Corp Ltd (1996) …. 909, 930 Shepherd v Bray [1906] …. 613 Sherred v McDonald [2005] …. 153 Sherwin v McWilliams (1921) …. 612, 645 Shevill v Builders Licensing Board (1982) …. 1132 Shields v Westpac Banking Corporation [2008] …. 308, 454 Shiloh Spinners Ltd v Harding [1973] …. 1139 Shipton v Casson (1826) …. 1174 Shire of Windsor v Enoggera Divisional Board [1902] …. 120, 610, 645, 647 Shirlaw v Taylor (1991) …. 248, 1737 — v — (1992) …. 839 Shogun Finance Ltd v Hudson [2004] …. 1007, 1009, 1038, 2527, 2528 Short v Crawley [2005] …. 1831 Shuman v Coober Pedy Tours Pty Ltd (unreported, 1994) …. 138, 2333, 2708, 2824 Sibbles v Highfern Pty Ltd (1987) …. 1170, 1414, 1433 Sibley v Grosvenor (1916) …. 1330, 1405, 1432, 1437, 2816, 2824 Siboen and The Sibotre, The see Occidental Worldwide Investment Corp v Skibs A/S Avanti Sidhu v Van Dyke (2014) …. 458, 1046 Sigsworth, Re [1935] …. 1922 Silverwood v Silverwood (1997) …. 2624 Sim v Rotherham Metropolitan Borough Council [1987] …. 909, 1173 Simmons v Wilmott (1800) …. 852 Simms, Re [1934] …. 1620, 1639 Simons v Zartom Investments Pty Ltd [1975] …. 1325, 2816, 2824

Simos v National Bank of Australasia (1976) …. 425 Simpson v Eggington (1855) …. 847 Simpson Steel Structures v Spencer [1964] …. 1152, 1160, 1820 Sinanian v EKS Carpentry Pty Ltd (1997) …. 1502, 1902 Sinclair v Brougham [1914] …. 121, 122, 126–128, 131, 250, 303, 845, 1020, 1021, 1321, 2607 — v Rankin (No 2) (1908) …. 1033 — v Registrar-General [2010] …. 2741 Sine Nomine, The see AB Corporation v CD Company Singh v Ali [1960] …. 308, 1609, 2605, 2609, 2623 Skeate v Beale (1841) …. 506, 527, 1312 Skibinski v Community Living British Columbia [2010] …. 827 Skinner v James Syphonic Visible Measures Ltd (1927) …. 2808, 2813, 2814, 2816 Sky Channel Pty Ltd v Tszyu [2000] …. 623 Skyring v Greenwood (1825) …. 2408 Slade’s Case (1602) …. 113, 115, 125, 2304 Slazenger & Sons v Spalding & Bros [1910] …. 1708 Slowey v Lodder (1901) …. 1168, 1428, 1429 Smith v Bromley (1760) …. 2604, 2609, 2626, 2639 — v Cock (1909) …. 621 — v — [1911] …. 621 — v Cox [1940] …. 847 — v Cuff (1817) …. 514 — v Hartshorn (1959) …. 909, 910, 1030, 1032, 1035, 1227 — v Hughes (1871) …. 1009 — v In Shoppe Pty Ltd (1976) …. 2810 — v Jenkins (1970) …. 1918, 2604 — v Jones (1924) …. 1113

— v Monteith (1844) …. 527 — v William Charlick Ltd (1924) …. 127, 128, 506, 508, 516, 527, 530, 1312 Smith Kline & French Laboratories Ltd v Secretary, Department of Community Services & Health (1990) …. 1723 — v Long [1988] …. 1625 Smith New Court Securities v Scrimgeour Vickers (Asset Management) Ltd [1994] …. 243, 2329, 2528 SmithKline Beecham plc v Apotex Europe Ltd [2007] …. 708, 709 Smits v Roach (2004) …. 1233 — v — (2006) …. 1233 Smyth v Jessep [1956] …. 1142, 1144, 1414 Snepp v United States (1980) …. 1711 Snowdon v Davis (1808) …. 524, 2419 Snyman v Cooper (1989) …. 1510 Societe des Hotels Reunis v Hawker (1913) …. 515, 520 Societe Franco Tunisienne D’Armement v Sidermar SpA [1961] …. 1232 Soldiers Memorial Hospital v Sanford [1934] …. 827, 828 Solle v Butcher [1950] …. 1301, 1311, 2333 Somes v British Empire Shipping Co (1860) …. 528 Sommerhalder v Burjan [1962] …. 1219 Sommers v Putnam County Board of Education (1925) …. 852 Soper v Arnold (1889) …. 1138 Sopov v Kane Constructions Pty Ltd (No 2) (2009) …. 1167, 1415, 1416, 1428–1430 Sorrell v Paget [1950] …. 835 Sorrenti v Crown Corning Pty Ltd (1986) …. 2703 SOS Kinderdorf International v Bittaye [1996] …. 1164 Souch v Strawbridge (1846) …. 1030

Soukop, Estate of (1997) …. 1909, 1912 Soulos v Korkontzilas [1997] …. 244, 256, 257 South Australia v Commonwealth (1942) …. 2027 — v — (1992) …. 2804 South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) …. 412, 415, 427, 447, 529, 2038 — v — (1965) …. 2639 South British Insurance Co Ltd v Brown’s Wharf Pty Ltd [1966] …. 619, 633 — v Norwich Winterthur Insurance (NZ) Ltd (1983) …. 618 South of Scotland Electricity Board v British Oxygen Co (No 2) [1959] …. 520, 529, 530 South Tyneside Metropolitan Borough Council v Svenska International Plc [1995] …. 2410, 2417, 2422 Southage Pty Ltd v Vescovi [2015] …. 2415, 2417 Southern Cross Commodities Pty Ltd v Ewing (1988) …. 2814 Spain v Union Steamship Co of New Zealand Ltd (1923) …. 2922 Spangaro v Corporate Investment Australia Funds Management Ltd (2003) …. 166, 318 Spectrum Plus Ltd (in liq), Re [2005] …. 2031 Spedding v Spedding (1913) …. 314 Spedley Securities Ltd v Greater Pacific Investments Pty Ltd (1992) …. 209, 1330, 1437, 2608, 2631 Spence v Crawford [1939] …. 129, 141, 1116, 1331, 1433, 1434, 1437, 1635, 2330 Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) …. 623 Spiers & Pond Ltd v Finsbury Metropolitan Borough Council (1956) …. 2040 Spiers & Son v Troup (1915) …. 613, 619, 621

Spies v Commonwealth Bank of Australia (1991) …. 2515 Spika Trading Pty Ltd v Harrison (1990) …. 613, 616, 619, 647 Spira v Commonwealth Bank of Australia (2003) …. 517, 522, 1302, 1312 Sprague v Booth [1909] …. 910, 1138 Spring Form Inc v Toy Brokers Ltd [2002] …. 2304 Springer v Great Western Railway [1921] …. 817, 838 Squire v Rogers (1979) …. 617 St John Shipping Corp v Joseph Rank Ltd [1957] …. 1902, 2616 St Vladimir College and Minor Seminary v Champs Take Home Ltd (1974) …. 2732 Staff Benefits Pty Ltd, Re [1979] …. 640 Stafford v Mayor Councillors and Citizens of South Melbourne [1908] …. 1138 Stammers v Akron Securities Ltd (1997) …. 2608 Standard Bank London Ltd v Canara [2002] …. 2017 Standard Brands Ltd v Fox (1974) …. 612 Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2003] …. 429 Staples v Baker [1999] …. 647 Star v O’Brien (1996) …. 2810 State Advances Recovery Office of the Republic of South Africa v Fine [1968] …. 2922 State Bank of New South Wales v Federal Commissioner of Taxation (1995) …. 2021, 2807, 2808, 2810 — v Swiss Bank Corp (1995) …. 424, 2418, 2422, 2803, 2810 State Bank of South Australia v Rothschild Australia Ltd (1990) …. 640 State of Queensland v Byers [2006] …. 1912 State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982)

…. 1212, 1232 State Trading Corp of India Ltd v M Golodetz Ltd [1989] …. 1129, 1828 Steedman v Drinkle [1916] …. 1143 Steele v Tardiani (1946) …. 158, 908, 909, 934, 1103, 1153, 1154, 1157, 1158, 1161–1165, 1171, 1419, 1422, 2723 — v Williams (1853) …. 524, 2011 Steinberg v Scala (Leeds) Ltd [1923] …. 1017 Stephen v Camden & Philadelphia Soap Co (1907) …. 1167, 1429, 1433, 1818 Stephens Travel Service International Pty Ltd v Qantas Airways Ltd (1988) …. 442 Stephenson Nominees Pty Ltd v Official Receiver on behalf of Official Trustee in Bankruptcy; Ex parte Roberts (1987) …. 135, 208, 248–250, 256, 257, 1035, 1728 Stergiou v Citibank Savings Ltd (1998) …. 708 Sterling v Marshall (1947) …. 1167, 1428 Stern v McArthur (1988) …. 135, 1139, 1141–1143, 1170, 1438 Sternbeck v Sternbeck (1968) …. 506 Steven v Bromley & Son [1919] …. 1161, 1171, 1419 Stevenson v Hook (1956) …. 935, 1167, 1419 Stevter Holdings Pty Ltd v Katra Construction Pty Ltd [1975] …. 2310 Stewart v Atco Controls Pty Ltd (in liq) (2014) …. 639, 810, 839 — v Layton (1992) …. 1726 Stiassny v Commissioner of Inland Revenue [2013] …. 432, 2018 Stickney v Keeble [1915] …. 1126 Stilk v Myrick (1809) …. 506, 531 Stimpson v Smith [1999] …. 642 Stinchcombe v Thomas [1957] …. 1027, 1416, 1419, 1422, 2722

Stirling v Burdett [1911] …. 643 Stockloser v Johnson [1954] …. 129, 908, 916, 1131, 1138, 1140–1144 Stocks v Wilson [1913] …. 1038, 1040, 1043 Stocznia Gdanska SA v Latvian Shipping Co [1998] …. 930, 941, 1110, 1126, 1127, 1129, 1133 Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] …. 917, 941, 1129, 1133, 1410 Stoke-on-Trent City Council v W & J Wass Ltd [1988] …. 1610, 1617, 1625, 1626, 1629, 1638, 1821 Stone, Re [1989] …. 1909, 1923, 1927 Stone & Rolls Ltd (in liq) v Moore Stephens (a firm) [2009] …. 2604, 2624 Stone and Saville’s Contract, Re [1963] …. 1126 Storthoaks, Rural Municipality of v Mobil Oil Canada Ltd (1975) …. 2040, 2404, 2415 Straede v Eastwood [2003] …. 1914 Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd [1952] …. 1629 Strang v Owens (1925) …. 313, 2618 Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) …. 147, 431, 458, 810, 910, 1027, 1035 Stratti v Stratti (2000) …. 614, 639 Street v Blay (1831) …. 916–918, 1116, 1433, 2333 — v Retravision (NSW) Pty Ltd (1995) …. 612, 619, 623 Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) …. 1705, 1712, 1715, 2737 Strickland v Turner (1852) …. 1017 Strongman (1945) Ltd v Sincock [1955] …. 1044 Stuesser v Ebee (1963) …. 1017, 1019

Sturt v Cusack (1989) …. 1143, 1305, 1323 Suburban Towing and Equipment Pty Ltd v Suttons Motor Finance Pty Ltd (2008) …. 837 Sullivan v Moody (2001) …. 135 — v Sullivan [2006] …. 2415 Suisse Atlantique Societe d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] …. 1174 Summers v Commonwealth (1918) …. 909, 1174, 1323 — v — (1919) …. 1174, 1323 Sumpter v Hedges [1898] …. 153, 157, 908, 909, 933, 934, 1113, 1151, 1155, 1156, 1158–1165, 1171 Sunbird Plaza Pty Ltd v Maloney (1988) …. 1128, 1135, 1139, 1403, 1808, 2310 Sunstar Fruit Pty Ltd v Cosmo [1995] …. 215, 431, 458, 810, 1170, 1438 Supercar International Holdings Ltd v Sommers [2011] …. 446 Surrey Breakdown Ltd v Knight [1999] …. 837 Surrey County Council v Bredero Homes Ltd [1993] …. 1809, 1821, 1824, 1831, 1833, 1834, 1837, 1841 Sutherland v Take Seven Group Pty Ltd (1998) …. 151, 153 Sutherland, Re; French Caledonia Travel Service Pty Ltd (in liq) (2003) …. 303 Sutherland Shire Council v Heyman (1985) …. 149 Sutton v Zullo Enterprises Pty Ltd [2000] …. 1028, 2615, 2616 Suttons Motors Pty Ltd v Campbell (1956) …. 129, 133, 1517, 1533, 1621, 1627, 2304 Svanosio v NcNamara (1956) …. 916, 1007, 1010, 1017, 1311, 1320, 1324, 2330, 2333 Svenson v Payne (1945) …. 458 Swain v Morland (1819) …. 1520

Swiss Bank Corp v State Bank of New South Wales (1993) …. 1509, 2824 Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) …. 1111 Swordheath Properties Ltd v Tabet [1979] …. 1626 Sybron Corp v Rochem Ltd [1984] …. 1320 Sydney Corp v West (1965) …. 1430 Sydney Real Estate Bank v Weiss (1891) …. 629, 642 Sydney Turf Club v Crowley [1971] …. 618 Sykes v Stratton [1972] …. 2635, 2640 Symes v Hughes (1870) …. 2632 Sympson v Juxon (1625) …. 706 Szep v Blanken [1969] …. 1221, 1310, 2318, 2320, 2326, 2330

T T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) …. 215, 506, 531, 1312, 1321, 1337 T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) …. 1811, 1812 T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd [1991] …. 1160, 1170, 1438 Tabcorp Holding Ltd v Bowen Investments Pty Ltd (2009) …. 211, 1152, 1815 Tabet v Gett (2010) …. 522 Take Harvest Ltd v Liu [1993] …. 1019 Talbot v General Television Corp Pty Ltd [1980] …. 1724 Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) …. 2516 Tanwar Enterprises Pty Ltd v Cauchi (2003) …. 106, 175, 1139 Tarea Management (North Shore) Pty Ltd v Glass (1991) …. 1532

Target Holdings Ltd v Redferns [1996] …. 1722, 1725, 2918 Tarlington v Hall (1981) …. 2808 Tate v Crewdson [1938] …. 612, 644 Tavistock Pty Ltd v Saulsman (1991) …. 1723 Taylor v Bowers (1876) …. 2632–2634 — v Chester (1869) …. 2605, 2616 — v Johnson (1983) …. 1008, 1009, 1311 — v Laird (1856) …. 157, 807, 815, 836 — v Plumer (1815) …. 303, 1619, 1632 — v Smith (1926) …. 440 — v Taylor (1890) …. 1028, 2615 TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) …. 706, 707 — v Hayden Enterprises Pty Ltd (1989) …. 1821 Tea Tree Gully Builders Co Pty Ltd v Martin (1992) …. 135, 153, 909, 1032, 1161 Tehno-Impex v Gebr Van Weelde Scheepvaartkantoor BV [1981] …. 2802 Telecom Vanuatu v Optus [2008] …. 1608 Tenji v Henneberry & Associates Pty Ltd (2000) …. 1315, 1334 Tennant, Re; Mortlock v Hawker (1942) …. 2814 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) …. 1708, 1713, 1716, 1721, 1739 Terra Nova Pty Ltd v Nalanda Pty Ltd [1977] …. 941, 1126, 1219, 2824 Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) …. 916, 917, 1133, 1134, 2511 Test Claimants in the FII Group Litigation v Inland Revenue Commissioners [2012] …. 2018, 2034 — v Revenue and Customs Commissioners [2008] …. 2419 — v — [2010] …. 446

Test Claimants in the Franked Dividend Investment Litigation v Revenue and Customs Commissioners [2008] …. 2040 Tetley & Co v British Trade Corp (1922) …. 818, 821 Tew v Jones (1844) …. 1615 Texaco (Ireland) Ltd v Murphy (No 2) [1992] …. 2018, 2019, 2826 Thackwell v Barclays Bank Plc [1986] …. 2609 Thai Trading Co v Taylor [1998] …. 2608, 2634 Thavorn v Bank of Credit & Commerce International SA [1985] …. 449, 1043 Theophanous v Herald & Weekly Times Ltd (1994) …. 2028 Thiess v Collector of Customs (2014) …. 523, 2039 Thiess Properties Pty Ltd v Ipswich Hospitals Board [1985] …. 1419 — v — [1985] …. 1419 Thomas v Atherton (1878) …. 614 — v Brown (1876) …. 1019 — v Houston Corbett & Co [1969] …. 442, 2421 — v Nottingham Inc Football Club Ltd [1972] …. 644 Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marak Finance Australia Ltd (1985) …. 2525, 2530 Thomas Brown & Sons Ltd v Fazal Deen (1962) …. 1609, 2605, 2616, 2619, 2621, 2623, 2732 Thompson v Palmer (1933) …. 2322, 2517 Thomson v McInnes (1911) …. 1019 Thorne v Motor Trade Association [1937] …. 503, 518 Thorner v Major [2009] …. 1046 Thornley v Tilley (1925) …. 1829 Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd [1989] …. 2304, 2308 Thorp and the Real Property Act, Re (1963) …. 1927 Thorpe v Fasey [1949] …. 916

Thors v Weekes (1989) …. 1148 Thurston v Mills (1812) …. 1520 — v Nottingham Permanent Benefit Building Society [1902] …. 640 — v — [1903] …. 640 Tiba v Waddell (No 2) [1977] …. 932 Tiiskeri, Nestegas and Enskeri, The see Neste Oy v Lloyds Bank Plc Tilley v Bowman [1910] …. 1532 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd (2010) …. 1438 Timber Engineering Co Pty Ltd v Anderson [1980] …. 257, 1727, 1728, 1731, 1829 Timmerman v Stanley (1905) …. 1410, 1433 Tinline v White Cross Insurance Association [1921] …. 1909 Tinsley v Milligan [1994] …. 2609, 2621, 2624 Tiplady v Gold Coast Carlton Pty Ltd (1984) …. 2318 Tipperary Developments Pty Ltd v Western Australia (2009) …. 419 Tito v Waddell (No 2) [1977] …. 1703, 1806, 1820, 1821, 1837, 1841 Toksoz v Westpac Banking Corporation (2012) …. 316 Tombs v Roch (1846) …. 625 Toohey v McCulla (1890) …. 619 Torr v Harpur (1940) …. 1126 Torrens Aloha Pty Ltd v Citibank NA (1997) …. 414, 416, 426, 2030, 2714, 2721, 2722, 2741 Towers v Barrett (1786) …. 909, 1116 Town & Country Property Management Services Pty Ltd v Kaltoum [2002] …. 1831 Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] …. 1045 Tozer Kemley & Millbourn (A’Asia) Pty Ltd v Collier’s Interstate Transport Service Ltd (1956) …. 127

TRA Global Pty Ltd v Kebakoska [2011] …. 2408 Trade Indemnity Australia Ltd v Parkinson Air Conditioning Pty Ltd (1994) …. 2206 Trade Practices Commission v Manfal Pty Ltd (No 3) (1991) …. 222, 619 — v Milreis Pty Ltd (1977) …. 1334, 2334 Traders Finance Corp Ltd v Marks [1932] …. 647 Tradigrain SA v State Trading Corp of India [2006] …. 1205 Trafalgar House Construction (Regions) Ltd v General Surety & Guarantee Co Ltd [1996] …. 1135 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) …. 1152, 1411 Transcatalana de Commercio SA v Incobrasa Industrial e Commercial Brazileira SA [1995] …. 2318 Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (t/as ‘Uncle Ben’s of Australia’) (1992) …. 1042 Trepca Mines Ltd (No 2), Re [1962] …. 1028, 2616 Tribe v Tribe [1996] …. 2632, 2634, 2635 Trident Beauty, The see Pan Ocean Shipping Co Ltd v Creditcorp Ltd Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) …. 1042, 1806 Trimboli v Secretary to the Department of Social Security (1988) …. 2108 Trimis v Mina [1999] …. 158, 215 Triple ‘C’ Holdings Pty Ltd v Hogan [1983] …. 1032 Trivan Pty Ltd, Re (1996) …. 255, 639, 640 Troja v Troja (unreported, 1993) …. 1909, 1912, 1914 — v — (1994) …. 1902, 1903, 1905, 1906, 1909, 1910, 1912, 1914, 1916, 1929, 1932, 1933 Tropical Traders Ltd v Goonan (1964) …. 1143, 1144, 1439, 2315, 2824

— v (No 2) [1965] …. 1143, 1144, 1439 Trust Co Fiduciary Services Ltd v Hassarati (No 2) [2011] …. 2410 Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] …. 504 Trustee of the Property of FC Jones and Sons (a firm) v Jones [1997] …. 219, 235, 302, 303, 310, 312, 1627, 1633, 1639 TTMI SARL v Statoil ASA (The Sibohelle) [2011] …. 1034, 1045, 1408 Tucker, Re (1920) …. 1902, 1905, 1906, 1922, 1928, 1931, 1933 — v Bennett [1927] …. 643, 644 Tugwell v Heyman (1812) …. 849 Turner v Bladin (1951) …. 127, 1024, 1030 — v Cameron’s Coalbrook Steam Coal Co (1850) …. 1620 — v Webb (1941) …. 845 Turquand, Ex parte; Fothergill, Re (1876) …. 649 Turriff Construction Ltd v Regalia Knitting Mills Ltd [1972] …. 1044 Turton v Benson (1718) …. 2627 Tutt v Doyle (1997) …. 1332 Twyford v Manchester Corp [1946] …. 2007

U UK Housing Alliance (North West) Ltd v Francis [2010] …. 1136, 1137 Union Eagle Ltd v Golden Achievement Ltd [1997] …. 1137–1139, 1142 Union Pacific RR v Public Service Commission (1918) …. 521 United Australia Ltd v Barclays Bank Ltd [1941] …. 104, 129, 133, 1517, 1521, 1617, 1620, 1621, 1627, 1638, 1639, 1718, 1841, 2304, 2306, 2307, 2313, 2314, 2318, 2711, 2729, 2730, 2732, 2733, 2905

United Dominions Corp Ltd v Brian Pty Ltd (1985) …. 1703, 1827, 1829 United Group Rail Services Ltd v Rail Corporation of New South Wales (2009) …. 1042 United Overseas Bank v Jiwani [1976] …. 2415, 2417 United Starr-Bowkett Co-op Building Society v Clyne (1967) …. 706 United States v Algernon Blair Inc (1973) …. 910, 1168, 1428 — v Boyd (1976) …. 852 — v Carter (1910) …. 1704 — v Dae Rim Fishery Co Ltd (1986) …. 853, 2731 — v Jefferson Electric Manufacturing Co (1934) …. 121 — v P/B STCO (1985) …. 824, 852, 2731 — v Wurts (1938) …. 2106 United States Surgical Corp v Consolidated Edison Co of New York (1978) …. 824 — v Hospital Products International Pty Ltd [1983] …. 1705, 1723, 1726, 1731, 1733 United Tool & Die Makers Pty Ltd v JV Motors Pty Ltd [1992] …. 2530 Universal Distributing Co Ltd, Re (1933) …. 158, 839 Universe Tankships Inc of Monrovia v International Transport Workers’ Federation (The Universe Sentinel) [1983] …. 506, 515, 518, 521, 523, 530, 1304, 1305, 1312, 1319, 1326, 1533 University of Canterbury v Attorney-General [1995] …. 419, 421 Unwin v Leaper (1840) …. 514 Update Constructions Pty Ltd v Rozelle Child Care Centre (1990) …. 158, 215, 909, 1103, 1171 Upjay Pty Ltd v MJK Pty Ltd (t/as Klobas Property Group) (2001) …. 1028 Upton-On-Severn Rural District Council v Powell [1942] …. 1027

Uren v John Fairfax & Sons Pty Ltd (1966) …. 1510 Urmston v Newcomen (1836) …. 851

V V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) …. 1710, 1717, 1721, 1733 Vacuum Oil Co Pty Ltd v Wiltshire (1945) …. 640 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) …. 1332, 1433, 1434, 1437 Vagres Compania Maritima SA v Nissho-Iwai American Corp (The Karin Vatis) [1988] …. 1130 Vakauta v Kelly (1989) …. 2712 Valentini v Canali (1889) …. 1017 Valoutin Pty Ltd v Furst (1998) …. 1002 Valpy v Manley (1845) …. 522, 528 Van den Berg v Giles [1979] …. 153, 158, 209, 932, 1025, 1027, 1046, 1416 Van Gervan v Fenton (1992) …. 853 Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev) [1989] …. 531, 1312, 1321, 1326 Vasco Investment Managers Ltd v Morgan Stanley Australia Ltd [2014] …. 1027 Vassos v State Bank of South Australia [1993] …. 847 Vauxhall Bridge Co v Spencer (1821) …. 2627 Vella v Permanent Mortgages Pty Ltd [2008] …. 435, 441 Vercoe v Rutland Fund Management Ltd [2010] …. 1821, 1831 Verschures Creameries Ltd v Hull & Netherlands SS Co Ltd [1921] …. 1521 Vestey v Inland Revenue Commissioners [1979] …. 2012 Vickery v JPP Custodians [2002] …. 116, 845

Victoria v Commonwealth (1975) …. 2102 — v Public Trustee [1962] …. 831 Victorian WorkCover Authority v Esso Australia Ltd (2001) …. 643, 644, 2805, 2809, 2811, 2812 Vigers v Cook [1919] …. 1152 Vimig Pty Ltd v Contract Tooling Pty Ltd (1986) …. 2333 Vistafjord, The see Norwegian American Cruises A/S v Paul Mundy Ltd

W W A Brown & Sons Ltd, Re (1964) …. 1532 W Cook Builders Pty Ltd (in liq) v Lumbers (2007) …. 151, 153, 158, 1160 W E Cox Toner (International) v Crook [1981] …. 2708 W H Brine & Co v Whitton (1981) …. 1732 Wabbits Pty Ltd v Godfrey [2009] …. 618 Wade Sawmill Pty Ltd v Colenden Pty Ltd (2007) …. 153, 1628, 1629, 1635 Wagdy Hanna & Associates Pty Ltd v National Library of Australia [2012] …. 2742 Wagner v International Railway (1921) …. 806, 827 Waikato Regional Airport Ltd v Attorney-General of NZ [2004] …. 2019, 2034, 2038 Wakefield v Newborn (1844) …. 528 Waldron-Brown v Geraldton Fishermen’s Co-operative [1983] …. 2922 Walford v Miles [1992] …. 1825 Walker v Bowry (1924) …. 643, 644, 647, 2723, 2738 — v Constable (1798) …. 2802 — v Council of the Municipality of Randwick (1929) …. 1133, 1151

— v — (1930) …. 1151 — v Secretary, Department of Social Security (1995) …. 2110 Wallersteiner v Moir (No 2) [1975] …. 2813, 2815 Walmsley v Christchurch City Council [1990] …. 517 Walsh v Bardsley (1931) …. 616 — v Borough of Albury (1901) …. 1126 — v Hoag & Bosch Pty Ltd (1976) …. 2527 Waltons Stores (Interstate) Ltd v Maher (1988) …. 149, 149, 175, 214, 1046, 2213, 2322 Wambo Coal Pty Ltd v Stuart Karim Ariff (2007) …. 454 Wang v Anying Group Pty Ltd [2011] …. 1639 Ward v Ellerton [1927] …. 1138, 1142, 1170, 1438 — v Eltherington [1982] …. 1045 — v Griffiths Bros Ltd (1928) …. 128, 1025, 1030, 1422 — v National Bank of New Zealand (1883) …. 647 Wardley Australia Ltd v McPharlin (1984) …. 517 — v Western Australia (1992) …. 206, 1838, 2725, 2738 Warman International Ltd v Dwyer (1995) …. 138, 248, 1509, 1536, 1710–1712, 1714–1717, 1731, 1733, 1739, 1827 Warringah Shire Council v Pittwater Provisional Council (1992) …. 415 Warwick v Richardson (1842) …. 615, 645 Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] …. 166 Waterhouse v Keen (1825) …. 1533 Watney v Mass (1954) …. 130, 941, 1120, 1217 Watson v Holliday (1882) …. 1532 — v — (1883) …. 1532 Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) …. 1629, 1637, 1721

Watt v Westhoven [1933] …. 1325, 1337 Watts v Morrow [1991] …. 1820 Watts Watts & Co Ltd v Mitsui & Co Ltd [1917] …. 1213 Waugh v Attorney-General [2006] …. 1626 Way v Latilla [1937] …. 158, 1034, 1045, 1416, 1419, 1422 WEA Records Pty Ltd v Stereo FM Pty Ltd (1983) …. 1721, 1726 Weatherhead v Cooney (1919) …. 1025, 1028 Webb v Chief Constable of Merseyside Police [2000] …. 2622 Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) …. 1334, 2334, 2528, 2703, 2709 Weld-Blundell v Synott [1940] …. 423, 2408 Weldon v Neal (1887) …. 2733 Wellston Coal Co v Franklin Paper Co (1897) …. 1167, 1841 Wendt v Bruce (1931) …. 2318 Wenham v Ella (1972) …. 1508, 1811 Wenning v Robinson (1964) …. 1038, 1045, 1209 Wentworth v Attorney-General (NSW) (1984) …. 705 — v Rogers (2006) …. 215, 1028 — v Tompson (1859) …. 615 — v Woollahra Municipal Council (1982) …. 1724, 1836 Werrin v Commonwealth (1938) …. 413, 447, 513, 2009, 2023, 2028, 2029, 2036, 2037 West v AGC (Advances) Ltd (1986) …. 612, 647, 1335 West Ham Union v Pearson (1890) …. 832 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] …. 123, 171, 246, 454, 2018, 2040, 2415, 2417, 2717, 2812, 2824 — v — [1996] …. 117, 122, 123, 126, 249–252, 256, 257, 303, 309, 314, 316, 454, 1015, 1017, 1021, 1043, 1710, 2410, 2807, 2809–2811, 2813, 2814, 2817, 2819, 2824

Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] …. 915 Weston v Beaufils (No 2) (1994) …. 2624, 2635, 2640 — v Downes (1778) …. 909, 918 Westpac Banking Corp v ATL Pty Ltd [1985] …. 424, 425, 437 — v Cockerill (1998) …. 510, 521, 2316 — v Dawson [1992] …. 437 — v Ellis [2007] …. 308 — v Palasty [2011] …. 315 — v Rae [1992] …. 636 Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] …. 1820 Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) …. 1110, 1128, 1171, 1214, 1217, 1225 Westwood v Perrett (1887) …. 703 Wheatley v Bell [1982] …. 2523 Wheeler Grace and Pierucci Pty Ltd v Wright (1989) …. 1821 Whincup v Hughes (1871) …. 908, 916, 1221, 1222 White v Copeland (1894) …. 120, 408, 424 — v Tomasel [2004] …. 706, 709, 712 White and Carter (Councils) Ltd v McGregor [1962] …. 1404 White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) …. 128, 529, 531 White Trucks Pty Ltd v Riley (1948) …. 1138 Whitecap Leisure Ltd v John H Rundle Ltd [2008] …. 1118, 1120 Whitelaw v Wilson [1934] …. 1905, 1906 Whiteley v Burns [1908] …. 2011 Whiteley Insurance Consultants (A Firm), Re [2009] …. 1015 Whitham v Bullock [1939] …. 604, 620, 621, 627, 633

Whittaker v Campbell [1984] …. 243 Whitwham v Westminster Brymbo Coal & Coke Co [1896] …. 1616, 1625, 1626, 1637, 1639 Whundo Copper Syndicate v Ferrari [1962] …. 1012 Whurr v Devenish (1904) …. 1337 Wickstead v Browne (1992) …. 1532, 1722, 1725 Wigan v Edwards (1973) …. 506, 507, 528, 1328, 2515 Wigram v Buckley [1894] …. 709 Wilcher v Steain (1961) …. 1124 Wild v Simpson [1919] …. 2616 Wilde v Australian Trade Equipment Co Pty Ltd (1981) …. 704, 708 — v Gibson (1848) …. 2333 Wilkinson v Feldworth (1998) …. 2814 — v Verity (1871) …. 2732 Willey v Synan (1937) …. 1608 William Lacey (Hounslow) Ltd v Davis [1957] …. 1033, 1035, 1036, 1046, 1416, 1417 William Sindall Plc v Cambridgeshire County Council [1994] …. 1508, 1837, 2333 William Thomas & Sons v Harrowing SS Co [1915] …. 1208 William Tibbits & Co v Holt (1890) …. 1325, 1337 William Whiteley Ltd v R (1909) …. 2011 Williams v Bayley (1866) …. 504, 515, 518, 525, 527, 1437 — v Central Bank of Nigeria [2014] …. 2737 — v Commonwealth (2012) …. 1010, 2102, 2103, 2109 — v — (No 2) (2014) …. 2102, 2109 — v Milotin (1957) …. 206 — v Minister, Aboriginal Land Rights Act 1983 (2005) …. 2736 — v Moore (1961) …. 1403

— v Roffey Bros & Nicholls (Contractors) Ltd [1991] …. 506, 531, 636, 1152, 1321, 1327 — v Spautz (1992) …. 513 — v Wentworth (1842) …. 831 — v Williams [2003] …. 2410 Williamson v Commonwealth (1907) …. 1167 — v Diab [1988] …. 2615 — v Murdoch (1912) …. 1155 Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 …. 413 Wilson v Brisbane City Council [1931] …. 1337 — v First County Trust Ltd (No 2) [2004] …. 1021 — v Kingsgate Mining Industries Pty Ltd [1973] …. 1148 Wilson International Pty Ltd v International House Pty Ltd (No 2) [1983] …. 2605, 2620, 2630 Wiluszynski v Tower Hamlets London Borough Council [1989] …. 909 Wing v Angrave (1860) …. 1923 Winkfield, The [1902] …. 1611 Winnote v Page (2006) …. 2719 Winslade Partners Pty Ltd v Steri-Flow Filtration Systems (Aust) Pty Ltd (2012) …. 910, 1233 Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] …. 1207 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) …. 138, 142, 208, 1501, 2904 — v — (1992) …. 208, 407, 910, 2904 Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) …. 1137, 1824 Wolmerhausen v Gullick [1893] …. 642, 644, 648, 2738 Womboin Pty Ltd v Savannah Island Trading Pty Ltd (1990) …. 1133,

1135 Woodgate as Trustee of the Estate of the late Mrs Marion McGuiness v Keddie (2007) …. 1221 Woods v Lowns (1995) …. 827 Woodside Petroleum Development Pty Ltd v H & R-E & W Pty Ltd (1999) …. 255, 639, 640 Woolf v Associated Finance Pty Ltd [1956] …. 1017 Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] …. 634, 642, 644 Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] …. 107, 166, 171, 308, 309, 426, 432, 507, 511, 513, 522, 524, 529, 530, 1113, 2001–2004, 2009, 2011, 2012, 2018–2027, 2032–2034, 2036–2041, 2103, 2111, 2410, 2511, 2722, 2804, 2807, 2826 Woolworths Ltd v Strong (No 2) [2011] …. 707, 710, 712 Worcester Works Finance Ltd v Cooden Engineering Co Ltd [1972] …. 2506, 2527 Work Childcare Holdings Pty Ltd (in liq) v Dwyer [2006] …. 153 Workcover Queensland v Suncorp Metway Insurance Ltd [2005] …. 618 Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] …. 1137, 1140, 2824 Workman Clark & Co Ltd v Lloyd Brazileno [1908] …. 1128, 1131, 1132, 1133 Wright v Kelly (1884) …. 506, 528, 531 — v TNT Management Pty Ltd (1989) …. 1821, 1838 Wroth v Tyler [1974] …. 1837 Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] …. 1625, 1821, 1831, 1837, 1841 Wuhan Guoyu Logistics Group Co Ltd v Emporiki Bank of Greece SA (No 2) [2014] …. 910

WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2002] …. 1831 — v — [2002] …. 1831 — v — [2006] …. 1821 — v — [2008] …. 1821, 1831, 1837, 1841 Wyandotte Transportation Co v United States (1967) …. 853

X XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) …. 1510

Y Yakamia Dairy Pty Ltd v Wood [1976] …. 1625, 1626 Yamaji v Westpac Banking Corp (1993) …. 1313 Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) …. 1014 Yardley v Saunders [1982] …. 1137, 1138, 1142, 1144 Yarmirr v Australian Telecommunications Corp (1990) …. 413 Yaxley v Gotts [2000] …. 1046 Yeoman Credit Ltd v Apps [1962] …. 1124, 1132, 1407, 2319 — v Latter [1961] …. 1135 Yeoman’s Row Management Ltd v Cobbe [2008] …. 171, 175, 249, 257, 458 Yerkey v Jones (1939) …. 1313 Yore Contractors Pty Ltd v Holcon Pty Ltd (1990) …. 1726 York Air Conditioning and Refrigerating (A’sia) Pty Ltd v Commonwealth (1949) …. 413, 428, 431, 1302 Youell v Bland Welch & Co Ltd (No 2) (The Superhulls Cover case) [1990] …. 2318 Young v Naval, Military, and Civil Service Co-operative Society of South Africa, The [1905] …. 630

— v Queensland Trustees Ltd (1956) …. 930, 2922 Youyang Pty Ltd v Minter Ellison (2003) …. 2814 Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia [1996] …. 2318

Z Zabic v Nabalco Co Pty Ltd (1983) …. 2808 Zamperoni Decorators Pty Ltd v Lo Presti [1983] …. 1152 Zannoth v Booth Radio Stations Inc (1952) …. 1156, 1417 Zegir v Woop [1955] …. 1615 Zegluga Polska SA v TR Shipping Ltd [1996] …. 708 Zeus, The see Attaleia Marine Co Ltd v Bimeh Iran (Iran Insurance Co) Zieme v Gregory [1963] …. 1138, 1414 Zobary v Commissioner of Taxation (1995) …. 249 Zsadony v Pizer [1955] …. 1148 Zurich Australian Insurance Ltd v GIO General Ltd (2011) …. 618

Table of Statutes References are to paragraph numbers

COMMONWEALTH Administrative Decisions (Judicial Review) Act 1977 s 5 …. 2014 s 16 …. 2014 Admiralty Act 1988 s 4(2)(d) …. 2803 s 4(3)(w) …. 2803 Australian Consumer Law …. 227, 229, 230, 504, 525, 608, 1004, 1038, 1040, 1047, 1108, 1138, 1147, 1148, 1172, 1175, 1315, 1316, 1318, 1333–1335, 1339, 1403, 1531, 1604, 1821, 1838, 2206, 2323, 2333, 2334, 2409, 2714, 2725 Australian Securities and Investments Commission Act 2001 ss 12BF–12BM …. 1138 s 12CB …. 1315 s 12CC …. 1315 Bankruptcy Act 1966 s 58(5) …. 257 s 82(2) …. 1532 s 116(2) …. 257 Bills of Exchange Act 1909 s 32 …. 2527

s 32(1)(a) …. 2527 s 32(1)(b) …. 2527 s 60(2) …. 612 s 62 …. 612 s 70 …. 844 s 73(5) …. 844 Cheques and Payment Orders Act 1986 s 30 …. 436 Commercial Arbitration Acts (Uniform) s 35 …. 529 Commonwealth Constitution …. 2003, 2027 s 51(ii) …. 2029 s 51(xxxi) …. 2037 s 53 …. 2036 s 55 …. 2029, 2036 s 83 …. 2102 s 90 …. 2029 s 92 …. 2028, 2029, 2036 s 99 …. 2029 Competition and Consumer Act 2010 Pt 2-3 …. 1138, 1316 Pt 3-1, Div 2 …. 1038 Pt IV …. 516 s 2(1) …. 1147, 1316 s 3 …. 1147, 1175 s 4 …. 1821 s 18 …. 214, 608, 1047, 1315 s 20 …. 504, 1315 s 21 …. 504, 1315

s 22 …. 504, 1315 s 23 …. 1316 s 24(1) …. 1316 s 50 …. 504, 1315 s 59 …. 1147 s 64 …. 1147, 2206 s 64A …. 1147, 2206 s 68 …. 226 s 82 …. 516 s 82(2) …. 2725 s 87 …. 516 s 87(1CA) …. 2725 s 236 …. 1333, 1531, 1838 s 237 …. 1047, 2334 s 242 …. 1047 s 243 …. 1047, 1334 s 259(2) …. 2323 s 259(3)(a) …. 2323 s 259(3)(b) …. 2323 s 260 …. 2323 s 262 …. 2323 s 263 …. 2323 s 263(4) …. 1147 s 264(6) …. 1118 s 265(3) …. 1147 s 267 …. 2323 s 267(3)(a) …. 2323 s 269 …. 2323

s 269(3) …. 1147 s 270 …. 2323 s 270(1) …. 1147 Sch 2 (Australian Consumer Law) …. 227, 229, 230, 504, 525, 608, 1004, 1038, 1040, 1047, 1108, 1138, 1147, 1148, 1172, 1175, 1315, 1316, 1318, 1333–1335, 1339, 1403, 1531, 1604, 1821, 1838, 2206, 2323, 2333, 2334, 2409, 2714, 2725 Copyright Act 1968 s 115(2) …. 1708, 1721 s 115(3) …. 1715 s 116 …. 1732 Corporations Act 2001 s 124 …. 1010 s 131(1) …. 1010 s 131(3) …. 1047 s 181 …. 1705 s 232 …. 616 s 254T …. 616 s 553E …. 1532 s 588G …. 616, 1725 s 588J …. 1725 s 592 …. 616 s 1005 …. 616 s 1317H …. 1720, 1721 Crown Suits Act 1947 …. 2029 Customs Act 1901 s 165 …. 2110 s 167 …. 523, 2003, 2039 s 167(4) …. 2016

Customs Regulations r 126(f) …. 2016 Designs Act 2003 s 75 …. 1715 s 75(1)(b) …. 1708, 1721 Enemy Contracts Annulment Act 1915 …. 1222 Evidence Act 1995 s 92(2) …. 1917 Excise Act 1901 s 154 …. 2039 Federal Court of Australia Act 1976 s 51A …. 2809 Franchise Fees Windfall Tax (Collection) Act 1997 …. 2035 Income Tax Assessment Act 1936 s 261 …. 414 Insurance Contracts Act 1984 s 54 …. 618 s 76 …. 618 s 76(2)(a) …. 618 Judiciary Act 1903 s 39(2) …. 2029 s 64 …. 2715 s 77MA …. 2809 s 79 …. 2028, 2715 Marine Insurance Act 1909 s 85 …. 637 s 86 …. 618 National Consumer Credit Protection Act 2009 ss 76–81 …. 1316

Sch 1 (National Credit Code) …. 1148, 1316 Olympic Insignia Protection Act 1987 s 45 …. 1708 Patents Act 1990 s 122(1) …. 1708, 1721 s 122(1A)(c) …. 1715 Plant Breeder’s Rights Act 1994 s 56(3) …. 1708 Sales Tax Assessment Act 1992 s 51 …. 2042 Sch 1, Table 3 (CR1) …. 2042 Sales Tax Assessment Act (No 1) 1930 s 26(3)(c) …. 2042 Social Security Act 1947 s 140 …. 2110 Social Security Act 1991 Ch 5 …. 2110 Swimming Pools Tax Refund Act 1992 …. 2042 Taxation Administration Act 1953 …. 2039 Taxation (Interest on Overpayments) Act 1983 …. 2808 Trade Marks Act 1995 ss 126–127 …. 1721 s 126(b) …. 1708 Trade Practices Act 1974 …. 504, 619 s 52 …. 166 Uniform Evidence Acts …. 1917 s 140(2) …. 1915

AUSTRALIAN CAPITAL TERRITORY Civil Law (Property) Act 2006 s 248 …. 1173 s 250 …. 1173 Civil Law (Wrongs) Act 2002 s 172 …. 1301 s 173(b)(iii) …. 2333 s 174 …. 1304 s 174(2) …. 1315 s 175 …. 1304, 1334, 1840, 2334 s 175(2) …. 1315 s 176(1)(b)(i) …. 1310 Commercial Arbitration Act 1986 s 46 …. 2716 Companies Ordinance 1962 s 222 …. 514 Crimes Act 1990 s 465(2) …. 1904 Domestic Relationships Act 1994 …. 229 Forfeiture Act 1991 …. 1908, 1914 Limitation Act 1985 s 8 …. 2742 s 8(1) …. 2737 s 10 …. 2733 s 11 …. 2717, 2724, 2733, 2737, 2738 s 18 …. 2732 s 21 …. 2738 s 21A …. 2039

s 27 …. 2737 s 32 …. 2740 s 33 …. 2742 s 33(3) …. 2742 s 33(4) …. 2742 s 33(5) …. 2742 s 34(1) …. 2741 s 43 …. 2732 s 54 …. 2039 s 56 …. 2715 Married Persons’ Property Act 1986 s 5 …. 850 Partnership Act 1963 s 13 …. 614 Sale of Goods Act 1954 s 4(a) …. 2505 s 7(3) …. 1040 s 11 …. 1010 s 12 …. 1209 s 13 …. 1038 s 14(1) …. 1209 s 16(4) …. 2323, 2333 s 26 …. 2525, 2530 s 27 …. 2528 s 29 …. 2527 s 34 …. 1174 s 39 …. 2323 s 52(2) …. 1128 s 54 …. 1822

s 56 …. 1174 s 56(3) …. 1820 s 57 …. 1146 s 62(1) …. 1336 s 62(2) …. 1338 Sale of Goods (Vienna Convention) Act 1987 s 6 …. 226 Supreme Court Act 1933 s 34 …. 1720 s 69 …. 2809 Taxation Administration Act 1999 s 21 …. 2042 s 22 …. 2042 s 23 …. 416, 2030

NEW SOUTH WALES Auctioneers and Agents Act 1941 …. 1028 Builders Licensing Act 1971 s 45 …. 1024 Building and Construction Industry Security of Payments Act 1999 …. 707 Children and Young Persons (Care and Protection) Act 1998 …. 827 Choice of Law (Limitation Periods) Act 1993 …. 2715 Civil Liability Act 2002 Pt 4 …. 1405 s 21 …. 1602 Civil Procedure Act 2005 s 100 …. 2809

Commercial Arbitration Act 2010 s 25 …. 2716 Companies Code s 556 …. 1725 Constitution Act 1902 s 5 …. 2102 Contracts Review Act 1980 …. 229, 504, 1318, 1335 s 5 …. 1316 s 6 …. 1316 s 7 …. 1335 s 7(1) …. 1335 s 8 …. 1335 s 9 …. 1335 s 9(1) …. 1316 s 9(2) …. 1316 s 9(5) …. 1316 Sch 1 …. 1335 Sch 1, cl 1 …. 1303, 1335 Sch 1, cl 2 …. 1335 Sch 1, cl 4 …. 1335 Conveyancing Act 1919 s 55(2A) …. 1148 s 142 …. 1173 s 144 …. 1173 Crimes Act 1900 s 465(1) …. 1927 s 465(2) …. 1904 Crown Proceedings Act 1988 s 5(2) …. 2810

De Facto Relationships Act 198 s 20 …. 1233 Defamation Act 2005 s 37 …. 1510 Environmental Planning and Assessment Act 1979 s 94 …. 2039 Evidence Act 1995 s 92(2) …. 1917 Family Provision Act 1982 …. 1912 s 7 …. 1929 s 9 …. 1929 Forfeiture Act 1995 …. 1908, 1913, 1914, 1928 Frustrated Contracts Act 1978 …. 226 Pt 3 …. 2724 s 2(1) …. 1236 s 4 …. 1239 s 4(1) …. 1239 s 5(1) …. 1239, 1243, 1246 s 5(1)(b) …. 1248 s 5(2)(b) …. 1248 s 5(3) …. 1245 s 5(4) …. 1243 s 6(1) …. 1240 s 6(2) …. 1240 s 6(3) …. 1241 s 7 …. 1242 s 7(1) …. 1242, 1244 s 7(2) …. 1242

s 8 …. 1244 s 9 …. 1248, 1252 s 10 …. 1248 s 11 …. 1237, 1245, 1248 s 11(1) …. 1245, 1250, 1251 s 11(2) …. 1249, 1251 s 11(2)(a) …. 1249 s 11(2)(b) …. 1250 s 12 …. 1237, 1245, 1246 s 13 …. 1244, 1245, 1252 s 13(1) …. 1237, 1247 s 13(2) …. 1237, 1247 s 14 …. 1238 s 15(1) …. 1252 s 15(1)(a) …. 1252 s 15(1)(b) …. 1252 s 15(1)(c) …. 1252 s 15(2) …. 1252 s 15(2)(a) …. 2808 s 15(3) …. 1252 s 15(3)(d) …. 1202 s 15(7) …. 1252 s 15(8) …. 1252 Guardianship Act 1987 …. 827 Imperial Acts Application Act 1969 s 6 …. 2025 Limitation Act 1969 …. 2715 s 11(1) …. 2737 s 11(2) …. 2742

s 13 …. 2733 s 14 …. 2733, 2738 s 14(1)(a) …. 2717 s 14(1)(b) …. 2717 s 14A …. 2724 s 21 …. 2732 s 23 …. 2736 s 26 …. 2738 s 47 …. 2737 s 48 …. 2737 s 54 …. 3740 s 55(1) …. 2742 s 55(1)(b) …. 2742 s 55(3) …. 2742 s 55(4) …. 2742 s 56(1) …. 2741 s 63 …. 2718 s 65 …. 2732 s 68A …. 2718 Limitation of Actions (Recovery of Imposts) Amendment Act 1993 …. 416, 2039 Local Court Act 2007 …. 2924 Local Government Act 1993 Ch 15, Pt 10 …. 2039 Married Persons’ (Equality of Status) Act 1996 s 7 …. 850 Minors (Property and Contracts) Act 1970 …. 1004, 1012, 1039, 1040 s 37(1) …. 1047 s 37(4) …. 1047, 1436

First Sch …. 833 Partnership Act 1892 s 9 …. 614 s 33 …. 1209 Prevention of Cruelty to Animals Act 1979 s 14 …. 837 Property (Relationships) Act 1984 …. 229 Property, Stock and Business Agents Act 1941 …. 1028 Public Service Act 1902 …. 2104 Real Property Act 1901 …. 1244 Recovery of Imposts Act 1963 …. 2039 s 1A …. 2039 s 2(1) …. 2039 s 3 …. 416, 2039 s 4 …. 2039, 2042 s 7(1) …. 523 Sale of Goods Act 1923 Pt 3.1 …. 2333 s 4(2) …. 1336 s 4(2A) …. 1338 s 4(2A)(a) …. 1310 s 4(2A)(b) …. 2333 s 5(2) …. 2505 s 7 …. 833, 1040 s 11 …. 1010 s 12 …. 1209 s 13 …. 1038 s 14(1) …. 1209

s 16(3) …. 2323, 2333 s 17 …. 833 s 26 …. 2525, 2530 s 27 …. 2528 s 28 …. 2527 s 33 …. 1174 s 38 …. 2323 s 38(1) …. 2333 s 38(2) …. 2323, 2333 s 51(2) …. 1128 s 53 …. 1822 s 54 …. 1174 s 54(3) …. 1820 s 55 …. 1146 s 64 …. 2206 Sale of Goods (Vienna Convention) Act 1987 s 6 …. 226 Stamp Duties Act 1920 s 35C …. 2016 State Revenue Legislation Further Amendment Act 1995 …. 2039 Supreme Court Act 1970 s 68 …. 1511, 1720 Supreme Court (Interest) Amendment Act 1983 …. 2810 Taxation Administration Act 1996 ss 18–20 …. 2003 s 20 …. 2042 Uniform Civil Procedure Rules 2005 r 14.12(1) …. 2924 r 14.14 …. 2910

r 51.54 …. 711

NORTHERN TERRITORY Choice of Law (Limitation Periods) Act 1994 …. 2715 De Facto Relationships Act …. 229 Emergency Medical Operations Act 1973 …. 827 Law of Property Act 2000 s 211 …. 1173 s 212(1) …. 1173 Limitation Act 1981 …. 2715 s 4(1) …. 2737 s 11 …. 2733 s 12 …. 2733, 2738 s 12(1)(a) …. 2717, 2724 s 12(1)(b) …. 2717 s 19 …. 2732 s 21 …. 2736 s 24 …. 2738 s 32 …. 2737 s 33 …. 2737 s 35D …. 2039 s 35E …. 2039 s 41 …. 2740 s 42 …. 2742 s 42(4) …. 2742 s 43(1) …. 2741 Married Persons’ (Equality of Status) Act 1996 s 5 …. 850

Partnership Act 1891 s 9 …. 614 Sale of Goods Act 1972 s 4(2) …. 1336 s 5(2) …. 2505 s 7(3) …. 1040 s 10 …. 1010 s 12 …. 1209 s 13 …. 1038 s 14(1) …. 1209 s 14(2) …. 1209 s 16(4) …. 2323, 2333 s 26 …. 2525, 2530 s 27 …. 2528 s 28 …. 2527 s 33 …. 1174 s 38 …. 2323 s 51(2) …. 1128 s 53 …. 1822 s 54 …. 1174 s 54(3) …. 1820 s 55 …. 1146 Sale of Goods (Vienna Convention) Act 1987 s 6 …. 226 Supreme Court Act 1979 s 84 …. 2809

QUEENSLAND

Auctioneers and Agents Act 1971 s 70 …. 1028 Choice of Law (Limitation Periods) Act 1996 …. 2715 Civil Proceedings Act 2011 s 19 …. 1720 Commercial Arbitration Act 2013 s 25 …. 2716 Common Law Practice Act 1867 s 72 …. 2809 Constitution of Queensland 2001 s 66 …. 2102 Limitation of Actions Act 1974 …. 2715 s 5(1) …. 2737 s 10 …. 2733, 2738 s 10(1)(a) …. 2717, 2724 s 10(6)(b) …. 2736 s 10A …. 2039 s 12 …. 2732 s 27(1)(b) …. 2737 s 27(2) …. 2737 s 35 …. 2740 s 38 …. 2741, 2742 s 38(2) …. 2742 s 40 …. 2738 Partnership Act 1891 s 12 …. 614 Property Law Act 1974 …. 229 s 69 …. 1148 s 231 …. 1173

s 232 …. 1173 Sale of Goods Act 1896 s 3(2) …. 2505 s 5(3) …. 1040 s 9 …. 1010 s 10 …. 1209 s 11 …. 1038 s 12(1) …. 1209 s 14(3) …. 2323, 2333 s 24 …. 2525, 2530 s 25 …. 2528 s 27 …. 2527 s 32 …. 1174 s 37 …. 2323 s 50(2) …. 1128 s 52 …. 1822 s 54 …. 1174 s 54(3) …. 1820 s 55 …. 1146 s 61(2) …. 1336 Sale of Goods (Vienna Convention) Act 1986 s 6 …. 226 Trusts Act 1973 s 113(3) …. 2405

SOUTH AUSTRALIA Commercial Arbitration Act 2011 s 25 …. 2716

Consent to Medical Treatment and Palliative Care Act 1995 s 13 …. 827 Constitution Act 1934 ss 59–64 …. 2102 Criminal Assets Confiscation Act 2005 ss 110–118 …. 1528 Criminal Law Consolidation Act 1935 s 295(1) …. 1904 Domestic Partners Property Act 1996 …. 229 Frustrated Contracts Act 1988 …. 226, 1256 s 2 …. 1236 s 3(1) …. 1239, 1241, 1243, 1253 s 3(2) …. 1254 s 3(2)(a) …. 1254 s 3(2)(b) …. 1254 s 3(2)(c) …. 1254 s 3(3) …. 1255 s 3(4) …. 1255 s 3(4)(a) …. 1255 s 3(4)(b) …. 1255 s 3(4)(c) …. 1255 s 4(1) …. 1240 s 4(1)(a) …. 1237 s 4(2) …. 1239, 1240 s 4(3) …. 1239 s 5 …. 1241 s 6(1) …. 1242 s 6(2) …. 1242, 1244 s 6(2)(a) …. 1242

s 7 …. 1257 s 7(1) …. 1237, 1257 s 7(2) …. 1252, 1253, 1257 s 7(3) …. 1257 s 7(4) …. 1257 s 7(5) …. 240, 1202, 1257 s 7(5)(a) …. 2808 s 7(6) …. 1243 s 8 …. 1238, 2724 Land Agents Act 1994 …. 1028 Law of Property Act 1936 s 63 …. 1173 s 104 …. 850 Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 …. 609 s 4 …. 624 s 6(1) …. 624 s 6(3) …. 624 s 6(9) …. 624 Limitation of Actions Act 1936 s 25 …. 2742 s 32(1) …. 2737 s 35 …. 2733, 2738 s 35(a) …. 2717 s 35(c) …. 2717 s 38 …. 2039 s 38(3a) …. 2042 s 38(3b) …. 2042 s 38E …. 2715

s 42 …. 2740 Minors Contracts (Miscellaneous Provisions) Act 1979 s 7 …. 1047, 1420 Misrepresentation Act 1972 s 5 …. 1301 s 6(1)(a) …. 1310 s 6(1)(b) …. 2333 s 6(2) …. 2528 s 7(1) …. 1304, 1315 s 7(3) …. 1304, 1315, 1334, 1840, 2334 Partnership Act 1891 s 9 …. 614 Sale of Goods Act 1895 s A2(2) …. 2505 s 2 …. 1040 s 6 …. 1010 s 7 …. 1209 s 8 …. 1038 s 9(1) …. 1209 s 11(3) …. 2323, 2333 s 21 …. 2525, 2530 s 23 …. 2528 s 25 …. 2527 s 30 …. 1174 s 35 …. 2323 s 48(2) …. 1128 s 50 …. 1822 s 52 …. 1174

s 52(3) …. 1820 s 53 …. 1146 s 59(2) …. 1336 Sale of Goods (Vienna Convention) Act 1986 s 5 …. 226 Supreme Court Act 1935 s 30 …. 1720 s 30C …. 2809 Wrongs Act 1936 s 25(3) …. 2738

TASMANIA Apportionment Act 1871 s 2 …. 1173 s 5 …. 1173 Commercial Arbitration Act 2011 s 25 …. 2716 Constitution Act 1934 ss 37–41 …. 2102 ss 42–45 …. 2102 Criminal Code Act 1924 s 11(2) …. 1904 Evidence Act 2001 s 92(2) …. 1917 Limitation Act 1974 s 2(1) …. 2737 s 4 …. 2733, 2738 s 4(1)(a) …. 2717, 2724

s 6 …. 2732 s 9 …. 2736 s 24(1)(b) …. 2737 s 24(2) …. 2737 s 25C …. 2042 s 25D …. 2039 s 29(4) …. 2740 s 32 …. 2741, 2742 s 32(2) …. 2742 s 32C …. 2715 Mercantile Law Act 1935 s 6 …. 1039 Partnership Act 1891 s 14 …. 614 Relationships Act 2003 …. 229 Sale of Goods Act 1896 s 3(2) …. 2505 s 5(2) …. 1336 s 7(2) …. 1040 s 9 …. 1039 s 9(1) …. 1039 s 9(3) …. 1039 s 11 …. 1010 s 12 …. 1209 s 13 …. 1038 s 14(1) …. 1209 s 16(3) …. 2323, 2333 s 26 …. 2525, 2530 s 28 …. 2528

s 30 …. 2527 s 35 …. 1174 s 40 …. 2323 s 53(2) …. 1128 s 55 …. 1822 s 57 …. 1174 s 57(3) …. 1820 s 58 …. 1146 Sale of Goods (Vienna Convention) Act 1987 s 6 …. 226 Supreme Court Civil Procedure Act 1932 …. 2810 s 11(13) …. 1720 s 34 …. 2809 Tortfeasors and Contributory Negligence Act 1964 s 3(5) …. 2738

VICTORIA Australian Consumer Law and Fair Trading Act 2012 …. 1243 Pt 3.1 …. 1118, 1147, 1175, 1338, 1339 Pt 3.2 …. 1210, 1236, 1241, 1265, 1268, 2724 Pt 3.2, Div 2 …. 1242 s 3(1) …. 1242 s 4 …. 1239 s 24 …. 1338 s 25(4) …. 1118, 1338, 2333 s 25(5) …. 1147, 1338 s 25(6) …. 1339, 1420 s 26(1)(b) …. 2528

s 35(1) …. 1242 s 35(1)(c) …. 1239 s 35(2) …. 1239, 1240 s 35(3) …. 1240 s 36 …. 1242, 1258–1260, 1262, 1265, 1266, 1268 s 36(1) …. 1258 s 36(2) …. 1258 s 37 …. 1258–1260, 1262, 1266 s 38 …. 1251, 1260, 1262, 1265–1268 s 38(1) …. 1261 s 38(2) …. 1416 s 38(3) …. 1416 s 38(3)(a) …. 1263 s 38(4) …. 1267, 1268 s 39 …. 1259, 1265 s 40 …. 1240, 1266 s 41 …. 1240, 1242 s 42 …. 1241 s 43 …. 1238 ss 43–44 …. 2724 Choice of Law (Limitation Periods) Act 1993 …. 2715 Commercial Arbitration Act 2011 s 25 …. 2716 Constitution Act 1975 s 62 …. 2102 Fair Trading Act 1999 Pt 2C …. 1236 s 32PA …. 2528 Frustrated Contracts Act 1959 …. 226, 1236, 2410

s 4(2) …. 1239 Goods Act 1958 …. 226, 1242 s 3(2) …. 2505 s 4(2) …. 1336 s 7 …. 1040 s 11 …. 1010 s 12 …. 1209 s 13 …. 1038 s 14(1) …. 1209 s 16(3) …. 2323, 2333 s 25(5) …. 1175 s 25(6) …. 1175 s 27 …. 2525, 2530 s 29 …. 2528 s 30 …. 2527 s 31 …. 2527 s 37 …. 1174 s 42 …. 2323 s 55(2) …. 1128 s 57 …. 1822 s 59 …. 1174 s 59(3) …. 1820 s 60 …. 1146 s 99(1) …. 2323 Limitation of Actions Act 1958 …. 2715 Pt II …. 2724 s 3(1) …. 2737 s 5 …. 2733, 2738

s 5(1)(a) …. 2717 s 5(8) …. 2736 s 6 …. 2732 s 20A …. 2039 s 20B …. 2042 s 21(1)(b) …. 2737 s 21(2) …. 2737 s 24 …. 2740 s 27 …. 2741, 2742 s 27(c) …. 2741 Partnership Act 1958 s 13 …. 614 Property Law Act 1958 …. 229 s 49(2) …. 1148 Sale of Goods (Vienna Convention) Act 1987 s 6 …. 226 Stamps Act 1958 s 111 …. 2015 s 111(1) …. 2015 State Taxation (Amendment) Act 1992 …. 2042 Supreme Court Act 1986 s 38 …. 1720 s 49 …. 1012 s 51 …. 1047 s 53(1) …. 1173 s 54 …. 1173 s 58 …. 2809 s 60 …. 2809 s 60(1) …. 2809

Wrongs Act 1958 s 23A(1) …. 624 s 24(4) …. 2738 s 24AD …. 624 Wrongs (Contribution) Act 1985 …. 609

WESTERN AUSTRALIA Choice of Law (Limitation Periods) Act 1994 …. 2715 Commercial Arbitration Act 2012 s 25 …. 2716 Constitution Act 1889 s 72 …. 2102 Criminal Code s 730 …. 1904 Crown Suits Act 1947 …. 2029 Family Court Act 1997 …. 229 Law Reform (Contributory Negligence & Tortfeasors’ Contribution) Act 1947 s 7 …. 2738 Limitation Act 1935 …. 2715 s 27 …. 2742 s 37A …. 2039 s 37B …. 2042 s 38 …. 2733, 2738 s 38(1)(c)(v) …. 2717, 2724 s 38(1)(c)(vi) …. 2717 s 44 …. 2740 s 47(1) …. 2737

s 47(3) …. 2737 Limitation Act 2005 …. 2715 s 3 …. 2736 s 4 …. 2736 s 13 …. 2717, 2724, 2733, 2736, 2737 s 13(1) …. 2717, 2737 s 17 …. 2738 s 27 …. 2736 s 28 …. 2039 s 38 …. 2742 s 47 …. 2740 s 60 …. 2732 s 79 …. 2703 s 86 …. 2042 s 87 …. 2042 Partnership Act 1895 s 16 …. 614 Property Law Act 1969 s 124 …. 413 s 124(2) …. 416 s 125 …. 413, 2407 s 125(1) …. 445, 2405, 2410, 2417 s 130(1) …. 1173 s 131 …. 1173 Sale of Goods Act 1895 s 2 …. 1040 s 4 …. 1039 s 4(1) …. 1039 s 4(3) …. 1039

s 6 …. 1010 s 7 …. 1209 s 8 …. 1038 s 9(1) …. 1209 s 11(3) …. 2323, 2333 s 21 …. 2525, 2530 s 23 …. 2528 s 25 …. 2527 s 30 …. 1174 s 35 …. 2323 s 48(2) …. 1128 s 50 …. 1822 s 52 …. 1174 s 52(3) …. 1820 s 53 …. 1146 s 59(2) …. 1336 s 60(2) …. 2505 Sale of Goods (Vienna Convention) Act 1986 s 6 …. 226 Supreme Court Act 1935 s 25(10) …. 1720 s 32 …. 2809, 2922 Trustees Act 1962 s 65(8) …. 2405

BRITISH COLUMBIA Financial Arbitration Act, SBC, 1981 c 15, s 67 …. 2111

Frustrated Contracts Act 1974 …. 1236 s 5(4) …. 1245 Frustrated Contracts Act 1979 …. 1263

MALAYSIA Contracts Act 1950 s 71 …. 147

NEW ZEALAND Contractual Remedies Act 1979 s 8(3)(a) …. 1129 s 9 …. 1148 s 9(4)(d) …. 1177, 1415 Frustrated Contracts Act 1944 …. 1236 Illegal Contracts Act 1970 …. 2609 Judicature Act 1908 s 94A …. 413 s 94B …. 413, 2404, 2405, 2421

INDIA Indian Contracts Act 1950 …. 147

UNITED KINGDOM Act to Abolish Forfeitures for Treason and Felony 1870 …. 1904 Bill of Rights 1689 …. 2018, 2033 Declaration 4 …. 2025

Chancery Amendment Act 1858 (Lord Cairns’ Act) …. 1502, 1508, 1511, 1617, 1706, 1707, 1719, 1720, 1724, 1726, 1831, 1836, 1837, 1841 Civil Liability (Contribution) Act 1978 …. 609 Civil Procedure Act 1833 3 & 4 Will 4, c 42, s 28 …. 2802 s 28 …. 2809 Common Law Procedure Act 1852 …. 115 s 3 …. 125 s 45 …. 125 Forfeiture Act 1982 …. 1909, 1914 Infants Relief Act …. 449 Insolvency Act 1985 s 211 …. 1532 Judicature Act 1873 …. 639 Law of Property (Miscellaneous Provisions) Act 1989 s 2 …. 1011 Law Reform (Frustrated Contracts) Act 1943 …. 232, 1236, 2723 s 1(2) …. 1238 s 1(3) …. 1226 s 2(5)(c) …. 1239, 1263 Limitation Act 1939 …. 2742 s 3 …. 2732 s 26(c) …. 2741 Limitation Act 1980 …. 2742 s 32(1)(c) …. 2741 Lord Tenterden’s Act 1833 …. 2809, 2810 s 28 …. 2922 Married Women’s Property Act 1882

s 11 …. 1919 Mercantile Law Amendment Act 1856 s 5 …. 640 Misrepresentation Act 1967 …. 2333 Revenue Act 1869 …. 2011 Sale of Goods Act 1979 s 7 …. 1263 s 30 …. 1174 Statute of Frauds 1677 …. 231, 1017, 1019, 1025, 1044, 1206, 1422, 2723, 2926 s 4 …. 1002, 1011, 1020, 1021, 1024, 1029–1032, 1039, 1046, 1425 s 17 …. 1002, 1039 Statute of Limitations …. 2623 Supreme Court Act 1981 s 35A …. 2018 Torts (Interference with Goods) Act 1977 …. 1611 Trade Union and Labour Relations Act 1974 s 13 …. 530 s 29 …. 530 Trading with the Enemy Act 1939 …. 1220

UNITED STATES Restatement of the Law, Contracts 1932 s 90 …. 149 Restatement of the Law Second, Contracts 2d 1979 …. 148 s 90(1) …. 149 s 141 …. 1025 s 145 …. 1025

s 197 …. 2606 s 198 …. 2626 s 199 …. 2626 s 283 …. 1206 s 348, comment (c) …. 1820 s 356(1) …. 1137 s 370, comment (a) …. 939, 940 s 370 Ill 2 …. 1168 s 371 …. 1416 s 371, comment (b) …. 922 s 373 …. 1030 s 373, comment (c) …. 1171 s 373, comment (d) …. 1428 s 373(1) …. 1103, 1168 s 373(2) …. 1152 s 373 Ill 1 …. 1408 s 374, comment (b) …. 1428 s 374(1) …. 1177 s 374(2) …. 1136, 1137 s 375 …. 1019, 1032 s 375, comment (b) …. 1030 s 376 …. 1305 s 377 …. 1202, 1231 s 377, comment (b) …. 1223, 1427 s 378 …. 2308 s 380 …. 2317 s 380(2) …. 2318 s 381 …. 2704 s 384 …. 1431, 2324

s 384, comment (a) …. 1433 Restatement of the Law Third: Restitution and Unjust Enrichment …. 102, 104, 133, 139, 448, 639, 852–854, 1508, 1903 s 1 …. 107, 108, 142 s 1 Comment e …. 219 s 1 Comment g …. 219 s 3 …. 219 s 5 …. 429 s 5(3) …. 432 s 7 …. 456 s 11 …. 419, 421 s 11(2) …. 421 s 19 …. 2019, 2032 s 20 …. 814 s 21 …. 835, 840 s 22 …. 826, 840, 854 s 22, comment b …. 817 s 22, comment g …. 824, 851 s 22, comment i …. 853 s 22(2)(a) …. 847 s 23, comment f …. 636 s 24 …. 255, 639 s 40, comment b …. 1509, 1639 s 40, comment e …. 307 s 44 …. 1520, 1523, 1524, 1526, 1639 s 45 …. 1904 s 45(1) …. 1912 s 51 …. 1509 s 51(3) …. 2419

s 52(3) …. 424, 2419, 2421 s 53 …. 2802, 2806 s 54 …. 2326 s 54(6) …. 2318 s 55–56 …. 454 s 55 …. 249 s 57 …. 639 s 58 …. 257 s 62 …. 446 s 65 …. 2326, 2404, 2410, 2419 s 67 …. 446 s 70 …. 2705, 2731 s 70, comment c …. 2717 s 70, comment e …. 2731 s 70, comment f …. 2722 s 115 …. 848 s 525 …. 1621

INTERNATIONAL Uniform Law on International Sale of Goods (1966) …. 226 United Nations Convention on Contracts for the International Sale of Goods 1980 (CISG or the Vienna Convention) …. 1177, 1201, 1209, 1431 arts 1–5 …. 226 art 6 …. 1108, 1110, 1149, 1176, 1209, 1226, 1235, 1436 art 79 …. 1209 art 81(1) …. 1110 art 81(2) …. 1149, 1176, 1226, 1235, 1436, 2332

art 82(1) …. 2332 art 82(2) …. 2332 art 84(1) …. 2808 art 84(2) …. 2332 art 84(2)(a) …. 1436 art 84(2)(b) …. 1436 art 84(2) …. 1176, 1235

Abbreviations Books that are frequently referred to have abbreviated titles and their publication details are provided in the list below. All other books are referred to by author surname and book title. The publication details for all works referred to appear in the bibliography at the end of this book. Bant and Bryan — Bant, Elise, and Bryan, Michael (eds), Principles of Proprietary Remedies, Lawbook Co, 2013, Sydney. Bant, Change of Position — Bant, Elise, The Change of Position Defence, Hart Publishing, Oxford, 2009. Beale — Beale, Hugh, Remedies for Breach of Contract, Sweet & Maxwell, London, 1980. Beatson — Beatson, Jack, The Use and Abuse of Unjust Enrichment, Clarendon Press, Oxford, 1991. Benjamin — Benjamin’s Sale of Goods, 7th ed, Sweet & Maxwell, London, 2006. Birks, Future — Birks, Peter, Restitution The Future, Federation Press, Sydney, 1992. Birks, Introduction — Birks, Peter, An Introduction to the Law of Restitution, Clarendon Press, Oxford, 1985 (paperback edition). Birks, Laundering — Birks, P (ed), Laundering and Tracing, Oxford University Press, New York, 1995. Birks, Unjust Enrichment — Birks, P, Unjust Enrichment, 2nd ed, Oxford University Press, New York, 2005. Bowstead — Reynolds, F M B, Bowstead and Reynolds on Agency, 17th ed, Sweet & Maxwell, London, 2001. Bullen and Leake — Bullen, H, and Leake, S M, Precedents of Pleadings,

3rd ed, Stevens & Sons, London, 1868. Burrows — Burrows, Andrew, The Law of Restitution, 2nd ed, Butterworths, London, 2002. Burrows, Essays — Burrows, Andrew (ed), Essays on the Law of Restitution, Clarendon Press, Oxford, 1991. Carter, Construction — Carter, J W, The Construction of Commercial Contracts, Hart Publishing, Oxford, 2013. Carter on Contract — Carter, J W, Carter on Contract, LexisNexis Butterworths, Sydney (looseleaf). Carter’s Breach of Contract — Carter, J W, Carter’s Breach of Contract, LexisNexis Butterworths, Sydney, 2011 and Hart Publishing, Oxford, 2012 (Hart Edition). CISG — United Nations Convention on Contracts for the International Sale of Goods (1980). Contract Law in Australia — Carter, J W, Contract Law in Australia, 6th ed, LexisNexis Butterworths, Sydney, 2013. Dawson — Dawson, J P, Unjust Enrichment: A Comparative Analysis, Little Brown & Co, Boston, 1951. Degeling and Edelman — Degeling, Simone, and Edelman, James (eds), Equity in Commercial Law, Law Book Co, Sydney, 2005. Edelman — Edelman, James, Gain-based Damages, Hart Publishing, Oxford, 2002. Edelman and Bant — Edelman, James, and Bant, Elise, Unjust Enrichment in Australia, Oxford University Press, Hong Kong, 2006. Ellinger, Banking — Ellinger, E P, Lomnicka, E and Hare, C V M, Ellinger’s Modern Banking Law, 5th ed, OUP, Oxford, 2011. Enonchong — Enonchong, Nelson, Duress, Undue Influence and Unconscionable Dealing, Thomson, Sweet & Maxwell, London, 2006. Fifoot — Fifoot, C H S, History and Sources of the Common Law, Stevens & Sons, London, 1949. Finn, Essays — Finn, P D (ed), Essays on Restitution, Law Book Co Ltd,

Sydney, 1990. Fleming — Sappideen, Carolyn, and Vines, Prue, Fleming’s The Law of Torts, 10th ed, Lawbook Co, Sydney, 2011. Fox — Fox, David, Property Rights in Money, Oxford University Press, Oxford, 2008. Fung — Fung, Y K, Pre-contractual Liability Rights and Remedies: Restitution and Promissory Estoppel, Sweet & Maxwell Asia, Selangor, 1999. Goff and Jones — Mitchell, Charles, Mitchell, Paul and Watterson, Stephen, Goff & Jones The Law of Unjust Enrichment, 8th ed, Sweet & Maxwell, London, 2011. Grantham and Rickett — Grantham, R, and Rickett, C, Enrichment and Restitution in New Zealand, Hart Publishing, Oxford, 2000. Handford, Limitation — Handford, Peter, Limitation of Actions, 3rd ed, Thomson Reuters, Sydney, 2012. Handley, Estoppel — Handley, K R, Estoppel by Conduct and Election, Sweet & Maxwell, London, 2006. Harland — Harland, D J, Law of Minors in Relation to Contracts and Property, Butterworths, Sydney, 1974. Hedley and Halliwell — Hedley, Steve, and Halliwell, Margaret (eds), The Law of Restitution, Butterworths, London, 2002. Higgins and Fletcher — Higgins, P F P, and Fletcher, K L, Law of Partnership in Australia and New Zealand, 9th ed, Law Book Co, Sydney, 2007. Interests in Goods — Palmer, Norman, and McKendrick, Ewan (eds), Interests in Goods, 2nd ed, Lloyd’s of London Press Ltd, London, 1998. Jackman — Jackman, Ian, The Varieties of Restitution, Federation Press, Leichhardt, 1998. Jackson — Jackson, R M, History of Quasi-Contract in English Law, Cambridge University Press, Cambridge, 1936. Jaffey — Jaffey, Peter, The Nature and Scope of Restitution, Hart

Publishing, Oxford, 2000. Jones — Jones, Gareth, Restitution in Public and Private Law, Sweet & Maxwell, London and N M Tripathi Pte Ltd, Bombay, 1991. Jones, Trends — Jones, Gareth, Anglo-American Trends in Restitution, Kluwer, Deventer, 1978. Keener — Keener, W A, A Treatise on the Law of Quasi-Contracts, Baker Voorhis & Co, New York, 1893. McInnes — McInnes, Mitchell, The Canadian Law of Unjust Enrichment and Restitution, LexisNexis, Markham, 2014. McGregor — McGregor, Harvey, McGregor on Damages, 17th ed, Sweet & Maxwell, London, 2003. McKendrick — McKendrick, Ewan (ed), Force Majeure and Frustration of Contract, 2nd ed, Lloyd’s of London Press Ltd, London, 1995. McMeel — McMeel, Gerard, The Modern Law of Restitution, Blackstone Press, London, 2000. Mapping the Law — Burrows, Andrew, and Rodger, Lord of Earlsferry (eds), Mapping the Law: Essays in Memory of Peter Birks, Oxford University Press, Oxford, New York, 2006. Meagher, Gummow and Lehane — Heydon, J D, Leeming, M J, and Turner, P, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 5th ed, LexisNexis Butterworths, Sydney, 2015. Mitchell, Contribution — Mitchell, Charles, The Law of Contribution and Reimbursement, Oxford University Press, Oxford, 2003. Mitchell and Watterson, Subrogation — Mitchell, Charles, and Watterson, Stephen, Subrogation Law and Practice, Oxford University Press, Oxford, 2007. Ong, Subrogation — Ong, Denis S K, Ong on Subrogation, The Federation Press, Sydney, 2014. Palmer — Palmer, G E, The Law of Restitution, Little, Brown & Co, Boston, 4 vols, 1978. Palmer, Bailment — Palmer, N E, Bailment, 3rd ed, Sweet & Maxwell, United Kingdom, 2009.

Parkinson — Parkinson, Patrick (ed), The Principles of Equity, 2nd ed, Law Book Co, Sydney, 2003. Phillips and O’Donovan — Phillips, J C, and O’Donovan, J, The Modern Contract of Guarantee, 3rd ed, LBC Information Services, Sydney, 1996. Restatement, Third — American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment, as adopted and promulgated on May 19, 2010, American Law Institute Publishers, St Paul, 2011. Restatement (Second) Contracts — American Law Institute, Restatement of the Law Second, Contracts 2d, as adopted and promulgated in May 1979, American Law Institute Publishers, St Paul, 1981. Restitution, Overpaid Tax — Elliott, Steven, Hacker, Birke and Mitchell, Charles (eds), Restitution of Overpaid Tax, Hart Publishing, Oxford, 2013. Restitution, Past, Present and Future — Cornish, W R (ed), Restitution, Past, Present and Future: Essays in Honour of Gareth Jones, Hart Publishing, Oxford, Evanston Ill, 1998. Rossiter — Rossiter, C J, Penalties and Forfeiture, Law Book Co Ltd, Sydney, 1992. Simpson — Simpson, A W B, A History of the Common Law of Contract: The Rise of the Action of Assumpsit, Clarendon Press, Oxford, 1975. Smith’s Leading Cases — Smith, J W (ed), Smith’s Leading Cases, 13th ed, Chitty, T W, Denning, A T, and Harvey, C P, 2 vols, Sweet & Maxwell, London, 1929. Stoljar — Stoljar S J, The Law of Quasi-Contract, 2nd ed, Law Book Co Ltd, Sydney, 1989. Sutton — Sutton, K C T, Sales and Consumer Law in Australia and New Zealand, 4th ed, Law Book Co Ltd, Sydney, 1995. Sutton, Insurance — Sutton, K C T, Insurance Law in Australia, 3rd ed, LBC Information Services, Sydney, 1999. Swadling — Swadling, William (ed), The Limits of Restitutionary Claims:

A Comparative Analysis, UK National Committee of Comparative Law, London, 1997. The Search for Principle — Swadling, William and Jones, Gareth (eds), The Search for Principle: Essays in Honour of Lord Goff of Chieveley, Oxford University Press, Oxford, 1999. Tolhurst — Tolhurst, G J, The Assignment of Contractual Rights, Hart Publishing, Oxford, 2006. Treitel — Peel, Edwin (ed), The Law of Contract, 12th ed, Thomson Sweet & Maxwell, London, 2007. Treitel, Remedies — Treitel, G H, Remedies for Breach of Contract, Clarendon Press, Oxford, 1988. Virgo — Virgo, Graham, The Principles of the Law of Restitution, 3rd ed, Oxford University Press, Oxford, 2015. Williams — Williams, G L, The Law Reform (Frustrated Contracts) Act 1943, Stevens & Sons Ltd, London, 1944. Woodward — Woodward, F C, The Law of Quasi-Contracts, Little Brown & Co, Boston, 1913.

Table of Contents Preface Preface to the Second Edition Table of Cases Table of Statutes Abbreviations

PART I — INTRODUCTION Chapter One: Restitution, Quasi-contract and Unjust Enrichment 1. 2.

3. 4.

Overview Quasi-contract (a) General (b) Common Counts (c) ‘Equitable Principles’ in Money Had and Received (d) The Implied Contract Theory Towards Unjust Enrichment as a Unifying Concept Elements of Unjust Enrichment (a) General (b) Benefit (i) General (ii) Incontrovertible benefits (iii) Requested benefits (iv) Non-requested but freely accepted benefits

(c) (d)

At the Expense of the Plaintiff Injustice (i) General (ii) Mistake, compulsion and other ‘vitiating’ factors (iii) Total failure of consideration and related factors (iv) Acceptance and unconscientious conduct

Chapter Two: Classifying Claims and Remedies in Restitution 1. 2.

3. 4.

5.

General Nature of Restitutionary Liability (a) General (b) Causes of Action in Restitution Restitution, Contract and Tort Classifying Restitutionary Claims (a) General (b) Three Main Conceptual Triggers for Restitution (c) Independent and Dependent Claims (d) Common Law and Equitable Claims (e) Claims Under Statute (i) General (ii) Recognition and conferral of right to restitution (iii) Discretionary powers (iv) Restrictions on contract validity (v) Restrictions on restitutionary relief Classifying Remedies in Restitution (a) General (b) Personal Remedies in Restitution (c) Proprietary Remedies in Restitution

PART II — CLAIMS BASED ON WANT OF TITLE Chapter Three: Want of Title: Misdirected Funds and Tracing 1. 2.

3.

General Restitution Against Unauthorised Recipients (a) Unauthorised Disbursal of Money: Common Law (b) Unauthorised Disbursal of Money: Equity Defences

PART III — MISTAKE Chapter Four: Mistake 1. 2.

3. 4. 5. 6. 7. 8. 9.

General Categories of Mistaken Payments (a) Mistakes of Fact (b) Mistakes of Law (c) Mistaken Gifts Matters Irrelevant to the Plaintiff’s Prima Facie Right to Recover Towards a Comprehensive Test of Mistake Mistake in Cheque Transactions Agents and Intermediaries Defences to Claims to Recover Mistaken Payments Proprietary Remedies Non-monetary Benefits

PART IV — CLAIMS BASED ON LEGAL OR MORAL COMPULSION Chapter Five: Improper Pressure 1.

General

2.

3.

(a) Introduction (b) Relevance of Contract Elements of Claim to Restitution for Improper Pressure (a) General (b) Establishing Improper Pressure (c) Benefit Recoverable (d) Causation (e) Defences (f) Remedies Categories of Improper Pressure

Chapter Six: Bearing Others’ Burdens: Contribution, Recoupment and Subrogation 1. 2.

3.

4. 5.

General Contribution (a) General (b) Categories (c) Alleged Requirement of Common Demand Recoupment (a) General (b) Who May Seek Non-statutory Recoupment? (c) Claims Subrogation Detailed Rules of Liability

Chapter Seven: Judgments Reversed or Set Aside Chapter Eight: Necessitous Intervention: Restitution for Unsolicited Services or Payments 1.

General

2. 3. 4.

5. 6.

(a) Introduction (b) Policy Considerations (c) Restitution and Unjust Enrichment Summary of Principles From ‘Agency of Necessity’ to ‘Necessitous Intervention’ Intervention to Protect Life or Health of Another (a) Medical Services (b) Supply of Necessaries Without Request Preservation of Property Fulfilment of Another’s Duty (a) Preservation of Credit and Payment of Another’s Debt (b) Situations Where There Is a Positive Public Interest

PART V — CLAIMS ARISING OUT OF INEFFECTIVE CONTRACTS Chapter Nine: Introduction to Ineffective Contracts 1. 2.

3.

General Key Concepts and Types of Claim (a) General (b) Quantum Meruit (c) Total Failure of Consideration (i) General (ii) The agreed return (iii) Failure of consideration (iv) Scope and application (d) Benefit and Acceptance Relevance of Reliance

Chapter Ten: Inherently Ineffective Contracts

1.

2.

3.

4.

General (a) Introduction (b) The Contractual Background (i) Void contracts (ii) Unenforceable contracts (iii) Illegal contracts Recovery of Money Paid (a) Total Failure of Consideration (i) General (ii) Void and unenforceable contracts (b) Countervailing Factors Restitution for Non-monetary Benefits (a) Quantum Meruit (i) General (ii) Void contracts (iii) Unenforceable contracts (iv) Contracts which fail to materialise (b) Accepted Goods Other Claims

Chapter Eleven: Contracts Discharged for Breach or Repudiation 1. 2.

3.

Introduction The Contractual Background (a) General (b) Rights of Discharge (c) Consequences of Discharge Recovery of Money Paid (a) General

(b)

4.

Recovery Based on Failure of Consideration (i) General (ii) Total failure (iii) Relevance of fault and intention (iv) Payments due but not paid (c) Recovery Based on Relief Against Forfeiture (i) General (ii) Jurisdiction (iii) Exercise of jurisdiction (d) Recovery Based on Statute Restitution for Non-monetary Benefits (a) The Contractual Background (b) Quantum Meruit (i) General (ii) Acceptance of benefit (iii) Claims by party in breach (iv) Claims against party in breach (c) Analogous and Other Claims (d) Statute and Reform

Chapter Twelve: Contracts Discharged Without Breach 1.

2.

General (a) Introduction (b) Contractual Background (i) General (ii) Consensual discharge (iii) Discharge by operation of law (iv) Consequences of discharge without breach Recovery of Money Paid

(a) (b)

3.

4.

General Total Failure of Consideration (i) General (ii) Cases of total failure (iii) Scope of the concept Restitution for Non-monetary Benefits (a) General (b) Quantum Meruit for Benefits Conferred Prior to Frustration (c) Quantum Meruit in Other Situations Frustrated Contracts Legislation (a) General (b) Objects and Bases for Recovery (c) Scope and Application (d) Impact on Contract and Contract Claims (e) Recovery Under New South Wales Legislation (f) Recovery Under South Australian Legislation (g) Recovery Under Victorian Legislation

Chapter Thirteen: Contracts Rescinded or Set Aside 1.

2.

General (a) Introduction (b) The Contractual Background (i) General (ii) Consensual rescission (iii) Contracts liable to be rescinded or set aside (iv) Consequences of rescission Recovery of Payments Made (a) General

3.

4.

(b) Total Failure of Consideration on Rescission Discretionary Claims (a) General (b) Under the General Law (c) Under Statute Sale of Goods Contracts

Chapter Fourteen: Valuation and Adjustment 1. 2.

3.

4.

General Restitution and Damages (a) General (b) Advantages (c) Damages Where Plaintiff Entitled To Restitution (d) Damages Where Defendant Entitled To Restitution Valuation of Non-monetary Benefits (a) General (b) Relevance of Contract Price (i) General (ii) Contexts other than discharge for breach (iii) Contracts discharged for breach or repudiation Restitutio in Integrum (a) General (b) Inherently Ineffective Contracts and Statute (c) Contracts Which Subsequently Become Ineffective

PART VI — CLAIMS BASED ON WRONG COMMITTED Chapter Fifteen: Introduction to Wrongs 1. 2.

General Monetary Remedies for Wrongs

3. 4.

5.

When Reliance on a Wrong is Required When Reliance on a Wrong is Permitted (a) General (b) Extent of Recognition (c) Policy, Discretion and Uncertainty Significance of Gain-based Remedies

Chapter Sixteen: Tort 1.

2. 3. 4. 5.

General (a) Introduction (b) Commonly Encountered Torts (c) Remedies From Waiver of Tort to Restitution for Wrongs Gain-Based Remedies for Wrongful Taking or Use of Land or Goods Claims Involving Money What are the Limits of Restitution for Tortious Wrongs?

Chapter Seventeen: Breach of Fiduciary Duty, Breach of Confidence and Infringement of Intellectual Property Rights 1. 2. 3. 4. 5. 6.

General Account of Profits Damages and Compensation in Equity, Intellectual Property and Corporations Act Claims Proprietary Remedies Restitution in Favour of Party in Breach of Duty Alternative Claims, Election and Prevention of Double Recovery

Chapter Eighteen: Breach of Contract

1.

2.

3.

4.

General (a) Introduction (b) Criteria and Objectives of Contract Damages (c) Contract Damages and the Enforcement of Contracts Benefit Equal to Loss (a) General (b) Money Retained and Expense Saved (c) Profit Lost and Benefit Not Received Terms of the Contract (a) General (b) Benefit Obtained in Breach of Contract Term Benefit Without Loss (a) General (b) Character of the Breach (c) Basis for the Award (d) Nature of the Wrong

Chapter Nineteen: Wrongful Killing: The Forfeiture Rule 1. 2. 3.

4. 5.

General The Forfeiture Rule Evidentiary and Procedural Issues (a) General (b) Causation Benefits Liable to Be Forfeited Criticism and Reform

PART VII — SPECIAL CLAIMS INVOLVING THE EXECUTIVE

Chapter Twenty: Restitution against the Revenue 1. 2.

3. 4.

5.

Introduction Claims to Recover Imposts Based on Mistake, Improper Pressure, Contract or Statute (a) General (b) Mistake (c) Improper Pressure (d) Contract (e) Statutory entitlement to restitution The Woolwich Principle outside Australia Likelihood of Australia Adopting the Woolwich Principle (a) Status of the Principle in Australia (b) Australian Constitutional Background (c) The Woolwich Principle in Australia? Reimposition of Tax, Legislated Bars on Relief and Defences

Chapter Twenty One: Restitution of Ultra Vires Disbursements from the Revenue 1. 2.

General The Principle

PART VIII — DEFENCES Chapter Twenty Two: Introduction to Defences 1. 2.

General Classifying Defences

Chapter Twenty Three: Election 1. 2.

General Election Between Inconsistent Remedies

3.

4.

(a) General (b) Alternative Claims in Contract and Restitution (c) Alternative Claims in Tort and Restitution Election Between Inconsistent Rights (a) General (b) Election as a Defence (c) Related Defences Restitutio in Integrum (a) General (b) Scope and Operation of the Defence

Chapter Twenty Four: Change of Position 1. 2. 3. 4.

General Recognition of the defence Ambit of the Change of Position Defence Operation of the Change of Position Defence

Chapter Twenty Five: Consideration and Bona Fide Purchase 1. 2. 3.

4.

General Consideration Compromises and Related Situations (a) General (b) Compromises (c) Release and Abandonment (d) Discharge of an Existing Debt and Other Cases Bora Fide Purchase (a) General (b) Relevant Situations

Chapter Twenty Six: Illegality 1.

2.

General (a) Introduction (b) Unjust Enrichment Scope of the Defence (a) General (b) Action Founded on Illegality (c) Action Independent of Illegality (i) General (ii) Illegality having no impact (iii) Assertion of property rights (d) Condition of the Plaintiff Better than that of the Defendant (i) General (ii) Absence of common purpose (iii) Repentance of illegal purpose (iv) Mistake and improper pressure

Chapter Twenty Seven: Delay 1. 2. 3.

General Delay in the Exercise of a Right Delay in the Pursuit of a Remedy (a) General (b) Statutes of Limitation (i) General (ii) Limitation periods (iii) Independent claims (iv) Dependent claims (v) Claims in equity (vi) Extension and postponement of limitation period

PART IX — INTEREST AND PLEADING RESTITUTIONARY CLAIMS AND DEFENCES Chapter Twenty Eight: Interest 1. 2.

3.

General Statutory, Common Law and Equitable Interest (a) Statutory Interest (b) Interest at Common Law (c) Equitable Interest Interest on Restitutionary Claims

Chapter Twenty Nine: Pleading Restitutionary Claims and Defences 1. 2. 3. 4. 5.

General Claims for Money Paid Claims for Remuneration Restitution for Wrongs Pre-Judicature Relics

Bibliography Index

[page 1]

PART I

Introduction

[page 3]

Chapter One

Restitution, Quasi-contract and Unjust Enrichment 1. 2.

Overview …. Quasi-contract ….

[101] [112]

(a) General ….

[112]

(b) Common Counts ….

[114]

(c) ‘Equitable Principles’ in Money Had and Received …. [120] 3. 4.

(d) The Implied Contract Theory ….

[124]

Towards Unjust Enrichment as a Unifying Concept …. Elements of Unjust Enrichment ….

[133] [140]

(a) General ….

[140]

(b) Benefit ….

[146]

(c) At the Expense of the Plaintiff ….

[159]

(d) Injustice ….

[164]

1. Overview [101] Objects. To the layperson, restitution indicates the return of something that has been taken or lost. It involves the giving back of the

victim’s property, or payment of its monetary equivalent if restoration is impossible. Until recently it was thought that the common law governing civil liability comprised tort and contract, with quasi-contract as a mere appendage to the latter.1 Quasi-contract has now been displaced by restitution and one object of this chapter is to explain the steps by which that development occurred. There is, however, much more to this process than a change in nomenclature. The law of restitution claims an area that is both wider and more coherently delimited than that of the old law of quasi-contract. The concentration on substance rather than form which generally characterises the modern and sophisticated legal system by which we are all governed has had a major impact on the attitude towards restitutionary liability. Whereas quasicontract was seen as dependent on contract for its existence and much of its analytical structure, restitution has emerged as a distinct basis for liability. One important reason for this, which we seek to explain briefly in this chapter, is that the law is finally breaking free from a fascination with forms of action. [page 4] The rejection of formalism has accompanied the search for a different explanation for the law. By way of contrast with quasicontract, unjust enrichment provides the theoretical basis for most (but not all) restitution awards under the modern law. Thus, the chapter also explains the adoption of that concept in Australia.2 [102] The ‘law of restitution’. This work is concerned with a body of case law and the penumbra of statutory rights and remedies replicating or refining that case law. The underlying principle is the prevention or stripping of gains made by the defendant at the plaintiff’s expense in circumstances recognised by the law as unjust or in consequence of an established wrong. There is, however, a handful of

exceptional claims that vindicate property rights whose historical or analogical links justify inclusion. Restitution is part of the civil (ie non-criminal) law of obligations. The remedies it provides are both personal and proprietary. Some derive from common law, some from equity; others embody a happy fusion of ideas blended from each historical root. Some of the rights or remedies are statutory, often by way of replicating or developing entitlements recognised in the general law. Restitution contains its own causes of action, such as the right to recover mistaken or extorted payments or payments made on a basis (‘consideration’) that fails to come about. As we perceive it, the law of restitution also embraces those aspects of tort, property, statutory and equitable wrongs which involve remedies whose objects include the vindication of certain property rights and the prevention or stripping of enrichment flowing from wrongs.3 [103] The historical core of restitution: quasi-contract. Scholars debate the scope of the law of restitution. Some prefer a smaller country lying within the borders of restitution that is called unjust enrichment and that has citizenship issues of its own. The common middle ground is a central core of ancient case law that is worthy of schematic exposition for historical and pedagogical reasons and because it illustrates the theoretical underpinnings of each subject. Any theoretical debate must address what informs this central core before it is possible to consider whether certain possibly older (equitable) and newer (legal and equitable) doctrines are also to be included within the scope of any coherent law of restitution or unjust enrichment. This core area was originally known as quasi-contract. In brief, it was the field occupied by the common money counts4 where they were used to recover money or remuneration or the value of goods in claims that did not stem from an express promise or genuine contract. These counts were short-form pleadings that averred a promise (‘assumpsit’) to pay (or make restitution, in modern parlance) where the fictional aspect of the promise was acknowledged in the ‘quasi’-contractual

label. Money paid under mistake or to obtain the release of wrongfully detained goods, or paid on a condition that failed to eventuate, has been recoverable in quasi-contract from before the eighteenth century. [page 5] [104] Particular influence of United States law. No area of the common law has benefited as much as restitution from developments in the United States. The synthesising insights of Lord Mansfield concerning the action for money had and received5 were embraced there in the nineteenth century6 and never fell under a cloud, as occurred in England and Australia.7 American law enacted the merger (fusion) of law and equity earlier than in England and has always been enthusiastic about the substantive opportunities for greater coherence that this offered. As early as 1887, Professor Ames in Harvard was teaching that unjust enrichment, not implied contract, formed the basis of quasi-contract. Ames recognised that a similar principle underpinned ‘constructive trusts and other equitable obligations created by operation of law’.8 Gageler J has observed that the American position founded more directly on Lord Mansfield’s conception is ‘considerably less canalised’ or defined than that in England.9 The next American milestone was the 1937 Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts issued by the influential American Law Institute. It was this Restatement that Lord Wright introduced to English law in the 1930s, inducing the House of Lords to begin chipping away at the misleading fiction of quasicontract.10 In 2011, the Restatement of the Law Third: Restitution and Unjust Enrichment11 was promulgated with the distinguished Professor Andrew Kull as its Reporter. This Restatement, Third has been frequently cited by the High Court.12 [105] Recent emergence of restitution and unjust enrichment. Restitution is a legal response to various triggers, most notably unjust enrichment and wrongs. The idea of a conceptual whole came to

Australian law mainly via England and earlier to England via the United States.13 There are now specialist journals, websites and conferences on the topic, not to mention numerous textbooks. The explosion of interest also stimulated debate about legal taxonomy, largely responsive to the vigorous proselytising of the late Peter Birks. The modern development of restitution [page 6] is a fascinating study of contestable theory (or theories) being applied to a rapidly developing corpus of law. Many factors explain the comparatively recent reception of ‘restitution’. The last century has been a period when jurists chafed at fictions, valued substance over form and pressed for greater coherence in legal doctrine. Comparative law studies have given exposure to parallel developments elsewhere in the common law world and in civil law systems. Leading American (and later English) academic scholars have clothed dispersed or forgotten case law with a framework of understanding, while vigorously promoting variants of the new ‘gospel’ to an ever-widening body of followers and fellow-travellers. Recognition of the unjust enrichment concept as the main basis for understanding quasi-contract led to the perception that other parts of the existing corpus of general law (including small portions of equity) operated on the same grundnorm. Restitution’s claim to selected parts of traditional equity has also been encouraged by equity’s failure to explain its structure or policies across the board according to any broad rational lines or even, in many cases, to make good its claim that an understanding of jurisdictional roots that were severed in England as long ago as 1875 offers a meaningful springboard for historical enquiries.14 [106] ‘Restitution law’ in Australia. Before Pavey & Matthews Pty Ltd v Paul15 was decided by the High Court in 1987, judges and commentators saw quasi-contract as an untidy corner of the law of

contract in a universe of personal remedies that allowed only for tort and contract.16 Equitable and statutory remedies analogous to quasicontract were viewed as an entirely different field, as were proprietary claims.17 Reports of an unexplored continent called ‘restitution’ were originally brought to Australia by postgraduate students who studied courses in restitution in England under Professors Gareth Jones and Peter Birks. Local practitioners and legal academics became aware of the standard work for English practitioners by (Lord) Goff and (Professor) Jones,18 which provided a modern source for analysis of case law previously buried in the third edition of Bullen and Leake’s work on pleading,19 confined and linked by analysis of the ‘common money counts’. Through this pioneering work, additional cases were brought to light and connections were found between similar claims (and claims following a consistent pattern or rationale) in diverse fields of law. Goff and Jones introduced English and Australian courts to the United States jurisprudence which had begun wrestling with the topic in the [page 7] late nineteenth century.20 The High Court’s break with the implied contract theory of quasi-contract21 in Pavey marked the birth of the law of restitution in this country.22 Alternatively, as Sir Anthony Mason suggested23 in a review of Professor Birks’s Introduction to the Law of Restitution, restitution was then ‘awakened from [a] long slumber’. Whatever the provenance, in about the 1970s an idea arrived that something called ‘Restitution’ existed, equipped (like Equity) with a capital letter but waiting to be fully explored and mapped out. The intellectual rigour of Professor Birks’s primary work, published in 1985,24 provided the stimulus to establish a theoretical structure. Some began to speak of the topic as the third member of a trinity, together with contract and tort.25 Ironically this trinitarian approach to the law of obligations arrived around the time that it came to be seen that contract and tort, if they ever existed as single fields of law, overlapped

and conflicted in many ways. And the unknown continent touched our consciousness about the same time that equity awakened from over a century of slumber with reinvigorated capacity to block or reverse the unfair or unconscientious exercise of legal rights.26 The concern to accommodate restitution within the scheme of ‘unconscionability’27 developed by the High Court in the 1980s is to some extent a distinctly local development. It is also a controversial one.28 [107] Structural debates about unjust enrichment and absence of cause. Subsequently, Birks perceived that it was false to see restitution as part of a set, alongside contract and tort. Restitution is a response to a trigger that may, he taught, be consent, wrongs, unjust enrichment and an innominate category of other causative events.29 This taxonomy may be labelled ‘Birks Mark-II’. It was expounded with customary vigour. Variants of it were anticipated or accepted by those scholars who saw gain-based remedies for wrongs as lying outside the field of restitution or who espoused unjust enrichment as the outer bound of their survey.30 Shortly before his untimely death, Birks’s cartographical thinking took another sharp turning and in 2003 he instructed his followers that ‘almost everything of mine now [page 8] needs calling back for burning’.31 The new insight (‘Birks Mark-III’) was that the trigger for restitution is not even unjust enrichment but the civil law concept of absence of cause. This view which rested on a tendentious reading of the English case law has yet to obtain judicial or academic acceptance in the common law world outside Canada.32 In Woolwich Equitable Building Society v Inland Revenue Commissioners33 Lord Goff declined to find for the plaintiff on the basis that there was no legal ground for the defendant’s enrichment, because although English law ‘might have developed so as to recognise a condictio indebiti — an action for the recovery of money on the ground that it

was not due — … it did not do so’. Justice Kiefel has, however, restimulated this debate in an extra-judicial contribution.34 Birks’s colleague, Professor Andrew Burrows, has explained in detail why he rejects Birks’s later rationalisations and why his preferred understanding and framework of restitution remains akin to ‘Birks Mark-I’.35 We have come to the same conclusion on the broad structural debate.36 [108] Unjust enrichment as a stimulus for ‘coherent’ legal reasoning. No branch of the civil law (other than the law of restitution) has sought to use the prevention or reversal of unjust enrichment as its principal norm.37 The idea that we should recognise as a principle that the law provides a remedy whenever a defendant would otherwise be unjustly enriched at the plaintiff’s expense is an appealing one. However, it suffers from its generality. Just as we recognise general ideals, such as that the law should not suffer a wrong to be without a remedy, that the operation of legal rules should promote certainty of decision, and that persons should not be permitted to benefit by their own wrongs, so we can suggest as a general proposition that persons should not unjustly enrich themselves at the expense of others. A generalisation is not, however, a legal principle, and ideals are not themselves doctrines.38 The High Court has repeatedly stressed that unjust enrichment is not a ‘definitive legal principle according to its own terms’.39 Repetition of this [page 9] truism is increasingly curious, because nobody apart from those seeking to defend pleadings about to be struck out40 has ever suggested otherwise.41 Indeed, in 2012 French CJ, Crennan and Kiefel JJ would acknowledge that, from the outset, unjust enrichment had not been ‘a definitive legal principle according to its own terms’.42 Merely to say the law of restitution is (wholly or largely) concerned

to prevent or reverse an unjust enrichment is not to state a principle of law. The reference may simply be to a ‘non-technical’ sense of unjust enrichment.43 Even so, it does provide both an aspiration and a norm or standard for judgment.44 [109] The unjust enrichment concept. The elements of a cause of action in restitution based on unjust enrichment form the three components which comprise the unjust enrichment concept:45 (1) enrichment (or benefit); (2) obtained at the plaintiff’s expense; where (3) the enrichment (or its retention) is unjust. (Lest it be overlooked, we record at this stage that it is now common to ask two further questions before restitution for unjust enrichment may be awarded: (4) is there any recognised defence to the claim?; and (5) is a personal or proprietary remedy appropriate?) By themselves, the words ‘unjust enrichment’ express no more than a ‘general principle of justice’,46 to which the whole law of civil obligations is relevant. But by embracing the notions of the defendant being enriched unjustly and at the plaintiff’s expense, the unjust enrichment concept provides a framework for understanding, exposition and development. [page 10] And, with the expulsion of the fiction of implied contract, no coherent alternative explanation is available for the cases and categories forming the core of restitution. Restitution in the sense of ‘giving up’, ‘making amends’, ‘making payment’, or ‘restoration’ may embrace compensation for loss, or restoration to a prior position or status. But restitution to reverse or ‘block’ unjust enrichment is more focussed in several respects.

The effect (or object) of introducing the concept of ‘benefit’ or enrichment as a frame of reference is to exclude cases where relief is given by way of compensation for a wrong. Tort and contract tend to occupy the compensation field, and they assume the breach of some duty. Thus, where B does a wrong to A, and A suffers a loss, an order made for the purpose of returning A to the position occupied prior to the commission of the wrong does not amount to restoration (restitution) of a benefit unless A’s loss happened also to benefit B. Yet a loss may be suffered even though the defendant has not been enriched; and an enrichment may be unjust even though the defendant has not been guilty of any wrong. Unjust enrichments would frequently not be redressed if our legal system were restricted to reversing enrichments on the ground that a wrong has been committed. Unlike with the criminal law, the right to enforce civil claims is confined to those closely connected to the transaction giving rise to the cause of action. Thus, contractual claims are generally required to be litigated by the parties to the relevant agreement (or their assignees) and tortious claims by the person wronged. The unjust enrichment concept’s second arm, at the expense of the plaintiff, serves a similar role of winnowing out busy-bodies.47 There is limited recognition of the idea that enrichment may be obtained indirectly.48 Since restitution that vindicates property rights49 and restitution for wrongs50 are, despite a profit-stripping objective, not within the unjust enrichment concept then the exceptions are very limited.51 The unjust enrichment concept in its third arm points to a basis for relief that is imposed by law. In one sense, this is by definition common to all legal obligations.52 Restitution generally respects other legal transactions if and while they subsist and it operates in a subsidiary or gap-filling manner. Benefits conferred under valid and extant contracts, gifts, court orders and statutes cannot be overreached by resort to restitution.53 But, more particularly, the concept of an ‘unjust’ (or vitiating) factor54 points to well-recognised categories such as mistake, improper pressure and failure of consideration. The scope of these categories is, in turn, fleshed out by case

[page 11] law and sometimes modified by statute, not unlike the duty of care integer of the tort of negligence. Similar factors may trigger rights and remedies in other branches of the law. However, there is no a priori reason why restitution should be limited to criteria already adopted in other areas, and no reason why the content of the factors should be determined by the definitions there adopted. The assumptions, that most orders for restitution are framed by reference to (1) a concept of benefit, (2) obtained at the expense of the person seeking restitution, and (3) the justice of restitution according to established norms, combine to produce the principle of restitution to prevent or reverse an unjust enrichment.55 Point (4) in the extended description of the concept referred to above recognises the availability of special and general defences to restitutionary claims. When courts speak of a ‘twostage’ approach to unjust enrichment56 they are recognising that a plaintiff’s entitlement prima facie to restitution for unjust enrichment (flowing from satisfying (1), (2) and (3)) may be undermined through a defence advanced and established by the defendant. [110] The artificiality argument. The main thrust of any argument against a ‘law of restitution’, when expressed in terms of artificiality, is that there is no point in creating a scheme when there are recognised bases for securing restitution in all the individual categories already recognised.57 The argument is that the categories depend for their operation on particular rules which do not admit of a generalisation. Once a generalisation is made, so the argument runs, the effect must be to redefine existing bases for liability, in terms of an artificial concept which exists in the minds of the theorists. Sometimes this is castigated by invoking the label of top-down reasoning as if it were self-evidently fallacious or unusual. At other times, the argument plugs into wider debates about the utility of legal taxonomy generally, many of them responding to the endeavours of Birks as he sought to explain the place of restitution and the inadequacies of formal and historical categories.58

The authors take the view that the concept is not artificial, and that analysis in terms of a proper understanding of the concept of restitution for unjust enrichment is important.59 Only in the past three decades have the Australian courts attempted to investigate and apply a subject termed ‘restitution’ and explore the role of the unjust enrichment concept. While this work has not set out to construct a theory which explains all cases in which an order in the nature of restitution may be made, systematic analysis of the concepts which make up unjust enrichment contribute to coherent legal thinking. For Australian law to spurn the concept root and branch would be to isolate us from judicial and academic scholarship elsewhere in [page 12] the common law world. To suggest doing so because there is an available alternative, called ‘equitable principles’,60 would be simply reckless. When courts reason by analogy, or decline to find an analogical link between two precedents, judges inevitably give effect to hypotheses and theories, albeit tentatively and subject to stated or unexplained qualifications. Restitution theory seeks to build on this reality and it is able to point to hundreds of years of case law showing footprints of the theoretical tools that are now commonplace. The fact that this was (in 1995) the first book published in Australia under the title ‘restitution’ is a fair indication that the existence of the subject is somewhat controversial.61 The idea that there is a common thread which enables diverse areas to be grouped together for the purpose of systematic analysis is a relatively new one for the AngloAustralian common law, newer still if equitable claims are to be integrated. The first English book on the subject was not published until 1966.62 Professor Stoljar’s work on the subject,63 although published in Australia, was for the most part an analysis of English law. While characteristically rigorous, it suggested a proprietary approach to the subject which was in effect rejected by the High Court in Pavey &

Matthews Pty Ltd v Paul.64 A subsequent edition took account of that decision,65 but ‘restitution’ was still regarded as an artificial explanation. Stoljar’s view, that the subject is quasi-contract rather than restitution, remained.66 The systematic analysis works only if there are concepts which can be discussed in a meaningful way, so as to bring together such apparently contrasting cases as restitution of money paid under mistake; restitution by an award of the reasonable value of services rendered; restitution for benefits conferred under a judgment reversed on appeal; and restitution for benefits conferred as a result of improper pressure. Pavey was the case in which the High Court first recognised the non-contractual basis of many of the claims which huddled together with ones truly based on implied agreement, under the heading of quasi-contract. Deane J had clearly looked ahead to such a position in 198567 as had Gibbs CJ (more tentatively) in 1986.68 [page 13] However, these were by no means the first Australian cases to emphasise the non-contractual nature of restitutionary claims.69 And, at the risk of repetition, United States jurists and scholars have seen unjust enrichment as an organising tool for a significant body of personal and proprietary rights and remedies since the nineteenth century. [111] Other bases for restitution. Restitution is also available to vindicate certain property rights affecting money or its product and to prevent or strip gains flowing from ‘wrongs’ as diverse as crimes, torts, infringements of intellectual property rights, breaches of fiduciary duty and breaches of contract. Due to the historical link with quasi-contract, rights to recover money paid to a third party at the request of the defendant are also included.70 We explain elsewhere71 why these claims are addressed in this work even though they may not be directly illustrative of the unjust enrichment concept. A contract might also

stipulate for restitution in certain situations, but the law of contract governs when and how such a right is enforced.

2. Quasi-contract (a) General [112] Introduction. The law of restitution emerged, and was given the name quasi-contract, when the forms of action ruled what we today refer to as the law of obligations. The historical background is, therefore, the use of writs of debt, covenant, account and assumpsit in the sixteenth and seventeenth centuries72 as well as miscellaneous common law remedies73 and various principles developed in Chancery that are now perceived to be relevant to the modern law of restitution. However, it is doubtful whether any coherent historical analysis of the origins and history of quasi-contract is possible. Application of a systematic analysis, based on the assumption that there was a theoretical basis for the developments, ignores the fact that the law developed in a pragmatic way, and continued to do so until the unjust enrichment concept emerged. [page 14] There are, however, two basic points. The first is that the law of quasi-contract emerged during the development and growth of the action in assumpsit.74 The second is that the modern law of restitution includes all claims which have traditionally been described as ‘quasicontractual’, whether or not they are now indicative of the unjust enrichment concept.75 [113] Growth of assumpsit. What was debated in the sixteenth and seventeenth centuries was the relationship between claims in debt and claims available under the widely used, but often controversial, forms of assumpsit. Assumpsit was used as a basis for liability both in contract

and quasi-contract. Whether contract lawyers have rightly regarded the decision in Slade’s Case76 as a landmark decision is perhaps doubtful. But in deciding that assumpsit was available as an alternative to debt in relation to executed contracts, and that every contract executory in itself imports an assumpsit, the decision paved the way for the rapid development of quasi-contract which followed.77 John Slade sold goods to Humphrey Morley, but the latter refused to pay for them. The court held that Slade could, at his election,78 maintain either an action in debt or an action on the case in assumpsit. Thus, the availability of the writ of debt, for payment of the price of goods bargained and sold, did not mean that an action on the case was not available. The action in assumpsit was (from a plaintiff’s perspective) procedurally compelling, since the action in debt attracted ‘compurgation’, that is, the wager of law process under which the defence comprised obtaining the oaths of a number of persons prepared to swear that the debt had been paid. The policy of restricting wager of law, as the ‘occasion of much perjury’,79 was evident. In subsequent decades the action in assumpsit was extended and refined, so that it became available in so many situations as to be a distinct form of action, ultimately superseding both debt and account. Assumpsit (indebitatus assumpsit) could be implied from the existence of a debt even where there was no express promise.80 The actions were heard in the King’s Bench and it was that court which manipulated assumpsit so as to encroach on the former jurisdiction of the Court of Common Pleas. Accordingly, although a plaintiff was always required to plead a known form of action and to use a writ on the register, there was a large degree of flexibility due to the variety of situations in which the forms of assumpsit were available. The action in indebitatus assumpsit was undoubtedly the most important development. This form of action did not assume or require the existence [page 15]

of an express promise. Accordingly, in many cases an assumpsit could be implied from the existence of a prior debt. One example was a case in which a person performed work without an express promise to pay an agreed amount. By the middle of the seventeenth century ‘quantum meruit’ was established as a means of recovering the reasonable value of work rendered under a contract which failed to state a price.81 Like quantum valebat, which was available in the case of goods supplied,82 the action arose in response to a shortcoming of the action in debt, in this instance the necessity of a liquidated sum.83 Where a price was fixed, (special) assumpsit was an alternative to debt.84 And where debt was not available, due to the absence of a fixed sum, indebitatus assumpsit was made available, on the basis that the completion of the work gave rise to a debt which the defendant impliedly promised to pay.85 Most significant of all was the use of indebitatus assumpsit to cover cases in which it was possible to say, for one reason or another, that the defendant was liable to the plaintiff for money had and received to the plaintiff’s use.86 It would be wrong to see these as preoccupied with cases involving promises. Thus, a recognised use of indebitatus assumpsit for money had and received was as an alternative to a claim (in tort) for damages for conversion of goods. The count for money had and received was used in a variety of circumstances to provide a monetary remedy entirely outside the sphere of contract, including failed negotiations, fiduciary relationships and even trust.87

(b) Common Counts [114] Introduction. In the law of quasi-contract, four major claims (or classes of claims) were those for: money paid; money had and received; quantum meruit; and quantum valebat. Ultimately, the growth of assumpsit gave rise to the so-called ‘common’ or ‘money’ counts. Much of the terminology of restitution is derived from the forms of action in assumpsit and the descriptions of quasi-contractual claims under the common counts. Although the forms of action have

gone, lawyers (especially in Australia) still tend to use words which invoke them.88 [115] Pleading devices. The ‘common’ or ‘indebitatus’ counts were pleading devices. They permitted the pleading of claims in general terms. The specific details of the debt sought to be recovered were left to the [page 16] evidence.89 All were variants of assumpsit.90 They comprised the common counts:91 (1) for money lent; (2) for money due for an account stated; (3) for money due as interest;92 (4) for money paid by the plaintiff to the use of the defendant; (5) for money had and received by the defendant to the use of the plaintiff; (6) for work done; (7) for goods bargained and sold; and (8) for goods sold and delivered. The counts averred the existence of a debt presently due and payable and the consideration or basis of the debt.93 Additionally, some counts, but particularly those for work done and money paid, stressed the existence of a request.94 Of course, we would today see many of the situations envisaged by such claims as contractual in character.95 Thus, where A sold and delivered goods to B, A could recover the agreed price as a debt on a count for ‘goods sold and delivered’. We would see this as, simply, an action for the price of goods, rather than a quasicontractual (restitutionary) claim. But the idea that performance of a contract confers a right to pursue a claim for debt which exists independently of the contract is still important today.96

[116] Count for money paid. The form of action for money paid by the plaintiff to the use of the defendant was superseded by the common count for money paid.97 The count averred a debt arising from payment of money by the plaintiff to and for the use of the defendant, pleaded the request that the money be so laid out, and (originally) averred the breach of a promise to pay the debt on the plaintiff’s request for payment. The principal use of the count for money paid was where B, at the request of A, discharged a debt [page 17] owed by A. Assume, for example, that A was indebted to C. If A requested B to pay off the debt, or to provide a guarantee pursuant to which B was later required to pay,98 and B discharged the debt by payment to C, the common count was available to enable B to recover the payment from A. B would recite the request, assert performance of the act of payment to C and plead failure by A to make the payment to B. In the old terminology of quasi-contract, the money paid to C was paid for the use of A.99 This was reflected in the short description in the count, as ‘money laid out (or paid) by the plaintiff to the use of the defendant’. Success at the trial led to reimbursement of the amount of the debt. The claim could be defeated, for example by proof of an arrangement whereby B agreed to make a gift to A. The count was available in relation to actual, implied100 and some non-contractual requests. In the last category the cause of action lay if there was what, in modern terms, was compulsion of law or necessitous intervention,101 or requests to pay triggering a non-contractual right to contribution or recoupment.102 A request may be implied by general course of dealing, or by the nature of the particular transaction. Provided it is relied upon by the plaintiff,103 liability may ensue unless a gift was in the reasonable contemplation of the parties or a reasonable person would have been expected to register dissent.104 Not every requested payment generates liability, but it is not necessary that the payment benefit the defendant. Indeed, it is a misleading diversion to

press these claims into the unjust enrichment framework.105 If the person making the request is the agent of another, then the agent will not be liable under the action.106 Where the defendant has acquiesced in a non-donative transaction, for example by adopting the benefit or outcome of the payment, such ratification may be relied upon as evidence of a previous request.107 [page 18] The defendant could not defeat the plaintiff’s claim by showing that the payment was requested and made in execution of an unenforceable or void contract, such as a lost wager.108 But if the requested payment was made for an illegal contract, then it was not recoverable.109 [117] Count for money had and received. A number of distinct cases were recognised in quasi-contract for ‘money had and received by the defendant to the use of the plaintiff’.110 In Moses v Macferlan111 Lord Mansfield categorised these as including ‘money got through imposition (express or implied)’, or a claim based on ‘mistake’, a ‘consideration which happens to fail’, ‘extortion’, ‘oppression’, or ‘undue advantage’ of the plaintiff’s position, ‘contrary to the laws made for the protection’ of a person such as the plaintiff. The count in quasi-contract for money had and received averred a debt arising from receipt of payment by the defendant for the use of the plaintiff and the failure to pay the debt on the plaintiff’s demand for payment. The various forms of money had and received were distinguished from one another by reference to the event which at the trial formed the basis for the claim. Lord Mansfield’s categorisation was not only representative of these, it is also representative of those claims which may today be brought under the rubric of restitution for an unjust enrichment.112 That all are important is shown by an examination of the table of contents of this book. Money had and received by the defendant to and for the use of the plaintiff was used in some additional cases of wrongful conduct, in

effect to obtain a benefit. Not all of these cases involved tortious conduct.113 However, some torts were within its scope. For example, a defendant who converted the plaintiff’s property, and thereby obtained a benefit which in justice belonged to the plaintiff, could be sued for money had and received.114 The breadth of claims within this common law action is revealed in Bullen and Leake’s Precedents of Pleadings, 3rd ed, 1868.115 There is even a [page 19] body of cases from the eighteenth and nineteenth centuries showing that the count was available to enforce certain types of trust obligation relating to money, by a beneficiary against a trustee, a happy fusion of law and equity.116 Additional aspects of substantive fusion of legal and equitable principles in this area are addressed below.117 Australian courts still frequently use the language of ‘money had and received’. However, the fourteenth (2001) and later editions of the English text Bullen and Leake have subsumed the topic under ‘Restitution’.118 [118] Count for work done. ‘Quantum meruit’ was a claim to recover the reasonable price of services.119 The expression means so much money as the plaintiff ‘therefore reasonably deserved to have’,120 or such sum as the court considers just.121 This was superseded by the indebitatus count,122 which was available for work done and materials supplied by the plaintiff to the defendant at the defendant’s request or accepted by the defendant.123 The cause or causes of action embodied in variants of this count include claims for reasonable remuneration for work done in favour of a third party at the defendant’s request.124 Putting to one side the contractual claims in quantum meruit,125 the object of the count was to provide the plaintiff with a remedy in circumstances where there was no contract, or no enforceable contract, in relation to the services rendered. The count averred a debt arising from work done, pleaded the request to do the work, and averred the

breach of a promise to pay the debt which had previously accrued on completion of the work. It appears that the count was also available for partially performed contracts, where the defendant (in breach of contract) prevented completion.126 [119] Counts for goods sold and delivered or bargained and sold. ‘Quantum valebat’ was the original quasi-contractual claim to recover the reasonable price of goods supplied to the defendant by the plaintiff at the [page 20] defendant’s request. The quantum valebat was superseded by the indebitatus counts for goods sold and delivered or bargained and sold.127 Whether the former or the latter was the relevant count depended on whether property in the goods passed under the contract (goods bargained and sold), or by virtue of delivery (goods sold and delivered). In either case, the count was available for a plaintiff who claimed to recover a reasonable sum, that is, so much as the goods were worth.128 In both counts, the pleading would aver a debt, by reference to goods sold and delivered or bargained and sold, plead the request that the goods be supplied, and aver breach of a promise to pay the debt. It appears that the counts were available in three cases. First, where there was an agreement to pay a fixed price, the counts were a means of enforcing the contract debt, in which case the relevant sum would be the agreed price.129 Second, the counts were available where there was no contractual right to payment of an agreed sum, because the contract failed to state a price.130 Third, the counts were available in cases where goods were delivered and accepted, but not in performance of the agreed contract. Thus, if the seller breached the contract by delivering defective goods which the buyer nonetheless accepted, the buyer was liable to pay a reasonable sum.131

(c) ‘Equitable Principles’ in Money Had and Received [120] Introduction. In Moses v Macferlan132 Lord Mansfield described money had and received as an ‘equitable action’, its gist being ‘that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money’. Similar language is found in some English cases and texts in the nineteenth century, particularly with reference to novel restitutionary claims.133 Lord Mansfield’s language was also used in Australia. Thus, we see the Full Court of the Supreme Court of New South Wales speaking in 1894 of a right to recover moneys intentionally paid for a specific purpose but [page 21] demanded back before the recipient appropriated them to that purpose as being entitled on grounds of ‘equity and good conscience’.134 Griffith CJ echoed Lord Mansfield when, in 1912, he said that the action for money had and received lay whenever the defendant had received money which ‘in justice and equity belonged to the plaintiff’.135 Barton J136 and Isaacs J137 had expressed themselves in similar terms in 1910. Controversies across the years and across the jurisdictions about what may be taken from Moses v Macferlan illustrate Lord Hoffmann’s aphorism that ‘once a judgment has been published, its interpretation belongs to posterity and its author and those who agreed with him at the time have no better claim to be able to declare its meaning than anyone else.’138 It is nevertheless appropriate to start with Lord Mansfield’s words in context. The full passage in Moses describes money had and received as:139

[an] action, founded in the equity of the plaintiff’s case, as it were upon a contract … This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which, ex aequo et bono, the defendant ought to refund: it does not lie for money paid by the plaintiff, which is payable in point of honour and honesty, although it could not have been recovered from him by any course of law; as in payment of a debt barred by the Statute of Limitations; or contracted during his infancy, or to the extent of principal and interest upon an usurious contract, or, for money fairly lost at play: because in all these cases, the defendant may retain it with a safe conscience, though by positive law he was barred from recovering. But it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express, or implied); or extortion; or oppression; or an undue advantage taken of the plaintiff’s situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.

[121] What was Lord Mansfield intending to convey? Moses v Macferlan140 was a common law action being tried before judge and jury [page 22] in the Court of King’s Bench.141 He clearly intended to signify that aspects of the cause of action responded to common notions of fairness, justice and equity. The reference to various situations (such as payment of a debt barred by the Statute of Limitations, or contracted during infancy) as ‘cases [in which] the defendant may retain [the money] with a safe conscience’ reinforce this perception. Yet the language and some of the examples that he provided (‘oppression; or an undue advantage taken of the plaintiff’s situation’) sound very much like claims recognised primarily in Chancery. It would appear that there was a deliberate blending of legal and equitable doctrines within the scope of this common law count. Several judges have detected and then either rejected or embraced the idea that Lord Mansfield was deliberately signalling the incorporation of equity (Chancery) jurisprudence in his synthesis. In the former camp were Pollock CB and Parke B who, in Miller v

Atlee,142 interrupted counsel who had submitted (in a direct take from Moses v Macferlan)143 that the action for money had and received was an equitable action, in which the plaintiff’s right to recover depended on all the circumstances of the case. Pollock CB stated that: ‘The old notion about the action for money had and received being an equitable action is exploded in modern practice — it is a perfectly legal action, and no good can result from calling it an equitable one’. To which Parke B chimed in: ‘None’. Lord Sumner went to considerable pains in Sinclair v Brougham144 to make the same point, explaining Lord Mansfield’s reference145 to assumpsit being ‘a liberal action in the nature of a bill in equity’ as addressing the procedural not the substantive aspects of money had and received. It is, however, difficult to avoid the impression that Lord Mansfield was seeking to go further. For example, in Sadler v Evans146 he spoke of money had and received as ‘a liberal action, founded upon large principles of equity, where the defendant cannot conscientiously hold the money. The defence is any equity that will rebut the action.’ Gummow J has demonstrated147 that the Supreme Court of the United States viewed Lord Mansfield’s references to equity and good conscience as deliberate.148 Gummow J also [page 23] noted149 that some of Lord Mansfield’s examples, including his references to failure of consideration, must have been adverting to substantive equitable doctrines that were part and parcel of the common law action for money had and received150 as well as being principles that generated distinctively equitable remedies. The third edition of Bullen and Leake151 and nineteenth century case law152 further attest to examples of substantive fusion of law and equity within the four corners of the common law action for money had and received. In a later age, Lord Mansfield might have been accused of ‘fusion fallacy’ but that particular charge has never been laid even by those who might be expected to do so.153

Lord Mansfield was a Scot who was familiar by training and interest with civilian jurisprudence, and there is a respectable view that he had civilian principles in mind in his synthesis, not to the exclusion of other general principles.154 Professor Baker has, however, warned that the use of Roman terminology did not necessarily import the borrowing of civilian learning. The thinking of the continental civilians was not current among the common lawyers outside Scotland.155 [122] Mansfield attacked or ignored outside the United States. Whatever Lord Mansfield’s intentions, his references to equity and good conscience came under sustained attack in England (and by derivation, Australia) over the ensuing centuries.156 In the words of French CJ,157 this was the era of ‘disparaging references, sceptical rejoinders, pejorative dismissals and pungent criticisms’. In Holt v Markham,158 Scrutton LJ referred to ‘the very pungent criticisms which Lord Sumner has made upon that now discarded doctrine of Lord Mansfield in Baylis v Bishop of London159 or in Sinclair v Brougham’.160 [page 24] Scrutton LJ described the history of money had and received as ‘a history of well-meaning sloppiness of thought’ and he specifically endorsed Hamilton LJ’s remarks in Baylis to the effect that judges were no longer free in the twentieth century to administer that ‘vague jurisprudence which is sometimes attractively styled “justice as between man and man”’. As this bathwater was being hurled out, so too was the possibility of a change of position defence,161 a personal action for restitution of money paid under an ultra vires contract,162 as well as the unjust enrichment concept itself.163 Modern English restitution texts remain very guarded about Lord Mansfield’s synthesis. Birks saw the invocation of ‘natural justice and equity’ as invoking a ‘dangerously high level of abstraction’.164 By 2005 he would declare that even ‘the unjust enrichment analysis of Moses v

Macferlan will not work’.165 Burrows, Virgo and the editors of Goff and Jones place no reliance upon the synthesising analysis of Lord Mansfield. Indeed, while Virgo acknowledges an equitable influence in the development of the unjust enrichment principle stemming from Moses, he criticises ‘using the language of equity today when describing unjust enrichment creates the danger that the principle is perceived to be discretionary, when in fact it is highly principled’.166 In the main, the modern English law of unjust enrichment is more sharp-edged than that in Australia and there is a higher level of judicial enthusiasm with the unjust enrichment concept as more than a working tool. Australian courts followed the English case law in going silent on Lord Mansfield until Moses’ resurrection in the early twenty-first century, mainly through the influence of Gummow J on and off the bench. So vigorous has that revival been that the unjust enrichment concept itself almost became collateral damage.167 [123] ‘Equitable principles’ touching money had and received in the High Court of Australia. The recent enthusiastic embrace of the Mansfeldian legacy by the High Court of Australia is one of the two major areas where the Australian law of restitution has, in the twentyfirst century, lurched towards the American position and away from the prevailing ethos in England.168 How the unjust enrichment concept came to the forefront of restitution law will be addressed later in this chapter,169 but its near derailment through excessive enthusiasm about the function of ‘equitable principles’ is charted briefly here. [page 25] Starting with Pavey & Matthews Pty Ltd v Paul170 in 1987, the High Court warmly endorsed the unjust enrichment concept as a rationalisation of much of the old quasi-contract cases and a useful tool for ongoing legal development. The fairness of doing so would be emphasised from time to time, just as Lord Mansfield had done, but in terms that clearly flagged the moral underpinnings of unjust

enrichment as distinct from suggesting any capital-E equitable grundnorm.171 Unjust enrichment discourse would be applied in very many areas,172 including the breaking down of the fact-law distinction in mistake and the recognition of a defence of change of position, all such developments being achieved without invocation of ‘Equity’. This was entirely congruent with developments in the overseas jurisdictions, including England and the United States. After the arrival of Gummow J in 1995 the High Court would at times draw a firm line when asked to recognise that the unjust enrichment concept manifested itself in traditional areas of Equity jurisprudence such as the recipient arm of Barnes v Addy173 and subrogation.174 Those outcomes are addressed elsewhere.175 Here we are interested in such of the reasoning as reflects upon ‘equitable principles’ residing within money had and received. In the quasicontractual heartland of the action for money had and received, the High Court adopted and still adheres to a two-stage analysis. Stage one asks whether the plaintiff has established a prima facie claim that the defendant was enriched at his or her expense in consequence of some recognised vitiating or qualifying factor such as mistake, improper pressure or failure of consideration. There is at this stage no need to assert or prove an additional factor of honest belief in entitlement to receive.176 Indeed, ‘equitable’ notions about unconscionability in retention are an irrelevant diversion at this juncture, although there is a long tradition of using such moralistic rhetoric, stretching back to Lord Mansfield. The prima facie entitlement to restitution in money had and received may, however, be rebutted or qualified if the defendant can establish one or more recognised defences such as change of position, good consideration, or limitation of actions. As regards change of position, this defence was foreshadowed by the High Court in Australia and New Zealand Banking [page 26]

Group Ltd v Westpac Banking Corp,177 a case in which the action for money had and received was described as ‘a common law action for recovery of the value of the unjust enrichment’.178 When ultimately recognised in David Securities Pty Ltd v Commonwealth Bank of Australia,179 the defence of change of position was justified largely by reference to the functionalist reasoning of Robert Goff J in Barclays Bank Ltd v W J Simms Son and Cooke (Southern) Ltd.180 Nevertheless, there was also an ambiguous flourish, in the tradition of Lord Mansfield, in Lord Goff’s oft-cited statement in Lipkin Gorman v Karpnale Ltd,181 describing the defence as ‘available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full’. When recently endorsing these remarks in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd,182 the justices were, however, at pains to indicate that there was to be no ‘balancing of competing equities as between the parties, based on considerations of fault’183 or some ‘arbitrary judicial discretion’.184 Nevertheless, the majority in Australian Financial Services stressed that change of position was ‘a species of the genus “inequitable”, not a synonym for it’.185 Taking the vigorous revival of Lord Mansfield to a new level, the court identified Moses v Macferlan186 as the true progenitor of the change of position defence. This taxonomical reallocation is no bad thing in itself (at least in the eyes of committed fusionists). Unsurprisingly, it brought other possibilities in its train. Accordingly, there are strong pro-fusionist statements by French CJ and Gageler J in such general direction187 as well as statements by them suggestive of blending of categories of estoppel188 [page 27] that traditionalists have striven to keep in separate compartments.189 There are also hints about the absorption of principles touching equitable estoppel into the reasoning expounding the change of position defence itself.190

One consequence of this rediscovery of the equitable roots of money had and received is that, while the defendant ‘must point to circumstances which the law recognises would make an order for restitution unjust’, it is open to that defendant to establish ‘any matter or circumstance which shows his or her receipt (or retention) of the payment is not unjust,’ as the court had flagged in David Securities Pty Ltd v Commonwealth Bank of Australia.191 Even though circumstances attracting the proper attention of courts yet falling outside traditional defences are likely to be rare,192 this open-endedness in the Australian jurisprudence perhaps distances us from England where courts still appear to share Birks’s aversion to ‘equitable’ longstops to the categories within the unjust enrichment concept. One must not forget that ‘any matter’ in Lord Mansfield’s synthesis and in the High Court’s David Securities statement may include statutory and common law bases (assuming that identifying ‘common law’ bases makes any sense in this corner of the law where common law and equity were (on this assumption) so firmly melded in Moses). In Westdeutsche Landesbank Girozentrale v Islington London Borough Council, Hobhouse J said that:193 The reasoning of the common law judges expressly had regard to what was conscionable and by inference reflected the analogy between the common law ‘use’ and the fiduciary concept recognised by equity. There was also a complete convergence of the principles applied by the common law and Chancery courts.

Only the first sentence was quoted by Gummow J in a 2001 judgment.194 Nevertheless, one hopes that the High Court will continue to progress towards the situation envisaged by Maitland who anticipated that:195 The day will come when lawyers cease to inquire whether a given rule be a rule of equity or a rule of the common law: suffice that it is a well-established rule administered by the High Court of Justice.

This generally encouraging review of modern equitable discourse in the action for money had and received sadly ends on a very bleak note.196 [page 28]

In a coda to the majority judgment in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd, five justices supplemented their reasons for rejecting a submission advancing the idea that ‘disenrichment’ was a necessary part of change of position197 with the following generalisation:198 This approach seeks to give effect to an understanding of unjust enrichment as a principle of direct application, which operates by measuring the extent of the enrichment or, where a defence of change of position is invoked, the extent of the disenrichment subsequent to that receipt. Such a ‘principle’ does not govern the resolution of this case because the concept of unjust enrichment is not the basis of restitutionary relief in Australian law. The principle of disenrichment, like that of unjust enrichment, is inconsistent with the law of restitution as it has developed in Australia. Disenrichment operates as a mathematical rule whereas the enquiry undertaken in relation to restitutionary relief in Australia is directed to who should properly bear the loss and why. That enquiry is conducted by reference to equitable principles.

It is conceivable that the justices intended their references to ‘the concept of unjust enrichment’ to read as if this was the customary diatribe against ‘unjust enrichment as a principle of direct application’.199 Such rectification would at least blunt the shock of this extraordinary statement. Read literally, the passage offers to replace the court’s entire unjust enrichment jurisprudence with little short of chaos.200 To suggest that ‘the law of restitution’ should abandon unjust enrichment in favour of ‘equitable principles’ is breathtaking when one recognises that (1) unjust enrichment is not the only trigger for restitution; (2) money had and received occupies only part of the law of unjust enrichment; and (3) (with the still orthodox two-stage process in addressing unjust enrichment claims)201 many cases do not involve defences, of whatever derivation. We would hope that the passage will eventually be ‘explained’ by the court as not involving rejection of the unjust enrichment concept root and branch. This expectation is reinforced by a later decision of the High Court reasserting the viability of the unjust enrichment concept.202 Problems with the passage remain, nevertheless. Mention of an ‘enquiry … directed to who should properly bear the loss’ seems inexplicable, even

[page 29] in a context where two innocent parties have suffered at the hands of a fraudster.203 However, the major concern with the passage stems from the invocation of ‘equitable principles’ as a touchstone of liability in mistaken payment and other categories traditionally addressed by the action for money had and received. Absent the raising of an ‘equitable’ defence, the observation is dangerous surplusage, especially when one recalls earlier admonitions in the High Court against requiring plaintiffs to prove additional factors such as the defendant’s want of honest belief in entitlement to receive payment.204 One also questions the utility of the now prescribed concept of ‘equitable principles’. What equitable principles? There are so many of them. Most have nothing to do with restitution. Some are strict, others conscience-based. Some involve the exercise of discretion, but surely not in this context. Words and phrases like ‘unjust’, ‘unconscionable’ and ‘contrary to equitable principles’ are used differently in different hands. In Australian Financial Services, Gageler J clearly explains the dangers and urges all to keep their eyes downwards on the cases.205 Finally, we record that in recent years the High Court has from time to time referred to the injustice of the defendant ‘retaining’ a benefit as an important overarching concept.206 This is a regrettable development if only because it contradicts the orthodox two-stage approach which is plaintiff focussed at its primary stage. Furthermore, the idea that restitution in response to an unjust enrichment such as a mistaken payment necessarily entails any notion of unconscionable retention was repulsed expressly by the whole court in David Securities Pty Ltd v Commonwealth Bank of Australia.207 And since both passing on is not a defence to a claim in unjust enrichment and change of position is not engaged merely by proof that the money has been spent, any overarching notion of unconscientious retention becomes quite dangerous unless viewed as a rhetorical, conclusory fiction.208 The extent to which ‘equitable principles’ continue to influence the

development of the law of restitution in this country remains a fascinating issue that will be addressed at various stages in this work. But it is necessary to return to matters of history. [page 30]

(d) The Implied Contract Theory [124] Introduction. The common counts gave effect to the idea that liability in assumpsit might lie, quasi ex contractu,209 on an implied obligation or debt irrespective of whether there was any genuine agreement to pay. Lord Mansfield used this phrase in his famous judgment in Moses v Macferlan,210 although, as we have seen,211 he went on to describe212 the basis of all claims for money had and received as being ‘the ties of natural justice and equity’. [125] The fiction. Although in cases such as Slade’s Case213 there was an express contract (so that the real issue was whether assumpsit could be maintained as an alternative to debt), the courts were emphatic that a debt itself implied a promise to pay.214 Assumpsit could be extended in its indebitatus form by means of implied promise to cases where there was no express contract. There was no real contract, but one could be implied from the debt, and the defendant made liable accordingly. Nobody sought to hide the fact that the socalled ‘contract’ (or assumpsit) was a pleading fiction, and that the real basis for the claim was a precedent debt.215 The forms of action were abolished by section 3 of the Common Law Procedure Act 1852 (UK) which was promptly adopted in the Australian colonies. Section 45 of that Act also directed pleaders to omit ‘all statements which need not be proved such as … the statement of promises which need not be proved as promises in indebitatus counts’. These reforms left most of the substantive principles untouched. But jurists began to examine more closely what lay behind the law’s enduring recognition of these exceptional non-contractual claims.

The implied contract fiction was naturally adopted in Australia as well.216 It proved tenacious. Its demise might have been expected as a result of the abolition of the forms of action. It survived those procedural reforms as well as the Judicature reforms of the nineteenth century. Its survival into the twentieth century has perhaps been the single most significant obstacle to the development of a rational and coherent theory of restitution. [page 31] [126] Casualties of the fiction in England. In Re Rhodes,217 Cotton LJ described the expression ‘implied contract’ as ‘erroneous and very unfortunate’. Yet the dangers manifested themselves in Sinclair v Brougham.218 In 1851 the Birkbeck Permanent Benefit Building Society was formed. By the time when, in 1911, an order was made for the winding up of the society, its operations had become very substantial, including the carrying on of the business of banking. Such business was ultra vires and this created problems for the customers with deposit and current accounts in their claim to share in the distribution of the assets of the society on its winding up. Questions of priority arose between the depositors, the society’s shareholders and other creditors. There was no doubt that the contracts with the depositors were void and could not be relied upon as a basis for recovery. The depositors claimed, however, that the money held by the society could be recovered in a quasi-contractual claim, as being money had and received by the society to their use. Viscount Haldane LC (with whom Lord Atkinson agreed) said that English law recognised only two classes of action: those founded on contract and those founded on tort. He included quasi-contractual actions in the former category and said that, to succeed in the instant case, there had to be an implied promise on the part of the society. No such promise could be imputed on the facts because it would strike at the root of the ultra vires doctrine. He reasoned that for a promise to be implied it had to be a promise which had it been express could have been enforced. Since

any such promise was void it was impossible to imply a promise. He said:219 The fiction becomes, in other words, inapplicable where substantive law, as distinguished from that of procedure, makes the defendant incapable of undertaking contractual liability. For to impute a fictitious promise is simply to presume the existence of a state of facts, and the presumption can give rise to no higher right than would result if the facts were actual.

Lord Sumner, whose speech became perhaps that most frequently referred to, said there was no ground for recognising an equity to the effect that money may be recovered merely because it would be the right and fair thing that it should be refunded to the payer.220 However, the depositors were not held to be entirely without remedy. The House of Lords ruled that the money held by the liquidator should be distributed pari passu between the depositors and the shareholders on the basis of an equity or trust in the depositors’ favour entitling them to follow the money into the liquidator’s hands. Justice was therefore done, but through ingenuity (the straining of equity)221 rather than the rational [page 32] application of the common law implied contract principle. What is significant is the way in which the implied contract theory diverted the court from the question whether there was unjust enrichment and the resolution of any conflict between restitution and the policy of the ultra vires doctrine.222 The speeches of Viscount Haldane LC, Lord Atkinson and Lord Sumner in Sinclair v Brougham223 decreed that implied contract lay as the basis of the action for money had and received. Their conclusion that an action in quasi-contract could only succeed if the fictional contract it represented would be valid if it really existed represented the apogee of this approach. Those who hearkened back to the ‘now discarded doctrine of Lord Mansfield’ were accused of being participants in a ‘history of well-meaning sloppiness of thought’.224

A further casualty of the fiction was the reasoning in Re Cleadon Trust Ltd,225 where the majority of the English Court of Appeal could find no basis for the reimbursement of a director who paid debts owed by his company to a third party in the expectation that the company benefited would repay him, where the debtor company did not duly request or ratify the payments before its liquidation. [127] The fiction in Australia. As might be expected, given the general focus of Australian law until the 1960s, Australian courts followed the English weather-vane fairly dutifully, with little sign of questioning the reasoning on which the English cases were based. As the general perception of the action for money had and received ebbed and flowed in England, so too this occurred in Australia (sometimes a little belatedly, as befitted a legal system that piously followed English precedent even in preference to its own). Fortunately, there were few casualties, although Sinclair v Brougham226 did have some negative impact. Before Sinclair, the High Court held that the incapacity of a person declared insane to contract to engage necessary legal services was no bar to a solicitor’s right to recover reasonable reimbursement in quasicontract.227 Although Griffith CJ referred in that case to ‘an implied obligation or contract’228 and Higgins J in another case229 said that the action for money had and received230 ‘rests on implied contract, on a fiction of law that the defendants promised to return what they ought not to retain’, neither judgment gave that statement any real content. Indeed, the result arrived at in both cases could not have been reached if any theory of implied contract had been taken seriously.231 [page 33] After Sinclair, the High Court in 1919 adopted the view that a payment made under mistake of law was not recoverable232 and reinforced this by citing Sinclair, albeit unconvincingly.233 Sinclair v Brougham was also applied in Hirsch v The Zinc Corp Ltd234 where

Isaacs J said235 that no contract could be implied where the express contract would be unlawful. In Smith v William Charlick Ltd236 the court was faced with a claim by a miller who submitted to a demand for additional payment for wheat already sold and delivered from the Wheat Harvest Board. The Board had no legal entitlement to make such demand. The plaintiff was unable to purchase any wheat except through the Board and would have been unable to continue business as a miller had he not submitted to the demand since the Board intimated that unless the sum demanded were paid the Board would not supply the plaintiff with wheat in the future. Though the money was paid under protest it was held irrecoverable since the plaintiff paid ‘voluntarily’ with full knowledge of all the material facts. Attempts to establish a right of recovery based on ‘equity’ or the fact that it was unconscientious for the defendant to retain the money were brushed aside by the court. Passages in an earlier Victorian case supporting the plaintiff237 were described238 by Isaacs J as resting ‘on equity since disposed of by Sinclair v Brougham’. Isaacs J added, ‘in justice to the memory’ of the judges in that earlier case who expressed a principle favouring the plaintiff (Smith), that ‘it must be remembered that they spoke 11 years before Sinclair v Brougham’. The remedy which the law provides in the context of payment made under compulsion was said to be by raising a ‘fictional promise to repay’.239 A right to recover money paid or demanded could only be accepted where, in Lord Haldane’s words in that case, ‘the law could consistently impute to the defendant at least the fiction of a promise’.240 Subsequently, in Turner v Bladin241 the High Court in 1951 accepted and applied the thinking242 that claims of a restitutionary nature are based on an implied contract. Accordingly, liability in respect of benefits conferred under an unenforceable contract was dependent on the ability to imply a contract. As recently as 1987, Baylis v Bishop of London was followed in National Mutual Life Association of Australasia Ltd v Walsh.243 [128]

Developments despite the implied contract theory.

Notwithstanding the prevailing (implied contract) theory, the law was not entirely captive to the fiction. Within the law reports can be found [page 34] discussions of the right to recover payment or reimbursement by reference to the concepts of acceptance or retention of an unjust benefit, without any of the trappings of a false contractual analysis.244 And, as in England, well-established categories of recovery (for example, for money paid under mistake) continued to be available as if Sinclair v Brougham245 had never happened. Thus, quantum meruit was allowed in relation to benefits accepted under void or unenforceable contracts by reliance on the common money counts, even in circumstances where it was acknowledged that an action to enforce the contract itself would fail.246 Despite the statements in Smith v William Charlick Ltd,247 by the 1940s members of the High Court were perceiving that the right to recover flowed directly from the receipt and retention of a benefit in circumstances which justly called for reimbursement.248 Indeed, in one case in 1944, White Rose Flour Milling Co Pty Ltd v Australian Wheat Board,249 which was on all fours with Smith v William Charlick Ltd except that the Wheat Board demanded the additional charge during the currency of a two-year contract, recovery of money demanded as money had and received was allowed by Rich J.250 A clear illustration of this trend is to be found in the judgment of Latham CJ in Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd.251 However, as recently as 1982, two members of the Full Court of the Supreme Court of Victoria were paying lip service to orthodox quasicontractual analysis, while at the same time totally ignoring its consequences.252 [129] Criticism of the implied contract theory in English cases. Although the English Court of Appeal could say in 1948 that ‘it may … be taken to be clearly established that the common law claim is

founded upon an implied promise to pay’,253 it was at about this time that the retreat from the implied contract theory and its consequences commenced. The pressure created by cases such as those referred to above,254 and criticism in speeches by Lord Wright and Lord Atkin in 1940, reopened the door to a theory of unjust enrichment.255 In United Australia Ltd v Barclay [page 35] Bank Ltd256 Lord Atkin, in the context of a ‘waiver of tort’ case, protested that the ‘fantastic resemblances of contracts invented in order to meet’ legal requirements as to forms of action which have now disappeared ‘should not in these days be allowed to affect actual rights’. More significant was the analysis by Lord Wright in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd,257 a case on an action to recover money had and received in the context of a contract for the supply of goods frustrated after payment by the plaintiff of part of the contract price. Lord Wright said that the true basis for recovery is not an implied promise, but rather an implied debt or obligation. So, in the context of a writ of indebitatus assumpsit where two averments were made: the debt (or obligation) and the assumpsit, it was the former which was the basis of the claim. In his view the real cause of action was the debt or obligation rather than the fictitious promise (assumpsit). Similarly, after the demise of the forms of action in assumpsit, in the common counts the reference to a debt was the real basis for the claim, reference to the defendant’s breach being pure fiction. Since the debt would in many cases arise independently of contract, it followed from this analysis that the obligation to pay the debt did not belong to either contract or tort but was part of a distinct basis for liability. Lord Wright analysed the law in this way to support the opinion expressed at the beginning of his speech258 that any civilised system of law is bound to ‘provide remedies for cases of what has been called unjust enrichment or unjust benefit’. These remedies, he said, fall

within a third common law category ‘called quasi-contract or restitution’. The other members of the House of Lords were not so reforming in their analysis. Viscount Simon LC preferred to go no further than to omit reference to the fictitious promise in holding that the payment in question could be recovered. Lord Atkin said it was unnecessary to discuss the concept of unjust enrichment. Lord Macmillan referred259 to restitution as, on one view, a ‘separate principle of the law independent of contract’. But this was not the general approach of English law. Lord Russell seemed adamant260 that there was ‘no place in English law’ for a concept of unjust enrichment. He shared with Lord Roche261 and Lord Porter262 the view that English courts have no power to decree restitution in the same way as the Scottish courts under the civil law.263 However, they united in denying that the quasi-contractual [page 36] claim of the plaintiffs could not be enforced — that no promise could be implied — unless the contract was rescinded ab initio. To that extent it was a victory for a more rational approach to quasi-contractual claims than had hitherto prevailed.264 It was left to the legislature to attempt a more expansive approach to restitution in the context of frustration.265 There were other cases in which unjust enrichment was called in aid, in apparent rejection of the implied contract theory.266 [130] Criticism of the theory in Australian cases. Lord Wright’s dicta in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd267 were cited by Street CJ and Herron J in Watney v Mass.268 The latter added:269 … the law implies a debt or obligation which is distinct from a promise to repay the money. It is not necessary to find a contract, but nonetheless the obligation to repay is as efficacious as if it were founded upon contract, the obligation in this case being a creation of the law just as much as an obligation in tort. This appears to have been recognised basically since 1760 in the judgment of Lord Mansfield CJ in Moses v

Macferlan.270 Essentially the claim is one based on the fact that the defendant has received the money and has, on the events which have supervened, no right to keep it.

The early twentieth-century orthodoxy about the implied contractual basis of quasi-contract was also questioned by Walsh JA in Deposit & Investment Co Ltd v Kaye271 and bluntly disputed by Windeyer J, who said in Mason v New South Wales:272 Provided it be recognised that the action for money had and received is not only the origin of but, as developed, still determines the scope of the English law of quasicontract, it seems to me not inapt to describe it as a law of ‘unjust enrichment’ … I certainly see no need today to look for the implication of a contract or to speak of the fiction of a contract when in reality there was no contract.

[131] Rejection of the implied contract theory. The implied contract theory has been an enduring one. However, it has been conclusively rejected as an explanation for quasi-contract. After the United States,273 the Supreme Court of Canada took the lead in 1954.274 In Australia this occurred in Pavey & Matthews Pty Ltd v Paul.275 [page 37] In Pavey, in the context of a claim for the reasonable value of services rendered,276 it was said that there is an obvious contrast between cases of genuine agreement and independent quasi-contractual claims. In the former a liquidated sum may be sought as the agreed price of goods or services. In the latter no contractual claim is available, and the basis for liability is not contract. Although the fictional promise to pay (make restitution) in the quasi-contractual claim may at one time have constituted a convenient procedural device, it did not obliterate the reality of the situation: liability was not contractual. However, to identify the fiction as the rationale for a substantive concept as Sinclair v Brougham277 suggested gave the fiction a significance it did not enjoy even in the seventeenth and eighteenth centuries. Accordingly, the appropriate course for modern Australian law was to discard the fiction

completely. In England the implied contract theory was rejected more recently, in Lipkin Gorman v Karpnale Ltd.278 [132] Impact of rejection of the implied contract theory. The primary impact of abrogating the implied contract theory was the ushering in of unjust enrichment to fill the conceptual void. The rejection of the implied contract theory does not necessarily mean that any of the cases on the common counts would be departed from today. Nor did the judges in Pavey & Matthews Pty Ltd v Paul279 create restitutionary rights where none existed before. However, by clearly separating the field of restitutionary claims from those lying in contract, the High Court freed a body of case law from what Deane J described as ‘the influence of discarded fictions, buried forms of action and the conventional conviction that, if a common law claim could not properly be framed in tort, it must necessarily be dressed in the language of contract’.280 In Roxborough v Rothmans of Pall Mall Australia Ltd281 Gummow J referred to Pavey ‘having removed Moses v Macferlan282 from the pikestaff of “implied contract”’. He added, more controversially, that this left Lord Mansfield’s ‘insightful observations’283 free to have their effect. The consequences to date as regards the ‘equitable’ side of money had and received have already been addressed.284 Pavey freed the categories clearly recognised as falling within the field of restitution from any lingering ‘contractual’ impediments. For example, in Pavey itself a claim by a licensed builder for reasonable remuneration for work done following an oral request was held not to be barred by a statute [page 38] rendering an unwritten contract to do building work ‘not enforceable’ by the builder. The New South Wales Court of Appeal285 had characterised an action in indebitatus assumpsit as one for the enforcement of an executed oral contract because the plaintiff had to

plead and prove the special contract for building work under which it claimed remuneration. By contrast, the majority of the High Court agreed with the judgment of Deane J who showed that the action for quantum meruit rested, not on implied contract, but on a claim to restitution or one based on unjust enrichment, arising from the defendant’s acceptance of benefits accruing from the plaintiff’s performance of the oral contract.286 Now that the implied contract theory of quasi-contract has been decisively rejected, there is no point in seeking to limit the law of restitution to the quasi-contractual categories in which fictional promises were employed. As Deane and Dawson JJ said in Baltic Shipping Co v Dillon (The Mikhail Lermontov)287 ‘artificial constraints imposed by the old forms of action can, unless they reflect coherent principle, be disregarded where they impede the principled enunciation and development of the law’. The question for modern lawyers288 is how far restitution for unjust enrichment provides a proper basis for explaining other claims, and recognising new ones. It can only do so if there is a coherent theoretical structure. The search for a unifying concept is explained below,289 and investigated throughout this book. The elements of the concept itself are discussed later in this chapter.290

3. Towards Unjust Enrichment as a Unifying Concept [133] Introduction. Once Lord Mansfield’s analysis in Moses v Macferlan291 fell out of favour with the courts,292 the idea that some general principle could explain the law of quasi-contract, and give it potential for significant growth, was largely neglected throughout the nineteenth century and first half of the twentieth century. The ‘ties of natural justice and equity’ were considered too vague, but nothing was put in their place. However, support for some general concept other than implied contract emerged, almost invariably expressed in terms of a concept of unjust enrichment. There were several reasons.

First, the criticism made in some cases of the implied contract theory naturally lent support to the existence of some other general explanation. Thus, as we have explained,293 there were decisions only explicable on the [page 39] basis of rejection of implied contract, and suggestions that some other concept, termed ‘unjust enrichment’, was perhaps the key. Second, some Australian lawyers became aware directly of the American Law Institute’s Restatement of the Law of Restitution Quasi Contracts and Constructive Trusts, as adopted and promulgated in May 1936. Section 1 provides: ‘A person who has been unjustly enriched at the expense of another is required to make restitution to the other’.294 This source was a window to the vast library of American case law which has generally adopted and applied the notion of unjust enrichment.295 Third, a further fillip was the Canadian Supreme Court decision of Deglman v Guaranty Trust Co of Canada296 which began to be cited regularly in Australian courts because of the opportunity it presented of getting around the difficulties presented by a narrow approach to the equitable doctrine of part performance. Deglman offered an independent cause of action (explained on the basis of unjust enrichment) in the recurring situation of the disappointed legatee who had performed work in expectation of reward by will. Fourth, the availability of successive editions of Goff and Jones’s well respected work297 lent support to a rationalisation in terms of unjust enrichment. They argued that many claims outside the ambit of the common counts — legal and equitable, personal and proprietary — were explicable by reference to the principle of unjust enrichment. [134] Earliest reference? In 1802 Sir William Evans published an Essay on the Action for Money Had and Received.298 The structure of the essay appears clearly to be based on the well-known passage in Moses v

Macferlan set out above.299 Its framework is very close to the modern law, as regards personal remedies in restitution.300 Evans recognised and explained the origins of Lord Mansfield’s synthesis which he described in the following terms: The introduction of the action for money had and received into the English courts is not novel, and the several cases had occurred previous to the appointment of Lord Mansfield, in which it had been properly applied, so

[page 40] that it was familiar in point of practice. But it was reserved to that eminent judge, to trace the nature and principles of the action, with a most instructive perspicuity, and to direct the general application of it in its proper channel.

Evans observed that the maxim of the civil law, that it is naturally just that one man should not be enriched to the detriment of another301 is particularly applied to the claims under examination. According to the editors who reproduced the work in 1998, this shows Evans to be the first writer in the common law tradition to accept that unjust enrichment could be a source of obligations.302 [135] The recognition of unjust enrichment and its implications. Writing in 1985, Sir Anthony Mason spoke of the doctrine of unjust enrichment as having been ‘so far rejected in AngloAustralian law’.303 The subsequent rejection of the implied contract theory did not in itself imply a rejection of quasi-contract304 nor did it imply the adoption of unjust enrichment as the basis for restitution.305 It was not therefore inevitable that unjust enrichment should be called in aid. But this is what occurred, for Australia in Pavey & Matthews Pty Ltd v Paul.306 In a significant passage in his judgment in Pavey, Deane J, with whom Mason and Wilson JJ generally agreed, said that:307 … unjust enrichment … constitutes a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal

reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case … In a category of case where the law recognises an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted, the general concept of restitution or unjust enrichment is, as is pointed out subsequently in this judgment, also relevant, in a more direct sense, to the identification of the proper basis upon which the quantum of remuneration or compensation should be ascertained in that particular category of case.

Two important contributions of unjust enrichment were identified in this passage. First, in freeing one category of claim (quantum meruit) from the implied contract theory, unjust enrichment provided a conceptual [page 41] framework for the analysis of other existing claims clearly recognised as falling within the field of restitution. Deane J thus described308 the concept of unjust enrichment as ‘a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff’. Second, unjust enrichment provided a basis for evaluating and recognising new types of claim hitherto unacknowledged in case law. Unjust enrichment, as ‘a unifying legal concept’ was said to assist ‘in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case’.309 These functions of unjust enrichment are closely linked. Together, they point to the utility of the concept as a framework for understanding the past and predicting the future. Recognition of the common principles underpinning established causes of action assists the principled development of the law by identifying factors that suggest or repel analogies. ‘Law’ in this context includes ‘equity’. With re-evaluation of the past comes the opportunity to free the law from some of the rules by which liability was restricted, in the interests of coherence.310 The analysis in Pavey suggests that rigid rules are to be

eschewed. Unjust enrichment will be a touchstone that has the potential of melting principles thought to be fixed. David Securities Pty Ltd v Commonwealth Bank of Australia311 provides a good example. Unjust enrichment was used to justify the High Court’s rejection of the old rule that money paid under a mistake of law is not recoverable. Treating ‘mistake’ as the overriding consideration, there could be no reason in principle for limiting mistake to cases of factual mistake.312 In addition, and as something of a countervailing factor, the defence of change of position was recognised.313 These developments within the law of restitution typify much of the jurisprudence of the High Court under the leadership of Mason CJ. Concern for ‘matters of substance rather than technical form’ originally expressed by Deane and Dawson JJ in Baltic Shipping Co v Dillon (The Mikhail Lermontov)314 were approved by the High Court in Dart Industries Inc v Decor Corp Pty Ltd315 and stated to be an ‘ordinary requirement of the principles of unjust enrichment’. The High Court’s many endorsements of [page 42] the importance of coherence in the law316 has also seen fruit in the restitution cases and in turn explain the reception of unjust enrichment. The principles of unjust enrichment are also achieved through several substantive doctrines of equity, as Pavey itself recognised.317 Illustrations in the equitable context are certain to excite controversy.318 Two additional examples may be given. First, although in Baumgartner v Baumgartner319 Toohey J offered a cautious interpretation of Pavey, he nevertheless considered that the notion of unjust enrichment helped to explain aspects of longstanding equitable principles governing constructive trusts. Gummow J had recognised the same in an influential decision in the Federal Court delivered the same year as Pavey.320 The other example is the relevance (or at least overlap) of the notion of unconscientious exercise of legal rights.321

Unjust enrichment analysis is not confined to situations involving strict liability. Nor should it spurn legal or equitable notions of fault. This said, we acknowledge that the High Court has stated firmly that ‘areas in which the concept of unjust enrichment applies are specific and usually long-established. Recipient liability for breach of trust or fiduciary duty has not been one of them’.322 The authors shall, of course, respect this categorical line in the sand — based perhaps upon the contestable idea that unjust enrichment liability is necessarily strict — while watching to see if the tide of legal history respects it.323 Since the unjust enrichment concept has been embraced by the highest tribunals in other common law countries, the fruit of their jurisprudence will continue to enrich the law of Australia which is justly receptive to the insights of comparative law. Reference to unjust enrichment by the Australian courts is now both commonplace and uncontroversial, save where it is invoked in support of a new cause of action based solely on unjust enrichment that is [page 43] not analogous to traditional ones324 or where it is used as a framework for understanding ‘traditional’ claims such as subrogation.325 The publication in 2006 of James Edelman and Elise Bant’s Unjust Enrichment in Australia illustrates the acceptance in some academic circles of a subject defined by the unjust enrichment concept. A second edition is eagerly awaited. We expound a broader topic. In our view, there are parts of the law of restitution linked historically to classical quasi-contract that do not apply the unjust enrichment concept clearly or at all. And recognition of restitution for wrongs cannot be forced into an unjust enrichment mould. Commentators (including ourselves) have argued that, in light of the unjust enrichment concept, some of the ‘leading’ quasi-contract cases were wrongly decided. It is disquieting for those who see certainty as a virtue in itself that well-known cases are questioned. However, we do

not regard uncertainty as a ground for rejecting the unjust enrichment concept that has been recognised throughout the common law world as having both descriptive and normative roles. The criticisms, or uncertainties, referred to above come together in at least one very practical way. This is the reluctance of courts to recognise unjust enrichment as a cause of action. It seems clear that the obligation to make restitution is implied in law. In Pavey & Matthews Pty Ltd v Paul326 the High Court was concerned to emphasise that the obligation to make restitution is a duty imposed by law, rather than a consensual one inferred from the circumstances. On the facts, the obligation to make restitution was clearly a primary duty, not a secondary one, implied on the basis of the commission of a wrong. References to ‘restitution or unjust enrichment’327 support this. On the other hand, references to ‘compensation for a benefit accepted’,328 and to an ‘obligation to pay compensation for a benefit accepted’329 suggest a secondary duty, to make compensation. As will be explained,330 this issue is an important one. [136] Recognition or rejection of defences. The unjust enrichment concept has also promoted the understanding and development of defences to restitutionary claims and issues surrounding the valuation of restitutionary claims. [page 44] One element of ‘unjust enrichment’ is the concept of a restitutionary defence.331 In Australia and New Zealand Banking Group Ltd v Westpac Banking Corp332 the High Court spoke of a ‘prima facie obligation to make restitution’ of money paid under mistake of fact. That prima facie obligation was said to be capable of displacement in a broad range of circumstances which would make an order for restitution unjust. Such a two-staged approach can be traced back as far as the time of Lord Mansfield.333 The obligation to make restitution may be imposed more readily and

appropriately where there is a range of defences to protect particular classes of defendant who ought not to be viewed as unjustly enriched to the full extent of the benefit identified as the enrichment. For example, Pavey assisted in the recognition in David Securities Pty Ltd v Commonwealth Bank of Australia334 that change of position may, in addition to matters such as payment for good consideration in discharge of an existing debt, be a valid (partial or complete) defence to a claim in restitution for unjust enrichment. The cases do not suggest that the list of defences is necessarily fixed. Unjust enrichment will continue to inform the development of recognised ‘defences’, and to encourage litigants to advance new ones.335 The defence of passing on was rejected by the High Court, essentially because it did not conform to the unjust enrichment concept in that the defendant’s enrichment was not at the expense of the plaintiff.336 [137] Valuation of claims. There is a contrast between, on the one hand, the value which a defendant has received and, on the other, the value which survives in the hands of the defendant at the time of proceedings. To the extent that restitution involves the imposition of a primary obligation to pay for a benefit unjustly obtained, the appropriate measure will be the value of what was received. Thus, where the plaintiff’s claim is for the return of money paid directly to the defendant, valuation generally presents no difficulty: the measure of restitution is the money sum plus interest.337 Similarly, in a case where restitution is available in relation to a nonmonetary benefit requested by the defendant, the basic measure of recovery in restitution is the reasonable value of the plaintiff’s performance.338 [page 45] That an enrichment is unjust may be clear, but the basis on which it is to be valued may be controversial. In this respect, the reason why the

elements of unjust enrichment are established may be carried through to the valuation of the plaintiff’s claim.339 In other words, the notion of unjust enrichment can itself help to identify the proper basis upon which the quantum of remuneration should be ascertained in relation to a non-monetary benefit.340 Thus, an unrequested341 benefit may fall to be valued by reference to the actual increase in the defendant’s assets, rather than market value of work done or services rendered.342 [138] Recognised claims based on unjust enrichment. Many traditional claims in restitution have now been recognised as based on unjust enrichment.343 This in turn helps provide a framework for understanding the concept and predicting outcomes in analogous situations. In the High Court, the following claims have clearly been recognised as based on that concept: the recovery of money paid under a mistake of fact or law;344 the award (and assessment) of reasonable remuneration following full performance of a contract unenforceable by statute;345 restitution based on failure of consideration;346 the award (and assessment) of an account of profits (at least for a patent infringement);347 and non-contractual claims for equitable contribution.348 It is also strongly arguable that the High Court has treated the recovery of money paid under a contract discharged for breach as governed by unjust enrichment.349 If we take account of High Court dicta and Supreme Court and Federal Court decisions, it is possible to add the following: restitution for a benefit conferred under a contract discharged by frustration;350 the recovery of money paid under compulsion;351 the recovery of reasonable remuneration [page 46] against a party in breach of contract;352 restitution in respect of a benefit conferred under a contract void for incompleteness,353 and the award of interest.354 Logic dictates that any analogous claim should be regarded as based

on the concept. [139] Responding to recent unjust enrichment scepticism in the High Court. There are some who remain sceptical about the utility or normative force of the unjust enrichment concept.355 In the main, they have challenged extreme (or assumed extreme) variants of the unjust enrichment concept. To the extent (if any) that these criticisms intersect any position taken in this work we have endeavoured to justify the stances we have adopted.356 We also note at this stage a deep irony about the schizophrenic attitude of the High Court in the past decade or so concerning matters ‘equitable’ in restitution. There has been an enthusiastic embrace of ‘equitable’ notions stemming from Lord Mansfield in claims for money had and received.357 But, in contrast with other jurisdictions, there has, during this same period, been a coolness towards allowing the unjust enrichment concept any formative influence in other areas marked ‘equitable’, as if there is a need to choose.358 In part, this has been a reaction to Birksian attitudes about unjust enrichment operating according to strict categories and discretionary [page 47] proprietary remedies that Australian law does not share. The strange disconnect has been noted by at least one distinguished outside observer.359 In the High Court, reserve bordering upon scepticism about the unjust enrichment concept has originated from Gummow J and, at times it has obtained traction in dicta joined by other justices. In Hill v Van Erp360 Gummow J quoted with apparent approval the views of Professor Andrew Kull. Gummow J said: In his article ‘Rationalising Restitution’,361 the American scholar, Professor Andrew Kull, after referring to the decline in teaching of the subject in that country, turns to the basic definitional issue of whether restitution is ‘merely a description of the end result’ or ‘a reference to the basis of liability’, and continues: ‘Before we can tell a straight story about restitution, we must decide what the subject is about. Is restitution the body of

law concerned with avoiding unjust enrichment? Is it mostly that but partly other things as well? Or is the identification with unjust enrichment altogether an illusion, and restitution merely a hodgepodge of devices for undoing, unwinding, throwing into reverse, and giving things back?’

A clearer insight into Kull’s vast legacy to the law may be gleaned from his work as Reporter to the Restatement of the Law Third: Restitution and Unjust Enrichment issued in 2011.362 The opening Comment to that work reads: Liability in restitution derives from the receipt of a benefit whose retention without payment would result in the unjust enrichment of the defendant at the expense of the claimant. While the paradigm case of unjust enrichment is one in which the benefit on the side of the transaction corresponds to an observable loss on the other, the consecrated formula ‘at the expense of another’ can also mean ‘in violation of the other’s legally protected rights,’ without the need to show that the claimant has suffered a loss.

This wholehearted endorsement of the unjust enrichment concept and this particular taxonomy of restitution correspond to the position adopted in the present work. Gummow J would later raise more specific charges against the concept itself, in the course of explaining its inapplicability in a particular (equitable) context. One of the charges was pointed at Birks, with the suggestion that the concept had an alien, ‘civilian’ aspect because it had been imposed ‘top-down’ by academics.363 In our view, this misrepresented both Birks’s endeavours364 and the notion of ‘topdown’ reasoning as [page 48] explained by Posner.365 In Equuscorp Pty Ltd v Haxton French CJ, Crennan and Kiefel JJ effectively answered this accusation and appeared to set the High Court back on course as regards the beneficial influence of the unjust enrichment concept, wisely used.366 A related accusation (in which Gummow J was joined by Hayne, Heydon, Kiefel and Bell JJ) was that the unjust enrichment concept contained ‘inherent’ dangers, entitling it to anticipate the same ‘fate’ as that of general reliance in negligence.367 In our opinion, this ignores the

overwhelming weight of High Court jurisprudence approving and using the concept that we point to throughout this work. Merely because the concept may have been misapplied in particular areas does not establish any ‘inherent’ vice. Finally, there are the warnings against viewing the concept as ‘allembracing’ or a principle of ‘direct application’.368 We have never suggested otherwise and know of no-one who has, other than counsel attempting to defend a pleading about to be struck out.369 The authors have never claimed that the concept is a theoretical straitjacket, let alone one into which the whole law of restitution can or must be forced.370 Nor do we contend that restitution must not embrace notions of fault or areas of equity, including aspects of discretionary remedialism that some, including Birks, were distinctly uneasy with and which are not yet comfortably accepted within the theoretical confines of the law in England (since English law went cold on Moses v Macferlan).371 Not all of restitution is concerned with strict liability and some ‘unjust factors’ (especially those deriving from equity) turn upon findings of unconscientious conduct and the favourable exercise of a judicial discretion.372 The late Professor Birks’s shift to the view that the civilian notion of absence of cause, what we have termed ‘Birks Mark-III’373 means that this highly-respected scholar’s name is to be added to the list of unjust enrichment sceptics. But, unlike those referred to above, Birks’s shift represented a switch in favour of a grander, all-embracing theory because he came to believe that unjust enrichment was an inadequate explanation for the case law. [page 49]

4. Elements of Unjust Enrichment (a) General [140]

Introduction. An appreciation of the role of the unjust

enrichment concept requires understanding of its elements. This section therefore contains a statement of the theory (and terminology) of restitution for unjust enrichment. We here refer to some areas of debate, but leave many of the details to later chapters. Similarly, we briefly introduce the concept of ‘restitutionary defences’, while postponing detailed analysis to subsequent chapters. [141] Elements of unjust enrichment. Although the cases do not provide an authoritative statement of the content of unjust enrichment,374 it is clear that there are three basic elements to the concept, analysis of which is required in any claim to restitution for an unjust enrichment. Because they delimit the concept of an enrichment which is unjust: all must be satisfied in most instances.375 The elements are: (1) ‘benefit’; (2) ‘at the plaintiff’s expense’; and (3) ‘injustice’. The above reduction, implied from the emphasis of the phrase ‘unjust enrichment’, is consistent both with the thrust of the cases and with academic analyses.376 Although satisfaction of these three elements means that the plaintiff has established what the High Court has termed377 a ‘prima facie obligation to make restitution’, the existence of an obligation to make restitution also assumes that no defence is available. The three basic elements are sufficient only in a case in which no restitutionary defence is argued. Once these matters have been addressed, attention may turn to the possibility of a proprietary remedy.378 [142] Elements as legal concepts. Although no more than a statement of the obvious, it should be borne in mind that the three basic elements of [page 50]

unjust enrichment are legal concepts. ‘Benefit’ may include any increase in wealth, in the form of money, services, property (both real and personal), the discharge of a debt, the use of property or information or the saving of an expense. In abstract terms, this is unhelpful, since this is no more than an indication of the enrichments which may, in a given case, justify a claim for restitution. There is a legal concept to investigate, and the fact that there has been an objective increase in the wealth of a defendant does not per se establish that the defendant has been enriched for the purposes of unjust enrichment.379 Superficially, the notion of an enrichment ‘at the plaintiff’s expense’ looks to be a simple one. Indeed, in most cases it is, since generally it merely signifies that the person who is claiming restitution must have been the person who conferred the enrichment. In this role the requirement that the benefit be ‘at the plaintiff’s expense’ represents a title to sue380 and focuses on identifying the correct plaintiff in cases of doubt. Professor Birks originally argued that the phrase could also be used in a secondary sense, referring to an alternative basis for restitution where the defendant obtained the benefit by reason of a wrong done to the plaintiff.381 He always stressed the need to differentiate between two quite different principles masquerading as one. But later he repudiated this view and declared that cases involving gain-based awards such as an account of profits were part of the law of wrongs with nothing to do with the law of unjust enrichment.382 Since the second edition of our work we have no longer pressed the semantic point that restitution for wrongs involves unjust enrichment ‘at the plaintiff’s expense’ in any meaningful sense. But we do stand with the Restatement, Third and those scholars who see utility in expounding the broader field of restitution, as distinct from a confined law of unjust enrichment in the strict (tripartite) sense referred to above. This broader field includes claims to vindicate certain property interests, claims for money paid upon request and gain-based remedies for wrongs. We explain our reasoning elsewhere.383 Restitution for unjust enrichment remains the greater part of the law

of restitution. It therefore remains necessary and useful to expound the integers of the unjust enrichment concept, drawing on later writings of Birks and those who have followed him in this constriction of the subject under review.384 As Deane J explained in Pavey & Matthews Pty Ltd v Paul,385 to identify certain legal claims as being independent of genuine agreement, and [page 51] founded on a principle of unjust enrichment, is not to ‘assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate’. The High Court has affirmed that ‘whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category’.386 Accordingly, the element of ‘injustice’ in the definition of unjust enrichment does not refer to unfairness in the abstract or to the relative merits of particular litigants. [143] Nature of claim to restitution for unjust enrichment. Putting proprietary remedies to one side for the moment,387 an award of restitution is simply an order that the defendant pay a sum of money to the plaintiff. In any case of restitution for unjust enrichment,388 where the defendant obtained a monetary benefit, the award of restitution is simply an order that the same sum be restored to the plaintiff, with interest. The receipt of money by the defendant is an obvious or ‘incontrovertible’ enrichment.389 However, as Robert Goff J said in BP Exploration Co (Libya) Ltd v Hunt (No 2),390 by their nature ‘services cannot be restored; nor in many cases can goods be restored’. A claim in relation to a non-monetary benefit is bound to be more controversial than one for the restoration of money, since in cases involving

restitution for non-monetary benefits there looks to be an element of ‘translation’ in an award of money. Nevertheless, the claim asserts no more than that the defendant must pay the value of the benefit as restitution. It is, however, wrong to treat the ‘translation’ of kind into money as no more than a valuation of the claim. The idea of valuation391 assumes that a restitutionary claim is available, whereas in most cases the element of controversy is whether an unjust enrichment has been established. [144] Defences. In its narrowest sense, a ‘restitutionary defence’ is one which is available only to a claim for unjust enrichment. There are very few of these, the chief example being change of position.392 We must allow both for defences which operate to negate one of the elements of unjust enrichment, and for those that provide a basis for defending a case in which the three [page 52] basic elements are made out. There are some (affirmative) defences which go to liability, and some which go merely to quantum.393 Knowing whether or not an affirmative defence is involved has pleading consequences.394 Because restitution operates in the law of obligations, it is obvious that some general defences, such as estoppel395 are applicable to claims in restitution, notwithstanding that they also apply to claims relying on contractual, tortious or equitable principles distinct from the law of restitution. There is also room for debate on what should be regarded as a defence. For example, one view is that the existence of an enforceable contract indicates that no issue of restitution for unjust enrichment can arise, whereas it is also possible to argue that the existence of an enforceable contract merely provides a defence to a claim for restitution. Finally, there are some matters, such as illegality,396 which may operate, depending on the circumstances, either as a defence to restitution or as an element of the prima facie

claim. Whatever view is ultimately taken on these issues, it is manifestly clear that when we speak of restitutionary defences we speak of the operation of legal concepts.397 [145] Terminology. It is necessary to reconsider the terminology of restitutionary claims.398 Clearly enough, the language of implied contract should not now be used. Even if restitution is not always based on unjust enrichment at the plaintiff’s expense, the proper approach today is to speak of an imposed obligation to make restitution. The description ‘implied contract’ should therefore be used only in cases of genuine, that is, consensual, implied agreement. It ought also to follow that we should no longer speak of restitutionary claims for reasonable remuneration as being for ‘compensation’, since this harks back to a fictional promise (assumpsit).399 It would also appear logical to jettison much of the terminology used to describe the proof of claims in quasi-contract, particularly in relation to claims now recognised as based on unjust enrichment, since the former terminology is likely to lead to confusion or error. Surprisingly, however, the High Court has given little impetus to this. For example, in Pavey & Matthews Pty Ltd v Paul400 Deane J approved the criterion401 that the [page 53] defendant’s conduct be such that, in the absence of the transaction, an action could have been maintained on the common money counts or on an executed consideration. The approval should be seen as limited to the purpose of explaining the law prior to the court’s decision. It should not in our view be seen as a statement of the terminology applicable where there is an inquiry in relation to a claim under the current law.402 Nevertheless, the term ‘money had and received’ has been particularly enduring. There is little point in perpetuating the quasi-contract terminology just because we are familiar with it. The terminology already used in

this chapter suggests that two further expressions frequently used in the context of quasi-contract are no longer necessary. The first is ‘total failure of consideration’. Since the principal idea behind the concept is that the plaintiff has not received what was promised as the price of the benefit conferred, the ideal reference should be to a ‘total failure of the agreed or contemplated return’.403 The second is ‘quantum meruit’. Apart from the general consideration that today it is better for legal concepts to be stated in English, it is preferable to use words which express the focus of the concept. Thus, we prefer to use ‘reasonable remuneration’.404 New words and expressions have crept into the analysis of restitution for unjust enrichment. In various contexts, expressions such as ‘incontrovertible benefit’, ‘limited acceptance’, ‘unjust factor’, ‘nonsubtractive receipt’, ‘subjective devaluation’, and so on have been used. Only some of this terminology has been adopted by the courts.

(b) Benefit (i) General [146] Introduction. A claim for monetary restitution is a claim for a sum of money equal to that paid by the plaintiff or a sum equal to the value of a non-monetary benefit in respect of which restitution is ordered.405 How wide then is the concept of benefit? Does it extend to any increase in a defendant’s wealth? Is benefit limited to money and other tangible assets and improvements to property capable of being realised as money? Is benefit restricted to positive additions to the defendant’s wealth subtracted from the plaintiff’s wealth, or does it also include a negative benefit such as the saving of an expense? If restitution were concerned solely with proprietary interests, or with the re-transfer of moveables, it would be easy to understand that ‘benefit’ must refer to something tangible and capable of being returned, or at least realisable in the market as money. However, most instances of restitution, including claims for reasonable remuneration, are pecuniary

[page 54] rather than specific. And the modern law of restitution looks to matters of substance, not form.406 The approach of the law of restitution to benefit is very complex. The complexity is due largely to a refusal to adopt an objective criterion of enrichment across the board.407 If analysis of benefit is dependent on the decision of the defendant to value the benefit, the plaintiff’s claim will be secure only if the benefit is one which no reasonable person could deny. (Money is the most obvious example.) In most other cases where an objective standard does not apply, the law responds by requiring the plaintiff to rely on the conduct of the defendant, in valuing the benefit. There are three relevant concepts: the incontrovertible character of some benefits; request; and acceptance.408 [147] Policy. Where a claim for restitution is brought, an argument may be made that the defendant has not been enriched. In BP Exploration Co (Libya) Ltd v Hunt (No 2)409 Robert Goff J explained that if a benefit ‘consists of payment of a sum of money, the plaintiff’s expense and the defendant’s enrichment are generally equal’, whereas ‘where the benefit does not consist of money, then the defendant’s enrichment will rarely be equal to the plaintiff’s expense’. An attempt to deny enrichment is therefore much more likely to succeed where the benefit is non-monetary than where the plaintiff claims as restitution a sum of money obtained by the defendant.410 Liability should not be forced on people behind their backs. The policy of the common law is therefore against rewarding benefits officiously conferred: the obligation to make restitution will not arise where services were ‘provided officiously’.411 Similarly, services rendered without prior request (even if not officiously rendered) will not generally be regarded as beneficial, unless the defendant freely accepts them.412 Again, if A, in performing a contract with B, happens incidentally to benefit C, this does not provide A with a right to claim restitution from C who made no

request. A must look to B for remuneration.413 Therefore, as a general rule, in asserting the existence of [page 55] a benefit, a plaintiff must establish more than what the impartial observer might regard as an increase in the defendant’s assets, or the saving of an expense which might otherwise have been incurred.414 It follows that, in the absence of a request415 that a benefit be conferred, recovery in restitution is ‘rare’.416 Concepts such as ‘acceptance’ and ‘incontrovertible benefit’ serve to qualify the general approach to unrequested benefits.417 The policy of the common law in relation to unrequested benefits has also been applied to cases where, although the defendant requested a particular (non-monetary) benefit, the ‘benefit’ which is in fact conferred does not correspond to that requested. From this perspective, the mere fact that a person has partly performed a contract does not of itself amount to the conferral of a benefit, even if the performance was essential to the conferral of the benefit in fact requested.418 Thus, except where the defendant prevented the plaintiff from completing performance,419 a plaintiff who has partly satisfied a request is generally in the same position as one who has not performed at all. But since such a plaintiff cannot be in a worse position than one who has conferred an unrequested benefit, the law is again qualified by ‘acceptance’ and ‘incontrovertible benefit’.420 [148] Tangible and intangible benefits. It now seems clear that, under Australian law, the concept of enrichment is not restricted to tangible accretions to wealth.421 ‘Benefit’ also includes the saving of necessary expenses and services which have no marketable end product, such as the transportation of goods and some kinds of professional services. Australian law has rejected the view that services which do not have an end product (sometimes termed ‘pure services’) cannot constitute

an enrichment for the purpose of unjust enrichment unless they involve the saving of a necessary expense. This view relied on a narrow version [page 56] of an ‘exchange value’ approach to benefit under which there is no benefit where there is no physical or human capital in the hands of the defendant.422 It suggested that those who have nothing to contribute other than their knowledge or expertise confer benefits not recognised by unjust enrichment. Given that the role of services in society is increasing daily, and the movement of the work force in many developed countries (including Australia) towards service industries and professions, the conclusion would have to be drawn that unjust enrichment had passed its ‘use-by’ date and was already in decline when ‘discovered’ by the High Court in 1987. This seems an inherently unlikely and unappealing approach. We must explain cases in which independent relief423 has been granted in relation to pure services. For those who take the more limited approach to benefit two conclusions are open. The first is that, because unjust enrichment does not apply, restitution does not operate.424 The second is that restitution is (or may be) available, although not based on unjust enrichment.425 In our view, restitutionary relief is generally explicable by the unjust enrichment concept. So long as care is taken not to recognise benefit merely in a plaintiff’s reliance on the words or conduct of the defendant,426 it is perfectly correct to regard those who market their time and expertise as conferring a benefit for the purposes of unjust enrichment.427 In other words, even an ‘exchange value’ approach to benefit is satisfied in cases where a benefit which has a market value has been accepted by the defendant.428 Issues of valuation remain and are addressed separately.429 [149] Reliance insufficient in itself. There is no doubt that reliance plays an important role in the Australian law of civil obligations. It is, for example, a concept crucial to tortious liability for

negligent misstatement.430 It is also the concept which generates pecuniary relief following contravention [page 57] of the general statutory prohibition on misleading and deceptive conduct.431 It has also in recent years figured very prominently in the promissory estoppel cases where liability has been sought to be imposed for the ‘breach’ of a non-contractual promise relied upon by the ‘promisee’. Indeed, there are those who see contract as a doomed institution precisely because it is tied to a narrow theory of consideration which gives insufficient prominence to reliance.432 However, the truth is that the common law of obligations does not recognise reliance alone as a basis for liability. This is manifestly the position in contract, where reliance, unless bargained for, does not constitute consideration.433 Similarly, reliance is not a sufficient basis for estoppel. Thus, in Waltons Stores (Interstate) Ltd v Maher434 Mason CJ and Wilson J said that ‘mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play’. The High Court did not regard reliance as a substitute for consideration,435 something more is required.436 Again, the imposition of liability in tort for negligent misstatement presupposes the existence of a duty of care, and liability under the statutory prohibition of misleading or deceptive conduct presupposes a breach of the duty. The extent to which reliance is important in the modern Australian law of restitution for unjust enrichment depends on how far reliance on a promise or a request is itself a benefit. It is, in our view, determined by the concept of benefit. Although reliance is often important, for example, in a claim for reasonable remuneration for services rendered, reliance on a request is not a sufficient basis for the imposition of a restitutionary liability. More generally, since unjust enrichment does not arise from the mere fact of reliance, restitution is not a response to reliance by a plaintiff on the words or conduct of the defendant.437

[150] Lingering fictions. Certain cases speak of a defendant being estopped from denying that acceptance has occurred. Thus, in Pavey & [page 58] Matthews Pty Ltd v Paul438 and some subsequent cases,439 reference has been made to ‘constructive’ acceptance or ‘constructive’ enrichment.440 The law should avoid such fictional discourse. Recent recognition of more finely tuned concepts such as incontrovertible, requested and freely accepted benefits offer sharper foci than fictional and opaque notions of ‘constructive’ acceptance or benefit.

(ii) Incontrovertible benefits [151] Definition. At its lowest, an ‘incontrovertible’ benefit is one which no reasonable person could deny.441 This concept is now firmly established in Australian law442 although there are debates as to whether it is present outside the well-recognised category of monetary benefits.443 In relation to other benefits the scope of the concept is controversial. The cases appear to support the application of the criterion expressed in terms of a benefit ‘one which no reasonable person could deny’, so as to include realised non-monetary benefits, although even here the law is to some extent uncertain. Such benefits must be contrasted with benefits which are merely realisable, that is, those which depend on the decision of the defendant to go into the market and convert the nonmonetary benefit into a monetary one. Generally, the law denies that a defendant can be required to make restitution for an enrichment which is merely realisable. There is, however, some support for a wider version of incontrovertible benefit which encompasses both realised and realisable benefits as well as saved expenses.444 [152] Money as an incontrovertible benefit. The receipt of money, which involves an increase in the assets of the defendant and —

when received from the plaintiff — a reduction in the assets of the plaintiff, is always a benefit for the purpose of unjust enrichment.445 Restitution for such a benefit involves no more than an order that the plaintiff receive an equivalent sum from the defendant, with the addition of interest to ensure [page 59] that the defendant does not profit from having had the money in the meantime. Restitution will therefore be ordered if the other requirements are met, that is, the money was obtained at the plaintiff’s expense and it would be unjust according to the case law for the defendant not to repay the money. On the assumption that no restitutionary defence is applicable, and that there was no intent to make a gift of the money, restitution will usually be determined by proof that the money was ‘unjustly’ received.446 However, any contractual allocation of risk must be respected.447 [153] Incontrovertible non-monetary benefit. What counts as an incontrovertible non-monetary benefit is a matter of considerable (academic) debate. It is also something which the courts have not discussed on many occasions. The two relatively uncontroversial forms are a benefit the value of which has been realised by the defendant, and the saving of a necessary expense. Although clear examples are somewhat sparse,448 both the concept and its terminology have been recognised by the courts.449 In Monks v Poynice Pty Ltd450 Young J said that there may be an obligation to make restitution where services constitute an incontrovertible benefit and it would be unconscionable for the defendant to keep the benefit without payment. This analysis has been followed and applied in several cases, including situations where services were rendered or expenses incurred by invalidly appointed liquidators or administrators or by parties ignorant of the fact that no valid contract existed between them and the defendant.451 In McKeown

v Cavalier Yachts Pty Ltd452 Young J was prepared to apply the concept to a situation in which a plaintiff increased the value of a defendant’s chattel, by doing work in accordance with the defendant’s expectation (but without contractual entitlement), and the defendant claimed its return. However, he referred to the plaintiff’s entitlement as one for ‘compensation’ and the (factual) circumstances of the case are not clear. In J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express)453 Carruthers J treated China-Pacific SA v Food Corp of India (The Winson)454 as an illustration. In The Winson, salvors who deposited cargo they had salvaged [page 60] on a wharf sought instructions on what was to happen to it. None were received. In order to preserve the cargo the salvors stored it, and sought restitution for the expenses they had incurred. The cargo owners were held liable because there was a relationship of bailor and bailee, and the right to recover restitution was correlative to their duty in relation to the goods. Other cases have cautioned against the salvage analogy.455 Suggestions456 that the concept may also extend to a benefit which is merely realisable find some support in the cases.457 However, since in general the law does not compel a defendant to realise any increase in its assets resulting from services which were rendered without request, it cannot be said that the mere fact that there is a realisable enrichment is enough to make the defendant liable, even assuming that the other elements of unjust enrichment are satisfied.458 The use of an asset (such as land or a chattel) can be an enrichment at the expense of the person who would normally charge for that benefit.459 There are many situations where a restitutionary obligation to pay interest with respect to the use of money that does not ‘belong’ to the defendant is imposed.460 A restitutionary analysis of the award of interest reflects the use value of money over time.461

(iii) Requested benefits [154] Introduction. Where the plaintiff does what the defendant requests, the law will sometimes impose an ‘obligation of protection’ on the defendant to compensate or indemnify the plaintiff for the expense incurred in or the consequences of the requested action. Even if there is no express or genuinely implied contract, the law of restitution traceable back to the days of quasi-contract will arm the plaintiff with an appropriate remedy in some situations even if the benefit goes to a third party. It may nevertheless be just, and it is the law, that the defendant make restitution in any event. This pocket of case law462 accords with common morality and shows that the unjust enrichment concept must not itself be treated as a straitjacket that becomes an instrument of injustice. When restitution is granted in this area, an obligation may be imposed that exceeds the value of any benefit derived by the defendant from the transaction. [page 61] [155] Requested benefits capable of generating a restitutionary remedy. The common money count for money paid at the defendant’s request and the body of case law stemming from it embraced situations where there was no express promise to recoup, indeed situations where there was no express or implied request to pay (for example, claims based on compulsion of law).463 The defendant may have received no benefit from the accepted request beyond the plaintiff’s compliance with what was sought to be done, because the payment was made to a third party. Similarly, a plaintiff who, at the request of the defendant, provides a guarantee of the defendant’s debt to a third party will, if called upon to meet the guarantee, be entitled to recoupment from the defendant.464 Services provided by the plaintiff at the defendant’s request may also generate an obligation to provide reasonable remuneration that does not turn upon the defendant having received, let alone retained, some product of (equivalent) value. Practice in an

industry or the prior dealings of the parties may indicate whether or not it is just to leave the loss where it falls or whether an obligation deriving from the quasi-contractual remedies of quantum meruit or quantum valebat should justly be imposed. We deal with the principles elsewhere.465 The point to be made here is that they do not turn entirely upon establishing the objective worth of the benefit received by the defendant. As Byrne J explained in Brenner v First Artists’ Management Pty Ltd:466 [W]here a person requests another to do something, it is not unreasonable for the law to conclude that the former sees some benefit in its performance, however wrong this view may be on an objective basis and for the law to act upon the perception of the recipient.

[156] Not all requested benefits generate claims in restitution. However, not every requested benefit establishes a claim in restitution.467 First, in relation to requests made under effective contracts discharged by performance, the remedy lies in contract not restitution.468 Second, it is not sufficient to establish enrichment of the defendant under a claim for restitution based on unjust enrichment that the defendant made a request, even if the request was satisfied, and notwithstanding that any contract in which the request was expressed is ineffective. Acceptance is, however, a proper basis for establishing enrichment in such circumstances.469 Third, where a request, contractual or otherwise, has not been complied with, there is, in relation to benefits that are not incontrovertible,470 [page 62] no enrichment471 unless acceptance is established, and notwithstanding that any contract in which the request was expressed is ineffective.472 However, where a plaintiff makes a claim for restitution following discharge of a contract based on breach or repudiation by the

defendant, acceptance will be deemed to have occurred, on the basis of actual or constructive prevention of performance.473 Fourth, although not all unrequested benefits are conferred officiously, an absence of both request and acceptance will generally imply that the defendant has not been enriched. This is, however, subject to the application of incontrovertible benefit,474 as well as principles governing necessitous intervention.475

(iv) Non-requested but freely accepted benefits [157] Introduction. Subject to statute,476 ‘free acceptance’477 of a benefit is the justification under Australian law for a conclusion that the defendant has been enriched by an unrequested478 non-monetary benefit that is not incontrovertible. The ‘bare fact of the conferral of some benefit upon another does not suffice to establish an obligation to repay the expenditure in providing that benefit.’479 Goods or services may be thrust upon persons unawares and they may be of problematic value to them (‘One cleans another’s shoes; what can the other do but put them on?’)480 However, some unrequested benefits will generate valid claims for work done or money paid. Older cases use the language of ‘acceptance’, but the [page 63] ambiguities in that term has seen the emergence of the concept of ‘free acceptance’ to emphasise the defendant’s choice and give content to the ideas supported by the cases. In short, ‘free acceptance’ requires: (1) acceptance by the defendant of goods or services provided by the plaintiff; where (2) the defendant knows or ought reasonably to know that the plaintiff was not providing the goods or services gratuitously; and where (3) the defendant did not take a reasonable opportunity to reject the

goods or services. Acceptance of benefit is the principal justification for recoverable remuneration in respect of inherently ineffective contracts.481 But additional hurdles need to be crossed before there can be restitution where the goods or services were provided under a contract that remains ‘open’ (ie is not void and is unrescinded); or where its terms continue to govern following discharge for breach or repudiation.482 The contract will, for example, continue to govern (ie recovery will be contractual, not restitutionary) where the plaintiff has elected to rely on contractual rights following breach by the defendant or where the plaintiff’s own breach engages the rule in Sumpter v Hedges.483 The principles are complex and those inherited from the era of quasicontract call for some reassessment in light of the unjust enrichment concept. We address them in Part V.484 There have, however, been suggestions in the literature that the free acceptance concept ought not to have been adopted as a general criterion.485 Professor Burrows in particular has argued that the notion ‘undermines respect for the individuality of values’486 because it is a rational indication of nothing more than indifference to the objective benefit being rendered.487 These criticisms are driven, in part, by an aversion for fictions in the law. But free acceptance has a very respectable pedigree in the law of quasi-contract488 and it reflects common morality. The issue is particularly relevant to claims in respect of non-monetary benefits conferred under ineffective contracts.489 Detailed discussion of the acceptance concept should therefore be postponed to that context.490 The object of the discussion here is merely to note the concept and its forms. [page 64] Free acceptance is unique in that, in some situations, it serves both as a test of benefit and an unjust factor.491 [158]

Meaning and forms of free acceptance. There has been at

times fierce academic debate in England492 about the concept of free acceptance and its precise role within an unjust enrichment calculus.493 It was recently recognised by the Supreme Court of the United Kingdom494 and there is a whole chapter devoted to the concept in the current edition of Goff and Jones.495 In Australia, ‘acceptance of benefit’ has always been a potential trigger for entitlement to payment for unrequested goods or services.496 But the notion of ‘acceptance’ is ambiguous for at least four reasons in this context. First, it may signal an implied genuine contract and there have been situations where contract alone, not restitution, explains orders for payment. Detecting which stream of law was in play may sometimes be difficult in cases decided during the era when the fiction of implied contract was the basis of quasi-contractual rights. Second, the ambiguity is compounded when, as often occurred, the issue of ‘acceptance’ arose in a contractual setting, for example where the defendant’s partial performance of obligation was not rejected by the plaintiff when defective goods or services were tendered and ‘accepted’ physically speaking.497 Third, acceptance alone would not suffice for a claim in quasi-contract or restitution if, as indicated already, an extant contractual arrangement governed the particular aspect of the transaction. Fourth, some authorities speak of ‘constructive acceptance’.498 [page 65] In the very case that would expel implied contract and establish unjust enrichment in Australian law the High Court awarded restitution for ‘unjust enrichment’ that arose from the acceptance of benefits accruing from the performance of an unenforceable oral contract.499 Since Pavey, ‘free acceptance’ as explained above has been acknowledged in Australia as the juridical basis of orders remunerating plaintiffs for the supply of unrequested goods or services. The principles have been frequently applied and further refined, under the

guidance of unjust enrichment.500 And the tag of ‘free’ acceptance has been endorsed so as to reinforce the need to show that the defendant had an effective choice. Freed of quasi-contract, the law now recognises the obligation of a defendant to pay a reasonable remuneration for a freely accepted benefit as based on unjust enrichment.501 A benefit is freely accepted if the plaintiff acted non-officiously and the defendant knew that it was not conferred gratuitously and failed to exercise a reasonable opportunity to reject it.502 In Lumbers v W Cook Builders Pty Ltd (in liq)503 the High Court held that the court below had erred in applying free acceptance in a context where building work on C’s property was provided under a contract between A and C. Without C’s knowledge or consent, A arranged for B to do the work and then failed to pay for it in full. B’s restitutionary claim failed principally because to have allowed it would have directly contradicted the terms under which A and C had contracted.504 B could not leap over the contractual arrangements and sue C in restitution merely because C had in one sense ‘benefited’ from the work done. It was in this context that the joint judgment said that ‘the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery’.505 Lumbers did not entail the rejection of free acceptance.506 [page 66] In Brenner v First Artists’ Management Pty Ltd507 Byrne J approved,508 as a description of the appropriate inquiry in cases of alleged acceptance of benefit, ‘whether the recipient of the services, as a reasonable person, should have realised that a person in the position of the provider of the services would expect to be paid for them and did not take a reasonable opportunity to reject those services’. Although framed in terms of services, the concept is clearly not limited to that category of non-monetary benefit.509 The relevance of the defendant’s knowledge of a non-gratuitous intent is well established.510 The description assumes that the defendant failed to avail itself of a

reasonable opportunity to reject the benefit.511 It is therefore consistent with unjust enrichment that if the defendant had no option but to take the benefit of work done, there must be something more than the mere enjoyment of the benefit of the plaintiff’s services or work.512 This limitation does not always apply to requested benefits.513 There may be valuation issues concerning freely accepted goods or services.514

(c) At the Expense of the Plaintiff [159] Introduction. One function of this sub-concept is to limit claims in unjust enrichment to the parties directly involved in the relevant transaction, in effect a principle of standing to sue.515 The requirement poses no general difficulties, since it merely signifies that the benefit in respect of which the plaintiff seeks restitution must have been obtained by the defendant from the plaintiff rather than a third party.516 Restitution in this ‘subtractive’ sense must be distinguished from restitution for wrongs or title-based restitution which may involve claims against third parties as well. The words ‘at the plaintiff’s expense’ include all benefits conferred by the plaintiff or the plaintiff’s agent but also, exceptionally, by a third party517 as where a defendant has obtained money from a third party which the plaintiff [page 67] was entitled to receive.518 A contrast between the primary and secondary senses of ‘at the plaintiff’s expense’ has been recognised by the courts.519 We have come to the view that use of the ‘expense of the plaintiff’ to do double duty in this context involves a semantic elision, although we point out elsewhere that restitution for wrongs is concerned with blocking or stripping unmerited profits.520 But we nevertheless recognise a frequently expounded distinction between a

primary and secondary duty to make restitution. It is convenient to explain it at this stage. [160] Primary duty to make restitution. An obligation to make restitution may be expressed in terms of a primary duty.521 This is manifestly the position where restitution based on a recognised ‘unjust factor’522 is sought in relation to a payment of money. It is also the position where the defendant is ordered to make restitution for a nonmonetary benefit obtained directly at the plaintiff’s expense. The only difference is that, in the latter case, valuation of the benefit may be controversial. In both cases, the order relates to an increase in the defendant’s wealth attributable to a benefit received from the plaintiff and, in that sense, a subtraction from the plaintiff’s wealth.523 This is often described as the ‘primary’ or ‘subtractive’ sense of unjust enrichment.524 In Roxborough v Rothmans of Pall Mall Australia Ltd,525 Gleeson CJ, Gaudron and Hayne JJ approved the remarks of Mason CJ526 that ‘[t]he subtraction from the plaintiff’s wealth enables one to say that the defendant’s unjust enrichment has been ‘at the expense of the plaintiff’. Recovery in restitution is not tied to specific (or general) categories of wrongdoing.527 In most situations, restitution is merely an order that the defendant restore to the plaintiff a benefit received from the plaintiff, with interest. There is, therefore, usually no need to determine whether any tort, breach of contract or other wrong has been committed. Indeed, in the majority of cases where the primary sense of restitution is relied upon, the defendant will not in fact have committed any breach of duty or other actionable wrong. An obvious case is where a payment is made under mistake. Such a payment is usually recoverable from an ‘innocent’ defendant.528 [page 68] There may, of course, be situations where relief is sought from a defendant who has in fact committed a wrong. The obligation to make

restitution based on mistake, compulsion, failure of consideration and the like is nevertheless autonomous, and independent of the breach of a consensual or imposed duty.529 Therefore, even in cases where there is a wrong it will not usually be the basis for relief,530 and there is generally no need to consider whether the wrong is an actionable one. Thus, it is of no consequence to restitution based on improper pressure that the conduct may not amount to a tort:531 a person who has paid money as a result of improper pressure in the eye of restitution may recover that money as restitution for an unjust enrichment. A plaintiff deceived into making a payment who opts to rely on the mistake, not the tort, as the basis for the claim is invoking to the defendant’s primary duty to make restitution. [161] Secondary duty to make restitution. It is, of course, trite that relief for breach of a primary duty may be analysed by reference to the extent of the secondary obligation which arises on breach of the primary duty. Analysis in terms of primary and secondary duties applies to most wrongs, since in most cases where there is a breach of a primary duty a secondary duty will come into effect.532 Similarly, references to a ‘primary’ sense of unjust enrichment, and a primary duty to make restitution, imply that there is a secondary sense of unjust enrichment, and a secondary duty to make restitution. Thus, if there is no independent enrichment giving rise to a primary duty to make restitution, the plaintiff may seek to rely on the wrong itself. A secondary duty to make restitution is (or may be) applicable where the obligation arises because of the commission of a wrong done and by virtue of which the defendant has been enriched.533 The controversial feature of analysis based on the commission of a wrong, and expressed in terms of damages, arises in cases where the wrong in fact causes no loss. In such cases the argument is that damages may be assessed to prevent unjust enrichment rather than to compensate the plaintiff. There are certainly cases where a defendant has been held liable to make restitution of a benefit on account of the commission of a wrong such as the tort of conversion. In these cases, there may be an award of damages, based on the need to ensure that the defendant does not

profit from its wrong rather than on a compensation basis. On the other hand, the idea that damages for breach of contract may be analysed in a restitutionary way has not so far been taken up by the Australian courts.534 Thus, in cases of breach of contract, compensation is almost invariably the basis for the award. [page 69] Given the importance of contract damages in the law of obligations, it looks to be a major weakness of arguments relying on a secondary sense of unjust enrichment that it is not supported in the context of breach of contract. However, even apart from tort, a major area to which reference may be made to support the secondary sense of unjust enrichment is the enforcement of equitable duties. Thus, it is well established that for breach of a fiduciary duty a defendant may be held liable to account for benefits gained as a result of the breach of duty.535 Equitable compensation may also be awarded by reference to a defendant’s gain rather than a plaintiff’s loss. It is not required that the gain was made at the plaintiff’s expense in the sense that interposition by the defendant prevented the plaintiff from obtaining the benefit. Indeed, it is not even required that the gain made by the defendant be one which could have been made by the plaintiff.536 The plaintiff may have lost nothing, but be able to recover what the defendant has gained. Significantly, in some of these cases the conduct of the defendant will amount to a breach of contract. There are, therefore, some cases in which the breach of a primary contractual duty is associated with an award equal to the defendant’s gain rather than a plaintiff’s loss.537 But the equitable analysis does not in terms rely on the distinction between primary and secondary duties, and in these cases the basis for the award is not the defendant’s breach of contract so much as the defendant’s breach of its fiduciary duty. However, it may well be significant for the future development of this branch of the law that in Hospital Products Ltd v United States Surgical Corp538 Deane J, in his dissenting judgment, countenanced an award of restitution (on

equitable principles) for breach of contract even though there was no breach of a fiduciary duty. [162] Waiver of tort. Restitutionary claims based on the commission of a tort are often analysed by reference to the confusing concept of waiver of tort.539 However, it is a mistake to regard all cases in which waiver of tort is relied upon for a restitutionary claim as involving a claim for restitutionary damages.540 Thus, under the law of quasi-contract541 recognition was given to money had and received claims based on the commission of a wrong such as conversion. Such claims were direct restitutionary claims involving the enforcement of a primary duty to make restitution. Sometimes these have been rationalised in terms of the plaintiff’s ability to rely on the defendant’s enrichment. We prefer to view these cases as a branch of the law of restitution concerned independently with vindication of title as distinct from applying the unjust enrichment concept.542 [163] Issues and analysis. The main question which arises is how to analyse cases in which, independently of equity, courts have awarded what [page 70] amounts to restitution for a wrong, whether on the basis of waiver of tort or otherwise. This is certainly an important question, and one on which we express our views.543 A subsidiary question is how far the cases with a recognised and well-established basis in equity should be reinterpreted in terms of an unjust enrichment analysis. We are content to confront the question when it arises, without attempting any general reconfiguration of the law.544 Although we recognise that this is a conservative view, we support it, in a pragmatic way, on two grounds. First, our main concern is to analyse in a systematic way the Australian law of restitution as currently being developed in the Australian courts. It is a very major issue how far unjust enrichment is a

proper explanation of what the courts have been doing. We are mainly concerned to emphasise the utility of restitution for unjust enrichment when ‘at the plaintiff’s expense’ means ‘by subtraction from the plaintiff’s wealth’. Second, in this country there remains a very strong tradition of seeing equity as a distinct branch of the general law. At this stage in the development of the law we see no point in re-analysing the established equitable bases in terms of a different theoretical structure which has no genuine reflection in the cases.545 The equity case law recognises the notion of unjust enrichment while often insisting that deterrent factors are also in play.

(d) Injustice (i) General [164] Introduction. In the unjust enrichment concept there is a third factor of injustice which must always be found in addition to the requirements implied by ‘enrichment at the plaintiff’s expense’. It goes without saying that not every benefit obtained by a defendant can be described as unjust and worthy of a restitutionary claim.546 An obvious example is a gift by A to B. There is no doubt that B is enriched at A’s expense, but absent some factor such as duress there is no scope for an issue of restitution. Similarly, if A confers a benefit on B in performing a contract, the enrichment of B is explicable and it would be irrational to say, in the absence of some factor such as (to use the same example) duress, that the enrichment is unjust. Consideration of a question of ‘injustice’ therefore assumes that a situation recognised in the case law has arisen in which the party from whom restitution is sought (the defendant) has been enriched at the expense of the party seeking the order for restitution (the plaintiff). There is an ‘unjust’ enrichment if there was an element of injustice, unfairness or inequity in the circumstances in which the enrichment was conferred. Alternatively, the conduct by which the defendant

obtained or seeks to retain the enrichment must be capable of being described as unconscionable or unconscientious.547 [page 71] Needless to say, more than one unjust factor can co-exist in a particular situation. Unjust factors can be identified in both law and equity.548 [165] Absence of cause insufficient. We have already drawn attention to the late Professor Birks’s final change of position in which he espoused with customary enthusiasm the civilian idea that absence of cause was the conceptual explanation for what he had earlier come to view as the law of unjust enrichment.549 The House of Lords declined to go down that path550 and Professor Burrows has criticised it soundly in terms with which we are in broad agreement.551 [166] Injustice and discretion contrasted. The introduction above552 does no more than emphasise that restitution for unjust enrichment must have a principled basis. However, because restitution developed so pragmatically (in its quasi-contractual era) it is somewhat difficult to formulate legal principles governing injustice in the unjust enrichment concept. But to the extent that these have been recognised in the cases they may be termed ‘unjust factors’.553 In Farah Constructions Pty Ltd v Say-Dee Pty Ltd the High Court said that:554 … whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category. In David Securities Pty Ltd v Commonwealth Bank of Australia,555 Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality…. [P]rinciples respecting fiduciary duty have been said to be foreign to unjust enrichment notions because the unjust factors are commonly concerned with vitiation or qualification of the intention of a claimant.

This, with respect is a most useful summary of the points we seek to

develop in this part of the chapter. The last sentence was expressed with such uncustomary tentativeness556 that we are emboldened respectfully to disagree with the proposition,557 especially if it proceeds from the idea that ‘unjust factors’ must all entail matters divorced from notions of fault, a fortiori if it is suggested that equity and restitution are categorical strangers. [page 72] Equitable triggers based upon the vitiated intention of a claimant have been recognised since as long ago as Moses v Macferlan558 and posed no problems for the High Court under Mason CJ.559 ‘Unjust’ is the ‘generalisation of all the factors which the law recognises as calling for restitution’.560 Because we need to search for recognised factors, examination of which involves an analysis of case law, the reference to ‘injustice’, as an element of unjust enrichment, is not a reference to judicial discretion. Normal judicial processes are involved and it is only in cases where there is no recognised basis for saying that injustice has arisen that problems can arise.561 The mere fact that there is no precedent is not conclusive. One of the main virtues of the law of restitution for unjust enrichment is to provide a principled means for analysis of such cases with a view to assessing whether analogical development in a particular direction is justified. To a large extent, the unjust factors are themselves expressions of policy and policy concerns. Since policy evolves, the list below may not exhaust all the possible bases for a conclusion that an enrichment is unjust.562 As is explained,563 compulsion, as a basis for injustice, is one name for a collection of factors. The categories of compulsion are not closed,564 and further refinement of the concept may occur. Although the list does not take full account of the impact of statute, where a statute establishes ‘a norm of conduct’,565 there is no reason to deny that, when obtained as a consequence of departure from the norm, an enrichment may be regarded as unjust.

(ii) Mistake, compulsion and other ‘vitiating’ factors [167] Mistake. It is clear that mistake on the plaintiff’s part is a recognised basis for an award of restitution based on unjust enrichment.566 It is also clear that, although mistake may arise from the conduct of the defendant, that is, a case of fraud or misrepresentation, the primary use of mistake [page 73] in restitution arises where the mistake is spontaneous, or the fraud or misrepresentation is at the hands of a third party. The mistake may be one of fact or law.567 However, in cases where the benefit is conferred under contract, mistake alone may not be sufficient as the benefit may have been conferred in contemplation of an anticipated agreed return under a valid and subsisting contract.568 Generally, mistake of fact or law has been distinguished from a mere misprediction569 as to what may subsequently occur. Accordingly, injustice is not generally shown by proof that work is done in anticipation of an agreement to remunerate the work.570 We explain elsewhere why we reject a separate unjust factor of ‘ignorance’.571 [168] Compulsion. Compulsion has been recognised, widely used and broadly defined as a basis for restitution.572 Whether legal or moral in its derivation and whether proper or improper, compulsion will sometimes be a ground for saying that an enrichment is unjust. Obvious examples of lawful compulsion capable in some circumstances of generating a claim in restitution are a payment by an unsuccessful litigant pursuant to a court’s order under a judgment subsequently set aside on appeal.573 Examples of moral compulsion are not so clear.574 Like mistake,575 some forms of ‘compulsion’ operate, in the contractual context, as vitiating factors, that is, factors which justify the conclusion that there is no contract or (more commonly) a right of rescission.576 On this basis, duress, fraud, undue influence or

unconscientious conduct577 may constitute valid bases for a conclusion of injustice.578 Accordingly, like mistake, they are often associated with contract. Unless the contract is inherently ineffective,579 an order for restitution will not be made until the contract has been rescinded or set aside.580 In other words, for the unjust factor to operate in relation to a benefit conferred under contract, it must be clear that the benefit will not be remunerated by contract.581 Account must also be taken of the operation of discretion, enshrined in the ability to make adjustments designed to achieve restitutio in integrum, for example, following rescission for misrepresentation. One perspective is to say that [page 74] the inquiry is equitable adjustment, not restitution. However, the better approach is an analysis in terms of restitution and counterrestitution.582 The link between factors such as mistake and compulsion suggests a general criterion expressed in terms of ‘voluntariness’. However, this concept is a slippery one. The word has various meanings, and is apt to mislead.583 To say that a payment made without consideration is voluntary relies on one sense of the word, that is, the payment is gratuitous. To say that a payment induced by mistake is not a voluntary one relies on a different sense, namely, that the transfer was vitiated. Once this distinction is drawn, it becomes clear, not only that even a gift may be vitiated, but also that general use of involuntariness as a basis for restitution will cause confusion.584 Accordingly, we do not see it as a proper basis for analysis. Thus, we favour the use of more specific unjust factors which may or may not be capable of being listed under a general concept of involuntary conferral of benefit.585 [169] Other ‘vitiating’ factors. Mistake and the various categories of compulsion are all examples of invalidating cause. They do not, however, exhaust the list of relevant ‘vitiating’ factors. Although there is no need to refer to fraud, as this is subsumed under the concept of

mistake, reference may be made to lack of legal capacity, and some cases of illegality. Illegality may count as an unjust factor where it is operative as a species of vitiating factor and the plaintiff is not implicated in the illegality.586 It is also possible that, ultimately, an ultra vires demand by the revenue may be looked on as a sufficient basis by which injustice may be established.587 Some illegality cases, and also some cases in which undue influence is the basis for saying that the defendant’s enrichment is unjust, appear to suggest that injustice may be found in the relationship of the parties. This might, perhaps, be taken a step further, to include all cases where there is a fiduciary relation between the parties. However, the law in that area is not easily translated into an unjust enrichment analysis, and to the extent that [page 75] breach of fiduciary duty may be relied on for a conclusion of injustice, the claim is best viewed as dependent on the commission of a wrong.588

(iii) Total failure of consideration and related factors [170] Total failure of consideration. It has long been recognised that total failure of the agreed return is a proper basis for restitution in relation to a payment made under a contract.589 From the unjust enrichment perspective, Deane and Dawson JJ expressed it in Baltic Shipping Co v Dillon (The Mikhail Lermontov)590 in terms that ‘unjust enrichment looks to the future performance and not the bare promise as the relevant consideration’. The concept signifies that a payment made, expressly or impliedly, in contemplation of a particular return may be recovered in restitution if the agreed return does not materialise. The High Court has adopted a criterion of total failure which ‘looks to the benefit bargained for by the plaintiff rather than any benefit which might have been obtained in fact’.591

Application of the concept of total failure of the agreed return generally assumes two things: that the claim is made in relation to a payment of money; and that the basis on which the payment was made fails subsequently. Thus, its principal operation is in the context of a discharged contract592 and, to a lesser extent, in the context of an inherently ineffective contract,593 or a rescinded contract.594 However, there are suggestions, at least in the literature, that total failure of the agreed return ought to be a basis for restitution in relation to nonmonetary benefits.595 This is an area where the overlapping ‘jurisdictions’ of law and equity are evident, thereby demonstrating that equity recognises independent causes of action based on unjust enrichment.596 [page 76] [171] Failure of basis of payment in related situations. A basis for restitution clearly related to (and perhaps broader than) total failure of the agreed return is failure of condition.597 If A makes a payment to B in the expectation that B will do an act on the occurrence of an event, the failure of the event to occur may imply that a condition under which the payment was made has failed. There are, therefore, cases in which the basis for restitution is not so much the failure of the other party to render an agreed return as the failure of an agreed or commonly assumed state of facts to be maintained, or the failure of an event to occur.598 For example, conduct money tendered with a subpoena to attend and give evidence was recoverable as money had and received where the case was settled before trial,599 and wedding and engagement presents are recoverable in most cases where the anticipated event does not happen.600 In Roxborough v Rothmans of Pall Mall Australia Ltd601 there was a perfectly valid contract. The vendor of tobacco products sold them under invoices that represented the wholesale value as ‘cost’ and added a component representing a licence fee intended to be passed on to the purchasers. The supervening constitutional invalidity of the legislation

imposing the fee was held to have brought about a failure of a distinct and severable part of the consideration for the purchase of the goods, recoverable by the purchasers by way of a restitutionary claim derived from money had and received. Although the mere fact that a sum has been paid which was not due for payment has not traditionally been regarded as of itself a basis for restitution,602 there is some support for the view that absence of consideration may in some cases count as an unjust factor.603 [172] Partial failure. Although it is clear that total failure of the agreed return is the general requirement, in certain circumstances a partial failure will suffice. However, under the current law, this factor is limited to three cases. First, in relation to a severable payment, partial failure will be sufficient if the failure relates to the whole of the agreed return for the payment.604 Second, partial failure may suffice under statute.605 Third, the process of [page 77] restitution and counter-restitution, applied, for example, on rescission for misrepresentation, will often result in a restitutionary award in relation to a payment the agreed return for which has failed merely partially.606 It has, however, been suggested that the law should go further. Thus, there have been suggestions in favour of partial failure of the agreed return as a basis for restitution in relation to non-monetary benefits.607

(iv) Acceptance and unconscientious conduct [173] Introduction. We should deal separately with free acceptance and unconscientious conduct as unjust factors or bases for restitution for a number of reasons. First, both are controversial. Second, there has been some criticism of the frequent use by Australian courts of these and related considerations.

Third, they are bases for injustice which concentrate, more than most of the other factors so far referred to, on the defendant’s conduct. Fourth, free acceptance is unusual in that, on one view of the law, it not only establishes injustice but also provides a basis for establishing enrichment in relation to a non-monetary benefit. Finally, unconscientious conduct can be relevant to the plaintiff’s right to a proprietary remedy in some circumstances.608 [174] Acceptance of benefit. The concept of acceptance of benefit was explained above,609 mainly from the perspective of enrichment. In any case where the defendant freely accepts a non-monetary benefit, the circumstances which show that the benefit has been accepted will show whether the enrichment of the defendant is an unjust one.610 The dual function was recognised in Rowe v Vale of White Horse District Council.611 This holds true even if the particular benefit was not requested by the defendant. It seems reasonably clear that in Australian decisions, no sharp distinction is drawn between proof of acceptance at the time of conferral and proof of acceptance by reference to retention of benefit. But, strictly, in order to establish enrichment, free acceptance must occur at the time of receipt.612 Thus, retention of benefit may be more an appeal to the concept of unconscientious conduct (or estoppel) than acceptance.613 The effect of the Australian cases may perhaps be expressed by saying that once benefit [page 78] is established through acceptance, the relevant basis for the conclusion of injustice is unconscientious retention of benefit.614 [175] Unconscientious or unconscionable conduct. Given the importance which Australian courts have attached to the concept of unconscientiousness in the law of civil obligations, it would indeed be surprising if it did not play a role in the law of restitution based on unjust enrichment. In one area at least it is clear that the concept is

important. This concept refers to situations where conduct that attracts the adverse attention of a wide spectrum of equity jurisprudence forms the basis for setting aside a transaction, or for a conclusion that the defendant has engaged in conduct prohibited by statute.615 It is also arguable that unconscientious conduct is the key to injustice in cases where restitution is sought on the basis of relief against forfeiture.616 It has, moreover, been explained617 that ‘unconscionable’ conduct may be associated with the notion of free acceptance. The High Court has expressed preference for the use of the term ‘unconscientious’ rather than ‘unconscionable’.618 We shall follow this lead unless in the realm of statutes like the Uniform Consumer Law that use the term ‘unconscionable’. The frequent use of this concept (often under the label of ‘unconscionability’) in the Australian decisions has been criticised, often with justification in our view. At times, the label has been used to characterise the result rather than the reasoning that leads to the application of that description.619 In this respect Connolly J’s statement in Kratzmann Holdings Pty Ltd v The University of Queensland,620 that whatever ‘may be involved in the concept of unjust enrichment, it may at least be said that it poses the question whether it is unconscionable’ to retain a benefit, is open to question because it may suggest a much greater role for unconscionable conduct than is justified or required. To treat unconscientious or unconscionable conduct as a general basis for restitution is to conceive of unjust enrichment as being little more than a reference to unfairness, and it invites the court to stray from the safe waters of precedent and analogical reasoning. At best, like Lord Mansfield’s statement in Moses v Macferlan,621 it suggests that unjust enrichment gives effect to a norm which receives expression in other areas of the law.622 The High Court’s general warning about loose and conclusory reasoning based [page 79] on the concept of ‘unconscionable conduct’623 should apply in this area

as well.624 From the specific perspective of unjust enrichment, it is only meaningful to have regard to unconscientious conduct as a basis for restitution where enrichment has already been established. Moreover, where a factor such as mistake or improper pressure is operative, it is usually both unnecessary and unhelpful to label the conduct of the defendant as unconscientious. Thus, it has been said (with considerable force) that it makes ‘no sense to speak of unconscientiousness when there is only shabbiness ex post, in retention as opposed to acquisition, since unconscientiousness merely reflects another, usually plaintiffsided ground for restitution’.625 In other words, once a proper basis for ‘injustice’ as established in the case law has been satisfied, it adds nothing to say that the defendant’s retention of benefit is unconscientious. The only area where it may be necessary to address this, as an additional matter for the plaintiff to prove, is where a proprietary remedy is sought.626

1.

See the statement by Lord Goff (with whom the other members of the House of Lords agreed) in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 184.

2. 3.

On the classification of claims and remedies in restitution see Chapter 2. This taxonomy broadly mirrors the approach of Virgo and Restatement, Third.

4. 5.

See [114]–[119]. See further [120]–[122].

6.

See the nineteenth and early twentieth century American decisions discussed by Gummow J in Roxborough v Rothmans of Pall Mall Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [85]–[86]. See [122].

7. 8.

9.

J B Ames, ‘Purchaser for Value Without Notice’ (1887) 1 Harv L Rev 1 at 3; J B Ames, ‘The History of Assumpsit — Implied Contract’ (1888) 2 Harv L Rev 53. See also Andrew Kull, ‘James Barr Ames and the Early Modern History of Unjust Enrichment’ (2005) 25 OJLS 297. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [125].

10. See Lord Wright, ‘Restatement of the Law of Restitution’ (1937) 51 Harv L Rev 369; United Australia Ltd v Barclays Bank Ltd [1941] AC 1. 11. Hereafter Restatement, Third (reviewed by Ben Kremer (2011) 35 MULR 1197). The project to issue a second Restatement on the topic foundered in the 1980s. As to the modern American law, see also Ward Farnsworth, Restitution: Civil Liability for Unjust Enrichment, University of Chicago Press, 2014. 12. See, eg Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [79]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [38], [104]. 13. See [104]. 14. See the reviews of Snell’s Equity, 30th ed (John McGhee) by Jeffrey Hackney in (2001) 117 LQR 150 and of Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, 4th ed by Peter Birks in (2004) 120 LQR 344. The words ‘across the board’ have been added to meet one of the criticisms of this passage by Mark Leeming, ‘Subrogation, Equity and Unjust Enrichment’ in Jamie Glister and Pauline Ridge, Fault Lines in Equity, Hart Publishing, 2012, pp 41–3. 15. (1987) 162 CLR 221; 69 ALR 577. 16. See generally [114]–[119]. 17. See generally on the classification of claims in Chapter 2. 18. Goff and Jones, The Law of Restitution, 1st ed (1966). See now Goff and Jones, The Law of Unjust Enrichment, 8th ed, published in 2011. The new editors promise in the Preface to address gain-based remedies for wrongdoing in a second volume. 19. H Bullen and S M Leake, Precedents of Pleadings, 3rd ed, Stevens & Sons, London, 1868. 20. See [104]. 21. See [131].

22.

See Keith Mason, ‘Restitution in Australian Law’ in Finn, Essays, p 20, an essay on which some of the material in this chapter is based.

23. Sir Anthony Mason (1989) 1 JCL 265. 24. Peter Birks, An Introduction to the Law of Restitution, Clarendon Press, Oxford, 1985 (paperback edition), revised 1989 (hereafter Birks, Introduction). 25. See generally on the relation between restitution, contract and tort [210]–[217]. 26. As to equity’s hardening in the nineteenth and early twentieth centuries, see Atiyah, The Rise and Fall of Freedom of Contract. See also [120]–[123]. For an overview of the developments in this direction see J W Carter and A Stewart, ‘Commerce and Conscience: The High Court’s Developing View of Contract’ (1993) 23 UWALR 49. 27. In Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 324; 201 ALR 359; [2003] HCA 57 at [21] the High Court pointed out that ‘unconscientious’ is the more accurate term. 28. Cf Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 (‘unjust enrichment partly a derivative of unconscionable conduct’). See further [175], [221]. 29. See, eg Birks, ‘Misnomer’ in Restitution: Past, Present and Future. 30. In Australia, see especially Jackman; Ben Kremer, ‘The Action for Money Had and Received’ (2001) 17 JCL 93; Edelman and Bant. 31. Birks, Unjust Enrichment, 1st ed, 2003, Preface, p xiv. See the extended Review Articles discussing this work in [2004] RLR 260. 32. See [139]; Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558. In 2004, the Supreme Court of Canada ‘redefine[d] and reformulate[d]’ the principle of unjust enrichment so as to turn conceptually upon absence of juristic reasons for retention of enrichment rather than a requirement of proof of an unjust factor: Garland v Consumers’ Gas Co (2004) 237 DLR (4th) 385 at 401. Tracing the new trajectory has been a nightmare for a leading Canadian scholar: see McInnes (reviewed by Charles Mitchell in (2015) 131 LQR 323). 33. [1993] AC 70 at 172. 34. The Hon Justice Susan Kiefel AC, ‘Lessons from a “Conversation” About Restitution’ (2014) 88 ALJ 176. 35. See Andrew Burrows, ‘Absence of Basis: The New Birksian Scheme’ in Mapping the Law. See also Restatement, Third § 1. 36. See further [111], [218]–[221] and Chapter 15 where we explain the inclusion of topics that are not part of a narrower law of unjust enrichment or ‘Birks Mark-II’ or ‘III’. 37. Cf Dawson, pp 3–4 (‘general guide for the conduct of the courts’). Equity’s concern to prevent trustees and other fiduciaries from profiting in consequence of their breaches shows that the unjust enrichment concept informs parts of traditional equity (not necessarily to the exclusion of other norms). This is one reason why we regard some parts of equity as lying within the bounds of restitution. See [121], [123] and Chapters 3 and 17. 38. Cf Lord Goff, ‘The Future of the Law of Restitution’ (1989) 12 Syd LR 1 at 2. 39. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378–9;

109 ALR 57 at 75; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [85]; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; 260 ALR 71; [2009] HCA 44 at [86]; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [20], [73], [78]. 40. See [2904]. 41. See Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) Aust Bar Rev 284 at 309–10. Cf Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; 260 ALR 71; [2009] HCA 44 at [86] which states that such a submission had been made in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378–9, whereas the passage cited went no further than stating that a different submission ‘appear[ed] to proceed from the view’ that unjust enrichment was a definitive legal principle according to its own terms. 42. Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [29] (‘[n]or was it such when first propounded in legal scholarship’). See also Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [141] per Gageler J. A similar position has always been maintained by this work, as recognised by Goff & Jones, § 1-07. 43. See Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, p 251. 44. Dawson, p 5; Restatement, Third, § 1. Cf Burrows, p 1 (‘essential role is as an organising tool’). See also J D McCamus, ‘Unjust Enrichment: Its Role and Its Limits’ in Waters (ed), Equity, Fiduciaries and Trusts 1993, p 129. 45. See further [140]ff. Cf the notions of duty, breach and damage in the tort of negligence. 46. Dawson, p 4. 47. A claim in money had and received is however capable of assignment in favour of a person with a genuine commercial interest in the restitutionary right: Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498; 286 ALR 12; [2011] HCA 12. 48. See [441] (mistaken receipt by intermediaries). 49. See Chapter 3 (Want of Title: Misdirected Funds and Tracing). 50. See Part VI. 51. See [441] (mistaken receipt by intermediaries). See also [910], [1156], [1518]. 52. This proposition is even true for contractual obligations in that the common law works on an objective theory of consensus and declines to enforce every conceivable promise. 53. See [215], [909]. 54. See further [167]–[175]. 55. The three elements are discussed in detail at [140]–[175]. 56. See further [123]. 57. In modern times, scepticism is mainly directed at the improper use or extended application of the unjust enrichment concept rather than attacking the idea root and branch. See [139].

58. See further [139]. 59. See also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [29]–[30]. 60. Cf Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [78]. See further [123]. 61. We should, however, draw attention to the important collection of essays under that title edited by Professor Finn. See P D Finn, Essays on Restitution, Law Book Co, Sydney, 1990. This was published following a gathering at the Australian National University of leading scholars (both believers and non-believers) from Australia, England and New Zealand. See H O Hunter, ‘Book Review’ (1992) 14 Syd LR 526. 62. Goff and Jones, The Law of Restitution, 1st ed. 63. Stoljar, The Law of Quasi-Contract, 1st ed, 1964. 64. (1987) 162 CLR 221; 69 ALR 577. 65. See Stoljar, The Law of Quasi-Contract, 2nd ed, 1989. 66. See Stoljar, The Law of Quasi-Contract, 2nd ed, p v. See also S Stoljar, ‘Unjust Enrichment and Unjust Sacrifice’ (1987) 50 MLR 603 at 605 (unjust enrichment growing out of all proportion to the ‘material facts available to it’). 67. See Muschinski v Dodds (1985) 160 CLR 583 at 617; 62 ALR 429. Muschinski (an equity case) was cited by Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257 as an example of the capacity of unjust enrichment to generate a new category of right. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at [16] (Gleeson CJ, Gaudron and Hayne JJ). 68. See Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 378–9; 65 ALR 193; National Commercial Banking Corp of Australia Ltd v Batty (1986) 160 CLR 251 at 268; 65 ALR 385. 69. See [128], [130]. For a list of the claims now recognised as informed by unjust enrichment in Australian law see [138]. 70. See [116]. See also [842]. 71. See [135], [140], [219]–[220], [302], [1501]. 72. See David Ibbetson, ‘Assumpsit and Debt in the Early Sixteenth Century: The Origin of the Indebitatus Count’ [1982] CLJ 142; Simpson, pp 281ff (relationship between assumpsit and older remedies); J H Baker, ‘The Use of Assumpsit for Restitutionary Money Claims 1600–1800’ in Shrage, ed, Unjust Enrichment: The Comparative Legal History of the Law of Restitution, 2nd ed, p 31. J H Baker, ‘The History of Restitution’ in Restitution: Past Present and Future, p 37. Cf the uses of debt referred to by Pollock and Maitland, History of English Law Before the Time of Edward I, 2nd ed, vol I, p 210. 73. Including mesne profits, reasonable royalties and awards labelled damages but assessed according to a ‘user principle’ or on a non-compensatory basis. See Pt VI. 74. See Maitland, The Forms of Action at Common Law, p 57. 75. See [111]. 76. (1602) 4 Co Rep 91a; 76 ER 1072. On the status and accuracy of this report see J H Baker, ‘New Light on Slade’s Case’ [1971] CLJ 51 at 213. 77. Cf J H Baker, ‘New Light on Slade’s Case Part II’ [1971] CLJ 213 at 226–7, 234–5.

78. See David Ibbetson, ‘Sixteenth Century Contract Law: Slade’s Case in Context’ (1984) 4 OJLS 295 at 315. Cf [162] (waiver of tort). 79. (1602) 4 Co Rep 91a at 93a; 76 ER 1072 at 1075. Cf J H Baker, ‘New Light on Slade’s Case Part II’ [1971] CLJ 213 at 228–30. 80. See Peter Birks and Grant McLeod, ‘The Implied Contract Theory of Quasi-contract: Civilian Opinion Current in the Century Before Blackstone’ (1986) 6 OJLS 46 at 48–9; Stoljar, p 11. 81. See, eg Mondel v Steel (1841) 8 M & W 858; 151 ER 1288 further [908] and generally Fifoot, pp 360ff. 82. Sometimes referred to as a ‘quantum valebant’. 83. See Pollock and Maitland, The History of English Law Before the Time of Edward I, 2nd ed, vol I, p 216; Simpson, p 65, 496–7. Cf Stoljar, p 190. 84. See Slade’s Case (1602) 4 Co Rep 91a; 76 ER 1072. 85. See Stoljar, p 187. The quasi-contract claim for quantum meruit was perhaps a distinct form of assumpsit. 86. See further [117]. 87. Bullen and Leake, pp 46–7; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 540; 185 ALR 335; [2001] HCA 68 at [64]–[67]. See [117]. 88. This is especially true with ‘money had and received’. See further [145], [908], [914]. See also [1517], [1614] (waiver of tort), [2921]–[2926] (pre-Judicature relics). 89. See Moses v Macferlan (1760) 2 Burr 1005 at 1010; 97 ER 676 at 679; Bullen and Leake, p 35; H K Lücke, ‘Slade’s Case and the Origin of the Common Counts Part 3’ (1966) 82 LQR 81 at 91; Simpson, p 305. For their current status as pleading devices see [2924]. 90. For the importance of Slade’s Case (1602) 4 Co Rep 91a; 76 ER 1072 in their development see H K Lücke, ‘Slade’s Case and the Origin of the Common Counts’ (1965–66) 81 LQR 422; 81 LQR 539; 82 LQR 81; and David Ibbetson, ‘Assumpsit and Debt in the Early Sixteenth Century: The Origin of the Indebitatus Count’ [1982] CLJ 142. See also S J Stoljar, A History of the Common Law of Contract, Chapter 9. The common counts avoided pleading a fictitious promise to pay, consistent with the reforms introduced by the Common Law Procedure Act 1852 (UK) (see [125]). 91. See Fifoot, p 369. For the precedents see Bullen and Leake, pp 35ff; Fifoot, pp 393–4; A F Rath, Principles and Precedents of Pleading, Law Book Co, 1961, [63]. 92. As to awards of interest on restitutionary grounds, see Chapter 28. 93. Bank of New South Wales v Laing [1954] AC 135. 94. In some, but not all cases, the request was as fictional as the promise. See Peter Birks and Grant McLeod, ‘The Implied Contract Theory of Quasi-contract: Civilian Opinion Current in the Century Before Blackstone’ (1986) 6 OJLS 46 at 49 and further [125]. 95. However, as actions for debts, the counts could not be used for the recovery of unliquidated damages. See Fifoot, p 369. 96. See [131]. 97. As to the history of this count, see J H Baker, ‘The History of Quasi Contract in English Law’, in Restitution: Past, Present and Future, pp 44–6. 98. Hutchinson v Sydney (1854) 10 Ex 438; 156 ER 508. See further [842].

99. See Britain v Lloyd (1845) 14 M & W 762 at 773; 153 ER 683 at 687–8; Israel v Foreshore Properties Pty Ltd (in liq) (1980) 30 ALR 631 at 636; 54 ALJR 421 at 423; Vickery v JPP Custodians [2002] NSWSC 782 at [127]ff; Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116 at 118–19. 100. Paynter v Williams (1833) 1 C & M 810; 149 ER 626; Alexander v Vane (1836) 1 M & W 511; 150 ER 537; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [89]. 101. See Exall v Partridge (1799) 8 TR 308 at 310; 101 ER 1405 at 1406; Pownal v Ferrand (1827) 6 B & C 439; 108 ER 513. See further [2925]. See also Stoljar, A History of Contract at Common Law, p 115; I M Jackman, ‘Promissory Obligations in the Law of Restitution’ (1995) 69 ALJ 614. And generally on compulsion and necessitous intervention Part IV. 102. Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116 at 118–19. See further Chapter 6, [842]. 103. As to the importance of this, see Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225. 104. Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225 at [60] (Young AJA). See also Brenner v First Artists Management Pty Ltd [1993] 2 VR 221 at 257–8. 105. Henderson’s Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539; [2011] VSCA 167 at [62]. See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [79]; Burness (as liquidator of Denward Lane Pty Ltd (in liq) v Supaproducts Pty Ltd [2009] FCA 893; (2010) 74 ACSR 1 at [45]–[46] (plaintiff does not have to establish more than the request); Johnson v Leader Computers Pty Ltd (2014) 118 SASR 408; [2014] SASCFC 14. 106. Johnson v Leader Computers Pty Ltd (2014) 118 SASR 408; [2014] SASCFC 14 at [78]. 107. A & M Green Investments Pty Ltd v Progressive Pod Properties Pty Ltd [2011] NSWSC 502 (revd on other grounds in Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225) at [59] (Windeyer J), citing Eastwood v Kenyon (1840) 11 Ad & E 438, 451, 113 ER 482, 487; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [89]. See also [842]. 108. See Jessop v Lutwyche (1854) 10 Ex 614; 156 ER 584; Knight v Cambers (1855) 15 CB 562; 139 ER 544; Rosewarne v Billing (1863) 15 CBNS 316; 143 ER 806. 109. Mortimer v Gell (1847) 4 CB 543; 136 ER 620. See also Jessop v Lutwyche (1854) 10 Ex 614; 156 ER 584; Knight v Cambers (1855) 15 CB 562; 139 ER 544; Rosewarne v Billing (1863) 15 CBNS 316; 143 ER 806. 110. As to the history, see J H Baker, ‘The History of Quasi Contract in English Law’, in Restitution: Past, Present and Future, pp 48–53. An example of the form of action is quoted from Stephen’s 1827 treatise on pleadings by Edelman J in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] WASC 162 at [46]. 111. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681 (set out at [120]). See also the analyses of this case by Gummow J in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545; 185 ALR 335; [2001] HCA 68 at [76]–[89] and by Warren Swain in Mitchell and Mitchell, Landmark Cases in the Law of Restitution, Chapter 2. 112. See also [134]. This is not to assert that all non-contractual claims for money had and

received can be shown to reflect the unjust enrichment concept: see Roxborough (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [71]. This is one of the reasons why the authors prefer to speak in terms of restitution rather than unjust enrichment. See Chapter 3. 113. See Fifoot, p 365. See further Part VI. 114. The misleading terminology of waiver of tort was used. See [162], [1517], [1618]–[1622]. 115. At pp 44–50. 116. See further [123]. 117. See [120]–[123]. 118. In doing so, the editors followed the lead of Lord Goff in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 683 where he spoke of ‘the old action for money had and received — what we would nowadays call a personal claim in restitution at common law.’ See also Juul v Northey [2010] NSWCA 211 at [216]. 119. See [113]. As to the history, see J H Baker, ‘The History of Quasi Contract in English Law’ in Restitution: Past, Present and Future, pp 42–4. 120. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251 per Deane J (quoting Chitty’s Treatise on Pleading, 7th ed, 1844, vol 1, p 351). 121. See Hoenig v Isaacs [1952] 2 All ER 176 at 182 per Denning LJ. 122. See J H Baker, ‘The History of Quasi Contract in English Law’ in Restitution: Past, Present and Future, p 41. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 836 per Robert Goff J (affirmed [1981] 1 WLR 232; [1983] 2 AC 352); Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251. For an example see De Bernardy v Harding (1853) 8 Ex 822; 155 ER 1586 (see [1168]). See further [914]. 123. As to requested and accepted benefits, see [154]–[158], [909], [933], [1025], [1027]. 124. Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [86]. See also Paynter v Williams (1833) 1 Cr & M 810; 149 ER 626. 125. See further [913]. 126. See Planché v Colburn (1831) 8 Bing 14; 131 ER 305. See further [1168]. 127. See Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 316; BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 836 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352); Simpson, p 499; J H Baker, ‘The History of Quasi Contract in English Law’ in Restitution: Past, Present and Future, pp 46–8. 128. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 per Robert Goff, affirmed [1981] 1 WLR 232; [1983] 2 AC 352 (reasonable price); Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251 per Deane J (reasonable remuneration). 129. See, eg Picturesque Atlas Publishing Co Ltd v Phillipson (1890) 16 VLR 675 (purchaser of publication liable to pay for parts delivered as goods bargained and sold). See also Martin v Hogan (1917) 24 CLR 234 at 264. Cf Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280 (on acceptance of a piece of furniture to be made under a special contract, containing some unperformed term amounting to a condition precedent, an action might be maintained on the special contract with a dispensation of the condition alleged). 130. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 (affirmed

[1981] 1 WLR 232; [1983] 2 AC 352). 131. See, eg Mondel v Steel (1841) 8 M & W 858 at 870–1; 151 ER 1288 at 1293; Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280; Addison, A Treatise on the Law of Contracts and Rights and Liabilities Ex Contractu, pp 218–19; J L Montrose (1934) 5 CLJ 275 at 275–6. See further [1174]. See also [174] as to free acceptance. 132. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681. 133. See, eg Freeman v Jeffries (1869) LR 4 Ex 189 at 197–8; Re Rhodes (1890) 44 Ch D 94; Bullen and Leake, p 44. 134. See White v Copeland (1894) 15 LR (NSW) 281. See also Rutherglen Shire v Kelly (1878) 4 VLR (L) 119; Melbourne Tramway and Omnibus Co Ltd v Melbourne City Corp (1903) 28 VLR 647. 135. See R v Brown (1912) 14 CLR 17 at 25. But for an earlier description by him of the right of contribution between co-obligors as based upon implied contract, see Shire of Windsor v Enoggera Divisional Board [1902] St R Qd 23 at 30. Cf his remarks in Harvey v Hinchinbrook Divisional Board [1903] St R Qd 174 at 175 (arguendo indebitatus claim not one for ‘breach of contract or damages’), 176 (the ‘contract is implied by law’). 136. See Campbell v Kitchen & Sons Ltd (1910) 12 CLR 515 at 531. 137. See Sargood Brothers v Commonwealth (1910) 11 CLR 258 at 303. 138. Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [14]. 139. (1760) 2 Burr 1005 at 1008; 97 ER 676 at 681. For a very early recognition of the unjust enrichment concept in this passage, see [134]. 140. (1760) 2 Burr 1005; 97 ER 676. 141. That money had and received was a common law action was acknowledged by all of the justices in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 at 525 [16] (Gleeson CJ, Gaudron and Hayne JJ), 553 [96] (Gummow J), 589 [202]–[203]. Indeed, Callinan J (at [203]) reiterated with emphasis Lord Sumner’s declaration in Sinclair v Brougham [1914] AC 398 at 454–6 that Lord Mansfield ‘probably had never conceived that the action was to be described as “an equity”, as the term was understood in the Court of Chancery.’ 142. (1849) 13 Jur 431. 143. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681. 144. [1914] AC 398 at 454–5. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 551; 185 ALR 335; [2001] HCA 68 at [91]. 145. In Clarke v Shee (1774) 1 Cowp 197 at 199; 98 ER 1041 at 1042. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 548; [2001] HCA 68 at [203] (Callinan J). 146. (1766) 4 Burr 1984 at 1986; 98 ER 34 at 35. 147. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 548; [2001] HCA 68 at [85]–[86]. 148. See, eg Myers v Hurley Motor Co 273 US 18 at 24 (1927); United States v Jefferson Electric Manufacturing Co 291 US 386 at 402–3 (1934); Atlantic Coast Line Railroad Co v Macferlan 295 US 301 at 309 (1935). See further [104].

149. (2001) 208 CLR 516 at 552; [2001] HCA 68 at [94]. 150. See [117]. See also Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257, where Deane J cited Muschinski v Dodds (1985) 160 CLR 583 at 617; 62 ALR 429 (an equity case) as an example of the capacity of unjust enrichment to generate a new category of right. 151. Precedents of Pleadings, 3rd ed, pp 44–5. 152. Remon v Hayward (1835) 2 Ad & E 666; 111 ER 256; Roper v Holland (1835) 3 Ad & E 99; 111 ER 351. 153. Cf the Honourable Justice W M C Gummow, ‘Moses v Macferlan 250 Years On’ (2011) 84 ALJ 756. 154. See [124]. See also Bradford Corp v Ferrand [1902] 2 Ch 655 at 662; Baylis v Bishop of London [1913] 1 Ch 127 at 137; J Beatson and G J Virgo, ‘Contract, Unjust Enrichment and Unconscionability’ (2002) 118 LQR 352 at 355, citing Sir William Evans, On The Action for Money Had and Received, 1802, reprinted in [1998] RLR 1 and Sir Percy Winfield, The Province and Function of the Law of Tort, Cambridge University Press, Cambridge, 1931, p 129ff. See further [134]. 155. J H Baker, ‘The History of Quasi Contract in English Law’ in Restitution: Past, Present and Future, p 53. See also Gummow J in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 548; [2001] HCA 68 at [84]. 156. See further W Swain, ‘Unjust Enrichment and the Role of Legal History in England and Australia’ (2013) 36 UNSWLJ 1030; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [110]–[128] (historical review by Gageler J). 157. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [14]. 158. [1923] 1 KB 504 at 513. 159. [1913] 1 Ch 127 at 139–40 (Hamilton LJ). 160. [1914] AC 398 at 454–5. 161. Baylis v Bishop of London [1913] 1 Ch 127, later overturned: see Chapter 24. 162. Sinclair v Brougham [1914] AC 398, later ‘departed from’ in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. 163. See Morgan v Ashcroft [1938] 1 KB 49 at 62 per Sir Wilfred Greene MR. 164. Birks, Introduction, p 80. 165. Birks, Unjust Enrichment, p 14. 166. Virgo, p 46. 167. See [123]. 168. The other is the readiness to embrace the remedial constructive trust (see [247]). The word ‘lurched’ is not intended to convey disapproval, prior to the extraordinary statement in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [78]. See also Robert Boadle, ‘Conscience and Unjust Enrichment’ (2015) 89 ALJ 641. 169. See [133]ff.

170. (1987) 162 CLR 221. 171. Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ (‘the grounds of the action for recovery are framed in the traditional words of trust or use and … contemporary principles of restitution or unjust enrichment can be equated with seminal notions of good conscience’). See also Muschinski v Dodds (1985) 160 CLR 583 at 619; 62 ALR 429 at 455 per Deane J (‘general equitable notions which find expression in the common law count for money had and received’); Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 376; 111 ALR 289 at 313 per Deane and Dawson JJ (‘notions of good conscience, which both the common law and equity recognised as the underlying rationale of the law of unjust enrichment’); Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 553; 185 ALR 335; [2001] HCA 68 at [95] per Gummow J (‘general considerations resonate with equitable notions’). 172. See [138]. 173. (1874) LR 9 Ch App 244. See Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 391. 174. See Bofinger v Kingsway Group Ltd (2009) 239 CLR 268; 260 ALR 71. 175. As to Barnes v Addy, see [1731]. As to subrogation, see [139], [639]. 176. See further [444]. 177. (1988) 164 CLR 662. 178. At 673 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ. 179. (1992) 175 CLR 353. 180. [1980] 1 QB 677 at 695. 181. [1991] 2 AC 548 at 580, approved in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [17] (French CJ), [72] (Hayne, Crennan, Kiefel, Bell and Keane JJ), [144] (Gageler J). See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385 (defence ‘necessary to ensure that the enrichment of the recipient is prevented only in circumstances where it would be unjust’, emphasis in original). 182. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [17] (French CJ), [113] (Hayne, Crennan, Kiefel, Bell and Keane JJ). 183. At [69] per Hayne, Crennan, Kiefel, Bell and Keane JJ. See also [29] per French CJ. Contrast the reference to ‘who should properly bear the loss’ in [78] (set out below). 184. At [23] (French CJ). See also [140] per Gageler J who also stressed that the process of elucidating ‘injustice’ in this aspect of the unjust enrichment concept must be ‘descriptive, accumulative and incremental’ (at [141]). These principles reflect the warnings about ‘idiosyncratic notions of what is fair and just’ uttered in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256 when the unjust enrichment concept was ushered into Australian law. 185. At [77] per Hayne, Crennan, Kiefel, Bell and Keane JJ. 186. (1760) 2 Burr 1005; 97 ER 676. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [5], [23] (French CJ), [68]–[75] (Hayne, Crennan, Kiefel, Bell and Keane JJ).

See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 187. 560; 307 ALR 512; [2014] HCA 14 at [12] (French CJ),(Ashburner’s ‘two streams’ metaphor ‘seems at odds not only with commonsense, but also with the reality of equity’s influence on the common law’); [156] (Gageler J). 188. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [12] (French CJ), [156] (Gageler J). 189. See, eg Handley, Estoppel, pp 20–1. 190. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [14] (French CJ), [102] (Gageler J). See also the recognition of the analogy of the principles of equitable estoppel as expounded by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674 by the whole court in Australian Financial Leasing (at [23], [85], [149]). See further [2408]. 191. (1992) 175 CLR 353 at 378–9, emphasis added in each instance. 192. For examples, see Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; Adrenaline Pty Ltd v Bathurst City Council (2015) 322 ALR 180; [2015] NSWCA 125 at [83]. 193. [1994] 4 All ER 890 at 923. The litigation went to the House of Lords, but upon other grounds: [1996] AC 669. 194. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 551; [2001] HCA 68 at [89]. 195. See J Brunyate (ed), Equity A Course of Lectures by F W Maitland, rev ed, Cambridge University Press, Cambridge, 1947, p 20. 196. What follows is developed at greater length in Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 ABR 284. 197. See further [2415]. It should be emphasised that our only concern with this decision relates to this extraordinary passage which hopefully may come to be regarded as obiter (of the not ‘seriously considered’ kind). 198. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [78] per Hayne, Crennan, Kiefel, Bell and Keane JJ, emphasis added. 199. See [108] where we observe that this tiresome mantra attacks a straw man. 200. Particularly vexing are the absence of reference to any earlier decisions, not even Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [29]–[30] where Crennan and Kiefel JJ themselves joined French CJ in a firm endorsement of the unjust enrichment concept. Indeed, the language used by them in Equuscorp signalled a pointed departure from Gummow J’s earlier statement that the concept was ‘moulded by civilian influences [where] the theory [came] first, and the source of the theory may be the writing of jurists not the decisions of judges’ (Roxborough v Rothmans of Pall Mall Pty Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [72]). 201. See above. 202. See Lavin v Toppi (2015) 316 ALR 366; [2015] HCA 4 at [41]. The case involved ‘equitable’ contribution (see further [606]). 203. Cf (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [69] (there is to be no ‘balancing of competing equities as between the parties, based on considerations of fault’). Further as to fault in change of position, see [2422]–[2423].

204. See [407], [444]. 205. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [140]–[141]. It needs also to be recognised that, in Lord Mansfield’s day, the separation between morality and Chancery law in judicial discourse was less than today. 206. See, eg Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [30], [32] (French CJ, Crennan and Kiefel JJ); Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [65] (Hayne, Crennan, Kiefel, Bell and Keane JJ). See also Edwards v Sydney Building Group Pty Ltd [2011] NSWCA 154 at [32] (Allsop P). See also [2808]. 207. (1992) 175 CLR 353 at 378–9; 109 ALR 57. 208. See also A McLeod, ‘Mistaken Payments, Change of Position and ministerial Receipt’ (2013) 129 LQR 339 at 341–2. Retention is, of course, relevant for proprietary remedies and for the title-based (non-unjust enrichment) claim discussed in Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 (see [311]). Absence of retention helps explain why there was only limited restitution in the exceptional case of Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; 257 ALR 658; [2009] NSWCA 186. 209. An expression derived from Roman law meaning, literally, ‘as if from contract’. For the civil law, and its influence on the common law, see Peter Birks and Grant McLeod, ‘The Implied Contract Theory of Quasi-contract: Civilian Opinion Current in the Century Before Blackstone’ (1986) 6 OJLS 46; Peter Birks, ‘Fictions Ancient and Modern’, in MacCormack and Birks, The Legal Mind: Essays for Tony Honore, p 95. 210. (1760) 2 Burr 1005 at 1008; 97 ER 676 at 678. For a more recent example see CravenEllis v Canons Ltd [1936] 2 KB 403 at 412. See also Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 356, 359, 376. 211. See [123]. 212. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681. 213. (1602) 4 Co Rep 91a; 76 ER 1072 (see [113]). 214. See, eg David Ibbetson, ‘Sixteenth Century Contract Law: Slade’s Case in Context’ (1984) 4 OJLS 295 at 316–17. Cf H K Lücke, ‘Slade’s Case and the Origin of the Common Counts Part 2’ (1965) 81 LQR 539 at 553–7. 215. Cf Simpson, p 491. See also Peter Birks, ‘Fictions Ancient and Modern’, in MacCormack and Birks, The Legal Mind: Essays for Tony Honore, pp 86ff (referring to money paid fiction of promise flowed from fiction of request). 216. See further [127]. 217. (1890) 44 Ch D 94 at 105. See also [1433] for another casualty. 218. 1914] AC 398. See Eoin O’Dell who, having analysed Sinclair v Brougham in depth, describes it in Mitchell and Mitchell, Landmark Cases in the Law of Restitution, p 245 as ‘mad, bad and dangerous to know’. Sinclair v Brougham was ‘departed from’ in both its limbs in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. See further Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549; [2010] EWCA Civ 579. 219. [1914] AC 398 at 417. 220. See also his judgment (when he was Hamilton LJ) in R Leslie Ltd v Sheill [1914] 3 KB

607. 221. Given that equity was then seen to require an antecedent fiduciary relationship before any tracing ‘remedy’ could be awarded. There was no such relationship in Sinclair v Brougham [1914] AC 398 as between the depositors and the building society. See further [250], [303]. 222. Cf Guinness Plc v Saunders [1990] 2 AC 663 (see [1021]). Cf also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7. 223. [1914] AC 398 at 415, 452. 224. See Holt v Markham [1923] 1 KB 504 at 513 per Scrutton LJ. See also Morgan v Ashcroft [1938] 1 KB 49 at 62. See [121]. 225. [1939] Ch 286. This is not to say that the outcome of that case is indefensible or that the case would be decided the same today (see [844]). 226. [1914] AC 398. 227. See McLaughlin v Freehill (1908) 5 CLR 858. 228. (1908) 5 CLR 858 at 863. Cf R Leslie Ltd v Sheill [1914] 3 KB 607 at 613. 229. Sargood Brothers v Commonwealth (1910) 11 CLR 258 at 308. 230. See [117]. 231. Although Higgins J in Sargood Brothers v Commonwealth (1910) 11 CLR 258 at 309 might have regarded the point as critical had it not been for his acceptance of an earlier precedent as binding. Cf Maitland, The Forms of Action at Common Law, p 5 (fictions were contrivances ‘to get modern results out of medieval premises’). 232. See now [414]. 233. Re Continental C & G Rubber Co Ltd (1919) 27 CLR 194. 234. (1917) 24 CLR 34. 235. (1917) 24 CLR 34 at 57. 236. (1924) 34 CLR 38. See further [529]. 237. See Melbourne Tramway and Omnibus Co Ltd v Melbourne City Corp (1903) 28 VLR 647. 238. See (1924) 34 CLR 38 at 55. 239. (1924) 34 CLR 38 at 56. 240. (1924) 34 CLR 38 at 57 (citing [1914] AC 398 at 454). See also per Starke J at 70. 241. (1951) 82 CLR 463 at 474–5. See also Tozer Kemley & Millbourn (A’Asia) Pty Ltd v Collier’s Interstate Transport Service Ltd (1956) 94 CLR 384 at 408. 242. Based on certain views of Lord Denning. See [1030]. 243. (1987) 8 NSWLR 585. 244. See, eg McLaughlin v Freehill (1908) 5 CLR 858. 245. [1914] AC 398 (see [126]). 246. See Ward v Griffiths Bros Ltd (1928) 28 SR (NSW) 425; Horton v Jones (1934) 34 SR (NSW) 359 at 367–8 (affirmed on other grounds (1935) 53 CLR 475); Horton v Jones (No 2) (1939) 39 SR (NSW) 705 at 719–20. Significantly, there was early acceptance of the English decision in Craven-Ellis v Canons Ltd [1936] 2 KB 403 (see [1027]), by Jordan CJ (for the court) in Horton v Jones (No 2) (1939) 39 SR (NSW) 705 at 720 and Newton v

Brownett (1940) 41 SR (NSW) 1 at 6 (affirmed without reference to the point sub nom Brownett v Newton (1941) 64 CLR 439); and by Williams J in Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246. See also Johnson’s Tyne Foundry Pty Ltd v Maffra Corp (1948) 77 CLR 544 at 562. 247. (1924) 34 CLR 38 (see [127]). 248. See Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235, 246. 249. (1944) 18 ALJ 324. 250. For other similar cases, see Chapter 6 (Improper Pressure). 251. (1947) 74 CLR 148 at 175 (see further [812], [823]). The House of Lords would reach a similar position on agency of necessity in 1981: see China-Pacific SA v Food Corp of India (The Winson) [1982] AC 939 especially at 958 and 965. See Chapter 8. 252. See Bank of New South Wales v Murphett [1983] 1 VR 489 at 493 (Starke J), 496 (Crockett J). 253. See Re Diplock [1948] Ch 465 at 480. 254. See [128]. 255. See [134] as to the earliest use of this concept in English law, in 1802. 256. [1941] AC 1 at 29. He went on to make his famous statement that the ghosts of the past should not now present substantive obstacles to just claims. This was an allusion to Maitland’s statement that though the forms of action have been buried they ‘still rule us from their graves’. See Maitland, The Forms of Action at Common Law, p 1. See also Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304 at 310. 257. [1943] AC 32 at 62–3. See also Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534 at 545; Spence v Crawford [1939] 3 All ER 271 at 288–9; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 356; 111 ALR 289. Lord Wright had published a review of the first Restatement in 1937 (see [104]). 258. [1943] AC 32 at 61. 259. [1943] AC 32 at 59. 260. [1943] AC 32 at 55. 261. [1943] AC 32 at 74. 262. [1943] AC 32 at 77. 263. Reference was made to Cantiare San Rocco SA v Clyde Shipbuilding and Engineering Co Ltd [1924] AC 226. See W W Buckland, ‘Casus and Frustration in Roman and Common Law’ (1932) 46 Harv LR 1281; Robin Evans-Jones, ‘Unjust Enrichment, Contract and the Third Reception of Roman Law in Scotland’ (1993) 109 LQR 663. 264. See further [916]. 265. See [1236]–[1268]. 266. Certain judgments of Lord Denning provide well-known examples. See James v Thomas H Kent & Co Ltd [1951] 1 KB 551; Stockloser v Johnson [1954] 1 QB 476 at 492; Kiriri Cotton Co Ltd v Dewani [1960] AC 192 at 204–5. The context is the ineffective contracts area. 267. [1943] AC 32 at 61 (see [129]). 268. (1954) 54 SR (NSW) 203 at 206, 222. See also Annal v Commonwealth Hostels Ltd [1958]

SASR 296. 269. (1954) 54 SR (NSW) 203 at 222. 270. (1760) 2 Burr 1005; 97 ER 676. 271. (1962) 63 SR (NSW) 453 at 457. 272. (1959) 102 CLR 108 at 146. See also Re Gasbourne Pty Ltd [1984] VR 801 at 846ff. 273. See [104]. 274. Deglman v Guaranty Trust Co of Canada [1954] 3 DLR 785. 275. (1987) 162 CLR 221; 69 ALR 577. See also Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51; 126 ALR 1; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 at 540 [63], 551 [90] per Gummow J, 578 [171] per Kirby J; 185 ALR 335; [2001] HCA 68. 276. For discussion of the case see [1024]. 277. [1914] AC 398 (see [126]). 278. [1991] 2 AC 548. See Peter Birks, ‘The English Recognition of Unjust Enrichment’ [1991] LMCLQ 473. Cf Lord Goff, ‘The Future of the Law of Restitution’ (1989) 12 Syd LR 1; Gareth Jones ‘A Topography of the Law of Restitution’ in Finn, Essays, p 1. 279. (1987) 162 CLR 221; 69 ALR 577. 280. (1987) 162 CLR 221 at 256. 281. (2001) 208 CLR 516 at 551; 185 ALR 335; [2001] HCA 68 at [90]. 282. (1760) 2 Burr 1005; 97 ER 676. 283. Quoting the first edition of Maddaugh and McCamus, The Law of Restitution, p 7. 284. See [123]. 285. See Paul v Pavey & Matthews Pty Ltd (1985) 3 NSWLR 114. 286. See also Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 357, 376; 111 ALR 289. 287. (1993) 176 CLR 344 at 376; 111 ALR 289. See also at 357 per Mason CJ, with whom Brennan and Toohey JJ agreed (implied contract approach ‘no longer represents the law in Australia’). 288. Cf J Beatson, ‘What Can Restitution Do For You?’ (1989) 2 JCL 65 (reprinted as revised in Beatson, p 1). 289. See [133]–[139]. 290. See [140]ff. The analytical framework is set out at [108]. 291. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681. 292. See [122]. 293. See [128]. 294. It appears that the citation of certain provisions of the Restatement, Restitution in United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 18 (prompted by the argument of A T Denning KC) was the first occasion in which any Restatement had been cited in the House of Lords. For Australian examples see Suttons Motors Pty Ltd v Campbell (1956) 56 SR

(NSW) 304 at 311; Bryson v Bryant (1992) 29 NSWLR 188 at 205. 295. American law was rarely cited in Australian courts before full borrowing rights to the library were tendered to Australian judges by Sir Anthony Mason at the time of his swearing in as Chief Justice. See Commonwealth Law Reports, vol 162, p x. It is now commonplace to cite Restatement, Third (see [104]). 296. [1954] 3 DLR 785. See now Garland v Consumers’ Gas Co (2004) 237 DLR (4th) 385. Generally, see Paul M Perell, ‘A Survey of the Case Law about the Cause of Action for Unjust Enrichment’ (2005) 29 Advocates’ Quarterly 458. Canada has later shifted away, to the dismay of a leading academic in that jurisdiction (see [107]). 297. Editions of Goff and Jones, The Law of Restitution, were published by Sweet & Maxwell, London, in 1966, 1978, 1986, 1993, 1998, 2002 and 2007. 298. It is reproduced in an edited form in [1998] RLR 1–33. 299. See [120]. 300. See the Table of Contents prepared by the editors, Professors Peter Birks, Francis Rose and Lionel Smith. 301. Hoc natura aequum est, neminem cum alterius detrimento fieri locupletiorem. 302. [1998] RLR 1 at 2. 303. See Sir Anthony Mason, ‘Themes and Prospects’ in Finn, Essays in Equity, p 246. Cf Shell Co of Australia Ltd v Esso Australia Ltd [1987] VR 317 at 329, 342, 345. 304. See Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 412 per Greer LJ (the obligation to pay reasonable remuneration for work done when there is no binding contract between the parties is one of the cases referred to in books on contracts as obligations arising quasi ex contractu imposed by a rule of law, and not by an inference of fact arising from the acceptance of services or goods). 305. See, eg Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 320 per Jordan CJ for the court (liability based on obligation imposed by law which does not depend on an inference of an implied promise). 306. (1987) 162 CLR 221; 69 ALR 577. 307. (1987) 162 CLR 221 at 256–7. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]. 308. (1987) 162 CLR 221 at 256–7. See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375, 389, 406; 109 ALR 57; Pearce v R (1998) 194 CLR 610; 156 ALR 684; [1998] HCA 57 at [66]. 309. (1987) 162 CLR 221 at 257; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [85]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [30]. Cf Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151] (areas are ‘specific and usually longestablished’). 310. See also [102], [126], [127] and Chapter 2. 311. (1992) 175 CLR 353. 312. See generally [414]–[417]. 313. See further [144]. 314. (1993) 176 CLR 344 at 376; 111 ALR 287.

315. (1993) 179 CLR 101 at 111; 116 ALR 385. Cf Chappuis v Filo (1990) 19 NSWLR 490 at 503. 316. See, eg Sullivan v Moody (2001) 207 CLR 562; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [23], [25], [34], [43], 45]. 317. (1987) 162 CLR 221 at 257. See also [121], [138], [606], [1142]. 318. Cf Mr Justice W M C Gummow, ‘Unjust Enrichment, Restitution and Proprietary Remedies’ in Finn, Essays, p 49 who questioned ‘whether there is much to be learnt from being told that the well settled and understood principles by which equity intervenes in transactions’ are but part of a general law of restitution. Contrast Sir Anthony Mason (1989) 1 JCL 265 at 266. 319. (1987) 164 CLR 137 at 153. See also Bryson v Bryant (1992) 29 NSWLR 188 at 200, 205, 220, 222–3; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 251, 252, 257 and further [328], [1504]. 320. Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 at 553; 76 ALR 485. See further [104] (United States influence). 321. See, eg Baumgartner v Baumgartner (1987) 164 CLR 137 at 154; Stern v McArthur (1988) 165 CLR 489 at 526–7. See generally, Keith Mason, ‘Restitution in Australian Law’ in Finn, Essays, pp 37–42. See further [175], [256] and also [1139], [1169], [1170] (relief against forfeiture). 322. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]. In Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 the court also adopted an ‘either-or’ approach, rejecting any role for unjust enrichment in nonconsensual subrogation (see [639]). 323. In Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 the New South Wales Court of Appeal held that a claim could be brought against persons who received and still ‘retain’ money improperly disbursed by those subject to fiduciary obligations (see Chapter 3). This, however, is not an unjust enrichment claim. 324. See, eg Home Management Maintenance Pty Ltd v Doyle (1992) 107 FLR 225 (loss apportionment in name of restitution); Tea Tree Gully Builders Co Pty Ltd v Martin (1992) 59 SASR 344 (restitution where contract still on foot see [909]). Cf Nepean District Tennis Association Inc v Penrith City Council (1988) 66 LGRA 440 (restitution apparently based solely on unconscionable conduct); Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 446 per McHugh JA (‘modern doctrine of restitution enables the court to overcome’ injustices of illegality see [2608]). See further [2904]. 325. See Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 (see [639]). 326. (1987) 162 CLR 221; 69 ALR 577. 327. See, eg Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 227 per Mason and Wilson JJ, and at 255, 257, 263 per Deane J. 328. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 255 per Deane J. See also Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673 per the court (compensation for the benefit of unjust enrichment). 329. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256 per Deane J. 330. See [159]–[162], [205]–[209] and generally Chapter 29.

331. See [141], [144]. See generally James Goudkamp and Charles Mitchell, ‘Denials and Defences in the Law of Unjust Enrichment’ in Mitchell and Swadling, Restatement Third Essays, Chapter 6. 332. (1988) 164 CLR 662 at 673. See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, especially at 402, 406; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344, especially at 375; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 67; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 257–8. 333. See Sadler v Evans (1766) 4 Burr 1984 at 1986; 98 ER 34 at 35. Further as to the twostaged approach, see [123]. 334. (1992) 175 CLR 353; 109 ALR 57. See also Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 65 per Mason CJ. 335. See further [2202], [2331]. As to ‘equitable’ triggers for established and novel defences in money had and received claims, see [123], [139]. 336. See Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75, 90, 103; 126 ALR 1. 337. See further [160]. This is, of course, subject to the availability of defences. 338. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 per Robert Goff J (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). 339. See further [160], [213] and Chapter 14 (Valuation and Adjustment). 340. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257, 263–4. 341. As to requested benefits, see [154]–[156], [842]. 342. See further [155], [1416]. 343. See further [207]. 344. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 (see [434]); David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (see [414]). 345. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 (see [1024]). 346. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 527, 529; [2001] HCA 68 at [20], [25]–[29]. See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382, 388; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 375. 347. See Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 123. Cf Warman International Ltd v Dwyer (1995) 182 CLR 544. 348. Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 294, 298; 187 ALR 612; [2002] HCA 17 at [22], [38]; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 at [88]; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4 at [41]. 349. See Foran v Wight (1989) 168 CLR 385, especially at 438; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, especially at 382–3, 388, 393; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344, especially at 359, 375. 350. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; Baltic Shipping Co v

Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 355–6, 375. See further [908] (view that Pavey applies generally to all types of ineffective contracts). 351. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ (‘mistake, duress or illegality’). See also Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363 at 374 per Gummow J; Bryson v Bryant (1992) 29 NSWLR 188 at 223 per Sheller JA (with whose reasons Samuels A-JA generally agreed); Equiticorp Financial Services Ltd (NSW) v Equiticorp Financial Services Ltd (NZ) (1992) 29 NSWLR 260 at 300 (affirmed and approved sub nom Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 at 151); Aviacion Colombiana Limitada Aviaco LTDA v Commonwealth of Australia (1994) Unreported, FCA (FC), 14 February per Cooper J; Shuman v Coober Pedy Tours Pty Ltd (1994) Unreported, SC(SA) (FC), 14 February per Olsson J. 352. See Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Iezzi Constructions Pty Ltd v Currumbin Crest Development Pty Ltd (1994) 13 ACLR 29. Cf Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12. 353. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382, 388 (total failure of consideration in relation to payment made under purported contract); Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 257–8 (quantum meruit). 354. See [2807]. 355. These include Justice Finn, ‘Equitable Doctrine and Discretion in Remedies’ in Restitution: Past, Present and Future, p 252; Jackman; Dietrich, Restitution: A New Perspective; Mark Leeming, ‘Subrogation, Equity and Unjust Enrichment’ in Fault Lines in Equity at pp 41–3. See also I M Jackman, ‘Why the History of Restitution Matters’ in Historical Foundations of Australian Law, vol 2, at pp 252–4 (capacity of ‘unjust enrichment school of restitution theorists’ to generate fictions in attempt to overcome ancient fictions; and to gloss over a legal world that is ‘by nature untidy, contingent and incorrigibly plural’); Mark Leeming, ‘Theories and Principles Underlying the Development of the Common Law: The Statutory Elephant in the Room’ (2013) 36 (3) UNSWLJ 1002 (criticism of Birks’s taxonomy for failure to recognise impact of statute). 356. In particular, we would reject any suggestion that statutory provisions have been overlooked, lest they contradict some ideal notion of unjust enrichment as a principle of direct application (as to which unicorn, see [108], [123]). 357. See [123]. 358. See, eg Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44. Cf [135] (equitable fillips for unjust enrichment itself), [639]. 359. See McInnes, pp 76–7. 360. (1997) 188 CLR 159 at 226, footnotes omitted. 361. (1995) 83 California Law Review 1191. 362. See further [104]. 363. See Roxborough v Rothmans of Pall Mall Australia Ltd. (2001) 208 CLR 516 at 543; 185 ALR 335; [2001] HCA 68 at [72] (‘To a lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writing of jurists not the decisions of judges. However, that is not the way in which a system based

on case law develops….’). 364. See Birks, Introduction, pp 19, 23 (unjust enrichment required effort to ‘look downwards to the cases’; ‘unjust’ must be ‘tied strictly to the cases’). Furthermore, Birks and other scholars have always recognised that restitution could be a response to triggers apart from unjust enrichment, for example wrongs. 365. See Roxborough v Rothmans of Pall Mall Australia Ltd. (2001) 208 CLR 516 at 543; 185 ALR 335; [2001] HCA 68 at [70]–[75]. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [77]. As to this entailing misunderstanding of Posner, see Keith Mason, ‘What is Wrong with TopDown Legal Reasoning?’ (2004) 78 ALJ 574. 366. (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [32]. This charge is also answered directly by Goff & Jones §1-08. 367. See Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 at [87]. Hopefully this was not the ‘fate’ that arrived on one reading of Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [78] (see [123]). 368. See Roxborough v Rothmans of Pall Mall Australia Ltd. (2001) 208 CLR 516 at 543; 185 ALR 335; [2001] HCA 68 at [74]. This passage was approved by the whole court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]. 369. See further [123], [2904]. 370. See [109]–[111]. 371. See [122]. See further Chapter 2. 372. Cf Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]. 373. See [106]. 374. Aspects of the framework are adverted to, with approval or at least absence of disapproval, in Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673–4 (per curiam); Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75 (Mason CJ); Roxborough v Rothmans of Pall Mall Australia Ltd. (2001) 208 CLR 516 at 543; 185 ALR 335; [2001] HCA 68 at [139] (Kirby J). Qualifying or vitiating factors (unjust factors) are mentioned in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [150] and Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [20], [73], 141]. Aspects of the framework were invoked to reject putative claims in Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635. 375. But see [1505], Chapter 19 (wrongful death). 376. It is also consistent with a general perspective of a concept of ‘restoration’ (see [101]). See Spence v Crawford [1939] 3 All ER 271 at 288; Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650. 377. See Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 663 at 673. This involves the first part of the orthodox ‘two-staged’ approach. 378. See [242]–[257].

379. See further [146]–[158] (benefit). 380. See Peter Birks, ‘The English Recognition of Unjust Enrichment’ [1991] LMCLQ 473 at 476. 381. Birks, Introduction, pp 23–4. See also Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363 at 374; Bryson v Bryant (1992) 29 NSWLR 188 at 222; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 73 (Mason CJ). See also Restatement, Third §1 (passage quoted at [139]). 382. See Birks, Unjust Enrichment, pp 12, 21, 282. 383. See [135], [140], [218]–[221]. See also Chapter 3. 384. Including Edelman and Bant. As we recognise at [106], Birks shifted ground a third time shortly before his death. We continue, like Professor Burrows, to support the broad structure of restitution suggested by Birks’s earliest writings. 385. (1987) 162 CLR 221 at 256. 386. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [150]. We venture the addendum that notions of fairness and unconscionability may be relevant to the extent of remedial responses: see [256]. 387. See further Chapter 2. 388. As distinct from restitution to vindicate a property interest (see Chapter 3) and restitution for wrongs (see Part VI). 389. See [151]–[153], [932] (incontrovertible benefit). The award usually carries interest, thereby mitigating any unjust enrichment flowing from the defendant’s enjoyment of the benefit. See further Chapter 28. 390. [1979] 1 WLR 783 at 799 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). 391. See further [137], [213] and generally Chapter 14 (valuation in context of claims arising out of ineffective contracts). 392. See generally Chapter 24. The defence was applied in Lipkin Gorman (a firm) v Karpnale [1991] 2 AC 548, something that either makes the case controversial because of the difficulty of fitting it into an unjust enrichment mould or shows that restitutionary defences are also available in other parts of the law of restitution. See further [319], [2410]. 393. Statutes of limitation illustrate a defence which may also go to liability. See generally Chapter 27. 394. See [2909]. See further James Goudkamp and Charles Mitchell, ‘Denials and Defences in the law of Unjust Enrichment’ in Mitchell and Swadling, Restatement Third Essays, Chapter 6. 395. See generally [149], [2213], [2308], [2322], [2404]–[2405], [2530], [2710]. As to estoppel being more than a rule of evidence, see Handley, Estoppel, pp 6–9. 396. See generally Chapter 26. 397. See further [2204] (issue not one to be decided simply by reference to whether the court considers it unjust or unfair that the plaintiff should recover). 398. See also [162], [1517], [1618]–[1622] (waiver of tort terminology). 399. This is, in fact, much more than an issue of terminology, since it goes to the very nature of

the defendant’s liability. See further [205]–[209]. 400. (1987) 162 CLR 221 at 250; 69 ALR 577 at 599. The test was previously approved in Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246 per Williams J. See also Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 at 536 (requirements of claim against defendant in breach are those set out in De Bernardy v Harding (1853) 8 Ex 822; 155 ER 1586 (see [1168])). Cf Milgun Pty Ltd v Austco Pty Ltd [1988] 2 Qd R 670 at 672. 401. Stated by Jordan CJ in Horton v Jones (1934) 34 SR (NSW) 359 at 367–8 (affirmed on other grounds (1935) 53 CLR 475). 402. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 390 per Brennan J (unjust enrichment is ‘present in all cases in which the common law action for moneys had and received lies’). Cf Chapter 3. 403. See further [203], [917]. ‘Agreed or contemplated’ since not all such claims are contractual. 404. See further [203], [912]. However, we have continued to employ ‘quantum meruit’ in headings. Cf Birks, Introduction, p 78. 405. See [235] on the distinction between personal and proprietary remedies in restitution. 406. See [135]. 407. At least as the law currently stands. See [143] and further [157], [928], [931]–[935], [2014]. 408. Absent from this list is the concept of ‘reliance’. Although reliance figures prominently throughout the law of obligations, the general perspective of benefit is that reliance on words or conduct is not in itself a benefit. See further [149] and generally [936]–[941]. There is, arguably, an exception where reasonable remuneration is sought against a party in breach of contract. See [158], [934], [1168], [1408], [1430]. 409. [1979] 1 WLR 783 at 805 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). 410. See Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 258 per Byrne J (question of benefit is determined by the ‘perspective of the recipient’). Cf Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; 257 ALR 658; [2009] NSWCA 186 (discussed by E Bant, ‘Incapacity, Non Est Factum and Unjust Enrichment’ (2009) 33 MULR 368). 411. See Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 257 per Byrne J. See generally E W Hope, ‘Officiousness’ (1929) 15 Cornell LQ 25; Goff and Jones, §1-080. Cf Birks, Introduction, p 103. See also [810]. 412. See [157], Chapter 8 (necessitous intervention). 413. See J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57; Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) 38 FCR 501. See also [910]; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 (discussed [910]). See also [215]. 414. Cf Peel Rumsey v North Eastern Railway Co (1863) 14 CBNS 641; 143 ER 596 (saving of costs of carriage); Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 165 (services which the plaintiff was not obliged to render). See further [938]. 415. As to requested benefits, see [154]–[156], [933].

416. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 per Robert Goff J (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). See [157]–[158].Cf Chapter 8 (necessitous intervention). Although exceptions may arise under statute, statutory provisions generally reinforce the common law. See, eg [1038] (legislation dealing with unsolicited goods and services). Cf [1037], [1040] (necessaries). See also [845]. 417. See generally [151]–[153], [157]–[158]. 418. See, eg Aviacion Colombiana Limitada Aviaco LTDA v Commonwealth of Australia (1994) Unreported, FCA (FC), 14 February per Cooper J. Contrast Burrows, pp 21–4 who asserts that there is a ‘rebuttable presumption’ that receipt of part of services bargained for is ‘beneficial to the defendant’. 419. See [156]. 420. The main examples are found in the context of ineffective contracts. See generally Pt V. Statute may invoke other concepts. See, eg [1236]–[1268] (frustrated contracts legislation). For a broader version see s 71 of the Contracts Act 1950 (Malaysia), a provision derived from the Indian Contracts Act 1950 discussed by David Fung, ‘Restitution and Section 71 of the Contracts Act 1950’ [1994] 1 MLJ lxxix. 421. This proposition is supported by the authorities. See, eg Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221; Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525; Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775 and generally [935]. See also the incontrovertible benefit cases referred to at [152]–[153]. 422. See J Beatson, ‘Benefit, Reliance and the Structure of Unjust Enrichment’ [1987] CLP 71 (reprinted as revised in Beatson, p 21). See also John P Dawson, ‘Restitution Without Enrichment’ (1981) 61 Boston ULR 563; Sharon Christensen, ‘Recovery for Work Performed in Anticipation of Contract: Is Reliance an Element of Benefit?’ (1993) 11 Aust Bar Rev 144. Contrast Restatement (Second) Contracts, 370 (part performance or reliance). 423. For the concept of an ‘independent’ claim in restitution see [220], [1514]. 424. Concepts which place greater emphasis on reliance and unconscientious conduct may also apply. See [1146], [1147]. 425. See J Beatson, ‘Benefit, Reliance and the Structure of Unjust Enrichment’ [1987] CLP 71 (reprinted as revised in Beatson, p 21). Cf Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 (see [1035]). It has been suggested that the law recognises, or should recognise, a concept of ‘unjust sacrifice’. See Samuel Stoljar, ‘Unjust Enrichment and Unjust Sacrifice’ (1987) 50 MLR 603; G A Muir, ‘Unjust Sacrifice and the Officious Intervener’ in Finn, Essays, p 241. Compare, however, Mason v New South Wales (1959) 102 CLR 108 at 146 per Windeyer J (‘the concept of impoverishment as a correlative to enrichment may have some place in some fields of continental law. It is foreign to our law’). 426. See also [149], [936]–[941] (relevance of reliance). 427. See Birks, Introduction, p 129 (analogy of the hire of corporeal property). Cf [1623] (wrongful user cases). 428. See also Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 257 (economic benefit not required). Cf Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays,

p 134. 429. See Chapter 14. 430. See Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 461, 502, 506; Hawkins v Clayton (1988) 164 CLR 539 at 576; Norris v Sibberas [1990] VR 161 at 172. 431. See [936]. 432. See Atiyah, Essays on Contract, pp 10ff. 433. The classic case is where reliance amounts to an executed consideration in the form of conduct in acceptance of an offer. Thus, on facts conforming to Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, ‘the relation of a quid pro quo’ may exist between an offer ‘capable of acceptance by the doing of an act, and the act which is put forward as the executed consideration’ for the promise: Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 at 456 per the court. 434. (1988) 164 CLR 387 at 406; 76 ALR 513. 435. Under s 90 of the American Law Institute’s Restatement of the Law, Contracts, as adopted and promulgated in 1932, reliance was seen as a substitute for consideration. See, eg Drennan v Star Paving Inc 333 P 2d 757 (Cal, 1958). Section 90(1) of the Restatement (Second) Contracts now gives effect to a broader view (cf Hoffman v Red Owl Stores Inc 133 NW 2d 267 (Wis, 1965)) and greater emphasis is given to the need to avoid injustice. 436. In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 406 Mason CJ and Wilson J referred to Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] 1 AC 114 as suggesting that this may be found, ‘if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party’. 437. See further [936]–[941]. 438. (1987) 162 CLR 221 at 257, 263; 69 ALR 577 at 604, 609. 439. See, eg J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 at 66; Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 257. 440. Foran v Wight (1989) 168 CLR 385 at 438; 88 ALR 413 at 451 per Deane J (the ‘benefit whose receipt falls into one of the categories of case which the law characterises as unjust enrichment may be … constructive as, for example, where it involves full or partial performance of something requested to be done’). See also [1025] (acceptance of benefit), [1046] (estoppel). 441. Cf Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 159 (benefit must be clear and manifest). See further [932]. 442. Sutherland v Take Seven Group Pty Ltd (1998) 29 ACSR 201 at 204; Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) 5 VR 577 at 600–1; Dean-Willcocks v Nothintoohard Pty Ltd (in liq) [2005] NSWSC 357; (2005) 53 ACSR 587 (Barrett J); [2006] NSWCA 311 (CA); CSR Ltd v Amaca Pty Ltd [2007] NSWCA 107. See also [155], [839]. Payment of another person’s debt raises additional issues: see Brasher v O’Hehir [2005] NSWSC 1194 at [36]–[37] and generally [841]–[847] of this work. 443. See [153]. 444. W Cook Builders Pty Ltd (in liq) v Lumbers [2007] SASC 20 at [70] (revd on other grounds: Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412;

[2008] HCA 27). See further [153]. 445. See [152], [932]. But for title-based claims that do not involve the unjust enrichment concept, benefit must be ‘retained’ in some situations (see [311]). 446. For the ‘unjust factors’ see [164]–[175]. 447. Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27. See generally [215]. 448. See further [932], [1027], [1036], [1416], [1418], [1437], [1438], [1439]. 449. See Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co (The Manila) [1988] 3 All ER 843 at 855 per Hirst J (‘neat phrase’). See also Van den Berg v Giles [1979] 2 NZLR 111 at 122 and the Australian cases referred to at [155]. Cf Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [75]. Cf Marston Construction Co Ltd v Kigass Ltd (1989) 46 BLR 109 (see [1036]). For discussion in a Canadian case see Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 158ff. 450. (1987) 8 NSWLR 662 at 664. See also Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 35. 451. Sutherland v Take Seven Group Pty Ltd (1998) 29 ACSR 201; Sherred v McDonald [2005] QSC 153; Work Childcare Holdings Pty Ltd (in liq) v Dwyer [2006] NSWSC 1443; DeanWillcocks v Nothintoohard Pty Ltd (in liq) [2006] NSWCA 311. See also [458]. 452. (1988) 13 NSWLR 303 at 312–13. See also Johnson Matthey (Aust) Pty Ltd v Dascorp Pty Ltd (2003) 9 VR 171; [2003] VSC 291 at [222]; Wade Sawmill Pty Ltd v Colenden Pty Ltd [2007] QCA 455; (2007) Aust Torts Rep 81-927. 453. (1990) 20 NSWLR 57. See David Fung (1991) 4 JCL 273. 454. [1982] AC 939. See further [823]. 455. Dean-Willcocks v Nothintoohard Pty Ltd [2006] NSWCA 311 at [101]–[107] (‘merely a convenient expression’; Beazley JA at [101]). 456. See Goff and Jones, §1-023 ff. 457. See W Cook Builders Pty Ltd (in liq) v Lumbers [2007] SASC 20 at [70] (reversed on other grounds: Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27). See also [213] and further [932]. 458. The classic example is Sumpter v Hedges [1898] 1 QB 673 (see [1155]). For contrary (but unexplained) examples see Home Management Maintenance Pty Ltd v Doyle (1992) 107 FLR 225 at 229; Tea Tree Gully Builders Co Pty Ltd v Martin (1992) 59 SASR 344 (see [909]). 459. Dimond v Lovell [2002] 1 AC 384 at 397. See also [1623]–[1629]. 460. See Chapter 28. 461. See [2807]. 462. See [155]. 463. See [116], [2925]. 464. See Chapter 6, [842]. 465. See [118], [156]. 466. [1993] 2 VR 221 at 258. See also ABB Power Generation Ltd v Chapple (2001) 25 WAR

158. 467. See [933]. 468. See, eg Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27. But cf Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. For discussion see [1151]–[1153], [1205]. 469. See [157]–[158]. Contractual allocations of risk must also be respected. See [215]. 470. As to incontrovertible benefits, see [151]–[153]. 471. The principle is, of course, in many contexts qualified by statute. See, eg [1236]–[1268] (frustrated contracts legislation). It is also qualified, particularly in the context of rescinded contracts (see generally on restitutionary claims made in this context, and also contracts set aside, Chapter 13), by the requirement of restitutio in integrum, where counter-restitution may be the price of restitution in relation to a monetary benefit. See generally on the requirement of restitutio in integrum [1329]–[1331], [1431]–[1439]. 472. Such contracts may be inherently ineffective or subsequently become so, by discharge or rescission. See generally on the contrast between inherently ineffective contracts and contracts which subsequently become ineffective [902]–[904], and see generally on restitutionary claims which arise in such contexts Part V. 473. See generally on restitutionary claims made in the context of contracts discharged following breach or repudiation Chapter 11. For claims made where discharge occurs without breach see generally Chapter 12. 474. See [151]–[153]. Whether there is scope for an independent concept of unconscientious conduct is unclear. Cf [175]. However, bases for liability other than restitution for unjust enrichment may, of course, apply. See, eg [1046] (estoppel). 475. See generally Chapter 8. 476. See, eg [1173], [1235] (apportionment legislation); [1176], [1235] (legislation on international sale of goods contracts); [1236]–[1268] (frustrated contracts legislation). 477. See Gareth Jones, ‘The Law of Restitution: the Past and the Future’ in Burrows Essays, p 3 and further [934]. This principle was expounded enthusiastically by Peter Birks, ‘Restitution for Services’ [1974] CLP 13 and Birks, Introduction, pp 114–15, 265ff; Birks, Unjust Enrichment, pp 56–8. See further [934], [1025]. 478. As to requested benefits, see [154]–[156]. 479. Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at [7] per French CJ, Gummow, Hayne and Bell JJ, emphasis added. See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27 at [80]. See also [810] where we explain the general principle rejecting restitution in favour of interveners. 480. Taylor v Laird (1856) 25 LJ Ex 329 at 332 per Pollock CB. 481. See [1025], [1027]. 482. See [934]. This is another aspect of restitution’s role of respecting the allocation of risks under contracts (see generally [215], [909]). 483. [1898] 1 QB 673. 484. See esp [934], [1155]–[1160]. 485. See Burrows, pp 20–3, 402–7; Andrew Burrows, ‘Free Acceptance in the Law of

Restitution’ (1988) 104 LQR 576; Geoffrey Mead, ‘Free Acceptance: Some Further Considerations’ (1989) 105 LQR 460. 486. Burrows, p 21. 487. Burrows, p 21. See also Fensom v Cootamundra Race Course Reserve Trust [2000] NSWSC 1072 at [97]; Hughes v Molloy [2005] VSC 240. 488. Lamb v Bunce (1815) 4 M & S 836; 105 ER 836; Leigh v Dickerson (1884) 15 QBD 60 at 64–5; Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 249; Re Cleadon Trust Ltd [1939] Ch 286 at 298. See generally, Virgo, pp 82–5. 489. For the concept of ineffective contract see [902]. 490. See [931]–[935]. See also [174] (acceptance as unjust factor). 491. See Rowe v Vale of White Horse District Council [2003] 1 Lloyd’s Rep 418. See also the passage from Goff and Jones quoted above and Edelman and Bant, p 312. See further [174]. But see [934]. 492. The term was coined by Goff and Jones. The idea was taken up enthusiastically in Birks, Introduction where it was argued that the concept served double duty, both as showing an enrichment that could not be ‘subjectively devalued’ and that it is unjust. Burrows, pp 57– 9, 334–9 challenges the concept and surveys the academic literature to date (2011). 493. For example, does it establish ‘benefit’ and/or the ‘unjust factor’ in an unjust enrichment calculus? 494. See Benedetti v Sawiris [2014] AC 938; [2013] UKSC 50. See also Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775; [2004] EWCA Civ 47; Chief Constable of Greater Manchester Police v Athletic AFC Ltd [2008] EWCA Civ 1449. 495. Chapter 17. 496. See, eg Liebe v Molloy (1906) 4 CLR 347 at 354 (implied contract may arise ‘from the owner standing by and seeing the work done by the other party, knowing that the other party … was doing the work in the belief that he would be paid for it as extra work’); Horton v Jones (1934) 34 SR (NSW) 359 at 367 (Jordan CJ), approved in Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246 per Williams J (‘accepts the benefit of [the plaintiff’s] acts’) (see also at 235 per Starke J (‘taken the benefit of the work done, goods supplied, or services rendered’)); Steele v Tardiani (1946) 72 CLR 386 at 402; Re Universal Distributing Co Ltd (1933) 48 CLR 171 (Dixon J) (see further [839]). 497. See, eg Steele v Tardiani (1946) 72 CLR 386 (analysed by us as a restitution case at [1165]). Some of the early cases were definitely restitutionary and only restitutionary. See [1158]. See also Re Universal Distributing Co Ltd (1933) 48 CLR 171. 498. See [934], [1025], [1031], [1032]. 499. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 227. See also at 227–8, 229, 255–6, 257, 259, 260, 262–3, 264; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [39], [53], [75], [80]. See further [934]. 500. See generally Mitchell McInnes, ‘Free Acceptance in the Australian Law of Restitution’ (1996) 24 ABL Rev 238; G J Tolhurst and J W Carter, ‘Acceptance of Benefit as a Basis for Restitution’ (2002) 18 JCL 52. For illustrations see Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 445; McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 at 313; Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 35; J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 at 66; Brenner v First Artists’

Management Pty Ltd [1993] 2 VR 221 at 257, 260; Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 at 538; Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122 at 128; Angelopoulos v Sabatino (1995) 65 SASR 1; Trimis v Minna [1999] NSWCA 140 at [64]; ABB Power Generation Ltd v Chapple (2001) 25 WAR 158; Damberg v Damberg (2001) 52 NSWLR 492 at 527–9; Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) 5 VR 577 at 599–609; Dean-Willcocks v Nothintoohard Pty Ltd (in liq) [2006] NSWCA 311 at [103]. See also Van den Berg v Giles [1979] 2 NZLR 111. 501. See further [934]. 502. See Damberg v Damberg (2002) 52 NSWLR 492 at 529, 530 per Heydon JA, for the Court, citing Goff and Jones, The Law of Restitution, 5th ed, pp 18–19, 63; Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) 5 VR 577 at 601; W Cook Builders Pty Ltd (in liq) v Lumbers [2007] SASC 20 at [59]–[61]. See [158]. 503. (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 (see [910]). 504. See generally [215]. 505. At [80] per Gummow, Hayne, Crennan and Kiefel JJ. See also at [82]. See also the explanation of Lumbers in Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at [7]. 506. See also the reasoning of Edelman J in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] WASC 162. 507. [1993] 2 VR 221. 508. [1993] 2 VR 221 at 260 (adopting Jones, p 108). See also Goff and Jones, §1-019. 509. See [157]. 510. Liebe v Molloy (1906) 4 CLR 347 at 354; Way v Latilla [1937] 3 All ER 759 at 763; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 272. 511. Angelopoulos v Sabatino (1995) 65 SASR 1 at 10–11; Cooke v Dunn (1998) 9 BPR 16,498; ABB Power Generation Ltd v Chapple (2001) 24 WAR 158; Damberg v Damberg (2002) 52 NSWLR 492 at 529–30; Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) 5 VR 577 at 600–1; Oliver v Lakeside Property Trust Pty Ltd [2005] NSWSC 1040. But cf Chapter 8 (necessitous intervention); Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [75]. 512. In the same way, the fact that the defendant utilises the plaintiff’s work, for example, in completing building work which the plaintiff commenced (but did not finish), does not usually signify that the plaintiff may claim restitution. See further [1155], [1164], [1177]. 513. See [116], [154]–[156] as to requested benefits. 514. See [1416], including the discussion of the concepts of ‘subjective devaluation’ and ‘subjective revaluation’ addressed in Benedetti v Sawiris [2014] AC 938. 515. See [109]. 516. See [327]. For analogies with the rule of privity of contract see Burrows, p 69ff. For a recent discussion suggesting that the concept tends towards circularity see F WilmotSmith, ‘Taxing Questions’ (2015) 131 LQR 531. 517. See generally Goff and Jones, §1-046. 518. See [2926] (account stated). For other possible exceptions see [1506], [1718]. See also Menelaou v Bank of Cyprus Plc [2015] UKSC 66 at [23]–[35], [73] (close causal

connection and economic reality sufficient to show benefit received at expense of plaintiff). 519. See [160]–[161]. 520. See Chapter 15. 521. See [137]. See also [1513]–[1517]. 522. As to unjust factors, see [164]–[175]. 523. Restitution for the value of services reflects the idea that in many instances time is money. 524. Birks, Introduction, p 23. See also Birks, Future, p 1 (substantive part of the law of restitution). But see N J McBride and Paul McGrath, ‘The Nature of Restitution’ (1995) 15 OJLS 33. 525. (2001) 208 CLR 516 at 529; 185 ALR 335; [2001] HCA 68 at [26]. 526. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75; 126 ALR 1 at 15. 527. Cf Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 165 (unlike tort and contract, questions of duty, standards and culpability are not in central focus in restitution). 528. There is no point in reciting the retention of the benefit, because the question whether this is ‘wrongful’ depends on there being an unjust enrichment. See [175]. See also [123]. 529. See further [162], [219]. 530. See further [219], [1514]. 531. See Chapter 5 and [1304], [1403], [1516]. 532. See A L Corbin, ‘Conditions in the Law of Contract’ (1919) 28 Yale LJ 739 at 745. For more recent analyses see Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 848–50; J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1984] 2 Qd R 413 at 425; Tilbury, Civil Remedies, Vol 1, 102–4. Cf John P Dawson, ‘Restitution Without Enrichment’ (1981) 61 Boston ULR 563. 533. Birks, Introduction, pp 39ff, 313ff. See also Birks, Future, p 1 (remedial part of the law of restitution), [1501]. 534. See Chapter 18. 535. See [1710]–[1718]. 536. On a restitutionary analysis, where the plaintiff could not have made the profit or benefit, it is a ‘non-subtractive receipt’ which is the measure of restitution. See Birks, Introduction, pp 313ff. See further [1515]. 537. See [1409], [1803], [1804], [1817]–[1823]. 538. (1984) 156 CLR 41 at 124–5; 55 ALR 417 at 475. 539. See generally Chapter 16. 540. See further [1517]. 541. See [113]. See further [220]. 542. See Chapter 3. 543. See generally Part VI. 544. See especially Chapter 17.

545. But see the suggestive analysis by P B H Birks, ‘Civil Wrongs: A New World’, Butterworth Lectures 1990–91, 1992, p 55. 546. The Canadian law of restitution is distinctive in its recognition of a general right to restitution in the absence of compelling reasons for the denial of relief. 547. As to the High Court’s preference for ‘unconscientious’ and the use of ‘unconscionable’ in some statutory contexts, see [175]. 548. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 374; 109 ALR 57 at 71 (reference to ‘compulsion’ and ‘undue influence’ in discussion about liability in unjust enrichment); Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 525; 185 ALR 335; [2001] HCA 68 at [16], [104] (equitable aspects of failure of performance or consideration). See also [120], [123]. 549. See [107]. 550. Deutsche Morgan Grenfell v Inland Revenue Commissioners [2007] 1 AC 558. 551. Andrew Burrows, ‘Absence of Basis: The New Birksian Scheme’ in Mapping the Law. 552. See [164]. 553. Cf Bryson v Bryant (1992) 29 NSWLR 188 at 223. 554. (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [150], citations omitted. 555. (1992) 175 CLR 353 at 379; 109 ALR 57 at 75. 556. Their Honours cite Edelman, ‘A Principled Approach to the Unauthorised Receipt of Trust Property’ (2006) 122 LQR 174 at 177–8. 557. See further [173]–[175]. 558. (1760) 2 Burr 1005 at 1008; 97 ER 676 at 681 (see [120]). 559. See [117], [120], [130]. 560. See Peter Birks, ‘The English Recognition of Unjust Enrichment’ [1991] LMCLQ 473 at 482. See also Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 164 (definition of ‘unjust’ required to preserve a measure of certainty); Aviacion Colombiana Limitada Aviaco LTDA v Commonwealth of Australia (1994) Unreported, FCA (FC), 14 February per Cooper J (‘some qualifying factor … must be proved’). See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at [15] per Gleeson CJ, Gaudron and Hayne JJ. 561. This paragraph and portion of the next was set out with approval by Campbell J (as he then was) in Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] NSWSC 987 at [16]–[17] and in turn Goff & Jones, § 1-08. See also Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 47 ACSR 285 at 301 [51]; Chidiac v Maatouk [2010] NSWSC 386 at [226]. 562. See further [171] (suggestion that failure of basis may in some cases count as an unjust factor). 563. See [168]. 564. See, eg Woolwich Equitable Building Society v IRC [1993] AC 70 at 165 per Lord Goff. See generally Chapter 5. 565. See Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 114 ALR 355 at 389 (referring to s 52 of the Trade Practices Act 1974 (Cth)).

See Chapter 4. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 566. ALR 209; [2007] HCA 22, the High Court refers (at [150]) to mistake being a ‘qualifying or vitiating factor’. 567. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. 568. See further [215], [909] and Chapters 10, 13. 569. See [431]. 570. See [1033], [1035]. 571. See [430]. Cf [2629] (ignorance of purpose in illegality). 572. See Chapter 5. 573. See generally Chapter 7. 574. See generally Chapter 8. Sometimes the compulsion, legal or moral, is to require the plaintiff to meet a legal or moral obligation of the defendant. See generally Chapters 6, 8. 575. See [167]. 576. See generally Chapter 13. 577. See further [175]. 578. See generally Chapters 5, 10, 13. 579. See generally Chapter 10. 580. For the general principle see [215], [909]. See generally Chapter 13. The position may be qualified by statute in some cases. 581. In many cases the plaintiff will ultimately rely on total failure of the agreed return. See further [941]. 582. See generally [1329]–[1331], [1431]–[1439]. The inability of the plaintiff to make counter-restitution may constitute a valid defence to the plaintiff’s claim for restitution. See generally [2324]–[2335]. 583. Cf [415] (mistake of law and ‘voluntary payments), [521], [1312] (overborne will theory of duress). 584. See Esso Australia Resources Ltd v Gas and Fuel Corp of Victoria [1993] 2 VR 99 at 101 (potential ambiguity in ‘voluntary’). 585. In this respect, Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 is perhaps open to criticism. See Peter Birks (1993) 109 LQR 164 at 167. 586. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; 109 ALR 57 at 75; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [150]; Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [30]. Where the plaintiff is implicated in the illegality, as where the plaintiff and defendant combine in an illegal enterprise, proof of illegality is not usually equivalent to proof of an unjust factor. See generally Chapter 26. Illegality that renders a contract ineffective is probably best addressed under the principles governing ineffective contracts. Accordingly, it is questionable whether illegality will ever come onto the stage as a fully-blown unjust factor. See Burrows, p 488; Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 ABR 284 at p 298. Virgo treats illegality as a defence.

587. See generally Chapter 20. 588. See generally Chapter 17. See also Farah Constructions Pty Ltd v Say-Dee (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at 151. 589. See [117]. For recent statements see Bryson v Bryant (1992) 29 NSWLR 188 at 223; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 375; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 552, 555; 185 ALR 335; [2001] HCA 68 at [93]–[94], [101]–[104] (Gummow J, emphasising the legal and equitable antiquity of this notion). See further [916]. But see Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [136]–[137] per Heydon J dissenting (‘it was not necessary that there be a total failure of consideration’). See further Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 ABR 284 at pp 293–5. 590. (1993) 176 CLR 344 at 376; 111 ALR 289 at 314. See also [916]. 591. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382; 109 ALR 57 at 78 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. The statement was adopted by Mason CJ, with whom Brennan and Toohey JJ agreed, in Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 351; 111 ALR 289 at 294. See also [919]. 592. See generally [1116]–[1135], [1217]–[1226]. 593. See Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923, approved David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382, 388 (contract or purported contract). See further [1015]–[1019]. 594. See generally [1319]–[1328]. 595. See [928], [1015]. 596. See generally Baumgarter v Baumgarter (1987) 164 CLR 583; 76 ALR 75; Pavey & Matthews Pty Lt v Paul (1987) 162 CLR 221 at 257; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. See also [121], [135], [138], [1142]. 597. See [408], [923], [1016]. 598. For illustrations see [1018] (unfulfilled condition precedent). See also Yeoman’s Row Management Ltd v Cobbe [2008] 1 WLR 1752; [2008] UKHL 55. 599. Martin v Andrews (1856) 8 El & Bl 1; 119 ER 1148, cited in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 555; 185 ALR 335; [2001] HCA 68 at [102]. 600. Cohen v Sellar [1926] 1 KB 536; Davies v Messner (1975) 12 SASR 333; Kais v Turvey (1994) 11 WAR 357. There is a short chapter on conditional gifts in the first (1966) edition of Goff and Jones. 601. (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. 602. See, eg Woolwich Equitable Building Society v IRC [1993] AC 70 at 164–6; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 394; 109 ALR 57 at 88. 603. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938 at 945–6, 953; [1994] 4 All ER 890 at 961–2, 969. Cf Woolwich Equitable

Building Society v IRC [1993] AC 70 at 156–7, 165, 166–7, 180–1, 197–8, 202; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 67; 126 ALR 1 at 10 per Mason CJ. But see Ewan McKendrick, ‘Restitution of Unlawfully Demanded Tax’ [1993] LMCLQ 88 at 95. See further [1015]. Cf [507]. 604. See, eg [1124], [1220], [1221]. 605. See further [929]. For illustrations see [1147] (consumer sales legislation); [1246], [1258] (frustrated contracts legislation). 606. See [1331], [1433]. Cf [1136] (relief against forfeiture where contract discharged); [1438], [1439], [2331] (restitutio in integrum in context of discharged contract). 607. See [928], [1025]. See also Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 ABR 284 at pp 293–5. 608. See [256]. 609. See [157]–[158]. See further [931]–[935]. 610. Unless contract stands in the way (see [157]). 611. [2003] 1 Lloyd’s Rep 418. 612. See Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 260 and generally Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 105. 613. Cf Kratzmann Holdings Pty Ltd v The University of Queensland [1982] Qd R 682 at 685; Foran v Wight (1989) 168 CLR 385 at 438. See further [175], [1025], [1035], [1165], [1167]. 614. See further [175]. 615. See [1042], [1334]. 616. See [1139], [1142], [1144]. 617. See [174]. 618. Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 324; 201 ALR 359; [2003] HCA 57 at [21]. See also Dean-Willcocks v Nothintoohard Pty Ltd [2006] NSWCA 311 at [6] (Spigelman CJ). 619. As Gaudron, McHugh, Gummow and Hayne JJ acknowledge in Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 409; 155 ALR 614; [1998] HCA 48 at [34]. 620. [1982] Qd R 682 at 685. Sheahan J agreed. Cf Nepean District Tennis Association Inc v Council of the City of Penrith (1988) Unreported, SC(NSW) (Hodgson J), 22 September; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 251, 257. See also [123]. 621. (1760) 2 Burr 1005 at 1008; 97 ER 676 at 678. 622. Cf Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 453; Foran v Wight (1989) 168 CLR 385 at 438; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 356, 359, 376. See also [221]. 623. Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 324; 201 ALR 359; [2003] HCA 57 at [20]–[26]. See also Yeoman’s Row Management Ltd v Cobbe [2008] 1 WLR 1752; [2008] UKHL 55. 624. See further [123].

625. See Peter Birks and Francis Rose, ‘Editorial’ [1993] RLR 1 at 3. 626. See [256].

[page 81]

Chapter Two

Classifying Claims and Remedies in Restitution 1. 2.

3. 4.

General …. Nature of Restitutionary Liability ….

[201] [203]

(a) General ….

[203]

(b) Causes of Action in Restitution …. Restitution, Contract and Tort …. Classifying Restitutionary Claims ….

[205] [210] [218]

(a) General ….

[218]

(b) Three Main Restitution ….

5.

Conceptual

Triggers

for [219]

(c) Independent and Dependent Claims ….

[220]

(d) Common Law and Equitable Claims ….

[222]

(e) Claims Under Statute …. Classifying Remedies in Restitution ….

[223] [234]

(a) General ….

[234]

(b) Personal Remedies in Restitution ….

[237]

(c) Proprietary Remedies in Restitution ….

[242]

1. General

[201] Objects. The classification of claims and remedies in restitution depends on the theoretical structure of the subject. Accordingly, this chapter seeks to analyse the place of restitution in the general scheme of civil obligations, including the relevance of statute and equity to restitutionary claims. The use of this book as an aid to practice also requires an appreciation of how the subject has been organised. [202] Organisation of this book. Lord Goff has remarked1 that the ‘contours of the subject are emerging from the mists’. Uncertainty still surrounds the full impact of the rejection of implied contract. We know that it is wrong to treat the boundaries of quasi-contract as marking the boundaries of restitution, and an error to structure the work by reference to the common counts. All but the most intransigent of equity traditionalists also know that some parts of equity address and inform the unjust enrichment concept and that equity and restitution are not mutually exclusive fields of discourse. It is also impossible to regard restitution and unjust enrichment as co-terminous. [page 82] Claims for restitution might be organised in various ways. One approach would be to contrast personal and proprietary claims. This will not work, for the simple reason that there are relatively few proprietary claims.2 Another approach would be to emphasise the form of benefit, and to structure the analysis by reference to a contrast between monetary and non-monetary benefits. This contrast is indeed an important one, and informs much of the analysis of ineffective contracts.3 However, it puts too much stress on form. A third approach, basing the structure mainly on the context of the claim seems to us a useful one, for a number of reasons. First, from a practical standpoint the relevant part of the work is most easily identified by reference to the factual, transactional or forensic context in which the claim is made.

Second, it allows for prominence to be given to unjust factors, that is, recognised bases for restitution, as well as the contextual perspective of claims arising from ineffective contracts. The two most important recognised bases for restitution are mistake and improper pressure. Because these factors also operate in the context of ineffective contracts, there is some overlap, but hopefully minimal repetition.4 Third, in Australia there is a wealth of learning on ineffective contracts. It is appropriate to deal separately with these,5 notwithstanding that one particular feature common to most such claims also appears in other contexts. This is the general rule that recovery is not available for ‘benefits conferred in fulfilment of a valid obligation owed to the recipient’,6 which also operates, for example, in relation to benefits conferred under statutes and court judgments.7 Fourth, claims based on the receipt of a benefit by reason of the defendant’s wrongful conduct can be easily separated from other claims.8 Fifth, this structure enables us to devote a separate part of the work to claims involving the Crown, including ultra vires disbursements from the revenue.9 In this area, constitutional principles play their part in generating and modifying rights that might otherwise apply. Sixth, it makes proper allowance for the major role which defences now play.10 [page 83]

2. Nature of Restitutionary Liability (a) General [203] Introduction. The main historical derivation for the modern law of restitution is the common law of quasi-contract. The two major quasi-contractual claims (or classes of claims) were those for money had and received by the defendant to the use of the plaintiff, and

quantum meruit.11 As has been explained,12 when superseded by the common counts, a number of distinct types of claim for money had and received came to be recognised. Expressed in terms of the operative factor which formed the real basis for the claim, these included: payment under mistake (of fact); payment under duress; payment following an ultra vires demand; payment following an illegal demand; and a payment made on a consideration which failed totally.13 The common feature of claims for quantum meruit (and quantum valebat) was the recovery of a reasonable sum of money representing the value of work, services, or goods requested and/or accepted by the defendant. When replaced by the common counts, claims for a reasonable remuneration were brought as counts for work done, or for work done and materials supplied, or for goods bargained and sold, or for goods sold and delivered.14 Some such claims were contractual in nature.15 Moreover, by the end of the nineteenth century most of the quasi-contractual claims in relation to goods had been transformed into contractual or statutory claims for the reasonable price of goods received and accepted.16 As already indicated,17 the recognition of restitution as a distinct subject (and the recognition of unjust enrichment as the unifying and framing concept for a large part of the topic) means that the explanation of claims derived from the common counts has now changed. Since there is a danger that the terminology of quasi-contract will continue to have an inhibiting effect, it should be sparingly used today. There seems to us no reason to perpetuate the forms of action in the terminology. The tendency today, under the guidance of unjust enrichment, is to drop the words ‘had and received’ (and to omit reference to the ‘use of the plaintiff’) and to refer simply to the operative factor, that is, mistake, improper pressure and so on. In terms of the unjust enrichment concept, the causative events constitute unjust factors.18 As already indicated,19 we also prefer to use total ‘failure of the agreed return’ to refer to the important claim based on a total ‘failure of consideration’. Similarly, we prefer ‘reasonable remuneration’ to

[page 84] ‘quantum meruit’.20 Although no one today speaks of a quantum valebat, the common count terminology ‘goods bargained and sold’ or ‘goods sold and delivered’ is still often used. However, the expression ‘reasonable price’ for accepted goods seems more appropriate.21 The recognition of unjust enrichment as a unifying concept also means that unjust enrichment may be used, in appropriate cases, to extend the law to new situations. That this has already occurred22 is testimony enough to the importance of restitution for unjust enrichment in Australia today. [204] Imposed liability to make restitution. It is a general characteristic of liability in restitution that the obligation is imposed rather than agreed, assumed or implied. But in the old law of quasicontract, the fiction was maintained that liability was contractual.23 In Pavey & Matthews Pty Ltd v Paul24 Deane J said25 that the tendency of lawyers to speak in terms of implied contract ‘should be recognised as but a reflection of the influence of discarded fictions and the conventional conviction’ that all common law actions were based on contract or tort. Deane J contrasted the two categories of claim to which the old indebitatus count was available to recover a reasonable remuneration or reasonable price. The first was the claim to recover a debt due for work done or goods supplied under an effective agreement. Clearly, this is governed by contract law. The second category of claim was to recover a sum in circumstances in which, notwithstanding the absence of genuine agreement, a contract was implied to pay the sum as if it were a debt.26 Since this was a fiction, the normal rules on contractual actions were not capable of easy application. Accordingly, even though the claim was conceived as one for breach of contract, rules such as causation and remoteness of damage were not applied.27 In Pavey28 Deane J said that, in this

category of case, the law imposed or imputed an obligation or promise to make payment for a benefit accepted. [page 85] Although for the most part based on the discredited implied contract theory, most cases decided under the implied contract analysis are still good law today.29 They therefore form the precedents which make up the legal matrix of restitution law.30 However, because the implied contract theory has been rejected, in the modern law of restitution it is appropriate to emphasise the non-contractual nature of liability in all claims formerly rationalised in terms of implied contract. The nature of a liability to make restitution is an obligation imposed by law. This is true whether the claim is to recover in respect of a monetary benefit on bases such as mistake and total failure of the agreed return or, as explained by Deane J, a non-monetary benefit.

(b) Causes of Action in Restitution [205] Introduction. Prior to the decision in Pavey & Matthews Pty Ltd v Paul31 the prevailing view in Australia was that the law did not recognise a cause of action in restitution for unjust enrichment.32 However, in Pavey, unjust enrichment was recognised as at least an important concept to be used in connection with restitutionary claims. We should now regard statements33 that there is no general principle of unjust enrichment as unhelpful except in emphasising that the concept is not a mere appeal to some undefined and purely discretionary concept of justice. Nevertheless, it is fallacious to conclude that it is impossible to construct a legal principle of unjust enrichment that may provide a direct right to claim restitution.34 There is no doubt that claims may be brought for restitution. What is in issue is whether the law has developed to the stage where it is useful

to emphasise the legal concept of unjust enrichment. Attention is drawn below to four points: the contrast between forms of action and causes of action; the recognition and application of unjust enrichment in the courts; the current uncertainty on the cause of action issue; and whether it is important for the law to recognise a cause of action for unjust enrichment. [206] Forms and causes of action. In the brief historical analysis of the subject ‘restitution’ it was explained35 that the actions in quasicontract emerged at a time when the law required any claim brought to be within a recognised form of action. The forms of action were abolished a long time ago. However, as lawyers, we continue to be fascinated by them and they still influence claims within the modern law of civil obligations. This is true [page 86] whether the claim is in contract, tort, restitution or under statute. The main impact of the procedural reforms which abolished the forms of action was to require a plaintiff to plead facts amounting to a recognised cause of action. We frequently describe these by reference to their institutional basis. Thus, it is perfectly normal to speak of a cause of action in contract, based on breach of contract, or a cause of action in tort, based on the commission of a tort. To these may be added a cause of action in restitution, based on unjust enrichment.36 Just as negligence does not occupy the entire field of tort, causes of action that are framed by reference to the unjust enrichment concept do not cover the whole field of restitution. The forms of action no longer provide a guide to substantive rights.37 Instead, guidance is provided, at least in our law, by the interaction of legal principle, precedent and policy.38 Thus, properly analysed, a cause of action is no more than a recital of factual elements which if

proved show that the plaintiff may succeed in the claim. Diplock LJ’s definition in Letang v Cooper39 that a cause of action is ‘simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person’ has been accepted as authoritative.40 In all areas of the law of obligations the one cause of action may give rise to several remedies, some of them dependent on the favourable exercise of a principled discretion. [207] Recognition and application of unjust enrichment. It is clearly legitimate to say that causes of action arise in restitution.41 This is because there are recognised factual bases for claims in restitution. In other words, there is sufficient legal principle, precedent and policy to enable plaintiffs to establish causes of action without appealing to abstract justice or intrinsic or relative merit. However, given the variety of situations in which restitutionary claims arise, it would be difficult to speak of a single cause of action. In truth, there are as many causes of action as there are recognised claims for restitution. In this respect, restitution is no different from tort law. Most successful claims for restitution will operate by reversing an unjust enrichment. Since no other distinct concept has been put forward as the basis for analysing the majority of claims, whenever a plaintiff frames a claim for restitutionary relief, the requirement of a cause of action to support the claim means that the plaintiff must usually satisfy the elements of unjust enrichment. The view that unjust enrichment is an appeal to ‘idiosyncratic notions of what is fair and just’42 has been rejected. The three elements [page 87] of a prima facie claim in unjust enrichment already identified43 (benefit, at the plaintiff’s expense, and injustice) are established concepts with real content.44

[208] The current uncertainty. When, in Pavey & Matthews Pty Ltd v Paul,45 Deane J described46 unjust enrichment as ‘a unifying legal concept’ this was not the recognition of a cause of action for unjust enrichment. His emphasis was on the operation of a concept rather than a basis for a claim. Equally, however, it did not in terms shut out the possibility. Similarly, in Winterton Constructions Pty Ltd v Hambros Australia Ltd47 Gummow J, in granting the plaintiff leave to replead, did not appear to deny the ability to plead unjust enrichment, supported by a proper particularisation of the three elements of the concept. However, he struck out the plaintiff’s pleading, couched in terms of unjust enrichment, because it did not specify with sufficient clarity the material facts upon which it proposed to rely to establish the elements of unjust enrichment. In 1988, the High Court would describe the action for money had and received as ‘a common law action for recovery of the value of unjust enrichment’.48 Despite this, in a number of subsequent cases this approach has been rejected, and the view expressed that unjust enrichment does not in itself provide the plaintiff with a cause of action.49 These cases rely mainly on certain passages in the judgments of the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia,50 which we discuss below. Dawson J’s statement in David Securities,51 that ‘unjust enrichment does not of itself constitute a cause of action’ appears clear enough, although it begs the question of what constitutes an ‘unjust enrichment’. In the judgment delivered by Mason CJ, Deane, Toohey, Gaudron and McHugh JJ, it was said52 that ‘it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable’. Given that the idea of a cause of action in restitution does not rely on a ‘subjective evaluation of what is fair or unconscionable’, and indeed, rejects that approach as unprincipled, the judgment merely rejects [page 88]

as insufficient some intuitive notion of unjust enrichment.53 However, the formulation of the argument which Mason CJ, Deane, Toohey, Gaudron and McHugh JJ considered that they had to address does lend some support to the view of Dawson J. They rejected a supposition that ‘unjust enrichment is a definitive legal principle according to its own terms and not just a concept’.54 They also formulated the argument that had been put to the court in terms of a requirement that, over and above mistake, there had to be proof of ‘unjustness’. The reason they rejected this argument was that, in cases of mistake, the mistake of a payer is a sufficient basis for a prima facie claim where the mistake causes the payment.55 In other words, the mistake itself establishes the injustice of the enrichment. From this perspective, far from rejecting unjust enrichment as a cause of action, the High Court has approved it. In any event, account must now be taken of Baltic Shipping Co v Dillon (The Mikhail Lermontov).56 In that case, Dawson J joined with Deane J in saying57 that the ‘modern substantive categorisation’ of a claim based on a ‘total failure of consideration’ is ‘in an action for unjust enrichment’. Mason CJ, with whom Brennan and Toohey JJ agreed, was not as forthright, but he did say58 that the ‘continued retention by the defendant’ of the plaintiff’s money in a case where the agreed return for the payment has totally failed, ‘is regarded, in the language of Lord Mansfield, as against conscience or, in the modern terminology, as an unjust enrichment of the defendant’. English courts have enthusiastically embraced the notion of a cause of action in unjust enrichment and applied it in a range of restitutionary situations.59 [209] Does it matter? Given the level of uncertainty on the question in Australia, we should consider whether it is important for the law to recognise causes of action in restitution for unjust enrichment. In Pavey & Matthews Pty Ltd v Paul60 Deane J described the obligation to make restitution in the [page 89]

form of payment for services rendered as ‘an enforceable obligation to pay compensation for a benefit accepted’. He did so in the context of a discussion of the significance of unjust enrichment. Deane J said:61 The circumstances in which the common law imposes an enforceable obligation to pay compensation for a benefit accepted under an unenforceable agreement have been explored in the reported cases and in learned writings and are unlikely to be greatly affected by the perception that the basis of such an obligation, when the common law imposes it, is preferably seen as lying in restitution rather than in the implication of a genuine agreement where in fact the unenforceable agreement left no room for one.

Without being critical of the judgment which provided the stimulus for almost all judicial and academic writing in Australia on unjust enrichment, there are two (related) controversial points in this dictum. The first is the idea of ‘compensation for a benefit accepted’, and the second is the impact of ‘the perception that the basis of such an obligation’ is restitutionary in character. Other cases, fortunately part of the early history of unjust enrichment in Australia, contain similar references to ‘compensation’, as if restitution is an alternative to an award of damages, or perhaps itself a form of damages. For example, in Sabemo Pty Ltd v North Sydney Municipal Council62 Sheppard J spoke in terms of an obligation to make ‘compensation or restitution’. In Hurst v Vestcorp Ltd63 McHugh JA referred to the ‘recovery of compensation by way of restitution for benefits given and accepted under [an] unenforceable contract’, and in Iezzi Constructions Pty Ltd v Currumbin Crest Development Pty Ltd64 McPherson JA referred to restitution by way of reasonable remuneration as an entitlement to be ‘compensated for work done’. In McKeown v Cavalier Yachts Pty Ltd65 Young J spoke of incontrovertible benefit as a ‘test for compensation’, and in Austotel Pty Ltd v Franklins Selfserve Pty Ltd66 Rogers A-JA spoke in terms of a claim for ‘damages based on principles of restitution’. However, in our view, an important feature of the recognition of unjust enrichment lies in the acknowledgment that, following the rejection of implied contract, the plaintiff’s cause of action does not usually depend on proof of breach of duty. It may be that Deane J was using the word ‘compensation’ in a loose sense referable to the fact that the benefit to which he refers corresponds to a loss to the plaintiff.67 Nevertheless, since in many

(perhaps most) successful claims for restitution there is no breach of duty, and no question of damages (compensation) can arise, it seems more helpful to recognise this than to imply a continued [page 90] connection with implied contract. In Roxborough v Rothmans of Pall Mall Australia Ltd68 Gleeson CJ, Gaudron and Hayne JJ warned against confusing between rights of compensation and restitution. We also disagree with Deane J’s view that the ‘perception’ of the nature of the obligation is unlikely to affect greatly the circumstances in which the law imposes an obligation to make restitution. The only available source for a compensation duty in the context to which Deane J was referring was an implied contract.69 Having freed the law from implied contract, its de facto reinstatement should not be encouraged by retention of a (fictional) compensatory basis for restitutionary claims. Indeed, in Foran v Wight,70 where a claim was made by a purchaser of land for restitution of the amount of a deposit payment, Deane J himself said that this did not ‘represent a claim for damages for the vendors’ breach’ of duty. Cases must certainly arise in which alternative claims are available for compensation and restitution. These are where the factual situation is one in which the plaintiff also has a claim in tort or contract for compensation.71 However, they are no more than illustrations that one set of facts may give rise to two or more causes of action. Generally, where a claim for restitution is brought, the plaintiff is not put to the burden of proving fault in the form of breach of duty or otherwise. Moreover, we cannot describe the defendant’s refusal to make restitution (or the retention of the enrichment) as a breach of duty, since this amounts either to the adoption of the implied contract fiction or the recognition of a claim for compensation where there is no legal (or equitable) wrong. The best way to give effect to the general nature of restitutionary liability as one imposed by law is to free the

liability from any general compensation basis. Logically, as Deane and Dawson JJ clearly acknowledged in Baltic Shipping Co v Dillon (The Mikhail Lermontov),72 this means that we should speak of an action ‘in unjust enrichment’. As we have observed on several occasions, this does not exhaust the law of restitution.

3. Restitution, Contract and Tort [210] Introduction. It has become fashionable in recent years to suggest that the role of what is termed ‘classical’ contract law has diminished, or even that contract is dead.73 It might also be said that the growth of tortious liability for negligence has made tort law an amorphous and largely unintelligible mass of decisions. The accuracy of such assessments is not [page 91] an issue in this work. However, we must make some attempt to analyse in general terms the operation of contractual, tortious and restitutionary bases of liability, so as to determine the place of restitution in the scheme of the law of civil obligations. That distinctions must be drawn seems to us obvious.74 We therefore investigate below the diversity of function in the law of contract, tort and restitution; their remedial perspectives; and areas of overlap.75 [211] Functions. The basic function of the law of contract is to deal effectively (and efficiently) with consensual relationships.76 It will be seen that one facility of the institution of contract is to negate or qualify rights or remedies that would otherwise be available if the law of wrongs or the law of restitution were applied. The principal perspective of contract, notwithstanding those who think otherwise, is expectation.77 The institution of contract exists for the purpose of giving effect to the parties’ bargain. It is a basic tenet of

the institution that promises should be kept, and that the expectation of the other party that performance will occur should not only be respected but also protected.78 Because it operates in such diverse situations it is impossible to express the law of tort in a single function. However, in contrast to the consensual basis of contract law, tortious duties are imposed by law independently of the wishes of the parties. The general object of tort law is to protect against harm arising from the breach of an imposed duty, and to do so by compensating injured plaintiffs. The function of the law of restitution is neither to give effect to expectations nor to protect against harm. Nor is restitution concerned with the (direct) enforcement of promises. In the idea that liability to make restitution is imposed rather than consensual,79 restitution is similar to tort. However, it is not a general function of restitution law to redress a wrong. If its function can be expressed in a general proposition, it is to reverse or prevent an unjust enrichment, although there are parts of the law of [page 92] restitution that cannot be explained in this way yet are linked historically and/or analogically.80 [212] Remedies. The contrast between contract, tort and unjust enrichment is more marked when we consider remedies. Subject to certain exceptions, such as protective statutes and the law on penalties, forfeiture and illegality, parties to contracts may themselves agree on the rights and remedies which are to flow from a breach of contract. On the other hand, both tort and restitution assume that the parties have not agreed upon risk allocation, let alone the remedies for which each system provides. Again, in contract, rights and remedies are provided to protect the expectations of the parties to the agreement. For example, the right to terminate a contract for a repudiation of obligation is designed to protect the expectation of receiving performance, and

damages are generally assessed on an expectation basis.81 In tort, remedial relief is given to redress the wrong, generally from some perspective other than expectation. On the other hand, in restitution the concern is to restore a benefit, generally (but not exclusively) one obtained directly at the expense of the plaintiff. In both contract and tort the concern is to redress the wrong: where restitution operates there may be no wrong to redress.82 Perhaps the most fundamental contrast arises when we consider the position of a contract which does not express an agreement on remedies. In contract and tort, enforcement in specie, by specific performance or injunction, tends to be the exception rather than the rule.83 In other words, the remedial perspective is generally substitutionary in character. The wrong is a given, and something (damages) is awarded in place of fulfilment of a primary duty. This is true whether the primary duty was consensually agreed (contract) or itself imposed by law (tort). Thus, on the breach of a primary contractual duty to perform, the law implies a secondary obligation to make compensation. And in tort the source of a wrongdoer’s obligation to make compensation is a secondary duty imposed by law. Absent a primary duty, no secondary duty can arise. An important contrast is that whereas in contract only the secondary obligation is imposed, in tort both the primary duty and the secondary obligation are imposed by law.84 On the other hand, in restitution the concern is usually to enforce a primary duty (imposed by law), generally by the award of a sum of money,85 and exceptionally by a proprietary remedy.86 Whether the sum is fixed by reference to money or other assets held by the defendant or the cost of providing goods or services, the relief usually amounts to the direct enforcement of a primary duty, not the enforcement of a secondary obligation. Since, in [page 93] most cases, there is no suggestion of enforcement of a secondary

obligation, restitution is not awarded by way of substitution for the performance of a (primary) duty.87 [213] Quantification. The legal principles regulating contract, tort and restitution certainly have one thing in common: they all provide for situations in which monetary relief may be granted. However, both the object of relief and the approach to quantification of such relief are generally quite different. As we have seen,88 the principal relief in contract and tort is an award of damages, whereas the money sum awarded as restitution is not an award of damages. There is no difference between contract and tort, which have the same general objective, namely, for the court to award a sum which places the plaintiff in the position which would have been occupied had the legal wrong not occurred.89 Moreover, there is, at least in practice, substantial similarity in the requirements of causation, remoteness and mitigation.90 In contract the object, so far as money can do so, is to place the plaintiff ‘in the same situation, with respect to damages, as if the contract had been performed’.91 Thus, damages are assessed in such a way as to put the plaintiff in the position which would have been occupied had the defendant performed rather than breached the obligation in respect of which the claim is made.92 Generally, although not exclusively, assessment follows the expectation function by an award of the difference between the value of the performance received and the value of the performance promised.93 To bring out the contrast between tort and contract, consider the case of a contract induced by fraud. The object of the remedy in damages for the tort of deceit is to put the plaintiff, so far as money can do so, in the position which would have been occupied had there been no reliance on the fraudulent inducement.94 It is indemnity or restoration of the status quo ante, rather than expectation, which informs the assessment of compensation. The contrast thus established is between putting the plaintiff in the position which would have been occupied had the transaction been

[page 94] performed (contract) and indemnifying the plaintiff for loss or damage suffered by reason of entering into the transaction (tort).95 Since the law of restitution generally looks to benefits obtained, the basis for calculation of a claim for restitution is the value of the benefit. There is no question of assessment by reference to expectations. To the extent that the law provides a remedy because otherwise the defendant would be unjustly enriched at the plaintiff’s expense, the measure of restitution is generally the value of the enrichment. This may be assessed as the amount by which the defendant’s assets have been increased, or the cost of obtaining a non-monetary enrichment.96 [214] Overlap between contract and wrongs. Overlap between contract and tort is well known.97 One reason for debate as to the status of contract as an institution is the very obvious fact that contract law is not exhaustive. That is to say, contract is not the exclusive source of rights and remedies in respect of consensual arrangements. Liability in tort or for breach of equitable obligation may arise even though the plaintiff and defendant were in a contractual relationship. A breach of contract may also amount to a tort or equitable wrong. A contract will sometimes trump an actionable wrong, as when a valid exemption clause applies. And, as Australian lawyers hardly need to be reminded, the impact of statutory provisions, particularly the Australian Consumer Law,98 may be to provide a remedy, independently of the common law, in respect of a consensual arrangement amounting to a contract. Even if a consensual arrangement does not amount to a contract, promises and representations may generate rights if other elements are present. Instances include restitutionary relief in respect of services rendered under a void contract; enforcement of a non-contractual promise by reference to promissory estoppel; the award of compensation following application of the Hedley Byrne principle; and relief for breach of s 18 of the Australian Consumer Law (misleading or deceptive conduct).

It might plausibly be suggested that certain rules of contract law have been too restrictively interpreted, or have hindered the development of the law.99 The doctrine of consideration, and the rule of privity of contract may be examples of this. However, there is still considerable force in the argument that rarely are rights and remedies in protection of expectations given in respect of consensual arrangements not amounting to contracts. Certainly, it is very rare for damages placing the plaintiff in the position which would have been occupied had the promise been performed to be awarded in respect of a promise where there is no contract.100 [page 95] [215] Overlap between contract and restitution. Just as the law of wrongs may have something to say in respect of some consensual arrangements, so too may the law of restitution. Indeed, since contract grew out of tort, and quasi-contract was seen (originally) as a necessary (but pragmatic) extension of contract, it would be remarkable if no areas of overlap existed. But our perspective has changed. Whereas, under the old law, contract and quasi-contract were seen as species of the genus ‘contract’, today the genus is ‘obligation’ and the species include contract, tort and unjust enrichment.101 However, as with wrongs, there are contexts where contract holds sway or pulls rank. The fundamental point is that, as a general rule, restitutionary issues arise in respect of ineffective102 rather than effective contracts. Only rarely will the law of restitution operate in the context of an effective contract.103 Thus, builders seeking to be remunerated at non-contractual rates will fail so long as an enforceable contract with the proprietor covers the relevant field and remains on foot.104 Claims seeking to recover money paid under improper pressure will also fail if that money was paid pursuant to a contract unless that contract is void or, if voidable, rescinded.105 There is therefore more scope for restitution to operate if there is no genuine agreement or if the agreement is unenforceable, or has been terminated or avoided.

Restitution nevertheless has a significant gap-filling role supplementing and complementing the operation of contract law,106 for example, in respect of money overpaid due to a mistaken understanding of a contract’s operation. This subsidiarity principle is really an aspect of a broader concept, that (even when a claim for restitution is properly brought) primacy is to be given to any legal relationship that exists between the parties.107 [page 96] These considerations mean that the area of overlap — and danger of contradiction — as between contract and restitution, is relatively small.108 One obvious area of overlap is where the same set of facts provides a remedy in both restitution and contract. Thus, the (contractual) measure of compensation may correspond to the measure of restitutionary liability.109 This can occur because contract law is not exclusively concerned to provide expectation damages for breach of contract. For example, in cases where a breach of contract leaves the defendant with a sum of money which the plaintiff paid under the contract but for which no benefit has been conferred, damages in the form of recovery of the price corresponds to restitution of the money received for a total failure of consideration.110 In such cases the plaintiff has alternative ways of obtaining (in monetary terms) the same relief. The price paid may be recovered either as damages for breach of contract or as restitution for an unjust enrichment.111 There is, however, no reason why the measure of restitution in respect of a benefit should correspond exactly to the assessment of damages in respect of that benefit. Nor is there any reason for thinking that restitution should never contradict the contractual position, although this will be controversial.112 For example, one analysis of the law relating to relief against forfeiture relies on restitution.113 Where a payment is made under a contract, but the payment is subject to a provision for its forfeiture, it is clear law that there may be a basis for granting relief against the forfeiture. To the extent that restitution (to

prevent unjust enrichment) is the explanation of this, restitution appears to contradict contractual principles.114 [216] Gap filling in contract. Restitution not only serves to adjust rights in certain situations, but also fills gaps in the law of contract.115 Thus, just as tort law operates in the context of pre-contractual liability, so also does restitution. Accordingly, benefits conferred during negotiations which [page 97] do not materialise into a contractual relationship may be the subject of a restitutionary claim.116 Similarly, money may be recovered in restitution even though the contract provides no express (or implied) right of recovery, and notwithstanding the inability of the plaintiff to seek compensation.117 Of course, what ought to be regarded as a gap in contract law is a matter on which opinions are likely to differ. We could fill gaps (contractually) by the implication of terms, for example, in relation to money paid under a contract which is subsequently discharged.118 However, the plain fact is that the courts have seldom taken the opportunity to imply terms, preferring (in the past) to apply quasicontractual (implied contract) analysis. It would be idiosyncratic, now that the implied contract analysis of quasi-contract has been refuted, to deal with contractual gaps by the implication of contractual terms. The device would often be as fictional as the implied contract analysis. One apparent reason for a law of restitution, and why there must be a coherent theoretical basis for the principles by which it is governed, is that we need to be able to deal with perceived gaps in a principled way. In this respect the concept of unjust enrichment is vital, since it embodies a policy goal which is quite independent of the consensual nature of the arrangement in the context of which restitution is sought. It is therefore not surprising that the seminal Australian case, Pavey & Matthews Pty Ltd v Paul,119 in which unjust enrichment was adopted in

preference to the implied contract theory, concerned an ineffective contract. [217] Overlap between tort and restitution. Overlap between tort and restitution is not quite as common as between contract and restitution. This is primarily because breach of a tortious duty does not lead to the conferral of benefits on the defendant as commonly as benefits are conferred under contracts. Overlap nevertheless exists in some situations. If the defendant’s tort results in the defendant obtaining a benefit, the question of restitution as an alternative to compensation may arise. One example is where the tort of conversion leads to the receipt of money by the defendant. The plaintiff may be entitled to elect to claim the money as restitution:120 there is no rule that the plaintiff must seek damages. Moreover, there is growing support for a concept of restitutionary damages. These are damages assessed on a restitutionary basis, rather than on the usual compensatory basis. Although compensation generally characterises tortious liability, restitutionary damages may sometimes be awarded.121 [page 98]

4. Classifying Restitutionary Claims (a) General [218] Introduction. Restitutionary claims which have been recognised may be linked, differentiated and classified by application of various criteria. There is no single basis for classification. Four are discussed below: (1) claims that vindicate title or which are triggered by unjust enrichment or wrongs;122 (2) independent and dependent claims;123

(3) common law and equitable claims;124 and (4) claims under the general law and claims under statute.125

(b) Three Main Conceptual Triggers for Restitution [219] Claims that vindicate title or which are triggered by unjust enrichment or wrongs. The somewhat pragmatic arrangement of this book recognises that under the general law restitution may vindicate title as well as respond to unjust enrichment or wrongs.126 Some claims vindicate the plaintiff’s title to money or other property. Others (the greater bulk) give effect to the unjust enrichment concept. Others entail gain-based remedies for wrongs that are themselves recognised elsewhere in the law (restitution for wrongs). We explain and illustrate these categories elsewhere.127 This tripartite taxonomy is recognised by some other writers as the framework of their exposition.128 Claims that vindicate title deserve slight elaboration here, if only because some of them also form part of restitution for wrongs. Such claims are not to be confused with proprietary remedies.129 Titlevindicating claims enforce and give content to the plaintiff’s preexistent title to money or an asset (sometimes an equitable as distinct from a legal title). However one defines property, many such claims lie entirely outside the realm of restitution. An order for possession of land (ejectment), a declaration of the existence of an express trust, and the award of damages for trespass or conversion are remedies that may vindicate property rights without engaging the unjust enrichment concept130 or even forming part of restitution’s inheritance [page 99] from the law of quasi-contract. But some traditional restitutionary claims directly vindicate property rights, albeit often by a personal

remedy.131 Thus, a restitutionary claim lies against those who find (and attempt to retain) or wrongfully take money. Various remedies are also available to strip wrongdoers of unjust gains stemming from unauthorised use of or interference with property or rights belonging to others. These are dealt with elsewhere in this work.132

(c) Independent and Dependent Claims [220] Independent and dependent claims. When stressing133 the nature of restitutionary liability as primary rather than secondary, we drew attention to the fact that most restitutionary claims are independent, in the sense that they do not rely for their enforcement on some other right arising, for example, under the law of contract or tort. Most claims are independent of the commission of a wrong. There is a contrast with cases in which the restitutionary claim is a dependent one, based on the commission of a wrong to the plaintiff.134 Since the bulk of restitutionary claims are explicable by the unjust enrichment concept as the basis for the enforcement of a primary (imposed) duty, most cases where restitution is ordered are examples of successful independent claims. These are usually cases in which the defendant is enriched at the plaintiff’s expense by the receipt of a benefit directly from the plaintiff.135 Clear examples are where restitution is sought on the basis that a conferral of benefit was induced by mistake, a failure of the agreed return for a payment, or as reasonable remuneration in relation to an accepted benefit. The common counts revolved around claims where the enrichment of the defendant was derived directly from the plaintiff.136 Notwithstanding the apparent contradiction with the implied contract explanation, relief did not depend on proof of wrongdoing. Under the guidance of unjust enrichment, such claims are independent claims, usually based on the (unjust) enrichment of the defendant rather than on any wrongful conduct on the defendant’s part. Most of this book is concerned with independent claims.137 [221]

Waiver of tort and election. Under the law of quasi-

contract, dependent claims were usually dealt with under the rubric of ‘waiver of tort’, an expression which, although used in various (confusing) senses, at least [page 100] implied that the plaintiff was confronted by two remedies: a claim in tort or a claim in quasi-contract.138 An example is a claim for restitution or damages following the defendant’s conversion of the plaintiff’s property.139 Waiver of tort now seems an unnecessary tool of analysis, having been displaced by the application of principles of election between remedies. The plaintiff may be presented with two or more alternative claims. For example, the facts may permit the plaintiff to rely either on the direct enrichment of the defendant or the fact that the defendant has been enriched by the commission of a wrong.140 Principles of election govern the impact of the plaintiff making out a case for two or more forms of relief. They are also crucial to the development of a theoretical structure for the analysis of restitutionary damages. Although the award of restitutionary damages reverses an unjust enrichment, the claim is for damages, not restitution. It may therefore succeed even though no independent claim is available, and notwithstanding that a (dependent) claim in restitution based on the wrong might not yield to the plaintiff the enrichment obtained by the defendant.141

(d) Common Law and Equitable Claims [222] Common law and equity. In historical terms, the origin of restitution in the old common law writs and the common counts stamps claims in restitution with a common law origin. True to its origins in quasi-contract, most of the law of restitution is concerned with what might be termed ‘principles of the common law’. A loose connection with equity is inherent in Lord Mansfield’s reference, in

Moses v Macferlan,142 to the basis of all such claims as being ‘the ties of natural justice and equity’. It is not inconsistent with Lord Mansfield’s description to regard some claims in restitution for unjust enrichment as ‘founded in the equitable notions of fair dealing and good conscience’.143 We have discussed this question earlier in the work.144 A concern to prevent or reverse unjust enrichment (standing alone) has not been the driving force behind equitable relief, although it would be both unrealistic and ahistorical to exclude the desire to ensure that one person does not retain unfairly a benefit obtained from another as a relevant factor in the exercise of various equitable discretions, or as a basis for relief in certain situations where there may be no relevant common law basis for restitution. An example of the former is relevance to the grant of relief against forfeiture of the gain to the party insisting on the forfeiture.145 An example of the latter is an account of profits.146 There are also examples [page 101] of equitable relief which are relevant to this work because their operation often has the effect of preventing or reversing an unjust enrichment. Some instances of equitable relief may be explained by direct reference to restitution for unjust enrichment. Relief against forfeiture147 and account of profits148 are examples. But there are other illustrations, including relief by way of equitable lien or constructive trust in some situations;149 and an order for the delivery up or retransfer of property.150 Certain claims or processes, which are capable of being viewed as restitutionary, have a basis both at common law and in equity. Contribution and subrogation, specific restitution, and perhaps also rescission of a contract for fraud, are examples of such claims.151 Again, a bribe taken by an agent is recoverable by the principal both at common law and in equity.152 Examples of processes largely common to equity and the common law include restitutio in integrum,153 tracing154 and change of position.155

There are, finally, claims which are difficult to classify as legal or equitable in any meaningful sense, and appear to us to be sui generis. For example, maritime salvage claims, belonging to the body of law developed in courts with admiralty jurisdiction, although certainly consistent with much of restitution law, arise in a rather specialised area with which we do not deal.

(e) Claims Under Statute (i) General [223] Introduction. The purpose of this section is to indicate in a general fashion the ways in which statute may operate in connection with restitutionary claims, and in particular how far statutory regimes for dealing with restitutionary issues are consistent with the idea of unjust enrichment.156 [224] Categories. Speaking generally, statute impacts on restitution in four main ways. First, some statutes preserve or give effect to restitutionary claims or defences under general principles. [page 102] Second, some statutes confer discretionary powers to make orders, including those in the nature of restitution, for the payment of money or the adjustment of property rights. Third, a large number of statutes restrict contractual validity. Their impact may be to create situations where restitutionary claims are common because other forms of civil relief are denied. Finally, the impact of statute may be approached from the perspective of whether the statute removes or creates a restriction on restitutionary relief.

(ii) Recognition and conferral of right to restitution

[225] Recognition. Some statutes merely recognise the ability to make claims for restitution. These do not create new restitutionary claims and are silent about the approach to be taken to recovery.157 Thus, the sale of goods legislation provides that nothing in the legislation affects the right of a buyer to recover money paid where the consideration for the payment of it has failed.158 [226] Direct conferral of rights. A larger number of statutes confer rights to restitution, or apparently (directly or indirectly) confer power to order restitution. In Australian law, the principal examples are to be found in the frustrated contracts legislation applicable in New SouthWales, South Australia and Victoria.159 There are further, more specific illustrations.160 The United Nations Convention on Contracts for the International Sale of Goods 1980161 was adopted in Australia, which then became a ‘Contracting State’.162 The Convention, often referred to as ‘CISG’ (or the Vienna Convention), prevails over any other law.163 CISG is significant in expressly [page 103] providing, in relation to international sale of goods contracts within its purview, both for general right to restitution in favour of a party who conferred benefits on the other prior to avoidance of a contract,164 and for providing that if both parties are bound to make restitution, they must do so concurrently.165 [227] Indirect conferral of rights. Many statutes confer rights to recover compensation. The most significant is the Australian Consumer Law166 which contains provisions for damages to be recovered in respect of various contraventions, including of the obligation to avoid conduct that is misleading or deceptive or is likely to mislead or deceive.167 In cases where a benefit conferred also represents the plaintiff’s loss

or damage, these provisions are available as a basis for recovering restitution. However, because the conception is of a right to compensation, not restitution, unjust enrichment does not play a direct role. The provisions do not in terms provide a right to have ‘loss or damage’ assessed on a restitutionary basis. However, it may be open to a court to award restitutionary damages or analogous relief.168

(iii) Discretionary powers [228] Introduction. A statute which affects the validity of payments, contract validity, or the validity of transfers of property may also confer a discretion to reverse the defendant’s enrichment. There are many examples, and no general theme, apart, perhaps, from giving effect to a perceived need to protect certain classes of persons. However, a contrast is drawn below169 between two types of discretion: statutes which confer power to make orders for the return of money paid or to adjust rights; and those which confer power to make orders for compensation in situations where restitutionary claims might otherwise be made. [229] Repayment of money and adjustment of rights. Where a statute confers power to order the repayment of money it seems fairly clear that, where an order is made otherwise than by way of compensation, it is an order for restitution. For example, in some jurisdictions there is a statutory power to order the repayment of a deposit paid under a sale of land contract.170 The jurisdiction is discretionary, and may be exercised whenever the court thinks it appropriate to do so. It is, of course, in just such a situation that an expressed criterion of unjust enrichment would be very useful in providing a principled basis for exercise of the discretion. There are also residual discretions which operate (for example) under the frustrated contracts legislation, which permit orders by way of adjustment following frustration and the operation of the substantive provisions of the legislation.

[page 104] The orders are designed to achieve results which are more equitable or just in their result than those achieved by the uncertain but possibly blunt operation of the substantive provisions.171 Another illustration, applicable only in New South Wales, arises under the Contracts Review Act 1980 (NSW). The Act applies where a person seeks relief in respect of an unjust contract, or a contract containing an unjust term.172 Where the court is seized of jurisdiction, and considers it appropriate to make an order there is an ancillary power to make such further orders as are just in the circumstances.173 These include an order for the repayment of money. Reference may also be made to provisions allowing for ‘financial adjustment’ in the context of de facto relationships.174 Of more general importance are the discretionary powers conferred by the Australian Consumer Law175 to make orders where the defendant engaged in conduct prohibited by the legislation.176 Although the range of orders is not restricted to the refund of money,177 it is clear that an order for pecuniary restitution may be made where the conduct engaged in caused the plaintiff to confer a benefit on the defendant. [230] Payment of compensation. The discretionary jurisdiction conferred by the Australian Consumer Law178 extends to orders for the payment of monetary compensation to a person who has suffered loss or damage by reason of the conduct engaged in. The object, as in cases where there is a statutory right to claim compensation,179 is to compensate the plaintiff in whole or in part for the loss or damage suffered, or to prevent or reduce the loss or damage. Accordingly, the concern is to enforce the statutory prohibitions from a compensation perspective. Although the legislation may increase the range of situations in which an order may be made the effect of which is to prevent the unjust enrichment of the defendant, the jurisdiction does not have an unjust enrichment perspective. The legislation does not in terms provide for the award of restitutionary damages. Nevertheless, it

may be open to a court to award damages (or analogous relief) on that basis.180

(iv) Restrictions on contract validity [231] Enforceability and legality. Many statutes impinge on the efficacy of contracts, and the validity of payments of money and transfers of property. There is a variety of purpose and a range of effects. The particular effect of any statute depends on its construction. However, from the contract [page 105] perspective, it may be said in general terms that the range of possible effects starts with procedural unenforceability and ends with voidness and illegality.181 The impact upon restitutionary claims may be sharply divergent. Some statutes, that prohibit the (natural) contractual basis, will tend to generate restitutionary claims. In other instances, the terms of the statute and its policy protective of the interests of the defendant may actually preclude restitutionary claims. The leading example of the former category is the Statute of Frauds 1677 (Imp). This example shows that the impact of statutes on contract validity is by no means new. Although in most Australian jurisdictions the statute has ceased to apply, its operation has been retained in some very important contexts by derivative legislation.182 The statute illustrates a form of unenforceability: the contract comes into being but cannot be enforced. Normal contract remedies are denied to at least one of the parties. Thus, claims for damages are not enforced and, unless the doctrine of part performance operates, specific performance must be withheld.183 Other statutes have a greater effect, in rendering any contract within their scope totally invalid, that is, void.184 Other statutes make contravention an illegal act, or combine

the commission of an offence with a prohibition of the contract which the parties purported to make.185 These statutes create various species of ineffective contract. Whenever a benefit is conferred under such a contract, the impact of the denial of contract enforceability is to create a situation where the possibility of unjust enrichment is very real. Although it is tempting to say that the statutes in question do not intend to countenance unjust enrichment, that really begs the question. Although the statutory policy is relevant to injustice, the question of injustice does not arise unless the defendant has been enriched. The mere fact that a contract has been partly performed does not necessarily signify enrichment.186 Even if a statute only strikes expressly at the validity of a contract, its policy may operate to preclude alternative rights in restitution if their enforcement would stultify that policy.187

(v) Restrictions on restitutionary relief [232] Removal of common law restrictions. What constitutes the removal of common law restrictions on restitutionary relief depends to a large extent on a perception of whether restitution would otherwise be available. Thus, at the time when the first frustrated contracts legislation was enacted in the Law Reform (Frustrated Contracts) Act 1943 (UK), the principle of unjust [page 106] enrichment had not been adopted in England. The same was true in Australia when local legislation on the same subject was enacted.188 One object of the legislatures in enacting the legislation was to cure defects in the common law of restitution. However, today it is quite possible that the general law provides (or will ultimately provide) rational solutions in jurisdictions where there is no legislation.189 Another example is the power to order the payment of money paid under mistake of law,190 rendered redundant by the abolition of the

law/fact distinction by judicial decision influenced by recognition of the unjust enrichment concept.191 Another is the enactment of a version of the change of position defence in Western Australia.192 There are other examples of legislation which directly broaden the circumstances in which restitution may be ordered, for example by conferring jurisdiction where none would otherwise exist, or would rarely be exercised.193 Other examples are better described as having an indirect effect. Thus, statutes which remove restrictions on the rescission of contracts for misrepresentation194 have an indirect effect on restitution by facilitating the satisfaction of a pre-condition to the making of such claims. Again, statutory restrictions on the use or operation of exclusion clauses195 may increase the ability to claim restitution. Most important of all is the impact of the Australian Consumer Law already referred to.196 This prohibits particular classes of conduct. To the extent that the effect is to define more generously (than under the general law) misrepresentation, particular categories of improper pressure and unconscionable conduct, it increases the potential for claims in relation to benefits conferred or retained. Moreover, since the jurisdiction is expressed in terms of compensation rather than restitution, and because the unjust enrichment concept has not been a driving force, restrictions (including defences) normally relevant to restitutionary claims do not control the jurisdiction.197 [233] Creation of restrictions and defences. There are important examples of statutory restrictions on restitutionary claims. These operate in various ways, but in general terms they fall into three categories. First, there are statutes which deny contract validity or prohibit payments or transfers of property, but without an element of illegality being present. It is always a question of construction whether a statute has achieved this directly or at least has as its object a prohibition on restitutionary relief.198 Although the creation of restrictions by way of prohibition on restitutionary relief may arise in this way, there appear to be very few statutes which have had this effect.199

[page 107] Second, there are statutes which create specific restrictions on restitutionary claims. These may be direct or indirect. Direct restriction occurs where a statute provides a defence to a restitutionary claim. The chief examples are statutes which impose time limits. Thus, statutes of limitation require (most) restitutionary claims to be brought within a specified period of time.200 The scope of the bona fide purchaser defence has been increased by the statutory embodiment (or creation) of specific exceptions to the rule nemo dat quod non habet.201 Again, the defences of change of position and passing on may have statutory expressions.202 Examples of indirect restrictions are found in statutes, relatively few in number, which lay down requirements for the termination and rescission of contracts.203 Third, reference may also be made to statutory illegality, as a general (and difficult) defence to a restitutionary claim that would otherwise be available.204

5. Classifying Remedies in Restitution (a) General [234] Introduction. A restitution claim may generate a range of personal and, exceptionally, proprietary remedies. The principles for determining whether a proprietary remedy will issue are similar whether restitution is granted to vindicate a proprietary right, for unjust enrichment or in response to wrongdoing. [235] Personal and proprietary remedies. Restitutionary claims may result in personal or proprietary remedies, stemming from common law, equity or statute. An order to pay money is a personal remedy, whereas a declaration of trust or the imposition of a lien is proprietary in nature. The latter remedies declare or establish the

plaintiff’s ownership of or secured interest over the relevant asset (usually against all the world). Proprietary remedies may give the plaintiff priority over the defendant’s unsecured creditors and other advantages as well. This section examines the distinction between personal and proprietary remedies in restitution and the exceptional circumstances in which the latter are available. Australian law is comfortable, in a way that English law is not, with discretionary proprietary remedialism based on equitable principles as an available response to unjust enrichment or wrongdoing or as a remedial option to vindicate title-based claims.205 Proprietary remedies are to be distinguished from title-based claims.206 [page 108] [236] Rules of tracing and following. Often property or money passes directly from the plaintiff to the defendant. But at times the form of the benefit transferred may change and/or pass through several hands before coming to the putative defendant. The rules of tracing and following which are briefly discussed elsewhere207 determine when and in what respects a plaintiff can identify benefit received or held by the defendant. They can thus act in aid of both personal and proprietary remedies.

(b) Personal Remedies in Restitution [237] Introduction. Nearly every restitutionary claim is a personal one, a claim in personam.208 Those deriving from the common money counts such as money paid, money had and received, quantum meruit and quantum valebat result in a personal remedy in the form of an order to pay money. The equitable remedy of account of profits209 is also a personal remedy designed to strip or to reverse unjust enrichment and to nullify types of wrongdoing. These remedies remain personal even when they depend upon the principles of tracing to

identify a property-based claim that lies against a third party,210 or even when they vindicate proprietary claims.211 [238] Consequences of the personal nature of most restitutionary remedies. Several things follow from the personal nature of most restitutionary remedies. First, it is generally sufficient for the plaintiff to show that a (usually monetary) benefit was received by the defendant. The claim is not defeated merely because the defendant no longer retains ‘the money’ paid by the plaintiff212 although for claims that vindicate the plaintiff’s title against volunteer third parties ‘retention’ of benefit is important.213 Second, the plaintiff does not, merely by virtue of the ability to claim restitution, obtain the right to assert a proprietary interest in the defendant’s assets. In some situations this will be the case, but it is not a usual feature of restitutionary claims. Take, for instance, a situation where the plaintiff has paid money to the defendant under a contract for the sale of goods induced by fraud. On valid rescission of the contract the plaintiff is entitled to recover the money. The claim is a personal one, and it is clearly wrong to treat rescission as providing a sufficient vehicle for proprietary relief in relation to payments made prior to rescission.214 Third, and perhaps most significant of all, a personal remedy implies that the defendant’s received enrichment, appropriately valued, is the normal measure of restitution.215 Only rarely does a benefit surviving at the time [page 109] when the claim is made form the basis for valuation.216 Thus, although proprietary remedies are pegged (in a practical sense) by reference to the value of the benefit remaining in the hands of the recipient, personal claims are assessed by reference to the benefit originally received (usually plus interest).217

[239] Payment or return of money. Many restitutionary claims involve money paid by the plaintiff to the defendant. Thus, the most common bases for claims in restitution are that money is paid by the plaintiff to the defendant as a result of mistake or improper pressure,218 or that money was paid to the defendant under an ineffective contract.219 The fact that the assets of the defendant have been increased by the amount paid is a sufficient basis for saying that the enrichment is the money received. Therefore, at least as a general rule, in these (and many other) cases it is unnecessary for the plaintiff to show that there was no intention that the defendant should become owner of the money.220 For example, where the defendant is enriched at the plaintiff’s expense by a payment mistakenly made, there is no need to inquire whether the mistake in fact vitiated the transfer of ownership in the money.221 It follows that, although we may speak of the ‘return’ of money paid when restitution is ordered, there is no requirement that the money be returned in specie, that is, the same notes or coins. The order for restitution is simply for the payment of an equivalent sum.222 There is, generally,223 no requirement that the plaintiff establish that the money paid is still in the hands of the defendant.224 For example, where the defendant is enriched at the plaintiff’s expense by a payment mistakenly made, the ability to assert a prima facie claim for restitution does not depend on the defendant’s retention of the money. Therefore, subject to restitutionary defences such as change of position, the order may be made even though the money has been dissipated.225 [page 110] [240] Claims for the value of services or goods. A claim in relation to work done, services rendered or goods received and accepted is also a personal claim for pecuniary restitution. It is not a claim for the return of a tangible benefit, and restitution may therefore be ordered even though services do not produce any marketable product.226 Similarly, in a case where a builder makes improvements to

a home, the improvements become the home owner’s property. The builder obtains no title to the improvements, and cannot assert a right over property simply on the basis of an ability to claim in contract or restitution. Thus, the builder’s claim in Pavey & Matthews Pty Ltd v Paul,227 for reasonable remuneration in respect of benefits conferred and accepted under an unenforceable contract, was not asserted on the basis of a proprietary interest. There may, of course, be a reservation of title in relation to goods, for example, for the purpose of preventing sale to a third party or to secure payment of the price. Similarly, an agreement between the parties may create a charge over real estate to the extent of improvements, again by way of security for payment. However, these are instances of contractual agreement. There are also some situations in which a party is in fact entitled to assert a proprietary right by virtue of work done or improvements to property. For example, the plaintiff may have a lien over the defendant’s property, or the circumstances may give rise to a constructive trust. In some cases these proprietary interests can be justified by reference to principles of restitution.228 However, in the total picture of claims for reasonable remuneration, these are very rare situations. They do not illustrate a general power to enforce a claim for reasonable remuneration by an order granting proprietary relief.229 [241] Other personal claims. Since our object was simply to state and illustrate the personal nature of most claims in restitution, we have not attempted to list exhaustively the in personam claims available under the law of restitution. As has been explained,230 most such claims are simply assertions of the right to recover a money sum equivalent to a benefit obtained by the defendant directly from the plaintiff.

(c) Proprietary Remedies in Restitution [242] Introduction. Some restitutionary remedies are proprietary in effect.231 Most, if not all of them, are equitable in derivation and in the

principles they apply. The ones we shall address are the remedial constructive [page 111] trust, the equitable lien and subrogation. We explain below232 why we regard the resulting trust as a right rather than a remedy in this context. The law in Australia is, we perceive, significantly different from that in England in this area. [243] Why rescission is excluded. Rescission on just terms may be an essential prelude to a proprietary remedy.233 But rescission is a right, not a remedy. And there can be rescission without revesting of title. It has been suggested234 that the ability of the plaintiff (or the court) to revest title to property by rescission of a contract illustrates a proprietary restitutionary remedy. Under this analysis, where a plaintiff rescinds a contract for fraud, and the grant of restitution in the plaintiff’s favour includes an order that the title to personal property transferred under the contract revest in the plaintiff, this is proprietary relief. Although it is certainly clear that a valid rescission has important restitutionary consequences, including the ability to recover money paid or property transferred, we do not analyse rescission as being of itself a restitutionary remedy, proprietary or otherwise.235 [244] Equitable proprietary remedies in restitution. Equitable proprietary remedies may effect restitution by precluding or reversing unjust enrichment at the plaintiff’s expense as well as, at times, serving vindicatory, prophylactic and deterrent functions. The primary remedies are the remedial constructive trust, the equitable lien (or charge) and subrogation. These proprietary remedies can in turn form the basis of personal (eg account of profits) or proprietary (eg orders to convey) remedies, as well as being the springboard for the processes of tracing and following, which in turn can lead to personal and proprietary remedies.236 A plaintiff seeking an equitable proprietary

remedy must show some particular circumstance making it just to do so. Merely because a personal remedy is worthless due to the insolvency of the debtor is not enough. On the other hand, the debtor’s insolvency is not itself a bar to a proprietary remedy under Australian law.237 Nor is it necessary to show a prior interest of a proprietary nature, let alone an antecedent ‘fiduciary’ relationship.238 In one of the seminal cases in the modern law of restitution, Australia and New Zealand Banking Group Ltd v Westpac Banking Corp,239 the High Court affirmed the availability of proprietary relief in response to a mistaken [page 112] payment. Mason CJ, Wilson J, Deane J, Toohey J and Gaudron J said240 that ‘The common law right of action [for money had and received] may arise in circumstances which also give rise to a resulting trust of specific property or funds or which would lead a modern court to grant relief by way of constructive trust’. Given that these remarks appear in a case involving a mistaken payment between two banks, this is one of many clear signals that the High Court does not invariably require proof of an antecedent ‘fiduciary’ relationship before considering the availability of an equitable proprietary remedy.241 It shows that the remedy is available in a proper case for independent claims in restitution as well as (dependent) ones involving wrongdoing. Relief by way of specific performance or otherwise to give effect to the principle that equity regards as done that which ought to be done is not restitutionary and does not involve the unjust enrichment concept. At best, and in certain circumstances, an order by way of specific performance may serve to prevent unjust enrichment.242 However, not all equitable proprietary remedies are concerned with unjust enrichment. This obvious proposition was recognised by the Supreme Court of Canada when it reversed its previously general statement that all were.243

[245] Defendant’s retention of benefit essential for proprietary remedy. Unlike personal remedies, which may lie against those who have received but no longer retain benefits,244 proprietary remedies can only be awarded with respect to benefits derived from the plaintiff that the defendant continues to hold.245 But the benefit need not be in its original form and the defendant need not be the person who directly received the benefit from the plaintiff, hence the relevance of the principles of following and tracing.246 [246] Advantages of proprietary remedies. A proprietary remedy may be advantageous for several reasons, including: (1) priority over unsecured creditors;247 (2) different limitation periods;248 (3) access to increase in value of or profits derived from the property; (4) saving of the need to prove the precise value of the defendant’s enrichment;249 [page 113] (5) a springboard for tracing and following property into different hands or different forms; and (6) personal preference for the property. The theoretical controversy in relation to constructive trusts, the most potent form of proprietary relief, is sometimes expressed in terms of a contrast between the constructive trust as an institutional or a remedial concept,250 but the role of such relief is far from a purely theoretical issue.251 A constructive trust may avoid the difficulties of proof involved in taking an account of profits.252 The effect may also be to secure to the plaintiff’s benefit any increase in the value of the property, and compound interest may be recovered in circumstances where the claim might otherwise carry simple interest.253 [247]

Flexible

proprietary

remedialism.

Two

broad

developments have advanced the flowering of proprietary remedialism in Australia and distinguish the law here from that in England. First, Australian courts are comfortable with remedial flexibility, in the sense of a duty to fashion the appropriate form of relief. The idea of an automatic link between right and remedy has been rejected, certainly in equity and in areas where statute offers a remedial smorgasbord.254 Second, and related to the first factor, Australian equity has boldly affirmed its context-specific, discretionary powers to prevent the unconscientious assertion or retention of legal rights. The case law255 amply demonstrates why Professor Birks’s attack on discretionary remedial proprietary interests has been rejected in this country.256 Before he embarked upon his judicial career, Professor Paul Finn observed that one of the greatest challenges facing restitution scholars is to formulate the principles governing the award of discretionary proprietary remedies. [page 114] He did not see judicial discretion as a cause for real concern in the remedy selection, and we agree. Helpfully, he suggested:257 Ordinarily it will be a plaintiff’s election that determines the remedy awarded. The classes of case where that selection is likely to be overridden are (1) where the remedy sought is disproportionate to the end to be served by remedy given the particular doctrine in question; (2) where the plaintiff’s own conduct operates as a disentitling factor; (3) where third party rights will be unfairly prejudiced; or (4) if the doctrine in question suggests its own natural hierarchy of remedy, where that selected is for that reason inappropriate in the circumstances.

Even more helpfully, Finn J recently and shortly before his judicial retirement joined with Stone and Perram JJ in Grimaldi v Chameleon Mining NL in expounding the relevant principles at great length.258 [248] Remedial minimalism. When selecting equitable remedies, the court applies a minimalist approach, granting a personal remedy such as an account of profits if it is efficacious; or, if it is not, preferring to impose a lien rather than a full constructive trust if it is both feasible

and equitable to isolate and accommodate the defendant’s interest in a mixed fund.259 ‘Ordinarily relief by way of constructive trust is imposed only if some other remedy is not suitable.’260 [249] Remedial constructive trust and lien. Not every constructive trust is remedial, but the existence of the sub-species in Australia is no longer disputable. It was first recognised by Deane J (Mason J agreeing) in Muschinski v Dodds261 and endorsed by the High Court generally in Baumgartner v Baumgartner.262 Those cases involved domestic relationships in which money had been contributed to the acquisition of property in circumstances not involving any actual common intention to share the beneficial interest. Earlier, McLelland J had imposed an equitable lien [page 115] in similar circumstances.263 These principles have been followed by the High Court and other Australian courts on many occasions.264 In Muschinski,265 Deane J described the relief as ‘an in personam remedy attaching to property which may be moulded and adjusted to give effect to the application and interplay of equitable principles in the circumstances of the particular case’. He emphasised that the remedial constructive trust is not a medium for the indulgence of idiosyncratic notions of fairness and justice but, as an equitable remedy, it is available only when warranted by established equitable principle or by the legitimate process of legal reasoning, by analogy, induction and deduction.266 The remedial constructive trust ‘serves as a remedy which equity imposes regardless of actual or presumed intention’.267 An existing proprietary base is not a prerequisite to a remedial constructive trust.268 A remedial constructive trust has been described as ‘one which is imposed by the Court as a remedy in circumstances where, before the order of the Court, no trust of any kind existed’. Accordingly, it

‘depends for its very existence on the order of the Court; such order being creative rather than simply confirmatory’.269 In Westdeutsche Landesbank Girozentrale v Islington London Borough Council,270 Lord Browne-Wilkinson aptly described the remedial constructive trust as ‘a judicial remedy giving rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of third parties lies in the discretion of the court’. His Lordship indicated that English law had not yet accepted the concept, and he left the matter open for the future. Later, the English Court of Appeal pushed the door firmly shut, referring to Canadian precedents, ignoring the Australian ones and taking a question-begging approach to the creation of proprietary interests in [page 116] equity.271 The remedial but proprietary nature of this type of constructive trust is evident from its capacity, at the principled discretion of the court,272 to recognise the prior, superior equity of the plaintiff when trumping legal or equitable rights that may predate the court’s order but which arose after the situation generating the plaintiff’s claim, most notably the rights of unsecured creditors in an insolvency.273 The remedial constructive trust may be awarded in circumstances that do not involve the unjust enrichment concept. Gummow J has explained that while a ‘constructive trust may readily in many cases be seen as a restitutionary remedy for an unjust enrichment at the expense of the plaintiff, this by no means always will be the case’.274 Proprietary relief may be a response to wrongdoing275 or to prevent at person from abusing a confidence.276 Proprietary relief may also give effect to other considerations that are not the concern of the law of restitution. An obvious illustration is where proprietary estoppel operates, and proprietary relief is given, in effect to enforce a non-contractual promise to confer an interest in real property. In Muschinski v Dodds277 Deane J said that278 ‘the constructive trust can properly be described as a

remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle’. Deane J also recognised,279 as have other members of the High Court,280 connections between constructive trust and unjust enrichment, something that is a commonplace in American law.281 [250] Fictions and confusing labels. Resort to the fiction of a preexisting fiduciary relationship has fortunately been spurned as an explanation for these discretionary proprietary remedies.282 As to English law, Millett J has described such a requirement as ‘widely condemned and depend[ing] on authority rather than principle’.283 [page 117] There is a well-established line of Australian cases stemming from Black v S Freedman & Co284 in which an antecedent fiduciary relationship plays no part in the reasoning and which support Bryson J’s statement that ‘the attribution of a constructive trust to stolen property is well established’.285 At times, even the invocation of the constructive trust is more talismanic than analytically helpful. The constructive trust is a well-known institution in areas having nothing to do with unjust enrichment or even restitution,286 but it is highly misleading to assume that the word is used consistently in the law. The word is used in many different senses, at times when no trust at all is present.287 In Professor Langbein’s words, the constructive trust ‘was a transparent fiction, rooted in the chancellor’s ability to overcome legal title by framing a decree to affect equitable title’.288 In its fictional role, the constructive trust has been used as the springboard to an alternative proprietary remedy such as an order to convey as a bare trustee,289 the imposition of a lien, an order in the nature of subrogation or even a

purely personal liability to account in the same manner as that of an express trustee.290 In these roles, especially the last mentioned one where the ‘trust’ is the precursor to a personal remedy, the remedial constructive trust has a claim to be equity’s counterpart to the fictitious implied contract that was shown the door in Pavey & Matthews Pty Ltd v Paul.291 In our view it would be better if courts entirely stopped invoking the concept when dealing with personal claims. In this area at least, it is ‘nothing more than a formula for equitable relief’.292 Lord Millett has proposed that the law should discard the words ‘accountable as a constructive trustee’ and substitute the words ‘accountable in equity’.293 [page 118] There is much debate as to the category in which to place the trust enforced against the defaulting fiduciary, the thief and their associates.294 Since such a trust is ‘institutional’ in the sense that it arises immediately upon receipt of unauthorised benefit by a knowing defendant, some prefer the label of resulting trust.295 We prefer the label ‘constructive’. We do not suggest that these trusts are, whatever their label, invariably remedial in the sense of being a response to unjust enrichment or deprivation of property. Nevertheless, the ‘theft’ cases illustrate the penetrative scope of equity and convincing reasons why analysis of proprietary remedies in restitution ought not to be hampered by distracting debate about pre-existing or continuing ‘fiduciary’ relationships. [251] Examples of restitutionary equitable proprietary remedies. Equitable proprietary remedies have been imposed to secure or create rights upon the failure of a domestic relationship or purely commercial joint enterprise.296 A constructive trust may be imposed in a commercial context where the basis of a payment has failed and, owing to the insolvency of the debtor, there is utility in such a remedy and it is just to do so.297

A constructive trust has also been declared or imposed to strip a defaulting fiduciary of investments traceable to the proceeds of bribes;298 or other serious breaches of fiduciary duty;299 or where there has been undue influence or improper pressure;300 to impound property held by associates of a company director who had transferred assets in breach of fiduciary duty to persons receiving them other than as bona fide holders for value without notice;301 to secure by lien a subrogated insurer’s right to settlement moneys paid to its indemnified insured;302 to preclude a murderer from acquiring a property benefit from the crime;303 to strip a thief or an associate of a thief who has received money or other property otherwise than as a bona fide purchaser [page 119] for value without notice;304 and in relation to mistaken payments where the recipient knew from the outset of the unintended transfer of value.305 It can thus be seen that they have a role in relation to both autonomous and dependent restitutionary claims. [252] Where proprietary remedies have been refused. A proprietary remedy has been rejected in relation to payments under judgments that are later set aside.306 A personal remedy was awarded in Westdeutsche Landesbank Girozentrale v Islington London Borough Council307 which involved payments under a void contract with no additional unjust factor. Although there was no claim for a remedial constructive trust in that case308 and although English law is still to recognise the remedial constructive trust, we think that the same result would follow in Australia because of the absence of unconscientious behaviour.309 In Hospital Products Ltd v United States Surgical Corp310 no fiduciary relationship was found to exist and a proprietary remedy was refused where parties to a commercial transaction dealt with each other at arm’s length. The case illustrates the restraint Australian courts

impose upon resort to equitable principles in commercial transactions unless something particularly catches the eye of equity.311 [253] Rescission, election and doing equity. If there is a contract, such as a contract of loan, the plaintiff cannot generally seek a proprietary remedy without avoiding that contract.312 The plaintiff will have to be prepared to do equity and otherwise satisfy equity’s requirements before rescission will be ordered.313 The rights of third parties will be taken into consideration.314 [254] Resulting trusts. Where money is paid without intention to benefit the recipient a resulting trust may arise by operation of law. [page 120] The traditional categories involve (1) apparent gifts, where the provider (without intent to benefit) transfers property gratuitously to another or provides the purchase price; and (2) express trusts which fail to dispose of all the property conveyed. The search for the intention (if any) of the provider of the money is aided by various presumptions which, being rebuttable, ‘may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts’.315 Detailed rules of equity determine when a resulting trust is presumed and when, on the contrary, an intention to benefit (the presumption of advancement) is presumed. Seen thus, the resulting trust has been recognised by some scholars as an institution which is restitutionary in the sense that it prevents unjust enrichment through the imposition by the law of an obligation to account back.316 But there are significant drawbacks with this analysis because it tends to be circular and conclusory and, if taken to its logical conclusion, would result in ‘excessive proprietary protection’317 because every case of unjust enrichment would see the defendant’s interest in any surviving property ‘result’ back to the plaintiff. English commentators have struggled to make the resulting trust do

useful work within restitution, in large part because of the refusal of English law to accept the remedial constructive trust.318 Australian law is free of these shackles. The resulting trust is well recognised here, but as a right, not a remedy. The weight of Australian authority supports the view that the resulting trust is ‘intent enforcing’.319 If a resulting trust is found to exist according to equitable principles, it assumes the incidents of an express trust and is protected by the normal trust remedies of declaration, account and vesting of property. We would classify the resulting trust as a right rather than a remedy. In any event, since resulting trusts are a discrete and bulky body of law addressed in specialist trust texts and monographs, we do not seek to expound the institution. [255] Subrogation. Subrogation is an equitable doctrine whereby rights are transferred from one person to another by operation of law. It is the ‘process by which one party is substituted for another so that he may enforce that other’s rights against a third party for his own benefit’.320 Subrogation operates in many different contexts including contracts of indemnity [page 121] insurance, surety agreements and trading trusts.321 The categories are not closed.322 Subrogation will sometimes place the plaintiff in the position of a secured creditor of the third party against whom the defendant had rights which were treated as assigned to the plaintiff,323 and in this sense subrogation serves as an equitable proprietary remedy that prevents the defendant’s unjust enrichment.324 Subrogation has been described as equity’s response to varieties of unconscionable behaviour.325 It is in no way inconsistent with such an approach to view it also as a response to unjust enrichment and, as this chapter illustrates, that the remedy may be proprietary in effect. In Banque Financiere de la Cite v Parc (Battersea) Ltd,326 Lord Hoffmann described subrogation as ‘an equitable remedy to reverse or prevent

unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived’. The High Court has also recognised that subrogation may prevent unjust enrichment.327 But at the same time, the ‘principles of equity’ were viewed as having been so well-developed in this area that the unjust enrichment concept casts no additional light.328 [256] Unconscientious behaviour the rationale? Several cases have recognised certain applications of these proprietary remedies as equity’s response to unjust enrichment.329 Naturally, this does not preclude acknowledgement of an additional deterrent role. Nor does it assert that every constructive trust is imposed to reverse unjust enrichment. (For example, the trust affecting a vendor under a specifically enforceable contract for sale is not of this category.) Australian courts have preferred, however, to embrace the concept of unconscionability to explain when proprietary remedies [page 122] will be granted in this field.330 Since, however, words like ‘unconscionable’, ‘inequitable’ and ‘unjust’ are used differently in different hands, it is essential that judges bear constantly in mind the dangers of idiosyncratic reasoning and keep their eyes downwards on the cases.331 Here in particular, the courts have emphasised that they are proceeding by cautious analogising, rejecting the charge of imposing palm tree justice, but nevertheless confident that flexible, individualised, context-driven justice are the hallmarks of equity. Equitable defences such as laches, lack of clean hands and failure to do equity332 will apply, as will the power to grant relief conditionally. [257] Impact on unsecured creditors. The imposition of a proprietary remedy may appear to displace or postpone existing legal rights, including the rights of unsecured creditors to share pari passu in the distribution of an insolvent’s assets.333 However, there is statutory

confirmation of a long-established equitable jurisdiction to do exactly this.334 It can also take priority over existing equitable interests if the facts giving rise to the imposition of the remedial constructive trust predate the creation of the equitable interest.335 These are aspects of the very nature of a proprietary remedy and of principles governing the priority of legal and equitable interests. They also explain the importance of giving notice to affected persons in any proceedings for proprietary relief.336 The remedy will be withheld against a solvent debtor337 and the court may, in its discretion, refuse such relief if it would be inequitable to unsecured creditors in the particular case.338 For example, a lien may suffice [page 123] to protect the interests of the plaintiff while allowing unsecured creditors the opportunity to share in profitable investments funded with the traceable proceeds of a bribe.339 Alternatively, the court may effectively postpone the creation of the proprietary interest until the date of the making of the order, thereby accommodating a prior security interest.340 But where the court determines to grant a proprietary remedy without postponing its effective date, it will be taken to have arisen as and from the date of the transaction which triggered the remedy. In this sense the remedial constructive trust or lien are institutional as well as remedial.341 In Re Polly Peck International plc (in administration) (No 2)342 the English Court of Appeal explained its refusal to countenance a remedial constructive trust that would interfere with an insolvent administration on the basis that the statutory insolvency regime shut out this remedy. We disagree, pointing out that the same logic would exclude express and resulting trusts as well. The Court’s decision was patently ahistorical when it is recognised that for centuries Equity has decreed that a trustee in bankruptcy stands in the shoes of the insolvent and therefore takes ‘subject to the equities’.343 Contrary to Polly Peck,

modern legislation dealing with bankruptcy and corporate insolvency law expressly recognises that ‘trust property’ and secured debts take priority over the rights of unsecured creditors (whether the security arises at law or in equity) and leaves it to the general law to identify when a legal or equitable interest comes within these categories. As with the controversial property/unjust enrichment dichotomy propounded by the House of Lords in Foskett v McKeown,344 reasoning can become circular or ambiguous unless there is a clearly stated position about the role of equity and its notions of ‘property’. It has been suggested that the court must find something which affects the conscience of the creditors whose rights are to be affected.345 We agree,346 [page 124] so long as the proposition is not elevated into a requirement that the creditors must be shown to have been actively complicit in procuring the enrichment. Creditors in insolvency have statutory rights to share in the distribution of assets subject to valid security interests and other interests given priority by statute. Sometimes the event affecting the imputed conscience of the unsecured creditors is the transaction whereby the debtor acquired the fund to which the creditors lay their derivative claim. There is no injustice in a remedy that goes no further than leaving the unsecured creditors in the shoes of the debtor against whose assets they claim in insolvency. Some have suggested that the remedial constructive trust will only be imposed to the detriment of unsecured creditors where it can be shown that they had accepted the risk that their debtor might cease to be the owner of property not specifically encumbered.347 This theory is at least consistent with cases where equitable proprietary relief was granted to prevent unsecured creditors from getting the windfall gain of a double payment.348 And there is no difficulty with refusing a proprietary remedy to a party that can be shown to have taken that risk; for example, in the light of the nature of its business or the commercial

transaction in question.349 But it tends to become a circular inquiry to ask, ex post, whether unsecured creditors of the defendant or the plaintiff in restitution took a particular risk. The nature of most restitutionary claims is such that the plaintiff got into a situation without knowledge, consent or even advertence. And it is usually artificial to impute any relevant intention to unsecured creditors, most of whom expected payment in full when they dealt with the debtor. Indeed, they may themselves have become creditors in consequence of a restitutionary claim that itself would have been unplanned.350 Since rescission will in many instances have to precede any claim to an equitable proprietary remedy, the court’s control over that process will often provide the context and the guidelines within which regard is taken for the equities, including the legitimate claims of third parties such as unsecured creditors.351 In Banque Financiere de la Cite v Parc (Battersea) Ltd,352 the House of Lords limited the remedy of subrogation, there awarded to reverse the defendant’s unjust enrichment, so that the plaintiff only obtained priority over the defendant and not as regards any of the other creditors of the defendant. 1.

See Lord Goff, ‘Foreword’ in Burrows, Essays, p v.

2.

3.

See [235] and Chapter 3 (Want of Title). Contrast Pollock and Maitland, The History of English Law Before the Time of Edward I, 2nd ed, vol I, p 205, referring to the action in debt (‘bold crudity of archaic thought’ equated the ‘repayment of an equivalent sum of money to the restitution of specific land or goods’). See generally Part V.

4. 5.

See the treatment of improper pressure: [505]–[507], [1312], [1321], [1326]. See generally Part V.

6.

See Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, p 247. See [215], [909]. See Chapter 7 as to judgments. The enforcement of express and implied trusts is another example.

7. 8. 9.

See generally Part VI. See generally Part VII.

10. See generally Part VIII. 11. See [117]–[118].

12. See [117]. 13. Although the list relates solely to the recovery of a benefit directly obtained, money had and received was also used in some cases of wrongful conduct, to make the defendant account for benefits obtained. See [113] and further [217], [1517] (waiver of tort). 14. See [118]–[119]. 15. See [118]–[119]. 16. See [225]. See also [1037]. 17. See [131]. 18. See [164]–[169]. 19. See [170]. See also [221], [1517] (waiver of tort terminology). 20. To the extent that ‘acceptance’ of work or goods is still the crucial consideration in derivative restitutionary claims for reasonable remuneration, it may or may not operate as the principal unjust factor. See [157]. 21. Cf BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 per Robert Goff J (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). Of course, we do not suggest that these expressions (‘reasonable remuneration’ and ‘reasonable price’) are the exclusive domain of restitution. 22. See [135], [136]. 23. See [125], [127]. 24. (1987) 162 CLR 221; 69 ALR 577. 25. (1987) 162 CLR 221 at 256. 26. Since such a sum is liquidated by subsequent events, it would not originally have been recoverable as a debt. But the replacement of debt by assumpsit permitted the extension to be made (see [113]). In much the same way, actions on warranties given by sellers of goods were by the end of the eighteenth century recognised as contractual and declared in assumpsit, even though they were for a long time pleaded in terms relying on the fiction of deceit. See Carter, §412. 27. In any event, in the early cases, pre-dating modern contract law, the theory underpinning these aspects had not been developed. Even in the nineteenth century, when the law of quasi-contract reached its peak, no reference was made to principles of assessment, as if the claims were in the nature of damages. 28. (1987) 162 CLR 221 at 255; 69 ALR 577 at 603. As to accepted benefits, see [157]–[158]. 29. See [128], [204], [209]. 30. This statement was approved by Gleeson CJ, Gaudron and Hayne JJ in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 525; 185 ALR 335; [2001] HCA 68 at [15]. 31. (1987) 162 CLR 221; 69 ALR 577. 32. The question was debated, shortly before Pavey, in Shell Co of Australia Ltd v Esso Australia Ltd [1987] VR 317 at 329–30, 342, 345–6, with a majority of the Full Court of the Supreme Court of Victoria upholding the conventional view. 33. See [138]–[139].

34. See further [141]–[142]. 35. See [112]–[132]. See further as to the distinction between forms of action and causes of action [2733] (limitations of actions). 36. Cf Birks, Future, Chapter 1. 37. Lonrho Plc v Fayed (No 5) [1993] 1 WLR 1489 at 1509 per Evans LJ. 38. Cf Robert Goff, ‘The Search for Principle’ (1983) 69 Proc of British Academy 169 at 182– 4. 39. [1965] 1 QB 232 at 242–3. 40. See, eg Golski v Kirk (1987) 14 FCR 143 at 145–6; 72 ALR 443 at 446; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 539; Republic of India v Indian Steamship Co Ltd (The Indian Grace) [1993] AC 410 at 419; Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 43 FCR 510 at 521; 115 ALR 377 at 388; See also Williams v Milotin (1957) 97 CLR 465 at 474; Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245; 52 ALR 231 at 240. See also [2304] and generally Chapter 29 (pleading restitutionary claims). 41. See further [138]. 42. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; 69 ALR 577 at 604 per Deane J. See also [2204] (approach to defences). 43. See [141]. 44. See [140]–[175]. 45. (1987) 162 CLR 221. 46. (1987) 162 CLR 221 at 256. 47. (1991) 101 ALR 363 at 374–6. See also Mercedes-Benz (NSW) Pty Ltd v ANZ and National Mutual Royal Savings Bank Ltd (1992) Unreported, SC(NSW) (Palmer AJ), 5 May, noted [1993] RLR 55 (unjust enrichment a ‘general normative principle or cause of action’). Cf Stephenson Nominees Pty Ltd v Official Receiver on behalf of Official Trustee in Bankruptcy; Ex parte Roberts (1987) 16 FCR 536 at 553; 76 ALR 485 at 502, 503; New South Wales v McCloy Hutcherson Pty Ltd (1993) 43 FCR 489 at 506–7; 116 ALR 363 at 381–2. See also [143], [2904]. 48. Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673. 49. See Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 117; 111 ALR 649 at 669; Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12; Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122 at 129– 31, 169. Cf Bryson v Bryant (1992) 29 NSWLR 188 at 222–3; Coshott v Lenin [2007] NSWCA 153. 50. (1992) 175 CLR 353; 93 ALR 271. 51. See (1992) 175 CLR 353 at 406. 52. (1992) 175 CLR 353 at 379. 53. See Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 at 97; 117 ALR 393 at 407. 54. (1992) 175 CLR 353 at 378. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [151]; Australian Financial Services

and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560: 307 ALR 512; [2014] HCA 14 at [73], [139]. 55. It is therefore deeply ironic that the mantra about unjust enrichment not being a ‘definitive legal principle’ gets repeated in cases where ‘equitable principles’ have been urged as supplementing reasoning that involves the more traditional ‘two-stage’ application of the unjust enrichment concept. See Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 Aust Bar Rev 284 esp at 307–10, 318. See also [142]. 56. (1993) 176 CLR 344; 111 ALR 289. 57. (1993) 176 CLR 344 at 375. See also at 379 per Deane and Dawson JJ (plaintiff’s ‘action in unjust enrichment’ failed); Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 117; 104 ALR 1 at 37 per Deane J (unjust enrichment ‘gives rise to a direct right of action’). Cf Foran v Wight (1989) 168 CLR 385 at 438; 88 ALR 413 at 450–1 per Deane J (‘restitution for, or of, unjust enrichment’); Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 578 per Lord Goff (‘claim … founded upon the unjust enrichment’ of the defendant). But cf Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122 at 131. 58. (1993) 176 CLR 344 at 359; 111 ALR 289 at 300. 59. See, eg, Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; Benedetti v Sawiris [2014] AC 938 at [10]. 60. (1987) 162 CLR 221 at 256; 69 ALR 577 at 604 (emphasis added). 61. (1987) 162 CLR 221 at 256 (emphasis added). 62. [1977] 2 NSWLR 880 at 903. Cf Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd [1994] 1 Lloyd’s Rep 213 at 235 per Sheller JA, with whom Cripps JA agreed (restitution or fair and just compensation). See also Van den Berg v Giles [1979] 2 NZLR 111 at 122. 63. (1988) 12 NSWLR 394 at 445. Kirby P agreed. Contrast Ansett Transport Industries (Operations) Pty Ltd v Alenia Aeritalia & Selenia SpA (1991) 105 FLR 169 at 175. 64. [1995] 2 Qd R 350 at 361. 65. (1988) 13 NSWLR 303 at 313. 66. (1989) 16 NSWLR 582 at 621. See also Geraldton Building Co Pty Ltd v Woodmore (1992) 8 ACSR 585 at 592 (claim as on a quantum meruit is a claim for damages). Cf Spedley Securities Ltd v Greater Pacific Investments Pty Ltd (1992) 30 NSWLR 185 at 191. 67. Contrast Cheese v Thomas [1994] 1 WLR 129 at 135 per Sir Donald Nicholls V-C (damages ‘look to the plaintiff’s loss, whereas restitution is concerned with the recovery back from the defendant of what he received’). 68. (2001) 208 CLR 516 at 528; 185 ALR 335; [2001] HCA 68 at [21]. 69. In an earlier passage in his judgment in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 252, Deane J rightly described as ‘bizarre’ the ‘notion that an action on a common indebitatus count for a reasonable remuneration was not an action to recover as a debt the actual liquidated amount payable but was an action for breach of some unmentioned fictional assumpsit or promise to pay’. 70. (1989) 168 CLR 385 at 438; 88 ALR 413 at 450.

For a comparison see [210]–[217]; and see further [1403]–[1414] (damages and 71. restitution). 72. (1993) 176 CLR 344 at 375; 111 ALR 289 at 313 (see [208]). 73. See, eg Gilmore, The Death of Contract. Contrast, eg Brian Coote, ‘The Essence of Contract’ (1988–89) 1 JCL 91, 183. For a survey see D B King, ‘Reshaping Contract Theory and Law: Death of Contracts II’ (1994) 7 JCL 245 and 8 JCL 16. 74. Contrast Atiyah, Essays on Contract, p 48 (separation of restitution from law of contract ‘misconceived’). Cf J D McCamus, ‘Unjust Enrichment: Its Role and Its Limits’, in Waters (ed), Equity, Fiduciaries and Trusts 1993, p 129. 75. We do not deny the importance of equity, but we dispute that it can claim to be no part of restitution. Part of it clearly is. See [123], [222] and Chapter 3. On the role of statute see [223]–[233]. 76. See, eg Sir Gerard Brennan, ‘Opening Address [to the First Journal of Contract Law Conference]’ (1990) 3 JCL 85 (since the ‘exigencies of civilised intercourse’ call for sanctions in relation to voluntarily assumed obligations, the ‘legal system must define the circumstances in which remedies are available to enforce such obligations and the scope of those remedies’). 77. See, eg Fried, Contract as Promise; A S Burrows, ‘Contract, Tort and Restitution — A Satisfactory Division or Not?’ (1983) 99 LQR 217. Contrast Atiyah, Essays on Contract, pp 52ff. 78. See, eg Moschi v Lep Air Services Ltd [1973] AC 331 at 346; Tabcorp Holding Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, [2009] HCA 8 at [13]. Cf Hawkinson v Johnston 122 F 2d 724 at 729 (CA, 8th Cir, 1941) (real sanctity of any contract rests only in the mutual willingness of the parties to perform). Contrast Atiyah, The Rise and Fall of Freedom of Contract, pp 431, 768. 79. The same contrast may be drawn between express (and implied) trusts and restitution. See Birks, Introduction, p 54. 80. See further Chapter 3 and Part VI. 81. See further [1808], [1810]. 82. Adoption of the conception that retention of a benefit is itself a wrong would return the law to the fictional implied promise basis. 83. But cf [1511] (damages in lieu of specific performance and injunction); [1815] (modern tendency to increase situations in which specific performance is available). 84. Compare contracts in which terms are implied in law, as incidents of a contract, and duties implied in law independently of contractual terms. See J F Burrows, ‘Implied Terms and Presumptions’ (1968) 3 NZULR 121; Elisabeth Peden, ‘Policy Concerns in Terms Implied in Law’ (2001) 117 LQR 459. 85. See further [220]. 86. See [242]–[258]. 87. But cf [142], [1514], [1515] (secondary sense of unjust enrichment) and see [220], [1514], [1515] (secondary duty to make restitution). And see [159]–[163] (‘at the expense of’ the plaintiff). 88. See [212].

89. See [1508]. On the relation between compensation and restitutionary damages see generally Chapters 16, 17 and 18. 90. Cf Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 116; 104 ALR 1 at 36 per Deane J (differences between tort and contract are largely the result of historical considerations and are of diminishing significance). 91. Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365 per Parke B. For an authoritative affirmation see Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80, 98, 117, 134, 148, 161; 104 ALR 1 at 9, 23, 37, 49, 60, 70. 92. See further [1509], [1809]. 93. Recovery of reliance loss is controversial. See Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; 104 ALR 1 and further [1810]. See also [1819] (recovery of restitution loss). And see generally on the relation between contract damages and restitutionary damages Chapter 18. 94. See, eg Alati v Kruger (1955) 94 CLR 216 at 222–3; Gould v Vaggelas (1984) 157 CLR 215 at 220–1; 56 ALR 31 at 34; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 7, 11–12; 63 ALR 600 at 603, 607. Cf East v Maurer [1991] 1 WLR 461 (see Simon Evans (1993) 6 JCL 73). 95. Carter on Contract, §20-460. 96. See [137], [212]. 97. See, eg Keith Mason, ‘Contract and Tort: Looking Across the Boundary from the Side of Contract’ (1987) 61 ALJ 228; Jane Swanton, ‘The Convergence of Tort and Contract’ (1989) 12 Syd LR 40. 98. See further [229]. 99. See, eg Samuel Stoljar, ‘Estoppel and Contract Theory’ (1990) 3 JCL 1. 100. In this respect Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; 76 ALR 513 is an important, though difficult, decision. See Handley, Estoppel, pp 180–2. 101. Cf Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 184–5. 102. See generally Part V. 103. See Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 275; Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 at 227–8; Newitt v Leitch (1997) 6 Tas R 396 at 408; Trimis v Mina (1999) 16 BCL 288; [1999] NSWCA 140 at [54]; Issitch v Worrell (2000) 172 ALR 586 at 592 [20]; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545, 553, 577; 185 ALR 335; [2001] HCA 516 at [75], [95], [166]; Wentworth v Rogers (2006) 66 NSWLR 474. See also Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 165 per Lord Goff, with whom Lords Keith, Ackner and Lowry agreed (money paid under binding contract ‘irrecoverable in restitution’); Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 257 per Byrne J (no claim where a ‘subsisting enforceable contract’); Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164 per Lord Goff, with whom Lord Lowry agreed (existence of an agreed regime ‘renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate’). See further [440], [909]. 104. See, eg Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 319; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232

CLR 635; 247 ALR 412; [2008] HCA 27 at [111]; Nikolic v Oladaily Pty Ltd [2007] NSWCA 252 at [101]; In the matter of MSU Management Pty Ltd [2011] NSWSC 54 at [369]. 105. T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [33]. See [506]. 106. See [216]. 107. See Henderson’s Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539; [2011] VSCA 167 at [56]. See also Lumbers; HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; [2011] HCA 31 at [46]. Cf also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 at [5] per Spigelman CJ (limiting decision to fiduciary relationships in a contractual context). See also A O’Brien, ‘The Relation Between the Law of Unjust Enrichment and Contract: Unpacking Lumbers v Cook’ (2011) 32 Adel L Rev 83. See also [909]. See further Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, p 247 (‘basic tenet’ of restitution that recovery is not available for ‘benefits conferred in fulfilment of a valid obligation owed to the recipient’). But cf Atiyah, The Rise and Fall of Freedom of Contract, pp 488–9. The difficulty of accommodating gifts is one of the key arguments voiced by Burrows for not accepting Birks’s espousal of absence of cause as the grundnorm of restitution: see Andrew Burrows, ‘Absence of Basis: The New Birksian Scheme’ in Mapping the Law. 108. Cf [149], [936]–[941] (relevance of reliance). 109. That is not to say that compensation and restitution are necessarily mutually exclusive obligations. See [1405], [1409], [2309], [2906]. Cf [1536] (recovery of bribe); [1811] (assessment of loss on combined bases); [1511], [1720], [1836] (damages in equity). 110. Rowland v Divall [1923] 2 KB 500 (see [1121]) is an example. 111. See further [1408], [1819]. 112. See further the discussion in [909]. Cf Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. 113. See [1142]. 114. But it is a rule of public policy which contradicts, or at least qualifies, the principle of freedom of contract. See [1142] (parties’ agreement impeached). Restitution is a basis by which effect may be given to the operation of the public policy rule. 115. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545; 185 ALR 335; [2001] HCA 68 at [75] per Gummow J; Alexiadis v Zirpiadis [2013] SASCFC 64. 116. See generally [1033]–[1036]. 117. See, eg [1125] (contract discharged for defendant’s breach). 118. Cf [923], [930] (relevance of restitution where failure of condition). 119. (1987) 162 CLR 221; 69 ALR 577. 120. See [117] (money had and received). Indeed, where the plaintiff seeks a remedy on the basis of the defendant’s tortious conduct in relation to the plaintiff’s property, and relief is given, the situation can often be subjected to alternative analyses, within restitution or in tort and restitution. See further [219] (independent and dependent claims). See further Chapters 3 and 16.

121. For a survey see Law Commission for England and Wales, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 132, 1993. See further [220] (independent and dependent claims). See also Chapter 15. 122. The distinction between personal and property-based claims is not to be confused with the distinction between personal and proprietary remedies in restitution (as to which see [237]–[258]). 123. See [220]. 124. See [222]. 125. See [223]–[233]. 126. For statutory triggers, see [222]–[232]. Statutory triggers may replicate or reflect grounds for restitution encountered under the general law but they need not do so: see Mark Leeming, ‘Theories and Principles Underlying the Development of the Common Law: The Statutory Elephant in the Room’ (2013) 36 (3) UNSWLJ 1002. 127. As to the unjust enrichment concept, see Chapter 1. As to restitution for wrongs, see Part VI. 128. See Virgo. See also Restitution, Third, §1 Comments e and g, §3. 129. Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 at 168 (Millett LJ). As to proprietary remedies, see [242]ff. 130. See eg, Foskett v McKeown [2001] 1 AC 102 at 109, 115, 118, 129. 131. For example, Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548. 132. See Chapter 3 (Want of Title) and Part VI (Claims Based on Wrong Committed). In one sense, restitution of money paid under mistake or improper pressure also serves this function, by providing personal remedies where property is transferred without the fully informed, free consent of the owner. 133. See [136], [161]. 134. See generally Part VI. 135. For indirect benefits see [1517], [1536] (money had and received claim brought to recover a bribe); Chapter 19 (wrongful death). For some claims, eg judgment reversal, necessitous intervention and claims entailing constitutional principles, policy bases inform and qualify the operation of the unjust enrichment concept. 136. Claims derived from the action for money had and received may also vindicate proprietary interests against third parties (see Chapter 3) and, in what used to be called waiver of tort, offer gain-based remedies for wrongs. 137. The exceptions are Pts II (Want of Title) and VI (Claims Based on Wrong Committed). 138. See [113], [129], [162]. See further [1517]. 139. See [113] and generally Chapter 16. 140. See [160], [220]. See further [1515]–[1517]. 141. See [160], [220]. See further [1507]–[1512], [1519]–[1529]. 142. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681 (see [120]). 143. Foran v Wight (1989) 168 CLR 385 at 438; 88 ALR 413 at 450 per Deane J. Cf Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 450. See also [610]. 144. See [123].

145. See Legione v Hateley (1983) 152 CLR 406 at 449; 46 ALR 1 at 31–2. 146. See Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 123; 116 ALR 385 at 387, 396. 147. See generally [1136]–[1145], [1170], [1439]. 148. See [1511], [1710]–[1714]. Cf [1719]–[1726], [1836] (damages in equity). 149. See [249]. 150. See [1607]. See also [504]. 151. See [243], Chapter 6 (Bearing Others’ Burdens: Contribution, Recoupment and Subrogation), [846] (subrogation by payment of another’s debt). See Jacqueline D Lipton, ‘Equitable Rights of Contribution and Subrogation: Recent Australian Judicial Approaches’ (1995) 13 Aust Bar Rev 21. See also Trade Practices Commission v Manfal Pty Ltd (No 3) (1991) 33 FCR 382 at 385; 105 ALR 520 at 523 (unjust enrichment as basis for rights of contribution). For specific restitution see [235], [1607]. We do not analyse rescission as a restitutionary claim (see [411]). 152. See Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 Ch D 339 at 367; Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374 at 380; Attorney-General for Hong Kong v Reid [1994] 1 AC 324. See generally Sir Peter Millett, ‘Bribes and Secret Commissions’ [1993] RLR 7. 153. See generally [1329]–[1331], [1431]–[1439], [2324]–[2335]. 154. See [236] and [303]. 155. See [2407]–[2408]. 156. For a review of English legislation, and a general analysis of the role of statute, see Jack Beatson, ‘Should There Be Legislative Development of the Law of Restitution?’ in Burrows, Essays, p 279. 157. See further [1146], [1336]. 158. See [1146]. 159. See NSW: Frustrated Contracts Act 1978; SA: Frustrated Contracts Act 1988; Vic: Frustrated Contracts Act 1959. There are, however, important differences of approach. Thus, only the Victorian legislation can be said to come close to the adoption of unjust enrichment. In New South Wales, and to a lesser extent in South Australia, the object is to provide for loss apportionment. See also [232] and generally Chapter 12. 160. See also [458] (mistaken encroachments), [1607] (specific restitution of goods), [608] (contribution), [2035] (restitution of taxes wrongly paid). Statutes providing for restitution following the commission of crimes are outside the scope of this work. 161. For the official text see Final Act of the United Nations Conference on Contracts for the International Sale of Goods (UN Doc A/CONF 97/18, 10 April 1980, Annex I). The Convention supersedes the Uniform Law on International Sale of Goods (1966) which never entered into force in Australia. 162. See ACT: Sale of Goods (Vienna Convention) Act 1987; NSW: Sale of Goods (Vienna Convention) Act 1986; NT: Sale of Goods (Vienna Convention) Act 1987; Qld: Sale of Goods (Vienna Convention) Act 1986; SA: Sale of Goods (Vienna Convention) Act 1986; Tas: Sale of Goods (Vienna Convention) Act 1987; Vic: Sale of Goods (Vienna Convention) Act 1987; WA: Sale of Goods (Vienna Convention) Act 1986. The Convention is attached as a

schedule to the legislation (except in Victoria, where it is now a schedule to the Goods Act 1958). For application of the Convention see CISG, Arts 1–5. 163. See ACT: Sale of Goods (Vienna Convention) Act 1987, s 6; NSW: Sale of Goods (Vienna Convention) Act 1986, s 6; NT: Sale of Goods (Vienna Convention) Act 1987, s 6; Qld: Sale of Goods (Vienna Convention) Act 1986, s 6; SA: Sale of Goods (Vienna Convention) Act 1986, s 5; Tas: Sale of Goods (Vienna Convention) Act 1987, s 6; Vic: Sale of Goods (Vienna Convention) Act 1987, s 6; WA: Sale of Goods (Vienna Convention) Act 1986, s 6. See also Australian Consumer Law, s 68. 164. See [1149], [1226]. 165. See [1436]. 166. Competition and Consumer Act 2010 (Cth), Sch 2. 167. See [1047], [1315]. 168. See further [1837]. See Larrikin Music Publishing Pty Ltd v EMI Songs Australia (No 2) (2010) 188 FCR 321 (discussed David J Brennan, ‘The Beautiful Restitutionary Heresy of a Larrikin’ (2011) 33 Syd L Rev 209). 169. See [229]. 170. See [1148]. 171. See [1237], [1252], [1257], [1268]. 172. See [1316], [1335]. 173. See [1335]. 174. See ACT: Domestic Relationships Act 1994; NSW: Property (Relationships) Act 1984; NT: De Facto Relationships Act; Qld: Property Law Act 1974; SA: Domestic Partners Property Act 1996; Tas: Relationships Act 2003; Vic: Property Law Act 1958; WA: Family Court Act 1997. 175. Competition and Consumer Act 2010 (Cth), Sch 2. 176. See [1047]. 177. See [1047], [1334]. 178. Competition and Consumer Act 2010 (Cth), Sch 2. See [229], [1047]. 179. See [227]. 180. See further [1837]. 181. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 at [104]–[107] per Gummow and Bell JJ for general discussion of the outcomes possible under differing statutory schemes. 182. See [1011]. See generally on restitutionary claims [1019], [1024], [1029]–[1032], [1039]. Its enduring effect under the modern law of restitution may also be seen in the application of these principles in analogous situations. See, eg [1024], [1030]. 183. See [1046]. 184. See [1010], [1021]. 185. See [1013]–[1014], [1022]. 186. See generally [933]–[935]. See also [2616] (illegality). 187. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7.

188. For the legislation see [226]. 189. See Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66. 190. See [413]. 191. See [135]. 192. See [2405]. 193. See, eg [458] (mistaken encroachments on land), [1148] (legislation in relation to deposits). 194. See [2333]. 195. See generally Contract Law in Australia, §§14-22–14-25. 196. See [227], [229], [230]. 197. See [2334]. 198. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7. 199. The contexts are very specific. See, eg [1028]. 200. See generally Chapter 27. 201. See [2527]. 202. See [2040]–[2041], [2405]. Cf [1247] (Victorian frustrated contracts legislation). 203. See, eg [2323], [2709]. 204. See Chapter 26. 205. Equity can at times be as hardnosed as the common law in its vindication of property rights that it recognises, eg the express trust. But the area considered in this chapter involves the application of broad equitable principles that lead in particular contexts to a conclusion that an equitable proprietary interest should be recognised. The presence of nuanced equitable defences and discretionary factors recognise that strict rules cannot always be formulated. 206. Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 at 168 (Millett LJ). 207. See [303]. 208. See Menelaou v Bank of Cyprus Plc [2015] UKSC 66 at [55], [81] as to a ‘monetary restitutionary award’ as the standard response. 209. As to account of profits as a personal remedy, see Maguire v Makaronis (1997) 188 CLR 449 at 468; 144 ALR 729 at 740. Rescission is a right not a remedy (see [243]). 210. See [236], [303], [1727]–[1734]. 211. See Chapter 3 (Want of Title). 212. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673; 78 ALR 157 at 162. See further [407]. Of course, if the defence of change of position is enlivened that is a different matter. See Chapter 24. 213. See [311]. 214. See the analysis in Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 103. 215. See [137]. 216. But account must be taken of the operation of defences, for example, the restitutionary

defence of change of position. See [136], [144] and generally Chapter 24. 217. An award of interest will usually ensure that the defendant is not unjustly enriched by any delay in ‘restoring’ the benefit to the plaintiff. See generally Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 and Chapter 28. 218. See generally Chapters 4 and 5. 219. See generally Part V. 220. But Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 illustrates that the plaintiff may sometimes rely on the fact that title to money in the defendant’s hands never left the plaintiff. So, A may rely on absence of intention that B was to obtain ownership of money in a claim against B or in one against C, a third party recipient not occupying position of bona fide purchaser. See Chapter 3. 221. See [428], [429]. 222. See Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 102–3 (context of total failure of consideration on rescission). As to interest, see Chapter 28. 223. For discussion of the circumstances in which a personal claim may have to be based on benefit retained see Birks, Introduction, pp 85–7, 93. 224. For statements from the unjust enrichment perspective see Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 572; Martin v Pont [1993] 3 NZLR 25 at 30. See also Peter Birks, ‘Misdirected Funds: Restitution from the Recipient’ [1989] LMCLQ 296 at 311–12. See also [2422]. 225. See Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157 (see [434]). See also [307], [2422]. 226. Subject to the issues discussed at [148]. 227. (1987) 162 CLR 221; 69 ALR 577. 228. See further [242]–[258]. See also [452]–[454] (proprietary remedies for some mistaken payers); [839] (equitable liens to prioritise rights of remuneration). 229. Such a power may arise under statute. See, eg Frustrated Contracts Act 1988 (SA), s 7(5) (for the purpose of giving effect to adjustment required following frustration of contract, a court may make an order for the creation of a charge on property). 230. See [239]. 231. See Mr Justice W M C Gummow, ‘Unjust Enrichment, Restitution and Proprietary Remedies’ in Finn, Essays, p 47; Roy Goode, ‘Property and Unjust Enrichment’ in Burrows, Essays, p 215; John Glover, ‘Equity, Restitution and the Proprietary Recovery of Value’ (1991) 14 UNSWLJ 247; Burrows, Chapter 8. See also [246]. 232. See [254]. 233. See [253]. 234. See Whittaker v Campbell [1984] QB 318 at 327 per Robert Goff LJ for the court (‘straightforward remedy in restitution’); Smith New Court Securities v Scrimgeour Vickers (Asset Management) Ltd [1994] 1 WLR 1271 at 1280. See also Burrows, pp 16–21. Cf Birks, Introduction, pp 66–7. 235. We do not see any particular utility in separating out cases in which rescission is a form of proprietary relief from those in which it is not. Moreover, rescission is a right, not a remedy. See Alati v Kruger (1955) 94 CLR 216 at 224 per Dixon CJ, Webb, Kitto and

Taylor JJ (rescission ‘is always the act of the party’). See also Burrows, pp 16–21; Bant & Bryan, Principles of Proprietary Remedies, p 2. 236. See further Chapter 3. 237. See [257]. 238. See [249]–[250], [303]. 239. (1988) 164 CLR 662; 78 ALR 157. 240. (1988) 164 CLR 662 at 673; 78 ALR 157 at 162. See also Neste Oy v Lloyds Bank Plc [1983] 2 Lloyd’s Rep 658 at 665–6 (Bingham J). 241. See further [251]. 242. See further [1141], [1169] (relief against forfeiture by specific performance). 243. Soulos v Korkontzilas [1997] 2 SCR 217; (1997) 146 DLR (4th) 214. 244. See [240]. 245. Fortex Group Ltd (in receivership and liquidation) v Macintosh [1998] 3 NZLR 171 at 175; Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 678 [29]; Chong v Channell [2009] NSWSC 765. The recognition of an equitable lien through the process of subrogation will in some situations entail a conceptual exception to the proposition stated (see Menelaou v Bank of Cyprus Plc [2015] UKSC 66 at [37]–[50]). 246. See [303]. 247. See [257]. 248. Cohen v Cohen (1929) 42 CLR 91. See [2736]. 249. See [1727]. 250. See further [249], [1728]. 251. See Sir Peter Millett, ‘Bribes and Secret Commissions’ [1993] RLR 7 at 9ff. 252. If the defendant claims a ‘just allowance’ the onus rests on the defendant. See [1717]. 253. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938; [1994] 4 All ER 890. Cf Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561. See generally Chapter 28. 254. See Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414; Maguire v Makaronis (1997) 188 CLR 449 at 467; 144 ALR 729 at 740; Akron v Iliffe (1997) 41 NSWLR 353; V Waye and D Wright, ‘Trial Strategy when Selecting a Remedy from the Remedial Smorgasbord’ (1998) 17 Aust Bar Rev 265; J C Campbell, ‘When and Why a Bribe is Held on a Constructive Trust: The Method of Reasoning Towards an Equitable Remedy’ (2015) 39 Aust Bar Rev 320. 255. See [249]. 256. See, eg Cope, Proprietary Claims and Remedies; Wright, The Remedial Constructive Trust; D Wright, ‘Professor Birks and the Demise of the Remedial Constructive Trust’ [1999] RLR 128; S Evans, ‘Defending Discretionary Remedialism (2001) 23 Syd LR 463; Fiona Burns, ‘The Equitable Lien Rediscovered: A Remedy for the 20th Century’ (2002) 25 UNSWLJ 1; Natalie Skead, ‘Undue Influence and the Remedial Constructive Trust’ (2008) 2 J Eq 143. References to Birks’s many writings on this topic may be found in Wright’s article. See eg P Birks, ‘Three Kinds of Objections to Discretionary Remedialism’ (2000) 29 UWALR 463 and his review of David Wright, The Remedial

Constructive Trust in (1999) 115 LQR 681. Birks was not alone among English writers in contending against the remedial constructive trust: see Sir Peter Millett, ‘Restitution and Constructive Trusts’ and A J Oakley, ‘Restitution and Constructive Trusts; A Commentary’ in Restitution: Past, Present and Future, pp 199, 219. 257. Paul Finn, ‘Equitable Doctrine and Discretion in Remedies’ in Restitution: Past, Present and Future, p 273. 258. (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [256], [503]–[511], [667], [672]–[681]. 259. Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 at 553–4; Lord Napier & Ettrick v Hunter [1993] AC 713 at 738, 744–5, 752; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414; [1998] HCA 59 at [42]; Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473; [1999] HCA 10 at [10], [49]–[50], [64]; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [46], [57], See also Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559–62; 128 ALR 201 at 210–12. See also John Phillips, ‘Equitable Liens A Search for a Unifying Principle’ in Palmer and McKendrick, eds, Interests in Goods, p 975; Sarah Worthington, ‘Equitable Liens in Commercial Transactions’ [1994] CLJ 263; Keith Mason, ‘Deconstructing Constructive Trusts in Australia’ (2010) 4 J Eq 98. See also Shirlaw v Taylor (1991) 31 FCR 222 at 228–31; 102 ALR 551 at 557–61. For reasons explaining why proprietary restitution was withheld in Grimaldi, see at [672]–[681]. 260. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 239 CLR 89; 236 ALR 209; [2007] HCA 22 at [200]. See further [1734]. 261. (1985) 160 CLR 583. 262. (1987) 164 CLR 137. 263. Morris v Morris [1982] 1 NSWLR 61. As to the interrelationship between the remedial constructive trust and the remedial equitable lien, see Bathurst City Council v PWC Properties Pty Ltd (1998) 0195 CLR 566 at 585; 157 ALR 414; [1998] HCA 59 at [42]. Generally as to the equitable lien, see Fiona Burns, ‘The Equitable Lien Rediscovered: A Remedy for the 21st Century’ (2002) 25 UNSWLJ 1. 264. See [251]. 265. (1985) 160 CLR 583 at 615; 62 ALR 429 at 451. 266. (1985) 160 CLR 583 at 615; 62 ALR 429 at 451. See also Baumgartner v Baumgartner (1987) 164 CLR 137 at 148; 76 ALR 75 at 83; Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 104. 267. Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; 157 ALR 414; [1998] HCA 59 at [40] (Gaudron, McHugh, Gummow, Hayne and Callinan JJ, speaking of the basis on which the judgments in Baumgartner proceeded). 268. See Attorney-General (Hong Kong) v Reid [1994] 1 AC 324 (and the other bribe cases where proprietary relief was awarded: see [251]); Zobary v Commissioner of Taxation (1995) 64 FCR 86 at 90; 129 ALR 484 at 487–8; Re Lewis [1995] 2 Qd R 506 at 519; Norilya Minerals Pty Ltd v Commissioner of State Taxation (1995) 16 WAR 266 at 274. We do not agree with Grantham and Rickett who view Attorney-General (Hong Kong) v Reid as a constructive trust proceeding from the shared intent of the parties: Grantham and Rickett, pp 409–10. This strikes us as entirely artificial, and reminiscent of the ‘implied contract’ of the old law of quasi-contract. Mr Reid never intended to account for his ill-gotten gains

derived from acceptance of bribes. Restitution and the remedy of the constructive trust were imposed as an appropriate response to his wrongdoing. 269. Fortex Group Ltd (in receivership and liquidation) v MacIntosh [1998] 3 NZLR 171 at 172, 173 (Tipping J for the New Zealand Court of Appeal). 270. [1996] AC 669 at 714–15. 271. Re Polly Peck (No 2) [1998] 3 All ER 812 (discussed [257]). See Keith Mason, ‘What has Equity to do with Restitution? Does it Matter?’ [2007] RLR 1. Cf Yeoman’s Row Management Ltd v Cobbe [2008] 1 WLR 1752 at [32], [37]. 272. See [249], [256]–[257]. 273. See further [257]. 274. Stephenson Nominees Pty Ltd v Official Receiver on behalf of the Official Receiver in Bankruptcy; Ex parte Roberts (1987) 16 FCR 536 at 553; 76 ALR 485 at 503. 275. See [251], [1727]–[1730]. 276. See [1707]. 277. (1985) 160 CLR 583. 278. (1985) 160 CLR 583 at 614. 279. (1985) 160 CLR 583 at 617. 280. See also Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 378–9; Baumgartner v Baumgartner (1987) 164 CLR 137 at 153. Cf Lonrho Plc v Fayed (No 2) [1992] 1 WLR 1 at 9–10; Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 99, 100, 104. 281. See Restatement, Third, §55. See Keith Mason, ‘R3RUE, the Taxonomy of the Constructive Trust and the Fusion of Law and Equity’ in Bant & Bryan, Principles of Proprietary Remedies. 282. Muschinski v Dodds (1985) 160 CLR 583 at 616; 62 ALR 429 at 452–3; Stephenson Nominees Pty Ltd v Official Receiver on behalf of the Official Trustee in Bankruptcy; Ex parte Roberts (1987) 16 FCR 536 at 552; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 106–7; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716. See further Chapter 3, especially [315]. 283. Agip (Africa) Ltd v Jackson [1990] 1 Ch 265 at 290. Millett J nevertheless added that the law was settled in Re Diplock’s Estate [1948] Ch 465. But this proposition was not part of the reasoning in the seminal cases of Re Hallett’s Estate (1880) 13 Ch D 696 and Banque Belge pour l’Etranger v Hambrouck [1921] 1 KB 321 and is based on a doubtful interpretation of the ratio in both Sinclair v Brougham [1914] AC 398 and Re Diplock’s Estate itself: see A J Oakley, ‘Proprietary Claims and their Priority in Insolvency’ [1995] 54 Cam LJ 377 at 383–4. This reasoning does not survive, even in England: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. 284. (1910) 12 CLR 105. 285. Australian Postal Corp v Lutak (1991) 21 NSWLR 584 at 589. See John Tarrant, ‘Theft Principle in Private Law’ (2006) 80 ALJ 531. See further [244]. 286. For example, the trust that arises in favour of a purchaser of land under a specifically enforceable contract who has paid the full purchase price, or in favour of the beneficiaries under a mutual will after the first testator dies. 287. See Sir Peter Millett, ‘Restitution and Constructive Trusts’ and A J Oakley, ‘Restitution

and Constructive Trusts: A Commentary’, in Restitution: Past, Present and Future, pp 200– 1 and 221–5 respectively; Grantham and Rickett, pp 406–9. See generally Keith Mason, ‘Deconstructing Constructive Trusts in Australia’ (2010) 4 J Eq 98. See also Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473; [1999] HCA 10 at [4]. 288. John H Langbein, ‘The Later History of Restitution’ in Restitution: Past, Present and Future, p 58. 289. Riches v Hogben [1985] 2 Qd R 292; Giumelli at [4], [64]. 290. Giumelli at [4], [64]. See also Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153. See further Chapter 3. 291. (1987) 162 CLR 221; 69 ALR 577. 292. Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 at 409 per Millett LJ, quoting Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 1 WLR 1555 at 1582. 293. Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 at 404. If the fusion of law and equity was taken seriously one could even drop the words ‘in equity’. 294. The competing academic and judicial authorities are summarised by Spigelman CJ in Robb Evans of Robb Evans and Associates v European Bank Ltd (2004) 61 NSWLR 75 at 100. See further [316]. 295. (2004) 61 NSWLR 75 at 100 [116]. For our view, see [254], [316]. 296. Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429; Baumgartner v Baumgartner (1987) 164 CLR 137; 76 ALR 75; Kais v Turvey (1994) 11 WAR 357; Parij v Parij (1998) 72 SASR 153; Ikeuchi v Liu (2001) 160 FLR 94; Lloyd v Tedesco (2002) 25 WAR 360. 297. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [46], [57], [153]. See also Roxborough v Rothmans of Pall Mall Ltd (1999) 161 ALR 253 at 265 [55]–[267] (Emmett J). We are not inferring that insolvency alone triggers or justifies the remedy. See also [257]. 298. Attorney-General (Hong Kong) v Reid [1994] AC 324; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [569]–[583]; FHR European Ventures LLP v Cedar Capital Partners LLC [2014] 3 WLR 535. 299. Cook v Deeks [1916] 1 AC 554; Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198. 300. Louth v Diprose (1992) 175 CLR 621; 110 ALR 1; Barclays Bank Plc v O’Brien [1994] 1 AC 180. 301. Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) (1997) 26 ACSR 544; Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 45 ACSR 244. These, in short, are cases where the defendant still retains the benefit which is secured for the plaintiff by a proprietary remedy. As to the recipient arm of Barnes v Addy (1874) LR 9 Ch App 244 in Australian law, see generally Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22; Grimaldi at [256], [559]. 302. Lord Napier & Ettrick v Hunter [1993] AC 713 (discussed by Gummow J in ‘Names and Equitable Liens’ (1993) 109 LQR 159). 303. See [1927]. 304. See [314]–[316]. 305. See the passage from Australia and New Zealand Banking Group Ltd v Westpac Banking

Corp (1988) 164 CLR 662 at 673; 78 ALR 157 at 162 quoted at [244]. See also Chase Manhattan Bank NA v Israel British Bank [1981] Ch 104; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714–5. See further [451]–[454]. 306. Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600 at 608. 307. [1996] AC 669. 308. See [1996] AC 669 at 702–3, 707. 309. See further [256]. See also The Leasing Centre (Aust) Pty Ltd v Shepard [2011] FCA 443. 310. (1984) 156 CLR 41; 55 ALR 417. 311. See also Re Goldcorp Exchange Ltd (in receivership) [1995] AC 74. See [256]. 312. This is an illustration of the principle of subsidiarity discussed at [215]. See further [243]. 313. Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371; 65 ALR 193; Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153; Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286; [2003] NSWCA 71; Guinness Plc v Saunders [1990] 2 AC 663 at 698; Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198. Rescission may not be possible because of delay, affirmation etc (Alati v Kruger (1955) 94 CLR 216 at 225; Hancock at 216 [193]–[206]). See also [244]. As to the possibility that rescission may not always be necessary, see Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [273]–[281], [342]. See also A J Oakley, ‘Restitution and Constructive Trusts: A Commentary’ in Restitution: Past, Present and Future, pp 229–30; Birke Hacker, ‘Rescission and Third Party Rights’ [2006] RLR 21. 314. Hancock Memorial Foundation Ltd v Porteous (2000) 22 WAR 198 at 215 [192]. See further [257]. 315. Mackowik v Kansas City St J & CBR Co 94 SW 256, 262 (1906) per Lamm J, applied in Nelson v Leitch (No 2) [2006] NSWCA 254. See generally Brown v Brown (1993) 31 NSWLR 582. 316. See generally Chalmers, Resulting Trusts. 317. Virgo, p 585. 318. See [257]. 319. Mario Salvo v New Tel Ltd [2005] NSWCA 281 at [92] per Young CJ in Eq, citing the analysis of Campbell J in Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060; (2002) 12 BPR 22,421. 320. Highland v Exception Holdings Pty Ltd (in liq) (2006) 60 ACSR 223; [2006] NSWCA 318 at [90] per Santow JA (Giles JA and Hodgson JA agreeing), quoting Mitchell, The Law of Subrogation, p 3. See now the revised edition by Charles Mitchell and Stephen Watterson, Subrogation Law and Practice, OUP, Oxford, 2007, p 3 (cited in this book as Mitchell and Watterson, Subrogation). Subrogation may also be a contractual right, as in many insurance policies. See further [637]–[640] as to subrogation in the context of restitution. 321. See generally Mitchell and Watterson, Subrogation, where the view is advanced that the (non-contractual) cases where subrogation has been awarded to date can all be explained in restitutionary terms. See also John Glover and Andrew Robertson, ‘Subrogation’ in Parkinson especially at [1504]; G Tilley, ‘Restitution and the Law of Subrogation in England and Australia’ (2005) 79 ALJ 518.

322. Re Trivan Pty Ltd (1996) 134 FLR 368. 323. Or even to create such a right; see Lord Napier & Ettrick v Hunter [1993] AC 713; Menelaou v Bank of Cyprus Plc [2015] UKSC 66. As to equitable liens arising outside contractual situations, see Nottingham Permanent Benefit Building Society v Thurston [1903] AC 6; Hewett v Court (1983) 149 CLR 639; 46 ALR 87; ACN 062 895 774 Pty Ltd v Tyndall [2007] NSWCA 64. 324. See further Chapter 6. 325. Cochrane v Cochrane (1985) 3 NSWLR 403 at 405; Lord Napier & Ettrick v Hunter [1993] AC 713 at 738. See further [639]. 326. [1999] 1 AC 221 at 231. See also Woodside Petroleum Development Pty Ltd v H & R-E & W Pty Ltd (1999) 20 WAR 380 at 388; Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291 at 33; Menelaou v Bank of Cyprus Plc [2015] UKSC 66. 327. See Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [88]. See also Restatement, Third, § 24. 328. Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [89]. See further [123], [639] and para [255] of the second edition of this work for our criticism of the inadequacies of this ‘either-or’ approach both generally and in the context of subrogation. 329. Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 at 553 (Gummow J); Baumgartner v Baumgartner (1987) 164 CLR 137 at 153; 76 ALR 75 at 87 (Toohey J); Lord Napier and Ettrick v Hunter [1993] AC 713 at 736–7(Lord Templeman); Westdeutsche Girozentrale Landesbank v Islington London Borough Council [1996] AC 669 at 716 (Lord Browne-Wilkinson). 330. Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 at 553; Baumgartner v Baumgartner (1987) 164 CLR 137 at 147; 76 ALR 75 at 83; Bryson v Bryant (1992) 29 NSWLR 188; Parij v Parij (1998) 72 SASR 153; Lloyd v Tedesco (2002) 25 WAR 360. Canadian law is arguably to similar effect: see Soulos v Korkontzilas [1997] 2 SCR 217; (1997) 146 DLR (4th) 214 (‘good conscience’). See also Boustany v Piggott (1993) 69 P & CR 298 (PC); Westdeutsche Girozentrale Landesbank v Islington London Borough Council [1996] AC 669 at 705; Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 at 408–9. 331. As Gageler J warns in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [140]–[141]. For an even stronger warning about the circularity of unconscionability reasoning, see Rohan Havelock, ‘Conscience and Unconscionability in Modern Equity’ (2015) 9 J Eq 1. As to the difficulties with discourse about injustice in ‘retention’ of benefit, see also [123]. 332. See Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [152]; Edmonds v Donovan (2005) 12 VR 513 at 542 [75]–[77]. See also [253], [2407]–[2408] (equitable origins and aspects of the change of position defence). 333. Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 379; 65 ALR 193 at 197–8; Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (receiver and manager appointed) (1994) 49 FCR 334; 121 ALR 626. 334. The Bankruptcy Act 1966 (Cth), s 116(2) excludes property held in trust from the property divisible among creditors. Secured creditors (eg lienees) take priority by virtue of

s 58(5) of that Act. The situation is similar as regards the property of a company in liquidation, as a result of case law: see Keay, McPherson, The Law of Company Liquidation, 4th ed, p 427. 335. Re Jonton Pty Ltd [1992] 2 Qd R 105. 336. See John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1. 337. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 at [46], [57], [153]. It might be otherwise if the plaintiff had a proper basis for claiming the specific asset (see [246]). 338. Bathurst City Council v PWC Properties Pty Ltd (1988) 195 CLR 566; 157 ALR 414; [1998] HCA 59 at [42]. See also Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 at 499; Katingal Pty Ltd v Amor (1999) 162 ALR 287; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714–15; Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 104; Soulos v Korkontzilas [1997] 2 SCR 217; (1997) 146 DLR (4th) 214 at 230 [45]; Fortex Group Ltd (in receivership and liquidation) v MacIntosh [1998] 3 NZLR 171. Contrast Re Polly Peck International plc (in administration) (No 2) [1998] 3 All ER 812, discussed below. 339. See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [583]. 340. Bathurst City Council v PWC Properties Pty Ltd (1988) 195 CLR 566; 157 ALR 414; [1998] HCA 59 at [42], explaining the order in Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429. 341. Muschinski v Dodds (1985) 160 CLR 583 at 614; Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 at 367; Parsons v McBain (2001) 109 FCR 120. 342. [1998] 3 All ER 812. See also Halifax Building Society v Thomas [1996] Ch 217. Cf Yeoman’s Row Management Ltd v Cobbe [2008] 1 WLR 1752 at [32], [37]. 343. See Harrison v Walker (1792) Peake 150 at 151; 170 ER 111 per Lord Kenyon CJ (assignment of property ‘passes only such property as the bankrupt is conscientiously entitled to’); Scott v Surman (1743) Willes 400; 125 ER 1235. See also Daraydan Holding Ltd v Solland International Ltd [2005] Ch 119 at 140 per Lawrence Collins J (a bribe case) (‘There is no injustice to the creditors in their not sharing in an asset for which the fiduciary has not given value, and which the fiduciary should not have had.’). See also William Swadling, ‘The Fiction of the Constructive Trust’ (2011) 64(1) CLP 399. 344. [2001] 1 AC 102. 345. Fortex Group Ltd (in receivership and liquidation) v MacIntosh [1998] 3 NZLR 171 at 176 (Tipping J, for the Court of Appeal). 346. See [256]. 347. Wright, The Remedial Constructive Trust, [4.20]–[4.25]; Burrows, pp 176–9 (noting that Burrows ‘fleshes out’ the concept); Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536 at 556 (Gummow J referring to United States case law). Cf Restatement, Third, § 58, Comment b. 348. Lord Napier & Ettrick v Hunter [1993] AC 713 at 737. See also Chase Manhattan Bank NA v Israel British Bank [1981] Ch 104 (discussed [454]). 349. See, eg Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 683–4 per Lord Goff.

350. See generally David M Paciocco, ‘The Remedial Constructive Trust: A Principled Basis for Priorities over Creditors’ (1989) 68 Can Bar Rev 315; Frederick Wilmot-Smith, ‘Replacing Risk-Taking Reasoning’ (2011) 127 LQR 610. 351. See Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371; 65 ALR 193; Robins v Incentive Dynamics Pty Ltd (2003) 45 ACSR 244; [2003] NSWCA 71. See [253] and Chapter 13. 352. [1999] 1 AC 221 at 228, 237.

[page 125]

PART II

Claims Based on Want of Title

[page 127]

Chapter Three

Want of Title: Misdirected Funds and Tracing 1. 2.

General …. Restitution Against Unauthorised Recipients ….

[301] [304]

(a) Unauthorised Disbursal of Money: Common Law …. [307] 3.

(b) Unauthorised Disbursal of Money: Equity …. [313] Defences …. [317]

1. General [301] Introduction. A person whose money (or other property) is misappropriated, misplaced or transferred in complete inadvertence may wish to assert personal or proprietary claims in restitution against the original or later recipients. Available causes of action are both legal and equitable in historical derivation. The principles of following and tracing need to be applied if the original property has changed hands or form. [302] Proprietary claims giving rise to personal and proprietary remedies. Various causes of action depend on the ability to show that the defendant received something ‘belonging’ to the plaintiff1 in circumstances where property did not pass according to principles of law or equity. This tracing and following process involves factual and legal enquiries, but the need to show ‘title’ does not mean

that the plaintiff must demonstrate an immediate right to possession that would generate a common law remedy such as conversion. The property right that is vindicated may itself be legal or equitable.2 Property-based rights may give rise to restitutionary personal or proprietary remedies.3 Personal remedies deriving from the count for money had and received, and equitable personal remedies proceeding from an imposed obligation to account, may lie against the recipient of the plaintiff’s money (or its traceable proceeds), sometimes even though the recipient has spent the money. In some circumstances, the plaintiff may also obtain a proprietary remedy, such as a lien, charge or declaration of trust, often as the springboard for a profit-stripping remedy.4 Such claims [page 128] will not, however, lie against a bona fide purchaser for value without notice, and other defences are available. Unlike claims illustrating the unjust enrichment concept, restitutionary claims to vindicate a proprietary interest may be available against parties beyond those to whom the plaintiff initially transferred the property. And, unlike claims (including those based on ‘knowing receipt’) where restitution is the response to species of legal or equitable wrongdoing,5 the plaintiff’s enduring title is the juridical basis of the restitution addressed in this chapter. [303] Ability to follow and trace essential. Property is not lost merely because it changes its form or passes into the hands of a third party. But if it is factually impossible to identify the plaintiff’s property at the time of receipt by the chosen defendant no personal remedy is available at law or in equity.6 A proprietary remedy additionally requires identification of an asset which remains in some form in the defendant’s hands.7 Subject to these essentially practical limitations, there are many opportunities to follow and trace property through different forms and

into the hands of third parties with a view to claiming remedies against them. The rules may possibly still differ in some respects as between law and equity, but not as much as formerly asserted, and without any justification in principle.8 In Foskett v McKeown,9 Lord Millett said that there was ‘no sense in maintaining different rules for tracing at law and in equity. One set of tracing rules is enough’. ‘Tracing’ is the process of identifying a new asset as the substitute of the old,10 so that the plaintiff can lay claim to the value inherent in it.11 Subrogation is related to tracing12 and, when applied in the present context means that when a loan that is secured over property is discharged with the proceeds of stolen funds the plaintiff may be able to assert a proprietary interest such as a charged debt in the property over which the security was discharged.13 [page 129] The ability to follow or trace is essential to claims in restitution that vindicate property rights, but the tracing rules are not themselves part of restitutionary or any other causes of action. This is because, in the words of Lord Millett:14 Tracing is neither a claim nor a remedy. It is merely the process by which a claimant demonstrates what has happened to his property, identifies its proceeds and the persons who have handled or received them, and justifies his claim that the proceeds can properly be regarded as representing his property. Tracing is also distinct from claiming. It identifies the traceable proceeds of the claimant’s property. It enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. But it does not affect or establish his claim. That will depend on a number of factors including the nature of his interest in the original asset … The successful completion of a tracing exercise may be preliminary to a personal claim or a proprietary one, to the enforcement of a legal right or an equitable one.

Claims to follow money against third parties at common law are rare, but that is due to practical difficulties of identification and the nature of money as currency, that is, the protection given to a person who gives value without notice of defect in legal title.15 The notion that the right to follow or trace money ‘in equity’

depends on finding some antecedent trust or fiduciary relationship was expounded by the English Court of Appeal in Re Diplock.16 This however was based on a forced interpretation of Sinclair v Brougham17 which the House of Lords has since repudiated.18 The fiduciary requirement has sometimes been tortured out of unyielding facts.19 Other cases have quietly ignored it.20 It should be expressly repudiated in light of modern understandings about equitable proprietary remedialism.21 The need for an antecedent fiduciary relationship was doubted by Waddell J in Re Dover Pty Ltd.22 Later authorities have recognised that Australian law does not require it.23 [page 130] A detailed exposition of tracing rules lies outside the scope of this work.24 Suffice it to say that they include the principle that a person who transfers money into a mixed fund and who withdraws from it for personal reasons is presumed to have withdrawn for lawful purposes so far as the moneys extend;25 the ‘lowest intermediate balance rule’;26 and the possible inability to trace into or through a mixed fund at common law.27 It is regrettable that the High Court has not visited tracing for many years, especially since intermediate appellate courts in this country remain strangely cautious about melding or fusing tracing rules. The bold obiter proposal that there was no principled justification why the common law lacked equity’s capacity to examine dealings in a mixed bank account, made by the Australian-born Atkin LJ in Banque Belge pour l’Etranger v Hambrouk28 almost a century ago, has yet to be squarely taken up and applied.29 A bold obiter endorsement of this approach by one panel of the New South Wales Court of Appeal in Heperu Pty Ltd v Belle30 was departed from without adequate justification by a differently constituted panel in a very recent case.31 That there remain pockets whereby different outcomes arguably flow depending on the historical derivation of the primary right asserted by the plaintiff is doubly curious in the present context given that the

equitable principles underpinning the action for money had and received have recently been emphasised by the High Court, and where the imposition of a charge over an asset or fund rather than a full-blown constructive trust is now commonplace.32 [page 131]

2. Restitution Against Unauthorised Recipients [304] General. A defendant who receives an unintended or unauthorised transfer of the plaintiff’s money or the traceable proceeds of the plaintiff’s property, can be required to make restitution, subject to available defences. The plaintiff’s remedies may be personal or proprietary, legal or equitable. Transferees from the original recipient may also be liable in certain circumstances. [305] Proving ownership. The plaintiff must be able to show a subsisting property right. Not every intermediary through whose hands money passes is an owner with title to sue.33 Accordingly, in Robb Evans of Robb Evans & Associates v European Bank Ltd34 the receiver of a fraudster’s company (Benford Ltd) was unable to show title to an investment account in an Australian bank that had been opened by the European Bank Ltd. Benson had parked some of the stolen money in an account of European Bank Ltd in Vanuatu. Benson’s chose in action in the Vanuatu account was certainly held on trust for the defrauded parties. But, since the European Bank Ltd was solvent, the relevant property was that account in Vanuatu. The European Bank Ltd, not Benson, owned the Australian chose in action created when it had chosen to on-deposit its funds in an Australian investment. Whether this property requirement necessitates proof of pre-existing

ownership or merely some step on the plaintiff’s behalf asserting title is a difficult jurisprudential question.35 [306] ‘Receipt’ in this context. Consistent with the now recognised ‘equitable’ underpinning of the action for money had and received,36 receipt in this context means more than temporary legal control. Money may be paid into a person’s bank account without his or her knowledge by a dishonest third party who may or may not be a joint holder of the account. Mere authority to access the account will not be enough to make the ignorant party a recipient for the purposes of the rules discussed below, although this would change if and when knowledge was acquired or ought to have been acquired or the party commenced to exercise control over the funds.37 [page 132]

(a) Unauthorised Disbursal of Money: Common Law [307] Principle stated.38 A personal cause of action, deriving from the count for money had and received, is available to the owner of money,39 or of property40 that is changed into money or its equivalent, that can be traced to someone who did not take the money as or from a bona fide purchaser for value without notice of defect of title. The plaintiff’s right does not turn upon proof of a tort or other wrong, although that is often the way of demonstrating the defendant’s unauthorised gain. The independent restitutionary claim41 is one means whereby the plaintiff’s property right is vindicated.42 Merely because the defendant has paid over the money to a third party provides no defence to the personal claim,43 but defences including change of position are available.44 These rights are distinct from those stemming from the tort of conversion (which, strictly, vindicates possessory rights), although their

impact may be similar. It has, however, been suggested that restitution has no role to play if a chattel belonging to the plaintiff is never converted into cash.45 The historical form of the action for money had and received supports this view. Many of the cases involve dishonest agents who misappropriated their employer’s or principal’s money and passed it to the defendant either as a gift or in return for something that does not represent consideration in the eye of the law.46 James v Oxley47 is a leading (seldom-cited) Australian case. Other examples are provided below.48 [308] Independent cause of action not dependent on proof of defendant’s wrongdoing. Examples of use. The independent or autonomous restitutionary cause of action to follow misdirected, lost or stolen money necessarily depends upon the plaintiff’s antecedent property in the transferred money or the plaintiff’s property that was originally [page 133] converted into money.49 But (unlike restitution for wrongs) it does not turn upon the wrongdoing of the defendant, or even of the initial recipient in the case of a claim against a third party.50 The action (deriving from the action for money had and received) is not confined to stolen or misappropriated property. It is available against an entirely innocent recipient who did not receive the money as a bona fide purchaser without notice,51 for example in relation to money that is simply lost by the plaintiff,52 or handed over in complete inadvertence,53 or, to use an example given by Robert Goff J, where a computer runs mad and makes the same payment several times over.54 When a bank computer glitch caused an account holder to receive huge sums of money that he knew were not his, the ‘fundamental’ mistake that prevented an intention to transfer the money rendered the dishonest recipient (and his ‘volunteer’ transferee) liable to personal

and proprietary remedies.55 There is a very wide potential for this category of claim.56 The variety of non-authorised transfers encompassed by this branch of restitution do not depend upon the plaintiff having acted under a particular state of mind, such as mistake or improper pressure. Nevertheless, sometimes this is present and the mistake or duress may be sufficient to show that title did not pass. To that extent, the cause of action here discussed may overlap others framed on alternative restitutionary bases. Some of the early cases proceeded on the basis of the fiction of waiver of tort.57 Where a payment is intended but mistaken, not every mistake prevents the passing of property. Only those where the mistake is so fundamental as to vitiate the plaintiff’s intention to pass property will suffice to ground restitution on the basis here discussed.58 The criminal law suggests that the mistake must relate to the identity of the recipient, the identity of the [page 134] property or the quantity of the property.59 Neither illegality60 or personal incapacity61 or ultra vires voidness62 will necessarily prevent the passing of property. [309] Lipkin Gorman (a firm) v Karpnale Ltd: a controversial unjust enrichment analysis. The line of cases where such claims have succeeded was explained in the House of Lords by reference to the unjust enrichment concept in Lipkin Gorman (a firm) v Karpnale Ltd.63 A firm of solicitors, following and tracing funds misappropriated by a dishonest partner (Cass), sued a gambling club for moneys had and received. Cass had withdrawn money from the firm’s client account by making cheques payable to cash. Being a mere creditor of the bank, the firm had no property in the money in the account, but it did own the chose in action constituted by the bank’s indebtedness to them, and it could trace this property into its product, being money

drawn from the account by the dishonest partner. This money was followed into the hands of the club, which did not receive it for good consideration because of the unenforceability of gambling contracts at common law. One ground upon which the claim could have been brought was the fiction of waiver of the tort of conversion which lay against the bank.64 In Lipkin Gorman, Lord Goff noted the availability of this alternative basis for relief (part of what we call restitution for wrongs) but in terms that made it clear that the present type of claim proceeded on a different principle.65 The cause of action recognised by the House of Lords was an autonomous or independent restitutionary right that gave rise to a personal remedy.66 No proprietary remedy based upon the imposition of a constructive trust was claimed.67 The right and remedy were based simply upon the plaintiffs’ ability to follow their property through various forms and into the hands of a recipient who was not a bona fide purchaser for value without notice. This claim was said to rest upon the principles of restitution for unjust [page 135] enrichment,68 thereby also attracting the defence of change of position.69 Lord Goff described the basis for the claim in the following terms:70 … in these cases the action for money had and received is not usually founded upon any wrong by the third party, such as conversion; nor is it said to be a case of waiver of tort. It is founded simply on the fact that, as Lord Mansfield said, the third party cannot in conscience retain the money — or, as we say nowadays, for the third party to retain the money would result in his unjust enrichment at the expense of the owner of the money.

This is a controversial statement, especially for those anxious to see the whole of restitution in an unjust enrichment framework and to explain the change of position defence recognised in Lipkin Gorman on this basis.71 Lord Goff did not identify any operative ‘unjust factor’. Some commentators have proposed that the unjust factor is

‘ignorance’.72 However, the High Court of Australia has observed that ‘No case, even in England, has treated ignorance as a “reason for restitution”’.73 In our view ‘ignorance’ is amorphous, insufficient as an explanation, and therefore ultimately unhelpful. It trails into ‘absence of cause’ and has overtones of ‘involuntariness’ which we have criticised elsewhere.74 An alternative conception to that taken in Lipkin Gorman, favoured by Virgo75 and ourselves, is to see Lipkin Gorman as a restitution case concerned with the vindication of property rights. This alternative variety of restitution (rooted historically in the action for money had and received) is protective of property, a sufficient justification in itself, notwithstanding the occasional difficulties of defining ‘property’ at law and in equity.76 It may be true that these cases all entail lack of consent or want of authority,77 but this appears to us to be the flip side of the same coin in the two-party cases and an incomplete explanation in the three-party cases. [page 136] [310] Personal remedy may strip profits even at common law. These claims all carry an entitlement to interest on the money received,78 but the vindication of the plaintiff’s title may go further when tracing principles are applied. Trustee of the Property of F C Jones & Sons (a firm) v Jones79 illustrates that, by combining the process of tracing property into substituted form with the personal restitutionary remedy, a plaintiff may be able to strip the defendant of profits stemming from use of the unauthorised receipt. The bankruptcy of a firm and the operation of the doctrine of relation back meant that the wife of one of the firm’s partners had no title to £11,700 paid to her pursuant to cheques drawn by her husband. She had invested the money in highly profitable dealings in the London potato futures market. When the trustee in bankruptcy intervened, her account balance with the commodities broker was £49,860. The broker interpleaded and the money was paid into court. The English Court of

Appeal applied Lipkin Gorman (a firm) v Karpnale Ltd, particularly the passage in the speech of Lord Goff80 where he spoke of the plaintiff firm tracing ‘their property at common law in that chose in action, or in any part of it, into its product’. The ‘product’ was the valuable chose in action vested in the wife with the broker (with its appurtenant profits). Nourse LJ recognised81 that the decision went further than Lipkin Gorman: … in that it holds that the action for money had and received entitles the legal owner to trace his property into its product, not only in the sense of property for which it is exchanged, but also in the sense of property representing the original and the profit made by the defendant’s use of it.

The notion of ‘enduring’ or ‘retained’ benefit82 that is recognised as the basis of third party personal liability in Heperu Pty Ltd v Belle,83 supports these principles, albeit that talk of ‘retention’ becomes somewhat fictional when extended to a third party who is held liable because he or she was on notice when the traced money or asset was disposed of.84 [311] Defendant’s receipt and ‘retention’ of benefit essential for personal remedy. As indicated earlier,85 the recipient of the plaintiff’s money or the proceeds of the plaintiff’s property must at some stage exercise actual control over the funds. This means that where money is paid into the defendant’s bank account, it must be shown that the defendant knew or ought to have known of the unauthorised derivation of the money before control passed away. [page 137] This requirement will not be a problem if the defendant was the finder of money obviously belonging to another or the thief who stole or misappropriated it directly from the plaintiff or the knowing beneficiary of a bank computer glitch. And if the third party ‘volunteer’ is shown to have been on notice of the original recipient’s want of title when the asset was transferred or to

have acquired such notice before disposing of the money (or asset) then personal restitution may be awarded against that party. Where notice that the money or property was the proceeds of the dishonest receipt is acquired by the third party, he or she will not be relieved of personal liability by later disposing of the money or property into which its benefit is traceable.86 Such notice may come from any source, including the originating process in the plaintiff’s proceedings. In these circumstances, the later disposal of the traceable asset will be irrelevant, whether or not a change of position defence is attracted. In this sense at least it can be said that the common law personal remedy does not require proof that the defendant ‘retains’ the plaintiff’s money.87 The defendant’s (sometimes fictional) retention of the benefit of the receipt will suffice for personal liability (subject to available defences). The principles stated above are expounded and illustrated by the New South Wales Court of Appeal in Heperu Pty Ltd v Belle.88 Cincotta fraudulently misappropriated cheques belonging to the plaintiff that had been handed to him for investment.89 He deposited those cheques in an investment account with Perpetual Trustees in the name of his then wife, Patrice Belle. Funds were then withdrawn from the Perpetual account and deposited with a Westpac account also in Belle’s name. Funds withdrawn from the Westpac account were used in mortgage repayments for real estate in Belle’s name (some of it held jointly with Cincotta). Belle was not proven to have been aware of her husband’s actions in misappropriating the cheques or operating the accounts in her name in Perpetual or Westpac.90 She only learned of the frauds when sued, along with her former husband, Accordingly, claims against her as a ‘volunteer’ or ‘finder’ with respect to the entire misappropriated funds that passed through the two accounts were dismissed even though the plaintiff’s property was clearly traceable. An alternative claim of ‘knowing receipt’ under the principles of Barnes v Addy91 was rejected on a similar basis. No proprietary remedy was available in Heperu because the relevant properties had been sold after a freezing order was discharged. Heperu also established that because the third party (Belle) was not

shown to have learnt of the facts establishing the plaintiff’s title before disposing of the traceable assets she was not liable under the personal claim. But Belle was [page 138] found liable both at common law (in money had and received) and in equity with respect to the value properly attributable to the earlier receipts derived from the misappropriated funds still ‘retained’ by92 or ‘remaining’ with93 her at ‘the relevant time’. This was when she learnt of the plaintiff’s claim or became aware that she held property paid for with misappropriated funds.94 At the further trial directed by the Court of Appeal, it was determined that the value of the traceable benefit was represented by the reduction on the principal indebtedness of the mortgages brought about by the use of the misappropriated funds.95 In light of these principles, the plaintiff must plead and prove that the ‘volunteer’ acquired relevant knowledge before receipt or while still controlling the money.96 Spending the money in acquisition of Torrens title land in which the defendant has an indefeasible title, absent fraud, does not preclude the personal remedy.97 [312] Common law claims to recover in specie. Sometimes the payer’s mistake attending an unintended transfer of money is so fundamental that ownership does not pass, with the consequence that the plaintiff may assert property in the very coins or notes transferred.98 It follows that there is, at least in theory, a right to recovery in specie before disbursal. This in turn could form the springboard for equitable claims to the profit or product of the transferred fund on the basis of a resulting trust; or a remedial constructive trust.99 Usually, however, the money is exchanged for a chose in action in the form of a bank account in credit.

(b) Unauthorised Disbursal of Money: Equity [313] Equitable relief usually supplementary. Because equity follows the law there is little reason to doubt that wherever the common law would vindicate title through the personal remedy of money had and received equity would enforce a corresponding ‘obligation to restore’ as regards equitable title.100 There is, however, simply no need to do so if personal restitution at common law suffices.101 [page 139] Where equity comes into its own is where the beneficiary of a trust wishes to take direct action.102 Also, where the plaintiff seeks a proprietary remedy in the form of a trust or equitable charge that secures the right to restitution over property extant in the defendant’s hands. A plaintiff may wish to do so because of special attachment to the particular asset or where damages would be an inadequate remedy103 or in order to stand ahead of unsecured creditors in a bankruptcy or corporate insolvency. We explain elsewhere104 why the English Court of Appeal was wrong in principle, history and its understanding of statute law in Re Polly Peck International Plc (No 2)105 when it declared that the very thought of a remedial constructive trust in such circumstances amounted to a judicially created departure from the statutory scheme of distribution in insolvency. [314] Thief as trustee. It is now firmly established that Australian law will, at least when appropriate,106 treat as a trustee the person who steals, fraudulently misappropriates or dishonestly pockets the mistaken transfer of the plaintiff’s money or the proceeds of other property. ‘Equitable obligations to restore’107 may trigger the imposition of a trust or charge over property taken or its traceable proceeds along with remedies including orders for restoration, accounting and accounting

for profits. The trust rests on the existence of property rights albeit that it touches the conscience of the recipient.108 Bryson J has remarked that ‘the attribution of a constructive trust to stolen money is well established’.109 He cited Black v S Freedman & Co,110 a case in which the (fiduciary) employment relationship played no part in [page 140] the High Court’s reasoning and in which O’Connor J declared that ‘where money has been stolen, it is trust money in the hands of a thief, and he cannot divest it of that character’.111 This is supported by the review of the case law offered by Callinan J in Australian Broadcasting Corp v Lenah Game Meats Pty Ltd.112 It is also corroborated by the cases where a proprietary remedy is given against the assets of third parties who take from the thief otherwise than as purchasers in good faith without notice.113 Acknowledging the plethora of modern authority, some scholars still question the legitimacy of this trust imposed on the thief.114 In their view, the trust is unnecessary given the adequacy of common law personal remedies that vindicate title. Doubts have also been raised as to the existence of ‘trust property’ given that the thief takes a bad title from the true owner.115 In our opinion, the ‘Black v Freedman trust’ is soundly based in principle, and it cannot be sidelined on the basis that the facts of the original case involved misappropriation by an employee, ie a person subject to fiduciary duties.116 [315] The ‘volunteer’ recipient from the thief. The relative paucity of cases involving the original thief or fraudster should not be mistaken for doubt about equitable proprietary relief against thieves. A better explanation is that thieves tend to disappear or become insolvent or offload ill-gotten gains to domestic partners or associates. Proprietary relief also lies against third parties who receive the proceeds in original or traceable form who have not given value and taken

without notice. If the traceable value of the plaintiff’s claim exceeds the value of the asset an equitable charge may be declared and imposed.117 As with the personal remedy, the equitable obligation triggering a proprietary remedy arises from the third party volunteer’s knowledge or discovery of the thief’s want of title. [316] The nature of the ‘trust’. There have been suggestions that the trust imposed on thieves and ‘volunteer’ third parties is a resulting, and not a constructive, trust.118 A resulting trust stemming from the unintended transfer would in theory arise immediately upon receipt, whereas a constructive trust conceptually derives from the affected conscience of the [page 141] thief. The distinction is almost certainly academic in this context given that the conscience of the thief or fraudster is necessarily triggered on receipt.119 The vast majority of modern authorities that prefer to label the trust constructive120 are, in our opinion, to be preferred given the irrebuttable nature of the property right, the analogy of the mistaken payment cases,121 and the authorities supporting the power to withhold full proprietary relief in preference for an equitable charge where that would do justice to the respective positions.122 This constructive trust has recently been described as of an institutional character given that it arises on receipt of the stolen property, and not when recognised by a court.123 But this label should not blind one to the possibility that a lesser remedy than a fully blown trust may be awarded.124 That is because we are dealing with species of proprietary relief that may be moulded, granted on condition or withheld if appropriate.125 Conceptually, talk of a ‘trust’ masks the reality, in Australian law, of a range of personal and/or proprietary responses moulded to do justice in the particular.126 Those who fear that the existing bankruptcy law is inadequate to cope with such possibilities overlook the history of

insolvency law as well as the express language of statutes that recognise that a trustee in bankruptcy or company liquidator does not become vested with property that the insolvent held ‘on trust’.127 The thief or volunteer upon whom ‘trust’ remedies are imposed may not be subject to the full gamut of duties that would apply if an express trust were engaged.128 If, however, they learn of the facts generating the trust, then (as with the common law action for money had and received),129 they will [page 142] dispose of the asset at peril because they may then be exposed to equitable personal duties to restore ‘trust property’.130

3. Defences [317] Introduction. Specific restitutionary defences have been recognised in relation to claims relating to misdirected funds. Their presence reinforces the case for viewing these claims as falling within the restitutionary mainstream. [318] Ministerial receipt. Strictly speaking, this is not so much a defence as a principle that identifies the appropriate defendant to sue.131 Since, however, it has a specific role to play in this area, it deserves special mention. A defendant who receives misdirected funds in an agency capacity and without taking a beneficial interest in them will not be liable if the funds have been paid over in good faith and in accordance with instructions from the apparent owner.132 [319] Change of position. The ministerial receipt defence is allied to the broader restitutionary defence of change of position.133 Change of position is an available defence to the recipient of misdirected funds

both at law and in equity.134 It will rarely be engaged given that recipients in this category of case are either on notice or (in the case of volunteer third parties) liable only to the extent of what they ‘retain’.135 [320] Bona fide purchase for value without notice. Unlike change of position, which operates pro rata, this defence offers complete exoneration [page 143] to the recipient of misdirected funds.136 Its availability is an aspect of the nature of money as currency, as well as being a specifically equitable defence in relation to competition between titles.137 [321] Election and barring double recovery. There are ample tools at the disposal of courts (applying equitable principles if they have to) to ensure that plaintiffs do not obtain double recovery. At the remedy stage of proceedings they will be required to elect.138 Once it is understood that the ‘constructive trust’ on offer in this context is always subject to ‘the equities’,139 fears of victims having ‘too many rights’140 are unfounded. 1.

If it belongs to someone else, this type of claim will fail: see [305].

2.

In Foskett v McKeown [2001] 1 AC 102 the plaintiffs established an equitable proprietary claim where property held in trust for them was misappropriated by the trustee. For the distinction in this area, see Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 at 168. See further [235].

3. 4. 5.

See [316]. As to proprietary remedies generally, see [242]–[257]. See Part VI, especially Chapter 17 (‘Breach of Fiduciary Duty, Breach of Confidence and Infringement of Intellectual Property Rights’).

6.

Taylor v Plumer (1815) 3 M & S 562 at 574–5; 105 ER 721 at 725–6; Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (receiver and manager appointed) (1994) 49 FCR 334; 121 ALR 626. See [245].

7. 8.

Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 at 168–70; Foskett v McKeown [2001] 1 AC 102 at 128–9. See also R M Goode, ‘The Right to Trace and its Impact in Commercial Transactions’ (1976) 92 LQR 360; N H Andrews and J Beatson,

‘Common Law Tracing; Springboard or Swan-song?’ (1997) 113 LQR 21; Goff and Jones, §§7-03–7-10; Smith, The Law of Tracing. 9. [2001] 1 AC 102 at 128. Lord Steyn agreed at 113. See also Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 103 [133]. 10. Foskett v McKeown [2001] 1 AC 102 at 127; Shalson v Russo [2005] Ch 281 at 314. 11. Foskett at 128. See further [310]. 12. Boscawen v Bajwa [1996] 1 WLR 328 at 340–1 (Millett LJ); Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [135]. 13. See Heperu at [135], citing Jacobs on Trusts, p 681, n86. See also Gertsch v Atsas (1999) 10 BPR 18,431; [1999] NSWSC 898 at [100]; Goff & Jones § 8-76. Contrast Russell Gould Pty Ltd v Ramangkura (2014) 313 ALR 367; [2014] NSWCA 310. Further as to subrogation, see [637]–[640]. 14. Foskett at 128 (citations omitted). See also Gertsch at [20]; Re Global Finance Group Pty Ltd (in liq); Ex parte Read (2002) 26 WAR 385 at 406 [94]–[120]; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 103–4; Heperu at [89]. 15. See further [320]. 16. [1948] 1 Ch 465 at 532. See also Shalson v Russo [2005] Ch 281 at 314–15. 17. [1914] AC 398. Insofar as the proposition derives from Sinclair v Brougham [1914] AC 398, it is impossible to see how the Birkbeck Permanent Benefit Building Society’s relationship with its customers was of this nature. 18. See Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] AC 669 at 688–9. 19. As in Chase Manhattan Bank v Israel-British Bank [1981] Ch 105. For an alternative analysis, based on the concept of the remedial constructive trust, see [454]. 20. See A v C [1981] 1 QB 956; Bankers Trust Ltd v Shapira [1980] 1 WLR 1274; [1980] 3 All ER 353; Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] AC 669 at 716. 21. See further [244]–[249]. 22. (1981) ACLR 307 at 310. 23. Puma Australia Pty Ltd v Sportsman’s Australia Ltd (No 2) [1994] 2 Qd R 159 at 163–4 (McPherson ACJ, dissenting, but not on this point); Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 106. See also Liggett v Kensington [1993] 1 NZLR 257 at 279; Menzies v Perkins [2001] NSWSC 40; Bracken Partners Ltd v Gutteridge [2003] EWCA Civ 1875: Barker and Grantham, Unjust Enrichment, §§18.12– 18.14; Smith, The Law of Tracing, pp 122–3; Meagher, Gummow and Lehane, [5-045]. See also Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 390. 24. See generally, Smith, The Law of Tracing; Michael Christie, ‘Tracing’, Chapter 23 in Parkinson; Jackman, The Varieties of Restitution, Chapter 8; Margaret Stone and Alistair McKeough, ‘Tracing in the Age of Restitution’ (2003) 26 UNSWLJ 377; Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; 258 ALR 727. 25. Parker v R (1997) 186 CLR 494 at 501–3; 143 ALR 293 at 297–9 where Brennan J emphasised that this was equally a rule of common law and equity; Heperu Pty Ltd v Belle

(2009) 76 NSWLR 230, 258 ALR 727 at [114]–[116]; Russell Gould Pty Ltd v Ramangkura (2014) 313 ALR 367; [2014] NSWCA 310. Cf Maguire v Makaronis (1997) 188 CLR 449 at 469; 144 ALR 729 at 741 (a rule, not a presumption). 26. Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361 at [175] (Campbell J). See also Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; 258 ALR 727 at [116] where it is pointed out that the falling of an account into overdraft is not necessarily fatal as against a wrongdoer. 27. See Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 572D. Cf Banque Belge pour l’Etranger v Hambrouk [1921] 1 KB 321 (Atkin LJ). For a critique, see Virgo, pp 626– 8. 28. [1921] 1 KB 321 at 335. See also Marsh v Keating (1834) 2 Cl & Fin 250; 6 ER 1149, discussed in J Edelman, ‘Marsh v Keating’ in Landmark Cases in the Law of Restitution, p 97. 29. See Brady v Stapleton (1952) 88 CLR 322 at 337; Puma Australia Pty Ltd v Sportsman’s Australia Ltd (No 2) [1994] 2 Qd R 159 at 162–3. Contrast Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [143]–[153]. It will be obvious that we applaud the bolder approach taken at first instance by Black J in Break Fast Investments Pty Ltd v Giannopoulos (No 6) [2012] NSWSC 286. 30. (2009) 76 NSWLR 230 at [143]–[153]. See also Break Fast Investments Pty Ltd v Giannopoulos (No 6) [2012] NSWSC 286 (Black J). 31. See Russell Gould Pty Ltd v Ramangkura (2014) 313 ALR 367; [2014] NSWCA 310 at [37] where Barrett JA, with whom Bathurst CJ and Ward JA agreed, held that since ‘the common law alone operates’ (see also at [29]) a claim in money had and received could not invoke equitable principles of subrogation. 32. See [123]. See also Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at 263 [143]–[146]. 33. James v Oxley (1939) 61 CLR 433; Russell Gould Pty Ltd v Ramangkura (2014) 313 ALR 367; [2014] NSWCA 310 at [29]–[30]. See also [434]. 34. (2004) 61 NSWLR 75 (NSWCA). 35. Cf Goff and Jones, Chapter 40; Brian F Fitzgerald, ‘Ownership as the Proximity or Privity Principle in Unjust Enrichment Law’ (1995) 18 UQLJ 166. 36. See [123]. 37. See Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; 258 ALR 727 at [59], [64], [70]–[77], applying National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251. See also James v Oxley (1939) 61 CLR 433; SCEGS Redlands Ltd v Barbour [2008] NSWSC 928; Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; [2009] NSWCA 186 at [123]–[128]; Break Fast Investments Pty Ltd v Giannopoulos (No 6) [2012] NSWSC 286 at [27]. 38. The text of this paragraph was approved in Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at 260 [127]. See also Chong v Wu [2010] NSWCA 10. 39. Money for this purpose includes coins and notes (chattels), a cheque (James v Oxley (1939) 61 CLR 433 at 445) and ‘money’ standing to the credit of a bank account (a chose in action). 40. As in Creak v James Moore & Sons (1912) 15 CLR 426 (proceeds of stolen goods) and Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156 (intangible property consisting

of carbon trading credits). 41. As to independent claims, see [220]. The personal claim is usually to the sum received plus interest, but it may go further (see [310]). 42. See generally Virgo, Chapter 20 and Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156 esp at 183 [85] (although we prefer not to use the label of ‘proprietary restitutionary claim’ suggested there by Stephen Morris QC at 182 [84]. In our taxonomy, proprietary restitutionary claims extend to situations where unjust enrichment and wrongdoing are also triggers). 43. But it may do so in some situations: see [311]. 44. See [317]–[320] and generally Part VIII. 45. MJR Crawford, ‘Theft, Trust and Property Rights: Is Equity’s Cure Worse than the Disease?’ (2014) 8 J Eq 338. Cf Restatement, Third, § 40, Comment e. 46. Clarke v Shee (1774) 1 Cowp 197; 98 ER 1041; Calland v Lloyd (1840) 6 M & W 26; 151 ER 307; Banque Belge pour l’Etranger v Hambrouk [1921] 1 KB 321 (where the only consideration suggested was a mistress’s ‘immoral’ cohabitation); James v Oxley (1939) 61 CLR 433; Nelson v Larholt [1948] 1 KB 339. 47. (1939) 61 CLR 433. 48. See [308]. 49. See [305]. 50. As indicated at [307], wrongdoing according to established categories may be the basis of showing that the defendant’s disbursement of the plaintiff’s money was unauthorised. There may also be tortious and restitutionary claims based upon the wrongdoing itself (see Chapter 16). 51. Barros Maltos Jnr v McDaniels Ltd [2004] 3 All ER 299. See also Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 at 391 (Lord Millett). See further [320]. 52. Holiday v Sigil (1826) 2 C & P 176; 172 ER 81; Moffatt v Kazana [1969] 2 QB 152 (money had and received for a biscuit tin of banknotes left behind when the owner moved overseas). 53. Merry v Green (1841) 7 M & W 623; 151 ER 916 (purse of money hidden in secret drawer inside bureau sold by plaintiff to defendant). 54. Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 697. 55. See Westpac Banking Corp v Ellis [2007] NSWSC 956 (on appeal, Shields v Westpac Banking Corporation [2008] NSWCA 268). 56. See also Jennifer Payne, ‘Unjust Enrichment, Trusts and Recipient Liability for Unlawful Dividends’ (2003) 119 LQR 583. 57. See eg, Neate v Harding (1851) 6 Exch 349; 155 ER 577. As to this, see [162], [220], [1618]–[1622]. See also Farquharson Brothers & Co v King & Co [1902] AC 325 at 334 (‘restitution or compensation’ the response demanded by theft and disposal of timber by an employee). 58. Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 689; Ilich v R (1987) 162 CLR 110 at 126; 69 ALR 231; Shields v Westpac Banking Corporation [2008] NSWCA 268 (money withdrawn from account after automatic banking malfunction known to recipient). See generally Fox, 2008, pp 148–59. Restitution on the

alternative basis of mistake may be available even when property has not passed: see [425]. 59. See generally Virgo, pp 586–8. Professor Virgo favours an interpretation of Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105 that turns on the mistake being fundamental. Our contrary view is set out at [447]. 60. Singh v Ali [1960] AC 167 (see [2609]). 61. Chaplin v Leslie Frewin (Publishers) Ltd [1966] Ch 71. Cf the situation with public authorities: Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 177 per Lord Goff referring to Auckland Harbour Board v R [1924] AC 318. See Chapter 21. 62. In the swap transactions considered in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 the House of Lords recognised that title to the money passed even though the transactions were void ab initio. A personal claim was still available, but in unjust enrichment stemming from a failure of consideration (or basis). 63. [1991] 2 AC 548. 64. See Lipkin Gorman [1991] 2 AC 548 at 587–8. See, eg Neate v Harding (1851) 6 Exch 349; 155 ER 577 and generally as to waiver of tort [162], [220] and Chapter 16. 65. See Lipkin Gorman [1991] 2 AC 548 at 583, 588. 66. Lipkin Gorman [1991] 2 AC 548 at 572. Contrast eighteenth century cases (especially Scott v Surman (1742) Willes 400; 125 ER 1235 that suggested the opposite). See Stoljar, pp 144–5; Heydon and Leeming, Jacobs’ Law on Trusts in Australia, 7th ed, §2702. 67. As Gummow J pointed out in Roxburgh v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 541; 185 ALR 335; [2001] HCA 68 at [66]. As to its availability in a proper case, see [314]–[316]. 68. See also Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 669–77; [2002] QCA 158 at [8]–[26]. 69. See generally Chapter 24. See [2410], where we show that the change of position defence is not confined to restitution claims fitting within the confines of the unjust enrichment concept. Contrast Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156. 70. [1991] 2 AC 548 at 572. See also at 559 per Lord Templeman. 71. While Goff & Jones press for an unjust enrichment conceptualisation, the learned authors concede that there are several difficulties with it: see §§ 8-11–8-14. 72. P Birks, ‘Misdirected Funds: Restitution from the Recipient’ [1989] 2 LMCLQ 296; Brian F Fitzgerald, ‘Tracing at Law, the Exchange Product Theory and Ignorance as an Unjust Factor in the Law of Unjust Enrichment’ (1994) 13 U Tas LR 116; Burrows, Chapter 16, esp p 433; Edelman & Bant, p 271ff. The arguments are critically and convincingly addressed by W Swadling, ‘Ignorance and Unjust Enrichment’ (2008) 28 OJLS 627. ‘Ignorance’ in this context is different from the ignorance causative of mistake referred to by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 369, 374. 73. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [156]. 74. See [106]. 75. Virgo, p 645. See also Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156.

76. See Jackman, The Varieties of Restitution, Chapter 8; Goff and Jones, Chapter 2; Virgo, p 645; Kenneth Handley, ‘The Black v Freedman Trust: Vindicating Property Rights or Remedying Wrongs?’ in Bant and Bryan; Levy v Watt (2014) 308 ALR 748; [2014] VSCA 60 at [65]. Cf also the analogy of Lord Goff’s description of the claim in Auckland Harbour Board v R [1924] AC 318 (see Chapter 21) as ‘proprietary in nature’: Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 177. 77. This is the unjust factor advanced by Goff & Jones, Chapter 8. 78. See, eg, Heperu Pty Ltd v Belle [2011] NSWSC 1151 at [55]. Generally, see Chapter 28. See also [123] and [313] for other examples of money had and received being used in equitable contexts. 79. [1997] Ch 159. It would appear that Millett LJ (at 164) and Nourse LJ (at 172) held opposing views as to whether the case was an action for money had and received. On one view, the order made in Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 was tantamount to a common law proprietary remedy: see Fox, §§ 9.40–9.41. 80. [1991] 2 AC 548 at 574. 81. [1997] Ch 159 at 174. 82. See [311]. 83. (2009) 76 NSWLR 230 (see [311]). See also Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; 257 ALR 658; [2009] NSWCA 186. 84. See [311]. 85. See [306]. 86. See Heperu at [42], [164]. 87. Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 580; Barros Mattos Jnr v McDaniels Ltd [2004] 3 All ER 299. 88. (2009) 76 NSWLR 230; 258 ALR 727. The judgment is that of Allsop P with whom Campbell JA and Handley AJA agreed. See also Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 670. Contrast Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd’s Rep 319 at 325. 89. As such, he was a thief holding the money and its proceeds under a constructive trust (Heperu at 257 [114]. See further [314].) He later went bankrupt. 90. See further [306]. 91. (1874) LR 9 Ch App 244 (see generally [1705]). 92. Heperu at [157]–[158], [163]. See also Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42. 93. Heperu at [144], [154]. 94. Heperu at [42], [164]. 95. Heperu Pty Ltd v Belle [2011] NSWSC 1151. Reductions attributable to nonmisappropriated funds were excluded. See also Break Fast Investments Pty Ltd v Giannopoulos (No 6) [2012] NSWSC 286. 96. See Burrup Fertilisers Pty Ltd v Oswal [2011] FCA 731, citing Heperu at [42]. 97. Break Fast Investments Pty Ltd v Giannopoulos (No 5) [2011] NSWSC 1508; Riverwood Legion and Community Club Ltd v Repaja & Co Pty Ltd [2015] NSWSC 383.

98. See [308] and Ilich v R (1987) 162 CLR 110 at 139–41; 68 ALR 231. On one view, the order made in Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 (discussed [310]) was tantamount to a common law proprietary remedy: See Fox, §§ 9.40– 9.41. 99. See generally Chapter 2. 100. Heperu at [145]. 101. Assuming that it is meaningful to talk of the common law and equitable sides of restitution deriving from the action for money had and received post Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 (see generally [123]). 102. Where assets are held under an express trust, unauthorised disposal will not destroy the trust. The recipient will be liable to account to the beneficial owner unless the defence of bona fide acquisition of legal title is established by the defendant and, in this context, constructive notice may be fatal. Equitable personal and proprietary remedies will include those designed to restore the trust property to its rightful owner: Strang v Owens (1925) 42 WN (NSW) 183; Chong v Chanell [2009] NSWSC 765; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [251]–[252]; Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] 3 WLR 597. Note, however, that Heperu suggests (at [143]) that money had and received would have been available to a beneficiary asserting an equitable title. See also Nelson v Larholt [1948] 1 KB 339. 103. Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581. 104. See [257]. 105. [1998] 3 All ER 812. Cf FHR European Ventures LLP v Mankarious [2014] Ch 1 at [14]. 106. See [316]. 107. Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [154]. 108. Heperu at [154]–[156]. Debate about whether the ‘trust’ is ‘institutional’ or ‘remedial’ is unhelpful. While the claims discussed in this chapter vindicate a pre-existing title, the level and means of vindication must be moulded and qualified consistently with equitable principles and history: see J C Campbell, ‘When and Why a Bribe is Held on a Constructive Trust: The Method of Reasoning Towards an Equitable Remedy’ (2015) 39 Aust Bar Rev 320. See further [316]. 109. Australian Postal Corp v Lutak (1991) 21 NSWLR 584 at 589. 110. (1910) 12 CLR 105. See also Spedding v Spedding (1913) WN (NSW) 81; Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 124–5; 55 ALR 417; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 715–16; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 100; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [255]; Helou v Nguyen [2014] NSWSC 22 at [110]. See generally J Tarrant, ‘Theft Principle in Private Law’ (2006) 80 ALJ 531. 111. (1910) 12 CLR 105 at 110. 112. (2001) 208 CLR 199 at 316–17; 185 ALR 1; [2001] HCA 63 at [300]. 113. See [315]. 114. See Susan Barkehall Thomas, ‘Thieves as Trustees: The Enduring Legacy of Black v S Freedman & Co’ (2009) 3 J Eq 52; Susan Barkehall Thomas, ‘Thieves, Owners and the

Problem of Title’ Parts 1 and 2 (2011) 5 J Eq 228, (2012) 6 J Eq 1; MJR Crawford, ‘Theft, Trust and Property Rights: Is Equity’s Cure Worse than the Disease?’ (2014) 8 J Eq 338. 115. This doubt may have been first voiced by Rimer J in Shalson v Russo [2005] Ch 281 at 317. The conceptual difficulties are convincingly addressed in Fox, §§ 4.103–4.106. 116. See J Tarrant, ‘Theft Principle in Private Law’ (2006) 80 ALJ 531; Keith Mason, ‘Deconstructing Constructive Trusts in Australia’ (2010) 4 J Eq 98 at 115–16; Kenneth Handley, ‘The Black v Freedman Trust: Vindicating Property Rights or Remedying Wrongs?’ in Bant and Bryan. As to tracing rules not being dependent on an initial fiduciary relationship, see [303]. 117. Heperu at [144], [156]; Westpac Banking Corporation v Palasty [2011] NSWSC 1478. 118. Support for the resulting variety stems from Robert Chambers, (see eg his Resulting Trusts (OUP, 1996)) who, it must be remembered, mainly addresses an English law that remains hostile to the remedial constructive trust. See also Spigelman CJ in Robb Evans of Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at [116]. 119. Given the nature of ‘receipt’ in this area (see [306]) and the thief’s knowledge of his or her actions. Neither law nor equity will countenance the thief proclaiming moral ignorance. See Vicky Priskich, ‘Theft, Fraud and Mistaken Payments: Personal and Proprietary Remedies in Banking and Commercial Cases’ (2008) JBFLP 163 at p 165. 120. Cases preferring the constructive label include Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 715–16; Grimaldi at [255]; Heperu at [114]. Academic support for the constructive label includes Meagher, Gummow and Lehane, [5-250]; Margaret Stone and Alistair McKeough, ‘Tracing in the Age of Restitution’ (2003) 26 UNSWLJ 377; Vicky Priskich, ‘Theft, Fraud and Mistaken Payments: Personal and Proprietary Remedies in Banking and Commercial Cases’ (2008) JBFLP 163. Handley AJA concurred with Spigelman CJ in Robb Evans, but announced a scholarly change of mind in Kenneth Handley, ‘The Black v Freedman Trust: Vindicating Property Rights or Remedying Wrongs?’ in Bant and Bryan. 121. See [454]. 122. For example, Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [144], [156]; Helou v Nguyen [2014] NSWSC 22. 123. Toksoz v Westpac Banking Corporation (2012) 289 ALR 577 at 580–1. 124. See [247]–[248] and the text below. 125. See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [255] (‘[It] is well accepted in this country that where property is acquired from another by theft, proprietary relief by way of imposition of a constructive trust should be granted if appropriate: Black v S Freedman & Co (1910) 12 CLR 105’). See further [247], [316] (discretionary remedialism). 126. See generally Keith Mason, ‘Deconstructing Constructive Trusts in Australia’ (2010) 4 J Eq 98; J C Campbell, ‘When and Why a Bribe is Held on a Constructive Trust: The Method of Reasoning Towards an Equitable Remedy’ (2015) 39 Aust Bar Rev 320; Meagher, Gummow and Lehane, [5-250]. See further [247]–[248]. 127. See [257]. 128. Giumelli v Giumelli (1999) 196 CLR 101 at 112; 161 ALR 473; [1991] HCA 10 at [5];

Heperu at [154]. 129. See [311]. 130. See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; 287 ALR 22; [2012] FCAFC 6 at [559]; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [154]. 131. See [306]. As to ministerial receipt generally, see W Swadling, ‘The Nature of Ministerial Receipt’ in Birks, Laundering, Chapter 9; R Stevens, ‘Why Do Agents Drop Out?’ [2005] LMCLQ 101. For another application of this principle in restitution, see [441] (receipt of mistaken payments by intermediaries). 132. See Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661; Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 47 ACSR 285; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75. See further [306]. See also [439]–[442]. 133. See generally Chapter 24. 134. Re Diplock [1948] Ch 465 (as explained in Boscawen v Bajwa [1996] 1 WLR 328 at 341); Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548; Gertsch v Atsas (1999) 10 BPR 18,431; [1999] NSWSC 898; Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661; [2002] QCA 158; Barros Mattos Jnr v McDaniels Ltd [2004] 3 All ER 299; Chong v Wu [2010] NSWCA 10; Jones v Hirst [2013] NSWSC 163 at [29]. See also Gareth Jones, ‘Some Thoughts on Change of Position’ in Andrew Burrows and Alan Rodger, Mapping the Law: Essays in Memory of Peter Birks, OUP, Oxford, 2006, pp 76–9. In Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156 at [103]–[106], Stephen Morris QC considered change of position to be unavailable because the claim is not based on unjust enrichment. In our view, its availability reinforces the argument that change of position is not confined to unjust enrichment situations: see also [2407], [2410]. 135. See [306], [311], [2417]. 136. See generally Chapter 25. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [157]; Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156 at [101]–[102]. 137. See Miller v Race (1758) 1 Burr 452; 97 ER 318; Black v S Freedman & Co (1910) 12 CLR 105 at 109; Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 563, 572; Re Global Finance Group Pty Ltd (in liq); Ex parte Read and Herbert (2002) 26 WAR 385 at 411 [120]; Barros Mattos Jnr v McDaniels Ltd [2004] 3 All ER 299. See also Stoljar, pp 116–18; Fox, Chapter 8. 138. Creak v James Moore & Sons (1912) 15 CLR 426; Helou v Nguyen [2014] NSWSC 22; Commonwealth v Davis Samuel Pty Ltd (No 8) [2014] ACTSC 312. 139. See [316]. 140. Eg, MJR Crawford, ‘Theft, Trust and Property Rights: Is Equity’s Cure Worse than the Disease?’ (2014) 8 J Eq 339 at pp 356–61. We do not share Crawford’s view that the power to mould a constructive trust is confined to the bribe or Barnes v Addy (1874) LR 9 Ch App 244 contexts.

[page 145]

PART III

Mistake

[page 147]

Chapter Four

Mistake 1. 2.

3. 4. 5. 6. 7. 8. 9.

General …. Categories of Mistaken Payments ….

[401] [410]

(a) Mistakes of Fact ….

[411]

(b) Mistakes of Law ….

[413]

(c) Mistaken Gifts ….

[417]

Matters Irrelevant to the Plaintiff’s Prima Facie Right to Recover …. [422] Towards a Comprehensive Test of Mistake …. [427] Mistake in Cheque Transactions …. [433] Agents and Intermediaries …. [439] Defences to Claims to Recover Mistaken Payments …. [443] Proprietary Remedies …. [451] Non-monetary Benefits …. [455]

1. General [401] Objects. We here deal mainly with the right to recover mistaken payments, that is, those which are unintended, or caused by some misapprehension. The recipient of such a payment is prima facie unjustly enriched at the expense of the plaintiff and required to give restitution. It will be seen that the category of mistakes that may ground recovery is broad, including mistakes of fact and law and mistaken gifts. So long as the plaintiff’s mistake caused the payment, restitution will generally be available. However, the plaintiff’s prima

facie right of recovery may be displaced to the extent that circumstances (such as the defendant’s change of position) have made it unjust to order restitution. The chapter briefly examines the main defences to this restitutionary claim. The availability of a proprietary remedy is also discussed. Brief mention is also made of the principles applicable to non-monetary benefits, including the mistaken performance of services. [402] Nature of claim. The law has for centuries recognised the right of a person who mistakenly pays money to another to recover the payment.1 The unbroken longevity of the cause of action makes it hard to understand how the implied contract theory ever entered legal currency. Two leading Australian cases illustrate the cause of action. In Norwich Union Fire Insurance Society Ltd v William H Price Ltd2 a cargo of lemons was covered under a policy of marine insurance. The insurer paid out a claim under [page 148] the policy in the belief that the lemons had been damaged by an insured peril (collision). In fact they had been sold because they were found to be ripening. The payment was recoverable from the payee because there was a misconception under which the payment was made, namely, that there had been a loss by an insured risk. In Commercial Bank of Australia Ltd v Younis3 a bank paid a cheque drawn on its customer’s account in favour of a third party, having overlooked the fact that payment had been stopped by its customer. It was allowed to recover from the payee despite its own negligence. It was no defence that the bank owed no duty to the payee under the cheque. In these two examples, a personal claim was involved and was presumably sufficient for the plaintiff’s purposes. But as against an insolvent defendant there may exist a proprietary remedy. The circumstances where it is available are controversial.4 Mistakes may be spontaneous or induced. Some of the leading cases

involve two innocent parties who were duped by a rogue who disappeared or became insolvent.5 If the defendant’s conduct or words caused the mistake, then restitution may also be available upon grounds related to failure of consideration if the plaintiff elects to rescind the induced transaction and offer counter-restitution;6 or pursuant to the principles of restitution for wrongs if a wrong was involved.7 This chapter (involving mistake as an unjust factor) covers mistake whether or not it is ‘fundamental’ or results in the passing of title.8 Claims will invariably be between payer and payee.9 [403] Unjust enrichment of payee. It is easy to see why the law favours recovery in mistake situations. The receipt of the money benefits the payee. A mistaken payment is unofficious, almost by definition. The destruction of the basis upon which payment was made, through negating the payer’s intention to pay in the light of the true facts, leaves the payee as the unintended recipient of a windfall whose amount corresponds directly to the countervailing detriment of the mistaken payer. The payee’s receipt due to the payer’s mistake makes the payee’s enrichment unjust, thereby satisfying the underlying concept identified by the High Court in Pavey & Matthews Pty Ltd v Paul.10 In explaining the rejection of the traditional fact/law distinction,11 the High Court later emphasised that in both categories ‘the crucial factor is that the recipient has been enriched’.12 Yet this simplicity can be deceptive. Not every mistake should ground recovery, otherwise every compromised dispute could be reopened in the [page 149] light of further reflection or the emergence of any unconsidered fact. And where mistake leads to the conferral of services, which may or may not benefit the recipient, special considerations will apply.13 [404]

Contractual mistakes. Payments made in fulfilment of a

contractual obligation stand in a different position from a mere payment made by mistake. There is a fundamental distinction between contractual and non-contractual mistakes if it is alleged that the contract, rather than the payment, was induced by mistake.14 A payment made pursuant to a valid and enforceable contract cannot be recovered. The contract has allocated the relevant risk.15 In the case of contractual mistakes, the contract must first be set aside, on the ground of mistake or otherwise, before a restitutionary action to recover the payment is available (subject to proof of mistake, duress or some other restitutionary basis).16 These principles were pellucidly stated and then applied by Wright J in Newitt v Leitch.17 The law imposes stricter tests for determining the kind of mistakes which avoid a contract than it does for the kind of mistakes causative of payments recoverable in restitution.18 This distinction illustrates restitution law’s respect for the contractual allocation of risk.19 This is not to say that restitution is never available with reference to a subsisting contract. Thus, an overpayment may be recoverable if caused by a mistaken construction of the contract.20 [405] Payee’s interests also recognised. This attitude to contractual allocation of risk is but one manifestation of restitution law’s recognition of the interests of the payee as well as those of the payer. The defences available to the recipient of a mistaken payment are further illustrations. The way the law responds sympathetically to these and other situations shows that concern for the payer may at times be counterbalanced by concern for the interest which the recipient may have in the security of the receipt. ‘It is reasonable for the mistaken party to want to be saved from the consequences of his mistake. But it is also reasonable for the recipient to say he needs stability in his affairs, that he cannot hold himself ever ready to give back what seems to have been fairly and finally acquired.’21 [406] Broadening categories of recoverable payments. In earlier times, the law drew categorical distinctions, based on the type of mistake

[page 150] involved. Thus, payments based on mistakes that did not relate to liability, or were not ‘as between’ plaintiff and defendant, or were mistakes of law were said not to be recoverable. Those distinctions and limitations have now been swept away. Latterly, the type of mistake has ceased to matter, but greater attention has been focused on the effect of the mistake, including its effect on the defendant. Nowadays, recovery is prima facie available whenever the mistake causes the payment, but greater attention is paid to the defendant’s position in order to ensure that his or her interests are not overlooked.22 This trend appears to have been motivated by at least two factors. First, concern that deserving plaintiffs might lose out by reason of an unduly narrow concept of mistake has seen recovery being allowed for new categories of mistaken payments such as mistakes as to moral obligations, mistaken payment of gifts, and mistakes of law. In earlier days judges were more ready to leave plaintiffs without remedy for these mistakes on the basis that they should have somehow done more to avoid their difficulty. Coupled with this widening scope of recovery has been an increased number of cases involving defendants deserving some measure of protection. In other words, broadening the prima facie right to restitution has been balanced by the recognition of a wider range of defences. [407] Impact of unjust enrichment. The second reason for this trend towards more extensive categories of claims lies in the identification of the true basis of restitution in this area, the concept of unjust enrichment.23 This focuses attention upon the question of the enrichment of the payee. ‘Once a notion of restitution or unjust enrichment is recognised, the distinction as to mistake of law and mistake of fact becomes simply meaningless.’24 It is also the unjust enrichment concept that precludes recovery in particular situations; for example, where the payee has spent the money before notice of the mistake in circumstances triggering the change of position defence.25

The High Court has repeatedly endorsed the role of the unjust enrichment principle in the field of mistaken payments. In Australia and New Zealand Banking Group Ltd v Westpac Banking Corp,26 it characterised the right to recover moneys paid under mistake of fact in the following terms:27 Receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment.

[page 151] The justices were careful to stress that ‘fundamental mistake’ was a shorthand expression to label those categories of mistake that would ground recovery, rather than to state a condition of relief. It was not necessarily a test to identify any or every type of mistake that would lead to a right to recover. Later, in David Securities Pty Ltd v Commonwealth Bank of Australia,28 the court rejected it as a necessary test. Building on the ‘unifying legal concept’ of unjust enrichment, the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia29 rejected the rule precluding moneys paid under a mistake of law. Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said:30 If the ground for ordering recovery is that the defendant has been unjustly enriched, there is no justification for drawing distinctions on the basis of how the enrichment was gained, except in so far as the manner of gaining the enrichment bears upon the justice of the case.

Although the concept of unjust enrichment underpins both the right of recovery and the reasons for denying it where appropriate, each turns upon legal principle, not discretion.31 The traditional fear of unloosing ‘a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate’32 explains the High Court’s reminder in David Securities Pty Ltd v Commonwealth Bank of Australia33 that ‘it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable’.34 If

money is paid as the result of a mistake, then the plaintiff has a prima facie right to recover it, without the need to prove additionally that the recipient has been unjustly enriched at the expense of the payer. The receipt of the mistaken payment is a sufficient prima facie basis for restitution.35 The plaintiff does not have to prove an additional factor of want of honest belief in entitlement to receive on the part of the defendant.36 Of course, matters showing the absence of unjust enrichment consequent upon a mistake (for example, change of position) may curtail the plaintiff’s prima facie right to recover; but the onus of showing this rests on the payee.37 [408] Conditional payments and the distinction between mistake and failure of consideration. Sometimes payments are made subject to an expressed or implied condition. In such category of cases, the benefit (if any) bargained for by the plaintiff in relation to the payment sought to [page 152] be recovered will in effect have totally failed.38 An illustration of this type of payment is the Victorian decision in Peck v Mayor of Hawthorn.39 The plaintiff who owned land adjoining a road petitioned the defendant council to take over, proclaim and make the road. The council resolved to do so if the plaintiff paid it half the cost of the work. The plaintiff paid, believing that the council intended and was willing to carry out the whole work, paying the other half of its expenses out of municipal funds. In fact the defendant, which had no such intention, stopped work when it had spent the plaintiff’s money and when only half of the length of the road fronting the plaintiff’s land was complete. The plaintiff was able to recover the whole of his payment on the basis that it had been paid under mistake of fact, the mistake being that the defendant was willing or intending to do the whole work. (In the light of David Securities Pty Ltd v Commonwealth Bank of Australia,40 the

change of position defence may have seen the plaintiff recovering half of his payment on the basis that half a road was better than none at all.) Nevertheless, mistake cannot be equated with total failure of consideration41 (what we would prefer to term failure of agreed return). In mistake claims it is necessary to concentrate on what caused the plaintiff subjectively to decide to make the payment, whether or not this was known to the defendant. By contrast, claims based on failure of agreed return look at the common, objectively discernible, basis of the payment.42 Mistake and failure of consideration are also determined at different times.43 Sometimes the same facts will justify a finding for the plaintiff on each basis.44 A plaintiff may be able to sue in the alternative. [409] Onus and method of proof. The plaintiff bears the onus of proving causative mistake and establishing the precise extent of the mistaken payment.45 With the abandonment of the fact/law distinction, it is no longer necessary to prove the particular nature of the mistake.46 Moreover, it is sufficient to demonstrate that the mistake caused the payment. It need not [page 153] be shown that the mistake was fundamental.47 The plaintiff may rely on inferences drawn from undisputed facts, but it may be dangerous not to call direct evidence if it is available.48 In Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners49 Lord Hope gave the following summary: The claimant must prove that he acted under a mistake. But the stage when he made his mistake does not matter, so long as it can be said that if he had known of the true state of the facts or of the law at the time of the payment he would not have made it. A wrong turning half way along the journey is just as capable of being treated as a relevant mistake as one that is made on the doorstep at the point of arrival.

The onus of establishing true restitutionary and other defences rests on the payee.50

2. Categories of Mistaken Payments [410] Introduction. It is convenient to identify certain broad categories, without claiming the list to be definitive. Later in the chapter we summarise the negative and positive criteria which help define when the prima facie right of recovery arises.51 Later still we shall also examine ‘defences’ and other circumstances where the prima facie right of recovery may be displaced in whole or in part.52 The categories of mistake are not closed. Quite apart from mistakes of law,53 there is now general recognition that any causative mistake will suffice to generate a prima facie right to restitution.54

(a) Mistakes of Fact [411] Mistakes giving rise to legal liability to make the payment. First, there is the commonest category of mistake of fact, that is, mistake as to a fact giving rise to a legal liability to make the payment. This is illustrated by Norwich Union Fire Insurance Society Ltd v William H Price Ltd.55 There the liability was believed to arise under an existing contract between the parties. Another common example is the recovery of money mistakenly spent to buy or lease land already owned by the payer,56 or pursuant to [page 154] a supposed contractual obligation that did not in truth exist57 or that had already been discharged.58 For a long time it was widely believed that this was the only category of actionable mistake, due mainly to a famous obiter dictum of Bramwell B in Aiken v Short59 where he had said: ‘In order to entitle a person to recover back money paid under a mistake of fact, the mistake must be as to a fact which, if true, would make the person paying liable to pay the money’. The dictum (which at least allowed for the mistaken liability to be owed to a third party) was

so clearly wrong in the light of decided cases that it is surprising that so much ink has been spilled in despatching it.60 This category includes the situation where the plaintiff by mistake pays more than is due under an existing agreement.61 [412] Mistakes need not be as to liability. Even before Bramwell B’s dictum in Aiken v Short62 was given the coup de grace, it became apparent that the law would not hold the line at mistakes going to liability. Voluntary transactions such as deeds of gift have long been capable of being set aside in equity for the donor’s (unilateral) mistake.63 The common law first began to undermine Bramwell B’s dictum when it included mistakes as to fact which give rise to certain moral obligations to the payee. For example, in Larner v London County Council64 the council had agreed, during the Second World War, to make up the difference between the civil and war-service pay of its employees. The employees were expected to keep their employer notified of changes to their war service pay to enable consequential adjustments to be made. Larner did not, but argued that recovery of the windfall excess was barred because the payments were ‘voluntary’. Bramwell B’s dictum in Aiken v Short65 was cited. Subject to a possible change of position defence,66 Larner was ordered to repay the excess on the ground that the council had paid it by mistake but ‘as a matter of duty’ arising from the moral obligation to honour its resolution. Money recoverable on this account ‘would not have come into [the payee’s] hands if it had not been for a false supposition … on the part of the payer causing the latter to believe that he was compelled to make the payment or at all events [page 155] that he ought to make it’.67 In truth, Larner involved an executed promise to make a gift. Then it was recognised that a mistakenly perceived liability to make a

payment was not confined to one owed by the plaintiff to the defendant.68 A bank that honours its customer’s cheque, overlooking the countermand of the mandate to pay, may recover from the payee even though no duty existed as between the bank and the payee.69 In Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd70 Robert Goff J demonstrated that Bramwell B’s line was untenable and that it had already been crossed.71 Mistakes need not be ‘as between payer and payee’ or as to liability. It sufficed that they were causative, subject to various defences capable of being raised by the payee. The reasoning in this highly influential judgment was adopted by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia.72

(b) Mistakes of Law [413] Introduction. Before the beginning of the nineteenth century no distinction was drawn between mistakes of fact and law.73 Yet for almost two centuries thereafter the law held payments under mistake of law to be generally irrecoverable.74 In Bilbie v Lumley,75 Lord Ellenborough’s apparent ignorance of the earlier law coupled with the application of the ‘wholly inapplicable’76 maxim ignorantia juris non excusat saw the fact/law distinction emerge and subsequently flower into a hardened rule. Payments made under mistake of fact were recoverable, but those under mistake of law were not. Mistake of law applied to several types of mistake, including misconstruction of a contract or statute. The fact/law distinction in this field became as firmly recognised in Australia as elsewhere.77 Unless the plaintiff could show that [page 156] unlawful compulsion or fraud caused the mistaken payment, it was generally irrecoverable.78 The ‘rule’ about mistakes of law attracted a growing mass of

miscellaneous exceptions which tended to consume the general principle. For example, mistake as to matters of public law was treated as mistake of fact,79 and the rule did not apply to: disbursements of public moneys without statutory authority;80 certain mistaken payments to public authorities;81 payments made to an officer of the court;82 payments mistakenly made by the court;83 or certain payments by personal representatives and trustees and other payments.84 Academic writers, law reformers and leading jurists called, with increasing stridency, for the abolition of the artificial distinction between mistakes of fact and law. Some legislatures responded, including Western Australia and New Zealand.85 Then suddenly, within three years, the great schism between fact and law was rejected by the highest courts in Canada,86 South Africa,87 Australia and the United Kingdom.88 (1) (2) (3) (4) (5)

[414] David Securities: recovery of money paid under mistake of law. In David Securities Pty Ltd v Commonwealth Bank of Australia89 a customer paid its mortgagee bank money in addition to interest, pursuant to a covenant in a mortgage. The covenant was designed to ‘gross up’ the amount of withholding tax that the Australian customer deducted from interest payable to its overseas lender. Unbeknown to the customer, s 261 of the Income Tax Assessment Act 1936 (Cth) avoided the covenant. The customer’s claim to set off the additional amounts paid under the covenant was rejected by the Full Federal Court, in accordance with the traditional rule denying recovery of moneys paid under mistake of law or mixed mistake of law and fact.90 On appeal, the High Court declared that the rule precluding recovery of moneys paid under a mistake of law should be held not to form part of the law in Australia. The injustice of the enrichment of the recipient of a mistaken payment no longer depends on the nature of the mistake that caused the

[page 157] payment to be made. The case was remitted for further hearing (subject to reopening), to determine whether the customer had paid because of its mistaken belief that the contractual arrangements with the bank required the payments, or whether the payment was ‘voluntary’ and irrecoverable. The case was also remitted to allow to be litigated the change of position defence which the High Court recognised for the first time.91 The majority justices in David Securities suggested that a working definition of moneys paid under mistake of law might be moneys paid to a recipient who is not legally entitled to receive them.92 This will doubtless cover situations where recovery would have been denied until the recent abolition of the fact/law distinction in this context. Thus, a person who pays money due to a mistaken construction of a statute or contract, or mistaken belief as to its validity, or a misinterpretation of a common law rule, or through ignorance of a statute or principle which would make the payment unnecessary or prohibited, will have a prima facie right of recovery, at least where the payer assumes the application of the statute or rule, or the enforceability of the contract pursuant to which the payment was made.93 Likewise, a person who pays pursuant to an obligation in an agreement, believed at the time to be valid, but later held to be ultra vires and void.94 Similarly, a person who misconstrues a contract or deed and thereby pays money that is not in truth due may recover.95 Mistake may include sheer ignorance of a statute or legal principle absolving the payer from any obligation, so long as the payer assumes that some legal obligation exists.96 [415] Mistake of law and ‘voluntary’ payments. The need to identify and prove a mistake ‘causative of the payment’ remains.97 In areas where the law is patently doubtful, the person who pays on a prediction which turns out to be wrong does not labour under a

mistake.98 Similarly, a person who pays knowing that the validity of the statute giving rise to the obligation [page 158] is under challenge in pending proceedings will have difficulty proving a causative mistake.99 Likewise a payer ‘with a knowledge of all relevant facts, and either being indifferent to whether or not he be liable in law, or knowing, or having reason to think, himself not liable, yet intending finally to close the transaction’.100 What in the past were labelled mistakes of law may in truth involve so called ‘voluntary’ payments, as the High Court demonstrated in David Securities Pty Ltd v Commonwealth Bank of Australia101 when it affirmed the result, but not all of the reasoning, of several earlier cases previously thought to stand for a wider proposition denying recovery based on mistake of law. Cases such as Bilbie v Lumley102 and South Australian Cold Stores Ltd v Electricity Trust of South Australia103 were said to involve payments ‘made voluntarily and not under any mistake at all’.104 The early High Court decision in Campbell v Kitchen & Sons Ltd,105 which is surprisingly not mentioned in David Securities, should presumably also be interpreted in this manner. In this context ‘voluntariness’ involves a direct denial of the basis upon which the plaintiff’s claim is made. The ultimate onus of proof is on the plaintiff, although it may be that a plaintiff who paid for a variety of reasons need only point to one that is mistaken.106 The revival by the majority justices in David Securities Pty Ltd v Commonwealth Bank of Australia107 of the ‘voluntariness’ notion was fairly criticised by Brennan J108 and Professor Birks.109 Different categories of payments need to be identified and distinguished, without resort to such an ambiguous label. A person who pays to another moneys apparently due under a contract or some statutory or tort-related obligation may have paid out of a variety of reasons. These may include the payer who:

(1) has a conscious but mistaken understanding of the payer’s legal obligation to pay or the payee’s legal right to receive the money; (2) intends to settle a claim honestly made by the payee; or (3) knows the money is not due or has no belief one way or the other on the matter, but is willing to pay because of the relationship with the payee or some anticipated benefit. [page 159] Category (1) clearly establishes a prima facie right to restitution in the light of David Securities. It includes the situation where the payer of a tax overlooks an amending law relieving it of liability.110 In categories (2) and (3), the plaintiff will fail.111 In category (2) there is a well-established defence because of the law’s policy of favouring the finality of dispute resolution.112 Category (3) is easier to identify in principle than in real life.113 What its various formulations have in common with each other, and (according to the majority in David Securities) with category (2), is that they emphasise the considered decision of the plaintiff to pay the money in question:114 The payment is voluntary or there is an election if the plaintiff chooses to make the payment even though he or she believes a particular law or contractual provision requiring the payment is, or may be, invalid, or is not concerned to query whether payment is legally required; he or she is prepared to assume the validity of the obligation, or is prepared to make the payment irrespective of the validity or invalidity of the obligation, rather than contest the claim for payment.

In David Securities the case was remitted for further hearing to determine whether it fell within category (1) or (3). If the appellant could show (with it bearing the onus)115 that it paid the additional amounts because of a mistaken belief that its contractual arrangements with the bank required the payments, it could succeed, subject to the bank’s change of position defence. It appears that this will require proof that the payer’s agent turned his or her mind to the question of the payer’s legal obligation at the time of the relevant payments and

believed, or consciously assumed, itself to be legally obliged to pay.116 The court held117 that the mere fact that the bank required the payments to be made would not of itself warrant the drawing of such an inference. If, on the other hand, the facts were that the appellant wished to ensure that there was a roll-over of its loans, whatever its belief as to the existence of an obligation to do so (indeed even if this was an equally open hypothesis, since the payer bears the ultimate onus of proof), it would fail.118 The presence of doubt is not necessarily incompatible with mistake, but payment under protest will render it nearly impossible to establish causative mistake.119 [page 160] [416] Change of law through judicial overruling. A distinct issue arises in relation to payments made when ‘the law’ at the time of payment required it, but where that law is later reversed by judicial overruling.120 If the overruling involves an appeal from the very judgment pursuant to which the plaintiff paid, special rules apply.121 But we are here concerned with payers who seek to recover money that was legally due when paid but which could, with the benefit of hindsight from a later judicial decision, have been withheld. In earlier days, the myth of the declaratory theory of judicial decision-making meant, by definition, that the payer who had regard to the law declared in an earlier decision (subsequently overruled) was, like the earlier judge, mistaken in the view that it ‘represented’ the law. But fear of countless claims and massive disruption to transactions settled years previously led judges to deny recovery to that payer. The standard reason given was that the payer’s mistake was one of law.122 There is now clear acknowledgment that judges make and change ‘the law’.123 This is what happened in David Securities Pty Ltd v Commonwealth Bank of Australia,124 despite the High Court’s attempt to demonstrate that no earlier decision of that court denied recovery for pure mistakes of law. However, the concept of prospective overruling

was rejected by the High Court in Ha v State of New South Wales.125 An appellate court decision overturning an earlier case, even one of its own decisions, must therefore be taken to declare that the earlier expressed view of the law was always erroneous. It follows that a payment caused by the payer’s reliance upon the earlier law will be regarded as having been made by mistake of law and recoverable at common law (unless barred on limitation or other grounds of defence).126 In the Australian Capital Territory, New South Wales and Western Australia this situation is reversed by statute which denies relief in [page 161] respect of payments of taxes and imposts made when the law was, or was commonly understood to be, as formerly declared.127

(c) Mistaken Gifts [417] Introduction. Gifts come in many varieties. Donors’ motives may also be mixed and are not always fully disclosed to donees. Some gifts are fairly spontaneous (such as those made to a charity doorknocker or a busker); others may have been worked out in detail with advisers expected to be alert to fiscal and other consequences. Some gifts are in favour of trustees, others may be by trustees. This chapter presupposes a gift that has been validly effected, whether by deed or (in the case of cash or chattels) by delivery accompanied with donative intent and not rejected by the donee.128 We also leave for specialist works gifts impugned due to the donor’s incapacity, disability or vulnerability; or because they were made in breach of trust or of fiduciary obligations. Gifts by will and donationes mortis causa are also excluded. [418] Alternative bases for restitution of gifts. In this chapter we address gifts liable to be recovered or set aside where mistake is an unjust factor operating as between donor and donee or where the

donor’s mistake is the sole basis for rectification or rescission of a deed of gift. This does not exhaust restitution law’s involvement with mistaken gifts. Alternative grounds for restitution are available in some situations. For example, ‘fundamental’ mistake may preclude the passing of property in money, triggering restitution based on continuing title as against immediate payees or third parties.129 Gifts induced by misrepresentation or fraud may also engage the principles of restitution for wrongs130 or restitution for failure of basis.131 Mistake might conceivably accompany a transfer made on some objectively discernible132 basis that happens to fail, enabling the plaintiff to rely on alternative restitutionary rights.133 [419] Rescission for mistake (including mistake as to tax consequences). If a mistaken gift is effected by a formal instrument such as a deed, then the instrument itself must be shown to be void, or (if voidable) duly rescinded.134 Alternatively, mistakes as to form may be [page 162] rectifiable on established grounds. A deed poll may be rescinded on the basis of the settlor’s mistake; and rectification may be awarded at the suit of an intended donee.135 Gifts by deed have been set aside for mistake in many situations.136 These include gifts made by a donor in forgetfulness that the donee has already been paid,137 or a factual or legal mistake as to a basic assumption consciously adverted to138 or a gift to A under the mistaken belief that A is B.139 A gift by deed where the donor misunderstood its legal character or operation may also be rescinded for mistake.140 The court setting aside a deed may order an account and the repayment of the mistaken sum. Relief may be limited to the mistaken excess of a gift. Australian courts have set their faces against rectifying an instrument

where a mistake relates to its tax consequences, as distinct from its ‘legal and factual operation … according to its true construction’.141 McLelland AJA described such mistakes as ‘remote, or collateral’.142 Should the same thinking apply to rescission, despite the fact that many operative mistakes entail no tainting of the form of the transaction? We are unsure, but doubt it. Take the situation where a donor chooses one charity over another because of a mistaken belief about the taxdeductibility of the gift to the chosen donee. Assume that the donor satisfies the court that the donation would not have been made were it not for the assumed tax benefit. Prior to the recent decision in Pitt v Holt143 English law at least appeared to draw a categorical line precluding rescission in such circumstances on the basis that the mistake went to the consequences or advantages as distinct from the effect of the gift.144 But the distinction is elusive and has been justly attacked [page 163] by commentators urging the position that we are inclined to favour, namely that tax-related mistakes should be addressed in the same manner as other mistakes (including the application of the but-for test of causation).145 In Pitt, the Supreme Court of the United Kingdom accepted that tax-related mistakes do not call for special treatment and that the distinction between mistakes as to consequences and effect was untenable. A voluntary deed approved by the English Court of Protection produced adverse inheritance tax consequences for the settlor widow on the death of her disabled husband. The income and capital gains taxation consequences had been adverted to by the settlor’s advisers, but they overlooked structuring the settlement in a way that would have avoided the inheritance tax bombshell.146 The court was obviously troubled lest it be seen to endorse artificial tax avoidance schemes that were ‘hardly an exercise in good citizenship’.147 Nevertheless, rescission was granted on the basis that doing so did not

offend what was described as an ‘objective … conscience test’.148 The possibility that causative mistakes in the course of more extreme taxavoidance exercises might result in equitable intervention being withheld on public policy grounds was flagged.149 It remains to be seen whether Australian courts will be prepared to grant or withhold equitable rescission for mistake quite as expansively as proposed in Pitt. [420] Recovery of mistaken gifts not made by deed or formal instrument. Because it was only recently that the common law recognised that payments could be recovered despite the absence of a liability mistake150 and that mistake of law was not a bar to recovery151 there are few common law cases involving mistaken gifts. However, Larner v London County Council152 was such a case; and there is no reason in principle why common law and equity should diverge at this point. There are strong indications that both ‘systems’ approach the key issues of identifying operative mistake by reference to identical principles.153 [421] Mistaken gifts attract the same restitutionary principles at common law and in equity.154 As with non-gift transactions, a change of mind about a gift will not suffice to engage the equitable jurisdiction to relieve (by rescission or rectification) against mistake.155 Nor will a plaintiff recover any gift simply by proving that any assumption which underlay it was [page 164] falsified156 or that there was a mere misprediction.157 Nor is the carelessness or forgetfulness of the donor a bar to relief.158 The onus of proving mistake rests on the person seeking to set the gift aside.159 Change of position is effectively a defence in equity.160 The English and Australian authorities also establish that, for gifts, ‘but for’ causation is sufficient to generate a prima facie right of

restitution based on mistake, whether at law or in equity.161 There is a highly persuasive dictum of Brennan J in David Securities Pty Ltd v Commonwealth Bank of Australia162 to the effect that the general principles should apply to gifts. We would reject any suggestion that mistakes in gifts must also be ‘serious’163 in nature or that ‘inequitable’ or ‘unconscionable’ conduct must be established against or fictionally attributed to the donee.164 Much ink has been spilled by commentators examining English decisions debating whether operative mistake should suffice for rescission in the way it now clearly does for other transactions affected by mistake.165 A distinction between mistake as to the ‘effect of the transaction itself’ and ‘its consequences or the advantages to be gained by entering into it’ that flourished for a while in the English courts166 has recently been abandoned there.167 Unfortunately, this was replaced with a most porous substitute that would require the operative mistake to be of a ‘gravity’ that offends an ‘objective’ assessment of ‘unconscionability’.168 One hesitates never to say never in matters falling within equitable jurisdiction. But fictions and judicial discretions should be avoided where possible, especially in the matter of rights as distinct [page 165] from remedies. It is doubtful that judicial recognition of unconscionability as a judicial long-stop169 or even an ultimate grundnorm for restitution170 adds anything, apart from explaining why the principles about causative mistake should converge at common law and in equity, as an English judge pointed out as long ago as 1891.171 We are also opposed to any special rule for mistake of law tax consequences, let alone a residual judicial discretion to negate mistakes made by those who indulge in tax planning that escapes legislative tentacles of which the court disapproves.172 Historically, common law courts and the Court of Chancery encountered mistake issues in different situations. But there is little

evidence and nothing in principle to support distinctions in the handling of common issues for their own sakes. Indeed, the case law suggests common approaches to similar conceptual issues, especially the case law addressing these matters after the general recognition of the unjust enrichment concept that occurred in the United States in the late nineteenth century and elsewhere in the common law world in the late twentieth century.

3. Matters Irrelevant to the Plaintiff’s Prima Facie Right to Recover [422] General. A number of possible grounds for denying a right of recovery have been identified and rejected by the courts. These include any requirement that the mistake be shared between payer and payee, the payer’s carelessness, knowledge of the truth by an agent not responsible for the payment, and demand before action.173 [423] Payer’s mistake need not be shared by payee, nor be ‘as between’ payer and payee. The plaintiff does not have to establish that the payee contributed to or shared the payer’s mistake.174 Earlier decisions and dicta175 asserted that the mistake must exist ‘as between’ plaintiff and defendant. However, the fallacy of the notion was clearly exposed by Robert Goff J in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd.176 A bank which pays a cheque overlooking its customer’s countermand is not involved with a mistake as between payer and payee, because its only duty is towards its customer. Indeed the mistake need not be as to the recipient’s entitlement to be paid from any source. For example, in R E Jones Ltd v Waring [page 166] & Gillow Ltd177 the plaintiff was falsely induced by a rogue (B) to deliver a cheque to the defendant in the belief that the defendant was

financing the manufacture of cars which were to be purchased by the plaintiff. In fact the cheque was used to pay B’s debt to the defendant. The plaintiff’s mistake related to its supposed contractual relationship with the car manufacturers or with the rogue B. Although there was no mistake about the defendant’s entitlement to receive the money, the plaintiff nevertheless recovered on the basis of its own mistake. [424] Payer’s carelessness. As long ago as Kelly v Solari in 1841,178 it was established that forgetfulness or other negligence will not preclude recovery by a plaintiff whose mistake led to the payment. There an insurance company paid out a life policy overlooking the fact that it had lapsed during the deceased’s lifetime for non-payment of premiums. This did not bar the right of recovery, although the court would have rejected the claim had it been established that the plaintiff had chosen to pay as the result of a conscious decision not to investigate the relevant facts carefully. Later decisions have confirmed that a payer’s negligence does not affect the right of recovery,179 even where equitable remedies are invoked.180 The call to have some regard to the payer’s negligence181 has generally gone unanswered although it occasionally surfaces as a confusing makeweight182 or is included in proposals to incorporate contributory or relative fault into the defence of change of position that have to date been rejected in principle.183 [425] Knowledge of true facts by non-paying agent. Nor will a plaintiff be precluded from recovering simply because the true facts were known by an agent of the plaintiff, unless that person was responsible for making the payment.184 [page 167] [426] Demand before action. Some older cases suggested that demand before action was a prerequisite to a valid cause of action, at least where the defendant did not know of the mistake.185 Others took the opposite position.186 The point was left open by the High Court in

Australia and New Zealand Banking Group Ltd v Westpac Banking Corp.187 It is submitted that demand before action is not essential. The reasoning underlying the earlier decisions is flawed by the suggestion that something needs to be done in order to ‘rescind’ the basis upon which the arrangement relating to the payment was made. The now orthodox ground for restitution ignores such requirements, regarding the defendant as having been enriched directly by the mistaken payment. That enrichment occurs at the moment of payment, not later;188 and that is when the limitation clock starts to run as a general rule.189 Any judgment should therefore carry interest from the date of payment.190 Of course a plaintiff is well advised to give notice at the earliest moment in order to protect his or her position in relation to costs and interest which may be at the discretion of the court. Notice of the mistake will also preclude the defendant from incurring expenditure or otherwise acting in such a way as to give rise to defences based on the principles of estoppel, accounting as agent, or change of position.191

4. Towards a Comprehensive Test of Mistake [427] Introduction. The foregoing analysis shows that it is possible to identify situations which clearly do or do not involve mistakes which will ground recovery. There will be little difficulty where the mistake is as to a matter giving rise to a legal or consciously adopted moral obligation to pay.192 But the problem remains of identifying a general test that will resolve issues that are not closely analogous, or which fall outside the bright line categories. In the search for an overriding principle, two broad approaches are evident in the cases.193 Earlier cases looked at the ‘nature of the mistake’ stressing its ‘fundamentality’ as the touchstone. These were affected by the contractual influence on restitution.194 Latterly, ‘the effect of the mistake’ has emerged as the relevant test, with mere causality emerging as sufficient to establish prima facie liability.

[page 168] [428] Mistake need not be ‘fundamental’. The test propounded in Porter v Latec Finance (Qld) Pty Ltd195 was that the mistake should be fundamental to the transaction (Barwick CJ, Windeyer J) or payment (Kitto J). Their Honours disagreed about the application of that rule to the facts of the instant case, and the decision ultimately turned on another issue.196 This approach left room for subjective decision-making as debate ranged over whether a mistake was fundamental or merely a ‘motivating fact in the (payer’s) decision to make the payment’.197 ‘Fundamentality’ of mistake will remain to be relevant to claims based, not on unjust enrichment, but subsisting title to money.198 [429] ‘But for’ causation sufficient where mistake is the unjust factor. The need always to find a fundamental mistake was challenged by Robert Goff J in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd.199 He held that there is a prima facie right of recovery so long as the mistake ‘caused’ the payment. The High Court initially noted the divergence of views, leaving their resolution for another day.200 However, in David Securities Pty Ltd v Commonwealth Bank of Australia201 the Court rejected the need to prove that the mistake was fundamental as well as causative. The notion of fundamentality was said to add little, if anything, to the requirement that the mistake caused the payment. A search going beyond causation would direct attention away from the vital matter of enrichment. The ‘but for’ test of causation applies,202 unless the mistake was induced by misrepresentation or improper pressure of the defendant.203 Naturally [page 169] the plaintiff bears the onus of proof.204 Thus, in Roxborough v Rothmans of Pall Mall Ltd205 retailers who paid wholesalers for tobacco on

invoices that included a component referable to a licence fee later found to be unconstitutional failed to recover the fee on the ground of mistake. The retailers knew that the fee was subject to constitutional challenge and none of them gave evidence that, but for a mistake, they would not have paid the full amount claimed by the invoices. The court inferred that they intended to recoup the fee from their own purchasers, rather than run the risk of a dispute with the wholesaler, Rothmans. A test expressed in terms of causation on the balance of probabilities seldom requires additional attention in the categories of mistake as to legal (or moral) obligation to pay or as to the payee’s legal (or moral) entitlement to receive the moneys, what we would describe as the ‘bright-line categories’. It also explains why a donor who makes a gift in forgetfulness that it had already been paid should be able to recover (subject to defences such as change of position and the like).206 There are, however, risks of circular reasoning if the concepts of ‘mere’ causation or ‘taking the risk’ of mistake are invoked incautiously.207 Time will tell whether the espousal of a causation test will provide a universal metwand, and whether the courts will be able to resist being drawn into more abstruse philosophical analysis if there looks like ‘too much restitution’. After all, ‘mental processes cannot be weighed and measured’ and ‘will power has no voltage’.208 Commentators have noted how open-textured a ‘test’ of causation really is, and asked whether the mistake must be the main or predominating cause of the payment.209 Brennan J suggested that, in principle, there seems to be no reason a donor should not be entitled to restitution in every case involving payment which would not have occurred ‘had the payer known all the relevant circumstances, both legal and factual’,210 because in such cases the defendant is unjustly enriched by the receipt. However, as he noted, there are cases to the contrary. [page 170] For example, in Aiken v Short211 Carter owed a debt to the

defendant. To secure its repayment he gave an equitable mortgage of an interest he thought he owned in the estate of a deceased person. Carter then assigned his supposed interest to the plaintiff bank, subject to the defendant’s equitable charge. The bank wished to realise its security by selling its assigned interest. It paid out Carter’s debt to the defendant in order to get rid of the prior charge. It turned out that Carter’s supposed interest in the deceased estate did not exist, because the will which bequeathed it had been revoked. The bank’s action against Short to recover its payment to Carter’s creditor failed. Woodward212 cites Aiken for the proposition that there is no recovery by one who confers a benefit under the inducement of a mistake of fact that affects merely the policy of the person’s act. But, in our opinion, the plaintiff failed because it made a payment that was in fact due, despite the payer’s mistake.213 This was the primary reason offered by Kitto J in Porter v Latec Finance (Qld) Pty Ltd, when he said that the bank:214 … did not get by the payment the advantage it thought it was getting, but that only meant that a belief was proved erroneous which had afforded an inducement to make the payment, but was not essential to it. As Bramwell B observed, the mistake was that the bank thought that if it paid the debt it could sell the property for a better price. The only facts that were fundamental to the payment were that the debt was owing and that the bank had the debtor’s authority to pay it on his behalf, so that the payment effected exactly what it was intended to effect, namely the discharge of the debt. As to these facts there was no mistake.

[430] Ignorance and forgetfulness. In David Securities Pty Ltd v Commonwealth Bank of Australia215 the High Court said that ‘mistake’ may include cases of ‘sheer ignorance of something relevant to the transaction in hand’ as well as cases of positive but incorrect belief.216 In that case, the payer believed money was due under a contract, but the belief was mistaken because of a statutory provision unknown to it that nullified the promise.217 In Hookway v Racing Victoria Ltd,218 Ormiston JA spoke of ‘a [page 171]

mistaken belief arising from inadvertence to or ignorance of a specific fact or legal requirement’. Ignorance that generates a claim based on mistake can include forgetfulness of the fact that the payment sought to be recovered had earlier been made.219 But mistake is distinguishable from lack of evidence. Thus, a person who paid, knowing the money was not due, but because he had lost the defendant’s receipt, could not recover.220 Some authors have treated ignorance as a separate unjust factor, a fortiori from mistake.221 We prefer to deal with the cases they discuss under the more stringent principles dealing with property-based claims to restitution.222 According to the High Court, ‘no case, even in England, has treated ignorance as a “reason for restitution”’.223 [431] Misprediction. Mistake must be distinguished from misprediction. A misprediction as to some future matter may be nothing more than the conscious taking of a risk of error that comes home. Absent conduct by the defendant that created or encouraged the expectation, the plaintiff will not recover money paid or the value of services rendered.224 In Kerrison v Glyn, Mills, Currie & Co,225 the plaintiff was entitled to recover a payment made to the defendant, a New York bank, for the purpose [page 172] of meeting an anticipated liability although he then knew that no actual liability had yet attached to him. (Indeed, had the plaintiff been presently indebted, the money would have been paid in discharge of an existing debt and been irrecoverable, despite an operative misapprehension.)226 In the first edition of this work we saw Kerrison as a case of mistake where a legal liability would accrue in the future.227 We now agree with Burrows228 and Virgo229 who followed Birks230 in stating that a mistake as to the future is a contradiction in terms. If the mistake is a mere misprediction it will not lead to restitution unless

there is a failure of the basis upon which a payment is made that attracts the principles discussed in Part V.231 Some apparent ‘mispredictions’ are capable of being characterised as a mistake as to the nature of the transaction in which the plaintiff is participating. In Kerrison there was a mistake as to the solvency of the New York bank. Distinguishing between a misprediction and a causative mistake will not always be easy on the facts.232 There is a difference between a mere misprediction and the payment of an estimated sum on the understanding of later adjustment.233 [432] Doubt and risk-taking.234 In 1998, Lord Hope declared that ‘[a] person who pays when in doubt takes the risk that he may be wrong — and that is so whether the issue is one of fact or law.’235 This statement is too absolute and there has been an appropriate retreat from it in later dicta.236 Unfortunately, one line of retreat was towards the idea that ‘causation’ would solve the issue.237 Another favoured asking whether the payer ‘took the risk’ of error238 or even whether this was something that the payer must be ‘taken to have run’.239 Resort to such fictional or circular reasoning confirms the difficulty of the task, but adds little to its resolution.240 [page 173] Some propositions may be stated dogmatically. First, there will be situations where what is tantamount to an express or implied contractual arrangement to make later adjustments can sometimes be teased out of the facts, thereby avoiding any role for restitution. Second, if the payer’s misconception can be characterised as a misprediction as distinct from a mistake, restitution will not lie.241 Third, the mere presence of doubt in the mind of the payer will not necessarily be fatal,242 although serious doubts would negate mistake especially if the payment is accompanied by protest.243 Fourth, there will be no causative mistake if the doubting payer means to waive all inquiry into the perceived legal or factual basis of the prospective

payment244 or to avoid litigation,245 or if the payer thinks it more likely than not that the payment was due yet pays anyway.246 Nor will a mistake count if the doubts are merged in a binding contract of compromise.247 Fifth, it will often be helpful to focus on the role and competency of the agent involved. Queensland Alumina Ltd v Alinta DQP Pty Ltd248 involved a contract for the supply of natural gas to a refinery operated by the appellant. A complex pricing formula entailing the conversion of the US$ rate was capped in certain events. The appellant’s principal buyer (Mr Mouna) became aware of this and, not being a lawyer, he sought the advice of in-house counsel (Ms Baker). In July 2002 she gave ‘preliminary advice’ that there was no power to charge above the cap. However, she referred the matter to outside solicitors who, after an initially cautious response, advised in late 2003 that the cap prevailed. This conclusion was confirmed by the Queensland Court of Appeal. It followed that excessive payment had been made and its return was sought on the ground of mistake of law. The majority of the court held that the appellant ceased to be under a mistake of law once Ms Baker’s advice had been received in 2002. Thereafter the appellant:249 … was not labouring under a positive belief as to the efficacy of cl 1(a), nor was it in a state of sheer ignorance. As to other possible states of mind, it is clear on the evidence that once Ms Baker’s view was given, the appellant believed that the contractual provision might be invalid but chose to make the payments nonetheless. It follows that from that point the payments were voluntary and not caused by a mistaken belief as to the legal position.

[page 174]

5. Mistake in Cheque Transactions [433] General. When a bank pays a cheque mistakenly it has advanced its own money. Nevertheless, its rights against the payee may be affected by its rights against its customer, the drawer. The availability of recourse against the customer in some situations, and the desirability of forcing the bank to resort to it in order to preserve the

certainty of the cheque as a negotiable instrument, has impeded the full application of the general principles concerning the recovery of mistaken payments. There are signs that this is changing.250 Mistakes by banks in honouring cheques may be of at least five different kinds: (1) the bank may have made a mistake as to the amount of the cheque; (2) the bank may have overlooked the fact that payment has been stopped by the customer who drew the cheque; (3) the bank’s mandate may have been withdrawn by reason of the death or supervening incapacity of its customer; (4) the signature of the customer, as drawer, may have been absent or forged; and (5) the bank may have mistakenly believed that the account of the customer was adequate to cover the cheque. In the first four categories the bank had no mandate to honour the cheque. (Its mandate in the first category was limited to the amount for which the cheque was drawn.) From this it follows that the customer’s account should not be debited with the amount paid, and is entitled to be credited if previously debited. Unless the customer ratifies the bank’s payment, the bank’s only recourse to recover the funds is from the payee. However, the second category may differ from the others in that the reason for the absence of the bank’s mandate may be a dispute between payer and payee. Indeed, in some cases the customer’s countermand of mandate will amount to a breach of an obligation to the payee under the cheque or its underlying contract. In the fifth category the bank has no obligation to honour the cheque. But there is a mandate and, if the bank chooses to accept its customer’s implied request to grant or increase overdraft facilities to cover payment, it becomes entitled to debit the customer’s account. In those circumstances the bank’s payment discharges the customer’s obligation to the payee on the cheque.251 If the bank declines, the payee can sue the customer on the dishonoured cheque. Restitution to the bank on the basis of mistake under these scenarios

is discussed in the succeeding paragraphs. [434] Overpayment. A bank that mistook the amount of a cheque and paid more than the sum for which it was drawn may recover the excess from the payee.252 [page 175] [435] Cheque stopped. It is well established that the bank which pays a cheque in ignorance of the fact that it has been stopped can recover payment from the payee (subject to the various defences available to mistaken payees).253 The bank which pays on a cheque that has been stopped will be unable to debit its customer’s account (unless the customer ratifies the payment),254 but will have a prima facie right of recovery from the payee. This favours the bank’s interest over the payee’s, because the drawer of the cheque may truly owe the money in question and the payee may have received payment in complete ignorance of the stop order.255 This result has been justified on the basis that it leaves the original parties free to litigate the substantive dispute between them that presumably led to the original countermand,256 although it discounts (in the bank’s favour) the procedural and substantive advantages given by the law to the payee or holder of a negotiable instrument.257 Its main justifications may lie in the fact that the receipt would otherwise be a windfall at the bank’s expense in the hands of the payee, and that any other solution would leave the bank without remedy (since it could not debit the customer’s account unless perhaps subrogation were available).258 By allowing the bank recovery, the law is consistent in permitting restitution for mistakes. It also provides a mechanism whereby the bank can force the payee to litigate with the payer the real issue which may have led to the cheque being stopped. [436] Bank’s ignorance of death or supervening incapacity of customer. Where the bank honours its customer’s cheque in ignorance

of the customer’s death or supervening incapacity259 there seems to be no reason why the principles above260 should not apply. We are aware of no cases which so hold, although Robert Goff J in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd261 seemed to regard this form of payment without mandate as covered by those principles. [page 176] [437] Forged cheque or absent signature. The bank which pays in the mistaken belief that it is its customer’s signature as drawer on the cheque should, in principle, be in the same position as in the categories discussed above. In all of them there is a mistake as to the bank’s mandate. In each case there could be no resort to the customer’s funds. And in each case the payee has received a mistaken windfall which involves unjust enrichment, unless any of the defences apply. Despite early cases suggesting a special rule for forged cheques, the general principle allowing recovery now appears to apply. It was once considered that a bank could not recover payment of a cheque containing the forged signature of the drawer or an indorser.262 This harsh rule in Price v Neal263 was explained on the basis of the need for speed and certainty in dealing with negotiable instruments. The rule was first confined to cases in which there was need to give notice of dishonour,264 and latterly on the basis of the principle of change of position.265 It is now clear that it does not apply to a forged cheque because it is not necessary to give notice to either the drawer or an indorser of a cheque to establish liability.266 Nor does it apply where the bank’s mandate is vitiated by a fraudulent alteration of a material detail, such as the raising of the cheque’s amount.267 In other words, a bank’s payment of a forged cheque may now be recovered from the payee under the general principles relating to mistake. [438] Payment where insufficient funds. As already indicated,268 this category differs from the foregoing because the bank, which is faced with a cheque drawn by its customer where there are insufficient

funds or an inadequate overdraft arrangement, has the choice whether or not to meet the cheque. If it does, it will discharge the customer’s obligation to the payee and accept the customer’s implicit request to advance further funds. The bank has a clear mandate to debit the customer’s account. Of course, customers who draw cheques that exceed existing arrangements may be on the verge of insolvency and it frequently occurs that the bank is unable to recover payment under the account. This adds the temptation to the bank to claim that the initial payment was mistaken, the relevant mistake being as to the fact that the customer was in funds. Judicial scepticism with such claims may be a reason why earlier authority suggests that the bank will be unable to recover from the payee even if it proves a genuine mistake.269 [page 177] These cases suggested that the bank is left with its right of action against the customer under the account. In Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd,270 Robert Goff J suggested (obiter) that these cases could be explained on the basis that the bank that paid a cheque due to a mistake as to the available balance still acted within the scope of its mandate and, being entitled to debit the account, may be regarded as having assented to a request to grant overdraft facilities. This reasoning has been criticised.271 If there was mistake as to the available balance, it is unrealistic to describe the bank as having genuinely consented to grant overdraft facilities. Indeed the bank will usually want recovery from the payee because of the insolvency of its customer, a fact which (if appreciated when the cheque was honoured) would usually have led to a refusal to honour it. In principle, a mistake of this nature is as significant as a mistake about the bank’s mandate. In Hilliard v Westpac Banking Corp272 the Victorian Court of Appeal awarded restitution when the bank paid cheques in ignorance of the fact that they were part of a fraudulent scheme and that certain proceeds were not for the benefit of the account holders. But if the bank goes no further than proving a

misprediction as to its customer’s capacity to repay a further advance, it should fail.273

6. Agents and Intermediaries [439] Introduction. A person may deal in a particular transaction as an agent for another. This does not necessarily mean that, where money is involved, the person pays or receives money which is the property of the principal. For example, a bank which pays money ‘on behalf of’ a customer will usually be advancing money in reliance or purported reliance on the customer’s mandate, even though the bank pays its own money and becomes its customer’s creditor to the extent of an authorised dealing. Similarly, a bank which receives money on a customer’s behalf will usually acquire property in that money. What it does with it, as between itself and its customer, will depend on the state of the customer’s account and the bank’s arrangements with its customer, to each of which the payer is not privy. Even if the account is in credit, the receiving bank which accounts to its customer thereby acknowledges an indebtedness as distinct from a trustee relationship. A number of reasons combine to create issues that require to be addressed where there is a mistaken payment involving an intermediary as immediate payer or payee. First, the transaction as between the principals cannot be ignored, since part of the payment may have been intended and it may have consequences affecting the principal. Second, a claim based on a mistaken [page 178] payment is not (usually)274 itself an action to recover or trace property belonging to the plaintiff. According to the High Court:275 It is a common law action for recovery of the value of the unjust enrichment and the fact that specific money or property received can no longer be identified in the hands of the recipient or traced into other specific property which he holds does not of itself

constitute an answer in a category of case in which the law imposes a prima facie liability to make restitution.

Of course this very matter may also entitle the intermediary who has acted in certain ways to the benefit of appropriate restitutionary ‘defences’ including those based on change of position. Third, the concept of unjust enrichment which informs and limits rights of recovery means that it may be inappropriate to visit liability on the intermediary who has paid over the proceeds to the principal. An intermediary who is a mere conduit pipe and who is not enriched by the mistaken payment may be an inappropriate defendant. And since there is an infinite variety of intermediaries, no clear answer can be given until the precise relationships at and after the time of the mistaken payment are carefully examined. [440] Payment by intermediaries. We have already noted that a principal may sue, provided there was a relevant mistake by the agent responsible for the payment.276 The fact that another employee or agent of the principal knew the true facts, or was negligent in not communicating them to the paying agent, is no bar to recovery.277 Where an agent mistakenly pays over money held for a principal, the principal may sue the recipient.278 So too may the agent, at least where the mistake is as to the principal’s authority for a transaction which the principal repudiates.279 A bank customer may invoke these principles where the bank mistakenly honours payment instructions to draw money (and charge the customer).280 It is, however, vital that the relevant principal is correctly identified. In Porter v Latec Finance (Qld) Pty Ltd281 one H H Gill owned land. His son (L H Gill) fraudulently impersonated his father in two mortgage transactions. He first borrowed money from Porter, giving in return a forged mortgage over his father’s land. Then he approached Latec Finance and arranged a fresh (forged) mortgage to receive a personal loan. The moneys advanced by Latec Finance to enable the discharge of the first mortgage were paid to Porter by Latec’s solicitors, who acted with the son’s authority. Latec Finance had an obvious cause of action against the

[page 179] son but he was a man of straw. Their claim against Porter was lost by a bare majority in the High Court, on the ground that the solicitors had paid the money on behalf of the son and not Latec. Although the money that was used to discharge Porter’s mortgage came from Latec, that did not mean that the relevant payment affected by a ‘fundamental mistake’282 was the advance of the funds by Latec into the custody of its solicitors. When those solicitors accounted to Porter in accordance with the dishonest son’s instructions, they were held by the majority of the court to be acting on behalf of that son whose liability under the first mortgage was discharged by payment. [441] Receipt by intermediaries. The personal nature of the ordinary restitutionary claim to recover money paid under mistake means that it is no defence for the recipient to establish that he or she was acting as an intermediary or even a strict agent for another.283 The agent can be sued without the need to join the principal as a party.284 Yet adoption of the unjust enrichment principle means that the law recognises that there may be cases where a recipient of an unmerited enrichment may escape liability to make restitution by reason of particular facts showing that it is no longer just to impose a remedy upon the recipient. Indeed an even later dealing involving repayment by the principal to the agent with a view to recouping the payer would restore the agent’s liability.285 Similar principles apply in relation to claims for misdirected or misapplied funds.286 In Australia and New Zealand Banking Group Ltd v Westpac Banking Corp287 a company (Jakes Meats Pty Ltd) had an account at a Westpac branch in Victoria. The account stood at $67,000 in debit within an overdraft limit of $90,000. ANZ transferred $114,000, purportedly on behalf of one of its customers, to the credit of Jakes Meats at the Westpac branch. In fact ANZ’s instructions were to remit $14,000, the extra $100,000 having been sent due to a clerical mistake made by one of its staff in the preparation of the documents. It was common ground that this would have been repayable had the mistake been notified

promptly. But by the time ANZ notified the error, Westpac had honoured a number of Jakes’ cheques and, by debiting Jakes’ account, had thereby already applied all but $17,000 of the overpayment to Jakes’ credit in accordance with the rule in Devaynes v Noble (Clayton’s Case).288 Jakes went into liquidation without having repaid ANZ any more than $2500 of the $100,000 windfall it had acknowledged and agreed to [page 180] repay. ANZ failed in its claim to recover $100,000289 and recovered only $17,000 plus interest from Westpac. According to the English Court of Appeal, this agency defence is not a species of the change of position defence. It really serves the narrower function of identifying the proper defendant.290 A different view was expressed by Lord Goff in Lipkin Gorman v Karpnale Ltd.291 An agent who receives payment for another will ordinarily displace the prima facie liability to make restitution for a mistaken payment when the agent has handed on the money received to the person for whom it was received or paid it to a third party on the customer’s behalf.292 In such a case the agent has not retained ‘the benefit of the windfall’ but been ‘a mere conduit pipe’.293 The plaintiff must then go against the principal. It is not necessary that the agent show more than payment over of the moneys. The High Court in Australia and New Zealand Banking Group Ltd v Westpac Banking Corp294 rejected the argument that the agent must also prove that he or she would have suffered overall detriment if the money had been repaid at the time when notice of the mistake was given. This ‘defence’ is also available to banks and other intermediaries who act for others but who are not strictly speaking agents in their dealings with the money received. Thus a bank or other payee which receives a mistaken payment of money on account of a customer will itself avoid liability where it allows a customer to draw on the funds standing to the

credit of an account,295 unless the bank would have allowed funds to be drawn regardless of the receipt.296 Indeed, the defence is available even if the bank thinks its customer is X when in fact it is someone fraudulently masquerading as X.297 However, this ‘agency defence’ is only available when the money is received as an intermediary. It is not sufficient that the payee was in fact dealing as an agent, nor even that the payer knew of the recipient’s ultimate principal; the payee must have been acting on behalf of a disclosed principal before payment over will discharge liability.298 This qualification to the ‘agency defence’ also means that it is not available to a trustee who accounts to the [page 181] beneficiary with moneys initially paid under mistake.299 Receipt of money as trustee and its subsequent disbursement according to the trust mandate is in a similar position.300 [442] Payment over without notice. However, the bank or other intermediary must have effectively passed on the money to or on behalf of the principal. In Australia and New Zealand Banking Group Ltd v Westpac Banking Corp the High Court said that:301 A mere book entry which has not been communicated to the third party or which can be reversed without affecting the substance of transactions or relationships will ordinarily not suffice. … It must appear that the third party has effectively received the benefit of the payment with the consequence that the prima facie liability to make restitution has become his.

It has been suggested that it is an essential characteristic of the defence that the payment over was irreversible.302 Where the bank operates a running account for a customer, the concept of ‘payment over’ requires a little attention. A recipient bank that honours cheques drawn by its customer at a time when the bank was ignorant of the payer’s mistake will be able to treat the debiting of those cheques as reducing the amount of any mistaken payment

previously credited in the running account.303 Indeed it may well be that a bank that credits a mistaken overpayment against the existing indebtedness of its customer is able to invoke the agency defence and thereby require the payer to proceed solely against the customer who received payment, albeit that it was used by it to pay off its own debt to the bank.304 We have observed that the ‘agency defence’ is only available when money is received as an intermediary.305 But if a person who deals as principal can never be excused by paying over to an undisclosed third party, there could never exist any general ‘change of position’ defence. That was the stance formerly taken in the leading case expounding this qualification to the ‘agency defence’, Baylis v Bishop of London.306 But now that Baylis has been swept away to make room for the more general defence of change of [page 182] position,307 it follows that most, if not all, payments over, even by those who received as principal, would operate to relieve the recipient. Whether they would automatically expose the undisclosed third party to a claim at the suit of the person who initially made the mistake would depend on that person’s capacity to identify the third party as the recipient of the plaintiff’s money.308 Even a person who receives as a true intermediary and thereafter pays over or accounts to his or her principal will not thereby be discharged if this occurs after notice of any mistake or irregularity,309 nor if the agent is a knowing party to a wrongdoing which led to the payment or was in some other way responsible for it.310

7. Defences to Claims to Recover Mistaken Payments

[443] Rationale. The corollary of the ‘prima facie’ right of recovery of a mistaken payment is the availability of certain defences. In broad principle, each reflects the absence of the underlying concept of unjust enrichment. However, the same fear of unloosing idiosyncratic judicial discretions which led the High Court to emphasise that unjust enrichment remains a concept explaining the basis for recovery in traditional cases like mistake, rather than a cause of action in its own right,311 has seen the court expressing caution about too abstract an approach to ‘defences’. Most are clearly identified, with the evidentiary onus of proof resting upon the defendant.312 Here we outline some of the key defences available in relation to mistaken payments.313 [444] Defences that have been rejected. It is not a defence, absent statute,314 that a mistaken payment was made pursuant to a ‘settled understanding of the law’.315 Nor is it a defence that the payer has recouped the outgoing or passed it on to others316 or that the payer may hold the proceeds of a successful action upon (constructive) trust for another.317 [page 183] Nor is it a defence that the defendant honestly believed in his or her entitlement to receive or retain the money mistakenly paid.318 [445] Change of position and related defences. The defence of payment over without notice has already been considered.319 In David Securities Pty Ltd v Commonwealth Bank of Australia320 the High Court recognised the defence of change of position in Australian law. This true defence is discussed in Chapter 24. In Western Australia, the defence is enacted in s 125(1) of the Property Law Act 1969 (WA).321 The availability of the defence means that the payer should give notice to the payee as soon as the mistake is discovered. Once this has

occurred the payee will be unable to show that later expenditure was incurred on the faith of the payment.322 [446] Moneys due anyway. If the money paid was actually due under a contract between the payer and the payee, there can be no recovery on the ground of mistake unless the contract itself is held void for mistake,323 or is rescinded by the plaintiff,324 or can otherwise be set aside. This is the corollary of the principle that restitution law respects a contractual allocation of risk in a transaction.325 The restriction extends to money due under a tortious liability326 or under statute.327 Thus, in David Securities Pty Ltd v Commonwealth Bank of Australia328 Brennan J explained: If a defendant has a right to receive a payment, whether under a statute, in discharge of a liability owing to him or pursuant to a contract, a mistake by the plaintiff in making the payment does not convert the receipt into an unjust enrichment. To the extent that a payment satisfies a defendant’s right to receive it, the defendant gives good consideration and is not unjustly enriched. If the defendant receives more than his due, he may be unjustly enriched to the extent of the excess and restitution may be rendered pro tanto.

[page 184] Similarly, a person who mistakenly believed that moneys were legally due and owing under a particular clause of a particular contract could not recover if it is shown that the moneys were in fact legally due and owing under another clause or contract329 or under a separate claim in restitution vested in the payee.330 In limited circumstances this will apply even where the payer is induced to make the payment through the dishonest intervention of a third party.331 But merely because payment is made pursuant to a completed contractual transaction will not preclude recovery if there was causative mistake and if the contract itself was void.332 In the case of debt, the payment may be owed by the payee or a third party. Thus, in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd,333 Robert Goff J spoke334 of a prima facie entitlement to recover money paid under a mistake of fact failing if:

… the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt.

A person with two creditors who, intending to pay one, mistakenly pays the other, cannot recover the money paid.335 Aiken v Short336 is probably best explained on this ground. Pollock CB and Platt B found for the defendant because the money received was actually due to her by her debtor, Carter, on whose behalf the plaintiff bank made the payment. Nor will it matter if the debt was, when paid, unenforceable because of some lack of form, limitation statute, infancy or other such technical reason.337 ‘Money due in point of honour or conscience, though a man is not compellable to pay it, yet if paid, shall not be recovered back.’338 [page 185] [447] Money paid to compromise honest claims. A payment in satisfaction of an honest claim made for the purpose of compromising or satisfying that claim will be irrecoverable. Discovery later that the money was not due will not assist the plaintiff.339 Even an invalid claim can be compromised.340 This principle explains why many so-called mistake of law claims were rejected in the past and will continue to be rejected.341 Nor will it matter that the payment was made in response to actual or threatened litigation. The threat to use legal process is not in itself an improper form of pressure.342 And if judgment is entered (by consent or otherwise), money paid under it will not be recoverable unless it be set aside,343 because ‘there must be an end of litigation, otherwise there would be no security for any person’.344 As Lord Halsbury LC put it in Moore v Vestry of Fulham:345 The principle of law is not that money paid under a judgment, but that money paid under the pressure of legal process cannot be recovered. The principle is based upon this, that when a person has had an opportunity of defending an action if he chose, but

has thought proper to pay the money claimed by the action, the law will not allow him to try in a second action what he might have set up in the defence to the original action.

In one sense, the policy against allowing unjust enrichment by reason of mistake is displaced by ‘the policy in favour of the finality of dispute resolution’.346 The finality principle means that money paid in actual settlement of legal proceedings is generally irrecoverable. However, the mere fact that proceedings are threatened or on foot does not alter the character of a payment extracted by compulsion or mistake. ‘Were it otherwise, every calculating highwayman, bushranger or robber could take out the insurance of instituting an action against any potential victim.’347 A litigant who (absent duress, fraud or undue influence) pays money to settle actual or threatened litigation cannot recover it by pointing to some mistaken assumption which underlay the payment, so long as the payment was made in voluntary submission to an honest claim.348 Whether [page 186] the mistake be as to fact or law, such a payer and intended that the payee ‘shall have the money at all events’.349 Payment made to compromise bona fide claims or litigation are labelled ‘voluntary’ and held irrecoverable.350 The reason is that ‘when a claim is settled by accord and satisfaction, a payment made in satisfaction is made in discharge of an obligation created by the accord; it is unaffected by any mistake as to the validity of the claim compromised’.351 In other words, the defence of payment to compromise an honest claim is a category of payment that is irrecoverable so long as the contract (or judgment) pursuant to which it is paid stands. The principle that restitution cannot displace the rights established under an extant contract is discussed elsewhere in this work.352 In David Securities Pty Ltd v Commonwealth Bank of Australia, the High Court laid emphasis on the subjective intention of the payer as

the touchstone of this ‘defence’. Using the traditional and overworked notion of voluntariness, the majority said:353 The payment is voluntary or there is an election if the plaintiff chooses to make the payment even though he or she believes a particular law or contractual provision requiring the payment is, or may be, invalid, or is not concerned to query whether payment is legally required; he or she is prepared to assume the validity of the obligation, or is prepared to make the payment irrespective of the validity or invalidity of the obligation, rather than contest the claim for payment.

In Robert Goff J’s words, ‘the payee intends that the payee shall have the money at all events, whether the fact be true or false’.354 It may be doubted whether this is really a case of mistake at all, because it is impossible to show that any mistake caused the payment.355 If it is not, then at least some situations within this category are not true defences but rather instances where the plaintiff fails to establish even a ‘prima facie’ case. In Bilbie v Lumley356 an underwriter, who was in possession of all the facts which would have allowed him to deny liability, paid the insured. At the time of [page 187] payment the underwriter was unaware that non-disclosure by the insured of essential facts at the time of entering the insurance contract relieved the insurer from liability. Recovery was denied. Although the case was long seen as one illustrating a rule of non-recovery for mistakes of law, it was, on its particular facts, one where the payer was not under any mistake. In David Securities Pty Ltd v Commonwealth Bank of Australia the High Court said that, on its facts, the decision in Bilbie v Lumley was probably correct ‘because the payment appears to have been made voluntarily and not under any mistake at all’.357 These principles have no application if the payee induced the payer’s mistake by fraud or misrepresentation.358 [448] Other payments for good consideration received in good faith. In all probability the irrecoverability of payments made in compromise of honest claims that has just been considered is a sub-

class of a wider ‘defence’.359 Robert Goff J’s dictum in Barclays Bank Ltd v W J Simms Sons & Cooke (Southern) Ltd,360 which we have quoted as supporting the defence that the moneys received were due anyway to the defendant, was not confined to that situation. He contemplated that other payments for good consideration and received in good faith might be irrecoverable, despite the payer’s mistake. The defence of payment for good consideration is well established in Australia.361 In National Mutual Life Association of Australasia v Walsh362 the relevant consideration was provided after receipt, in the form of the defendant’s promised services. The onus of proof of the defence lies on the recipient.363 This defence was not made out in David Securities. Since s 261 of the Income Tax Assessment Act 1936 (Cth) avoided any attempt to pass the [page 188] burden of the withholding tax on to the borrower, the borrower had no indebtedness in respect of that tax, the discharge of which could form consideration for the payments sought to be recovered for mistake. Those payments were therefore not made for good consideration within the terms of the defence.364 Consideration that is illegal or contrary to public policy will not satisfy this defence.365 [449] Where repayment would frustrate the policy of a statutory or common law rule. In Equuscorp Pty Ltd v Haxton,366 the High Court explained that restitution in claims deriving from the action for money had and received must respect statutory policies that are directly or indirectly applicable to the transaction at hand. Although money paid under an illegal contract is generally irrecoverable, the well-known case of Kiriri Cotton Co v Dewani367 illustrates how this does not apply where the payer was a member of a class of the public for whose protection the transaction was made illegal in the first place. A similar principle, which applies to the converse situation, will prevent recovery of moneys paid under mistake where to

do so would undermine a statutory or common law rule designed to protect a class that includes the payee. In Thavorn v Bank of Credit & Commerce International SA,368 a bank account had been opened by a woman in the name of her infant nephew, but with specific instructions that she alone was to operate the account. The woman recovered substantial damages. A counterclaim by the bank against the nephew was dismissed. Citing R Leslie Ltd v Sheill,369 where a payment to an infant who fraudulently misrepresented his age was irrecoverable, Lloyd J said:370 It would be absurd for me to hold that a payment made under a mere mistake of fact as to the infant’s age can be recovered … when a payment induced by the infant’s own fraud cannot. … [T]he statutory policy enshrined in the Infants Relief Act [(UK)] cannot be so easily circumvented.

The difficult case of Morgan v Ashcroft371 is probably best explained on this basis. An overpayment by a bookmaker to his client in respect of a wager was held irrecoverable in the action for money had and received. The general scope of this defence is discussed more fully later in this work.372 [450] Limitation of actions and statutory bars involving mistaken payment of taxes. Restitution claims based on mistake must be brought [page 189] within six years (three years in the Northern Territory) from date of payment.373 However, this period will be extended in most jurisdictions if the plaintiff can establish that the action is for relief from the consequences of a mistake and that the plaintiff could not with reasonable diligence have discovered the mistake.374 Claims to recover taxes paid by mistake are subject to tighter timebars.375 Equitable claims to rescind or rectify deeds of gift on the basis of

mistake as a step towards restitution of moneys paid thereunder may be rejected if there is delay or acquiescence.376

8. Proprietary Remedies [451] Restitution for mistake usually a personal remedy, but proprietary remedies may exceptionally be awarded. Thus far in this chapter we have been discussing the personal remedy derived from the common money count for money had and received and equitable counterparts. Although it is loosely said that the plaintiff can recover money mistakenly paid, it is important to recognise that what the successful plaintiff gets against the defendant is a money judgment. In Australia and New Zealand Banking Group Ltd v Westpac Banking Corp the High Court said (of the action for money had and received):377 It is a common law action for the value of the unjust enrichment and the fact that specific money or property received can no longer be identified in the hands of the recipient or traced into other specific property does not of itself constitute an answer in a category of case in which the law imposes a prima facie liability to make restitution.

In Australia & New Zealand Banking Group Ltd v Westpac Banking Corp378 the High Court also recognised that the common law (personal) right of action may arise in circumstances which also give rise to a resulting trust of specific property or funds or which would lead a modern court to give relief by way of constructive trust. That case did not call for any application of those principles given that the defendant was a solvent bank. [452] Common law. The right of a mistaken payer to recover money in specie is very limited. The mistake must be so fundamental as to vitiate the plaintiff’s intention to pass property.379 And the money must remain identifiable and traceable.380 [page 190] If the plaintiff can show that title to money did not pass, due to

mistake or other causes, then personal restitution is available against the payee and (in many circumstances) against third parties who did not acquire the money or its traceable substitute in good faith and for valuable consideration.381 [453] Equity. In various fields equity will lend its aid when a common law remedy is inadequate to do justice in the particular circumstances. Most injunctions are granted on this basis. Specific restitution of goods wrongfully detained in circumstances where damages for conversion would be inadequate is another example.382 A paradigm situation of inadequacy is where the defendant’s insolvency would effectively defeat the plaintiff’s legal right.383 In this context, equity offers the prospect of a proprietary remedy in the form of a trust or lien in some situations. The general principles are discussed in Chapter 2. Where the plaintiff’s claim is title-based it may subsist against third parties in some situations and it is exigible against traceable property acquired with the money. In the latter situation, the remedy will be proprietary and dependant on equitable principles.384 Where, however, the claim invokes mistake as an unjust factor, the plaintiff’s rights are determined according to the principles discussed in this chapter and they are exigible against the original payee only. However, the availability of a personal claim does not in itself disqualify the plaintiff from equitable, proprietary relief385 and there is no reason a priori why the equitable principles should cease to apply. One of those principles is that equitable proprietary remedies will only be provided if a personal remedy is inadequate.386 The critical question is what must be shown in addition to the principles discussed thus far in this chapter to qualify the plaintiff to some form of equitable, proprietary relief such as a lien or remedial constructive trust. Discussion invariably commences with Chase Manhattan Bank NA v Israel-British Bank (London) Ltd.387 [454] Chase Manhattan. In 1979 Goulding J granted a proprietary remedy in relation to a mistaken payment. In Chase Manhattan Bank

NA v Israel-British Bank (London) Ltd388 he held that a person who paid money to another under a factual mistake could (in certain situations) assert an equitable property in it such that the payee in conscience was subject to a fiduciary duty to respect the proprietary right. A bank transferred $2 million to another bank which was later ordered to be wound up on the ground of [page 191] insolvency. The same amount had been mistakenly paid twice. Goulding J held that the plaintiff bank had a proprietary right to trace the money represented by the second payment, thereby enabling the plaintiff to assert its restitutionary claim in priority to the defendant’s general creditors. He was, we believe, clearly correct in rejecting the defendant’s argument that the absence of an initial fiduciary relationship between the two banks precluded the existence of the trust.389 But the difficulty with this controversial decision is that it throws unclear light on the circumstances which will enliven a proprietary remedy, beyond the holding that it will arise in some but not all classes of mistaken payment. Commentators are also divided as to whether the trust is resulting or constructive, although this debate is driven in England by the continuing rejection of the concept of the remedial constructive trust that need not trouble an Australian reader.390 Speaking of New York restitution law, Goulding J referred to a general right to sue in equity, while adding that the court will not, in its equitable jurisdiction, order specific restitution where the payee is solvent.391 Presumably it was a vital step in the particular case to have found that the payee learnt of the mistaken payment within days of receipt, although the judgment denies the relevance of knowledge and does not appear to make this link.392 The question of whether the plaintiff could actually trace its payment was not decided, as further evidence was needed as to what happened to it after the defendant received it.

In Westdeutsche Landesbank Girozentrale v Islington London Borough Council, Hobhouse J suggested at first instance that an equitable claim arises when the plaintiff’s mistake was so fundamental as to prevent property passing in equity,393 while in the House of Lords Lord Browne-Wilkinson (with whom Lords Slynn and Lloyd agreed) said that he thought that the reasoning (as distinct from the decision in Chase Manhattan) was incorrect.394 In his view, the decision rested on the fact that, once the recipient bank became aware of the overpayment, its conscience was bound, thereby giving rise to a constructive trust. We respectfully agree. Chase Manhattan has been applied by the New Zealand Court of Appeal against a defendant whose misrepresentation induced the plaintiff’s mistake.395 It has been followed in one Australian decision at first instance396 [page 192] and cited with apparent approval by no less than three High Court justices and one judge who would later become a High Court justice.397 As recently demonstrated by Sloss J in Focus Metals Pty Ltd v Babicci,398 proprietary relief against the knowing recipient of a mistaken payment is entirely consistent with the approach taken to proprietary remedies as regards money paid under ‘fundamental’ mistake and other cases such as Shields v Westpac Banking Corp399 awarding proprietary remedies in cases of title-based restitution.400 While title-based cases offer personal restitution from the moment of receipt, when proprietary relief is exceptionally granted, the court has regard to all matters touching the conscience of the recipient or the third party involved.401 In any event, it is not an objection that entitlement to the proprietary remedy may be triggered at a time after receipt given that even personal restitution may be affected by matters going to the conscience of the recipient occurring after receipt.402 In our view, Chase Manhattan was correct in the result and (in

Australia, where the remedial constructive trust is well established)403 should, as the House of Lords recognised, be seen as an instance of a proprietary remedy imposed to preclude unconscientious assertion of a legal claim to a fund swollen in circumstances where the recipient must have and did have actual knowledge of the mistake perhaps from the outset, but certainly by the time the application was made.404

9. Non-monetary Benefits [455] General. There are few cases dealing with the mistaken conferral of non-monetary benefits, for the simple reason that such mistakes happen less frequently than mistakes in the payment of money. Services are one example of a non-monetary benefit. But so too are the discharge of another’s liability, the supply of goods, and the transfer or improvement of property. A person may confer any such benefit upon another whilst labouring under various categories of mistake. Generally, but [page 193] not always, the mistake involved in the conferral of non-monetary benefits consists of a mistake as to contract validity or entitlement. Nonetheless the issue arises in other contexts relevant to this work. [456] Discharge of another’s liability. The discharge of another person’s liability, whether by mistake405 or otherwise, raises complex issues which we address elsewhere.406 Where appropriate, proprietary remedies may be crafted in equity using the concepts of constructive trust, subrogation or equitable mortgage.407 [457] Benefits conferred under ineffective contracts or involving free acceptance. If services are conferred in performance of

a contract that was ineffective, for example due to mistake, then the contract’s ineffectiveness will provide a proper context for recovery of remuneration in restitution.408 An alternative basis for restitution may be the principle of free acceptance409 which may apply in relation to an ineffective contract but which is not confined to that situation. If the defendant allowed the plaintiff to render the services, with the knowledge of the plaintiff’s mistake, the defendant will have freely accepted those services and will be required to pay reasonable remuneration for them.410 Free acceptance will not, however, be permitted to undermine a contractual allocation of risk.411 [458] No colour of a contract. If there was no colour of contractual arrangement between the plaintiff and the defendant, the plaintiff may have rendered the service in the mistaken assumption that the defendant would reward the plaintiff. That is a mere misprediction, not a mistake, and will not ground restitution.412 If, however, property is transferred or services conferring obvious benefit are performed by mistake and freely received by the defendant, restitution is available.413 In Greenwood v Bennett,414 an obligation to pay for mistakenly rendered services involving a chattel was imposed as the price of equitable relief. Lord Denning MR held that the mistaken improver also had an active claim deriving from the law of [page 194] restitution, a proposition expressly rejected by Cairns LJ.415 Phillimore LJ gave no opinion on this matter. It is different for land. Absent unconscientious acquiescence, owners of land improved by a stranger acting under a mistaken belief as to ownership will not be required to reimburse the cost of materials fixed to the land or to reward the work, let alone account for the increased value of their land.416 Legislation in some jurisdictions has provided

limited relief, although some of those provisions are confined to improvements made to adjoining land.417 There are several cases in equity, deriving from Ramsden v Dyson,418 where the doctrine of acquiescence (or proprietary estoppel as it is sometimes called) has led to the imposition of a trust or lien in favour of the plaintiff. It must be demonstrated that the defendant created or encouraged the plaintiff’s expectation and retained the benefit conferred.419 The cases in this field discuss the plaintiff’s rights from an equitable, and usually proprietary, perspective.420 They emphasise the unconscientious nature of the defendant’s conduct in not transferring the promised or expected interest, rather than the defendant’s enrichment in itself. Purchasers who improve property in anticipation of completion of a contract that is later duly terminated have generally been unsuccessful in recovering the cost of their outlay or the value of improvements effected.421 In Marriott Industries Pty Ltd v Mercantile Credits Ltd422 the plaintiff erected an extraction system on the defendant’s land, relying upon a contract with a third party. Its mistaken assessment of the contracting party’s capacity to pay gave it no restitutionary claim against the landowner absent acquiescence or free acceptance. 1.

See the historical review by P A Butler, ‘Mistaken Payments, Change of Position and Estoppel’ in Finn, Essays, pp 89–97.

2.

[1934] AC 455. The result would have been different if the payment had involved an element of compromise: cf Prudential Assurance Co Ltd v C M Breedon Pty Ltd [1994] 2 VR 452. See [447]. [1979] 1 NSWLR 444. See also Bank of New South Wales v Murphett [1983] VR 489.

3. 4. 5.

See [451]–[454]. See, eg R E Jones Ltd v Waring & Gillow Ltd [1926] AC 670 (see [423]); Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177; Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 (PC); Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14.

6. 7.

See [408] and generally Chapter 13. See Part VI.

8.

Contrast Chapter 3 where the plaintiff must establish a subsisting title to the money transferred. Including where the parties are agents or intermediaries (such as banks) (see [439]–[442]).

9.

10. (1987) 162 CLR 221.

11. See further [414]. 12. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376; 109 ALR 57 at 74 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. 13. See further [455]–[458]. 14. See generally, Jackman, pp 13–14, 23–8. A payment twice by mistake of a sum due under a contract presents no conceptual difficulty. 15. Brady Contracting Pty Ltd v Kellyville Christmas Tree Farm Pty Ltd [2005] NSWCA 22; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27. 16. See, eg Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 15 FCR 185 at 207; 167 ALR 326 at 347 (on appeal (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68). See generally [215]. 17. (1997) 6 Tas R 396 at 408–9. 18. See Carter on Contract, Chapter 22; Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [115]. 19. See further [215]. 20. See [414]. 21. Birks, Introduction, p 148. 22. See generally J Beatson and W Bishop, ‘Mistaken Payments in the Law of Restitution’ (1986) 36 U Toronto LJ 149 at 161–2. 23. See generally [133]–[138]. 24. Hydro Electric Commission of the Township of Nepean v Ontario Hydro (1982) 132 DLR (3d) 193 at 209 per Dickson J, cited with approval in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375, 393; 109 ALR 57 at 73, 87. 25. See also Lloyds Bank v Independent Insurance Co Ltd [2000] QB 110 at 132. 26. (1988) 164 CLR 662; 78 ALR 157. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [150] (passage quoted at [166]). Cf Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [78] (discussed at [123]). 27. (1988) 164 CLR 662 at 673; 78 ALR 157 at 161–2. 28. (1992) 175 CLR 353 at 377–8, 402; 109 ALR 57 at 74, 94. See [428]–[429]. 29. (1992) 175 CLR 353; 109 ALR 57. 30. (1992) 175 CLR 353 at 375; 109 ALR 57 at 73. See also at 393; 87 per Brennan J. 31. Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 578 per Lord Goff. See further [142]. 32. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; 69 ALR 577 at 604 per Deane J. 33. (1992) 175 CLR 353 at 378–9; 109 ALR 57 at 75. 34. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; 109 ALR 57 at 75 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. See also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [150]. 35. See, eg Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 117;

111 ALR 649 at 669. 36. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378; 109 ALR 57 at 76; Hookway v Racing Victoria Ltd (2005) 13 VR 444; [2005] VSCA 310. See further [444]. 37. See [409]. 38. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382–3; 109 ALR 57 at 78. A conditional payment may also sometimes involve an express or implied contract to reimburse in particular events. 39. (1892) 18 VLR 24. See also White v Copeland (1894) 15 LR (NSW) (L) 281. 40. (1992) 175 CLR 353; 109 ALR 57. 41. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 390; 109 ALR 57 at 84 (Brennan J). 42. See Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 250–5 (reversed on other grounds, (2006) 229 CLR 386; 229 ALR 58; [2006] HCA 41). The distinction was significant in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 (where the claim based on failure of consideration succeeded) but the claim in mistake failed in the courts below: see (1999) 95 FCR 185 at 207–8; 167 ALR 326 at 347–8 (discussed at [429]). 43. Mistake at the time of transfer, failure of consideration subsequently: see R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670 at 690. See also Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (receivers and managers appointed) (in liq) (No 3) (2006) 94 SASR 103 at 119. 44. See, eg Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912. 45. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 675; 78 ALR 157 at 163. For a recent case where the plaintiff failed, see Prasad v Sangha [2012] NSWCA 92. See also [415]. 46. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375, 378, 393. Cf Avon County Council v Howlett [1983] 1 WLR 605; [1983] 1 All ER 1073. 47. See [421], [429]. 48. Lamesa Holdings BV v Federal Commissioner of Taxation (1999) 92 FCR 210 at 236 [108]– [112]; 163 ALR 1 at 26; Duncan v Prudential Assurance Co Ltd (1999) 10 ANZ Ins Cas ¶61-433; Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 95 FCR 185 at 207 [79]; 167 ALR 326 at 348 (on appeal (2001) 208 CLR 516; 185 ALR 335). 49. [2007] 1 AC 558 at [59]. As to mistake and doubt see [432]. 50. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379, 383, 405–6; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [16], [67], [106]–[107]. As to the major defences, see [443]–[450] and Part VIII. 51. See [422]–[432]. 52. See [443]–[450]. 53. See [413]–[416]. 54. See [421], [429]. 55. [1934] AC 455 (see [402]).

56. Chirnside v Keating (1889) 15 VLR 697; Harper v Gaynor (1893) 19 VLR 675. 57. Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912; [1989] 3 All ER 423; Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd (1996) 136 ALR 166 at 198. As to the recovery of payments made pursuant to inherently ineffective contracts, see Chapter 10. See also Commonwealth v McCormack (1982) 45 ALR 355; 69 FLR 9 (this conclusion being upheld on appeal to the High Court: see Commonwealth of Australia v McCormack (1984) 51 ALR 621; 58 ALJR 205). 58. Commonwealth of Australia v McCormack (1982) 45 ALR 355; 69 FLR 9. 59. (1856) 1 H & N 210 at 215; 156 ER 1180 at 1182. 60. See Leedon v Skinner [1923] VLR 401 and the analysis of Kitto J in Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 190. 61. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 392; Prudential Assurance Co Ltd v CM Breedon Pty Ltd [1994] 2 VR 452 at 457. 62. (1856) 1 H & N 210 at 215; 156 ER 1180 at 1182 (quoted at [411]). 63. See further [417]–[421]. 64. [1949] 2 KB 683 (CA). See also Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd (1991) 28 FCR 151; 100 ALR 447. 65. (1856) 1 H & N 210 at 215; 156 ER 1180 at 1182, quoted [410]. 66. See [445], [2036] and Chapter 24. 67. South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65 at 75 per curiam. See also Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd (1991) 28 FCR 151 at 170–1. 68. See [423]. 69. See [427]–[432]. 70. [1980] 1 QB 677 esp at 696. 71. Among other things, he cited a dictum of Windeyer J in Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 204. 72. (1992) 175 CLR 353 (see [429]). 73. See, eg Farmer v Arundel (1772) 2 W Bl 824; 96 ER 485. 74. For a review of the traditional rule and its deficiencies, see David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 370–5; 109 ALR 57 at 68–72; New South Wales Law Reform Commission, Restitution of Benefits Conferred under Mistake of Law, LRC 53, 1987. 75. (1802) 2 East 469; 102 ER 448. 76. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 370; 109 ALR 57 at 69. 77. Re Broughton (1897) 18 LR (NSW) 247; Malone v Williams (1905) 5 SR (NSW) 665; Campbell v Kitchen & Sons Ltd (1910) 12 CLR 513; Murray v Baxter (1914) 18 CLR 622 at 630; Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194; Midland Junction Municipality v Kent (1931) 34 WALR 99; Werrin v Commonwealth (1938) 59 CLR 150 at 158–60; McColl v Bright [1939] VLR 204; York Air Conditioning and Refrigeration (A/sia) Pty Ltd v Commonwealth (1949) 80 CLR 11 at 30; Burns v Leda Holdings Pty Ltd (1987)

89 FLR 365; Yarmirr v Australian Telecommunications Corp (1990) 96 ALR 739. 78. See, eg Air India v Commonwealth [1977] 1 NSWLR 449. 79. Lazard Bros & Co v Midland Bank Ltd [1933] AC 289. 80. Auckland Harbour Board v R [1924] AC 318. See Chapter 21. 81. See further Chapter 20. 82. The rule in Ex parte James (1874) LR 9 Ch App 609, discussed in Re Roberts (1976) 12 ALR 730; 26 FLR 330 and Hartogen Energy Ltd v Australian Gas Light Co (1992) 36 FCR 557. 83. Re Birkbeck Permanent Benefit Building Society [1915] 1 Ch 91. 84. See generally New South Wales Law Reform Commission, Restitution of Benefits Conferred under Mistake of Law, LRC 53, 1987, Chapter 3. 85. Property Law Act 1969 (WA), ss 124 and 125. And see Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd (1991) 28 FCR 151; Judicature Act 1908 (NZ), ss 94A and 94B. 86. Air Canada v British Columbia (1989) 59 DLR (4th) 161 especially at 191. 87. Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 (4) 202 (A). 88. Morgan Guaranty Trust Co of New York v Lothian Regional Council 1999 SLT 299; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. 89. (1992) 175 CLR 353; 109 ALR 57. 90. See (1990) 23 FCR 1 at 31–7; 93 ALR 271 at 302–4. 91. The case was later settled. 92. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376; 109 ALR 57 at 73. 93. See Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51; 126 ALR 1 (where the principle in David Securities was held to give rise to a restitutionary obligation even though the relevant mistake occurred between 1985 and 1989, and thus preceded the change of the law effected by the David Securities decision itself in 1992). See also Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581; 144 ALR 89; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; Nurdin & Peacock Plc v D B Ramsden & Co Ltd [1999] 1 WLR 1249. As to ‘changes’ in the law through judicial overruling, see [416]. Cf Sharpe Bros & Knight v Chant [1917] 1 KB 71. 94. Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. 95. Cf Re Hatch [1919] 1 Ch 351; Holt v Markham [1923] 1 KB 504; Air India v Commonwealth [1977] 1 NSWLR 449. 96. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 369– 70; 109 ALR 57 at 67–8, retrospectively reversing J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539; 61 FLR 108. See also Marshall v Marshall [1999] 1 Qd R 173 at 178. See further [430]. 97. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378; 109 ALR 57 at 75. See Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 95 FCR 185 at 207–8; 167 ALR 326 at 347–8. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 562; 185 ALR 335; [2001] HCA 68 at [122] per Kirby J. As to causation see [429].

See Peter Birks, ‘Modernising the Law of Restitution’ (1993) 109 LQR 164 at 166. See 98. also [410]. See, eg Riessen v South Australia (2001) 79 SASR 82. As to misprediction, see [431]. 99. See Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 95 FCR 185 at 207–8; 167 ALR 326 at 347–8. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 562; 185 ALR 335; [2001] HCA 68 at [122] per Kirby J. 100. Mason v New South Wales (1959) 102 CLR 108 at 143 per Windeyer J. See also The New Zealand Refining Co Ltd v Attorney-General (1993) 15 NZTC 10,038 at 10,045 (NZCA); Salib v Gakas [2010] NSWSC 505. 101. (1992) 175 CLR 353; 109 ALR 57. 102. (1802) 2 East 469; 102 ER 448. 103. (1957) 98 CLR 65. 104. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 371; 109 ALR 57 at 69. 105. (1910) 12 CLR 515. 106. See [429]. Cf Birks, Introduction, p 158. Contrast the rule in public law for striking down administrative action motivated by a plurality of reasons, some only of which are improper: Samrein Pty Ltd v Metropolitan Water Sewerage & Drainage Board (1982) 41 ALR 467; 56 ALJR 678; Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491. 107. (1992) 175 CLR 353 at 373–4; 109 ALR 57 at 71. 108. (1992) 175 CLR 353 at 398; 109 ALR 57 at 91. 109. Peter Birks, ‘Modernising the Law of Restitution’ (1993) 109 LQR 164 at 167. See also Damberg v Damberg (2001) 52 NSWLR 492 at 530: Goff and Jones § 9–27. 110. Cf Mercantile Mutual Health Ltd v Commissioner of Stamp Duties [2003] 2 Qd R 515; [2002] QCA 356. 111. Category (3) situations involving taxes paid to public authorities may be in a different position (see Chapter 20). 112. See [447]. See also [507]. 113. For examples, see Halgido Pty Ltd v DG Capital Company Ltd (1996) 34 ATR 582; 97 ATC 4060; Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 95 FCR 185 at 207 [76]–[79]; 167 ALR 326 at 347 (on appeal (2001) 208 CLR 516). 114. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 373–4; 109 ALR 57 at 71 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. See further [432] as to ‘risk-taking’. 115. See [409]. 116. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, esp at 368, 386, 404–5; 109 ALR 57, esp at 67, 81, 96. The case was subsequently settled. 117. (1992) 175 CLR 353 at 368; 109 ALR 57 at 67. 118. See (1992) 175 CLR 353 at 368, 386, 403–5. 119. See [432]. The ‘nearly impossible’ qualification allows for the mistake relating to something other than the subject-matter of the protest.

120. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 66–8; 126 ALR 1 at 9–10 Mason CJ treated a payment made under statutory obligation that was subsequently repealed with retrospective effect as having been made under mistake of law. But the majority of the court held otherwise. In our opinion the majority were clearly correct on this issue. See also Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 323; 152 ALR 624; [1998] HCA 20 at [94]. Of course, denial of operative mistake in that unique context did not conclude the restitutionary issues: see also Chapter 20. In any event there is a distinction between the effect of a judicial overruling and the repeal with retrospective effect of a statute. Cf Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 381, 395, 400. 121. See Chapter 7. 122. See Henderson v Folkestone Waterworks Co (1885) 1 TLR 329, and other cases discussed in New South Wales Law Reform Commission, Restitution of Benefits Conferred under Mistake of Law, LRC 53, 1987, 5.19–5.27. Of course many of these cases involve claims against public authorities, to recover taxes and other imposts, as to which see Chapter 20. 123. See, eg Giannarelli v Wraith (1988) 165 CLR 543; 81 ALR 417; Mabo v Queensland (No 2) (1992) 175 CLR 1; 107 ALR 1; and, generally, Keith Mason, Constancy and Change, Chapter 2. 124. (1992) 175 CLR 353. See [414]. 125. (1997) 189 CLR 465. 126. Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 (special leave to appeal to the High Court was refused); Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. The plaintiff must still prove causative mistake, and a payment made at a time when the earlier view of the law was under challenge to the knowledge of the payer may therefore be irrecoverable: see Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 95 FCR 185 at 207–8; 167 ALR 326 at 347–8; Kleinwort Benson at 409–11; Cobhold v Bakewell Management [2003] EWHC 2289 at [19]. As to a limitation defence, see Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558. 127. ACT: Taxation Administration Act 1999, s 23; NSW: Recovery of Imposts Act 1963, s 3 (inserted by Limitation of Actions (Recovery of Imposts) Amendment Act 1993); WA: Property Law Act 1969, s 124(2). See Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale [1969] WAR 104 (on appeal (1969) 121 CLR 137). As to the applicability and constitutionality of such provisions in federal matters, see Chapter 20. 128. Gifts of land, choses in action or equitable interests may require additional formalities. 129. See Chapter 3, esp [308]. 130. See Part VI. 131. See Chapter 12. 132. If the basis of the mistaken gift is not patent, then the donor must rely on mistake (see [408]). 133. For example, an engagement ring might have been presented under the mistaken belief that the fiancée-to-be was unmarried. 134. See further [215]. If rescission is by the court in the exercise of equitable jurisdiction, accounting and repayment may be ordered (sometimes on terms, including counterrestitution).

135. Kent v Brown (1942) 43 SR (NSW) 124; Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329; Tipperary Developments Pty Ltd v Western Australia (2009) 38 WAR 488; [2009] WASCA 126 at [278]. 136. See generally as to rescission for mistake, Meagher, Gummow & Lehane, Chapter 14; Dominic O’Sullivan, Steven Elliott, Rafal Zakrzewski, The Law of Rescission, 2nd ed, 2014, OUP, chap 29; Restatement Third: Restitution and Unjust Enrichment § 11; TWu, ‘Restitution for Mistaken Gifts’ (2004) 20 JCL 1 (although we do not agree with the author’s rejection of the ‘but for’ test of causation); J C Campbell, ‘Should the “Rule in Hastings-Bass” be Followed in Australia? – Trustees’ Duty to Enquire and Trustees’ Mistakes’ (2011) 34 Aust Bar Rev 259; Birke Hacker, ‘Mistaken Gifts after Pitt v Holt’ (2014) 67 CLP 333. 137. Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476; Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 697. 138. Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476; University of Canterbury v AttorneyGeneral [1995] 1 NZLR 78; Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [121]– [122]. See also Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 332 (Mahoney AP, in the context of rectification). See further [430]. 139. Morgan v Ashcroft [1938] 1 KB 49 at 66. 140. Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [122]. 141. Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 345 per McLelland AJA. See also Baird v BCE Holdings Pty Ltd (1996) 40 NSWLR 374 at 384; Davis v Federal Commissioner of Taxation (2000) 171 ALR 654 at [57]; Franknelly Nominees Pty Ltd v Abrugiato [2013] WASCA 285 at [179]–[180]; Meagher, Gummow and Lehane, [27-115]. 142. Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 345. 143. [2013] 2 AC 108; [2013] UKSC 26. 144. The leading case was Gibbon v Mitchell [1990] 1 WLR 1304 at 1309. The difficulties with this analysis are exposed by Lord Walker in Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [116]–[123]. See also J C Campbell, ‘Should the “Rule in Hastings-Bass” be Followed in Australia? — Trustees’ Duty to Enquire and Trustees’ Mistakes’ (2011) 34 Aust Bar Rev 259. 145. See further [421]. See also Mercantile Mutual Health Ltd v Commissioner of Stamp Duties (Qld) [2003] 2 Qd R 515; [2002] QCA 356 (belief that tax was payable incorrect because of a change in the tax law of which the payer was ignorant). 146. See [2013] 2 AC 108; [2013] UKSC 26 at [53]–[54]. 147. [2013] 2 AC 108; [2013] UKSC 26 at [135] per Lord Walker. 148. [2013] 2 AC 108; [2013] UKSC 26 at [124]–[128]. 149. Pitt v Holt [2013] 2 AC 108; [2013] UKSC at [135]. 150. See [412]. 151. See [414]. 152. [1949] 2 KB 683 (see [412]). 153. See [421]. 154. See generally Restatement, Third, § 11(2).

155. Ogilvie v Littleboy (1897) 13 TLR 399 (on appeal to the House of Lords reported as Ogilvie v Allen (1899) 15 TLR 294); University of Canterbury v Attorney-General [1995] 1 NZLR 78 at 81. 156. Morgan v Ashcroft [1938] 1 KB 49 at 66. 157. Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [109]–[113]. Generally as to misprediction, see [431]. 158. Barrow v Isaacs & Son [1891] 1 QB 417 at 426. See also [424], [430]. 159. Ogilvie v Allen (1899) 15 TLR 294 at 295. See also [409]. 160. See [445], [2407]. 161. Generally, see [429]. As to this applying to gifts, see Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 697; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 392–3 (Brennan J); Fender v National Westminster Bank [2008] EWHC 2242 (Ch). See also the references to ‘causative mistake’ in Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [122], albeit that Lord Walker adds the requirement that the mistake be of ‘sufficient gravity’ as to generate unconscionability that we criticise below. See also J C Campbell, ‘Should the “Rule in Hastings-Bass” be followed in Australia? — Trustees’ Duty to Enquire and Trustees’ Mistakes’ (2011) 34 Aust Bar Rev 259 at 289. Cf Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [87]. 162. (1992) 175 CLR 353 at 392–3. 163. As suggested obiter in Morgan v Ashcroft [1938] 1 KB 49 at 66 (Greene MR). Cf the now abandoned debate about ‘fundamental’ mistake (see [429]). 164. See also Restatement, Third, § 11 RN e. 165. See the review in Burrows, pp 214–17. Professor Burrows argues persuasively that ‘but for’ causation should suffice for gifts. 166. See Gibbon v Mitchell [1990] Ch 1304 at 1309 (Millett J). The difficulties with this analysis are exposed by Lord Walker in Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [118]–[122] and by JC Campbell, ‘Should the “Rule in Hastings-Bass” be Followed in Australia? — Trustees’ Duty to Enquire and Trustees’ Mistakes’ (2011) 34 Aust Bar Rev 259 at 289. 167. See Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [123]. 168. Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [124]–[125]. These tests are sourced in the late nineteenth century decision of Ogilvie v Littleboy (1897) 13 TLR 399 at 400. Ogilvie necessarily predates the seminal judgment of Robert Goff J in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 and all modern developments involving mistake as an unjust factor. 169. Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26. 170. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [78]. 171. See Barrow v Isaacs & Son [1891] 1 QB 417 at 426 per Kay LJ. 172. See [419]. 173. See [423]–[426]. 174. Bunge (Australia) Pty Ltd v Ying Sing (1928) 28 SR (NSW) 265 at 271–2; Australia and

New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 671; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 377. 175. Morton v Smith (1912) 18 ALR 332; 34 ALT 79; Barclay & Co v Malcolm & Co (1925) 133 LT 512; Weld-Blundell v Synott [1940] 2 KB 107 at 112; Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 204 (Windeyer J); Commonwealth Trading Co v Reno Auto Sales Ltd [1967] VR 790 at 798; Platemaster Pty Ltd v M & T Investments Pty Ltd [1973] VR 93 at 97. 176. [1980] 1 QB 677 at 689–96. 177. [1926] AC 670. Thus, O’Neill v Mincher [1926] St R Qd 250, which applied R E Jones Ltd v Waring & Gillow Ltd [1925] 2 KB 612 (English Court of Appeal) before that decision was reversed in the House of Lords, should no longer be regarded as good law. 178. (1841) 9 M & W 54; 152 ER 24. 179. Grimwood v Smith (1880) 6 VLR (L) 433; White v Copeland (1894) 15 LR (NSW) (L) 281; Imperial Bank of Canada v Bank of Hamilton [1903] AC 49; Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444 at 450; Westpac Banking Corp v ATL Pty Ltd [1985] 2 Qd R 577; Rover International Ltd v Cannon Film Ltd [1989] 1 WLR 912 at 922; Marook Pty Ltd v Winston Gellard Pty Ltd (1994) 10 SR (WA) 207; Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 211 at 235; Scottish Equitable Plc v Derby [2000] 3 All ER 793. 180. See Barrow v Isaacs & Son [1891] 1 QB 417 at 426. 181. Tang Hang Wu, ‘The Role of Negligence and Non-Financial Detriment in the Law of Unjust Enrichment’ [2006] RLR 55. 182. See State Bank of New South Wales v Swiss Bank Corp (1995) 39 NSWLR 350 at 356 (effectively overruled in Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391; [2012] NSWCA 381); Ford by his tutor Watkinson v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42; 257 ALR 658; [2009] NSWCA 186 at [130]. 183. See [2421]. Cf Restatement, Third, § 52(3) which proposes the removal of the change of position defence against a negligent third party whose negligence exceeds that of the claimant. 184. Anglo-Scottish Beet Sugar Corp Ltd v Spalding UDC [1937] 2 KB 607; Platemaster Pty Ltd v M & T Investments Pty Ltd [1973] VR 93 at 97; Royal Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1; Simos v National Bank of Australasia (1976) 10 ACTR 4; Westpac Banking Corp v ATL Pty Ltd [1985] 2 Qd R 577; Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd [2010] QCA 323. See further [439]–[442] as to agents and intermediaries. 185. Kelly v Solari (1841) 9 M & W 54 at 58; 152 ER 24 at 26; Freeman v Jeffries (1869) LR 4 Ex 189; Bunge (Australia) Pty Ltd v Ying Sing (1928) 28 SR (NSW) 265 at 272. 186. Peck v Mayor of Hawthorn (1892) 18 VLR 24; Baker v Courage & Co [1910] 1 KB 56. 187. (1988) 164 CLR 662 at 669; 78 ALR 157 at 159. 188. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385, 389–90; Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 at 595–6; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 386, 409; Fuller v Happy Shopper Markets Ltd [2001] 1 WLR 1681. 189. See [2722]. Statute may enlarge the time (see [2741]).

190. Cf Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. See further Chapter 28 as to interest. 191. See [445] and generally Chapter 24. 192. Cf South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65 at 75. 193. See P A Butler, ‘Mistaken Payments, Change of Position and Estoppel’ in Finn, Essays, pp 98–9. 194. Cf Bell v Lever Bros Ltd [1932] AC 161. 195. (1964) 111 CLR 177 at 186–7, 190–1, 204. See also York Air Conditioning & Refrigeration (A/sia) Pty Ltd v Commonwealth (1949) 80 CLR 11 at 31 (Williams J); Platemaster Pty Ltd v M & T Investments Pty Ltd [1973] VR 93 at 97; Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444 at 450; Bank of New South Wales v Murphett [1983] VR 489 at 493. 196. The solicitors for the second mortgagee (Latec Finance) who advanced the money to discharge the first mortgage in favour of Porter were treated as having acted on behalf of the dishonest third party (the mortgagor’s son) and not Latec Finance. 197. Barwick CJ in Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 187. 198. See Chapter 3, esp [308]. See also Fox, § 4.118. 199. [1980] 1 QB 677 at 695. See also Crockett J in Bank of New South Wales v Murphett [1983] VR 489 at 494; Citibank NA v Brown Shipley & Co Ltd [1991] 2 All ER 690 at 700–1; Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [143]. 200. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 672; 78 ALR 157 at 161. 201. (1992) 175 CLR 353 at 376–7, 395–6, 402; 109 ALR 57 at 73–4, 89, 94. See also Miller v CSR Timber Products Pty Ltd (1993) 29 NSWLR 611 at 619; Marshall v Marshall [1999] 1 Qd R 173 at 178; Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 95 FCR 185 at 207; 167 ALR 326 at 347–8. 202. See also Restatement, Third, §5; Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 at 227, 234; Nurdin & Peacock Plc v DB Ramsden & Co Ltd [1999] 1 WLR 1249 at 1273; Dextra Bank and Trust Co v Bank of Jamaica [2002] 1 All ER (Comm) 193; Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [59]–[60], [84]–[87], [143]. In Nurdin, Neuberger J left open the possibility of the need to prove a close and direct connection between the mistake and the payment and/or a requirement that the mistake impinge upon the relationship between payer and the payee. These qualifications appear unsupported by authority and unhelpfully vague. ‘But for’ causation also suffices for gifts, in our view (see [421]). 203. See Edgington v Fitzmaurice (1885) 29 Ch D 459 as to misrepresentation and [522] as to improper pressure. The more flexible test of contributory cause is sufficient in these cases because the defendant’s conduct makes it easier to conclude that any enrichment received by the defendant was received in circumstances of injustice (Virgo, p 161). See also Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2003] 1 AC 959 at 967. 204. See also [409]. As to proof, see also Lord Hope in Kleinwort Benson Ltd v Lincoln City

Council [1999] 2 AC 349 at 409. 205. (1999) 95 FCR 185 at 207–8; 167 ALR 326 at 347–8 (Federal Court, Full Court). An appeal to the High Court succeeded on other grounds: see Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. See also Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 401, 407–11. 206. Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 697. See [419]. 207. See [432]. 208. Birks, Introduction, pp 148, 157. Cf the approach to causation in tort (March v Stramare Pty Ltd (1991) 171 CLR 506; 99 ALR 423) and crime (Royall v R (1991) 172 CLR 378; 100 ALR 669). 209. See Birks, Introduction, p 158; P A Butler, ‘Mistaken Payments, Change of Position and Estoppel’ in Finn, Essays, p 99. Cf Samrein Pty Ltd v Metropolitan Water Sewerage & Drainage Board (1982) 41 ALR 467; 56 ALJR 678. 210. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 392; 109 ALR 57 at 86. See [421]. 211. (1856) 1 H & N 210; 156 ER 1180 as analysed by Kitto J in Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 191. 212. Woodward, p 25. 213. See [446]. 214. (1964) 111 CLR 177 at 191. 215. (1992) 175 CLR 353 at 369, 374. See also Newitt v Leitch (1997) 6 Tas R 396 at 408; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 409–10; Hookway v Racing Victoria Ltd (2005) 13 VR 444; [2005] VSCA 310 at [21]; Hilliard v Westpac Banking Corp (2009) 25 VR 139; [2009] VSCA 211 at [76]. See also P Watts, ‘Mistaken Payments and the Law of Restitution’ [1993] LMCLQ 145 at 146; D W McLauchlan and C E F Rickett, ‘Mistake and Ignorance under the New Zealand Contractual Mistakes Act 1977’ (1995) 8 JCL 193. For an example that would be decided differently post-David Securities, see Home and Colonial Insurance Co Ltd v London Guarantee Accident Co Ltd (1928) 45 TLR 134. See also [416]. 216. Thus, ignorance that a payment has already been made may generate a mistaken doublepayment. As to the overlap and distinction between mistake and failure to enquire, see Newitt v Leitch (1997) 6 Tas R 396 at 407–8. 217. See also Mercantile Mutual Health Ltd v Commissioner of Stamp Duties (Qld) [2003] 2 Qd R 515; [2002] QCA 356 (belief that tax was payable incorrect because of a change in the tax law of which the payer was ignorant). 218. (2005) 13 VR 444; [2005] VSCA 310 at [21] (prize money paid to wrong owner because racing official ignorant of recent change in rules of racing permitting an appeal against disqualification after a drugs test). Warren CJ agreed with Ormiston JA on this and, semble, so too did Harper AJA. See also Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [105]–[108]. 219. See, eg Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476; Commonwealth v McCormack (1982) 45 ALR 355; 69 FLR 9 (this conclusion being upheld on appeal to the High Court: see Commonwealth of Australia v McCormack (1984) 51 ALR 621; 58 ALJR 205).

220. Marriott v Hampton (1797) 7 TR 269; 10 ER 969. As to the irrelevance of the payer’s negligence see [424]. 221. See P Birks, ‘Misdirected Funds: Restitution from the Recipient’ [1989] LMCLQ 296; Burrows, Chapter 4. It has been suggested that Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 (see [309]) could have been decided on the basis of a payment made in ignorance: see P Birks, ‘The English Recognition of Unjust Enrichment’ [1991] LMCLQ 473 at 483; E McKendrick, ‘Restitution, Misdirected Funds and Change of Position’ (1992) 55 MLR 377 at 380–1. In our view this reduces mistake to something akin to absence of cause, which is so vague and needs so many qualifications as to be an unhelpful concept. 222. See Chapter 3. See also Goff and Jones § 9-48. 223. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [156]. See also Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [104] (‘mistake must be distinguished from mere ignorance’). 224. Strang Patrick Stevedoring Pty Ltd v The ‘Sletter’ (1992) 38 FCR 501 at 524, per Cooper J citing Birks, Introduction, p 278. Further as to the distinction between mistake and misprediction, see Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 32; Marriott Industries Pty Ltd v Mercantile Credits Ltd (1990) 55 SASR 228 at 238; Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 at 225–7; Clancy v Salienta (2000) 11 BPR 20,425; [2000] NSWCA 248; Dextra Bank & Trust Co v Bank of Jamaica [2002] 1 All ER (Comm) 193 at [29]; Hookway v Racing Victoria Ltd (2005) 13 VR 444; [2005] VSCA 310 at [61]; Re Magarey Farlam Lawyers Trust Accounts (No 3) (2006) 96 SASR 337 at 387; Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [26]; Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [109]–[113]; Lahoud v Lahoud [2010] NSWSC 1297 at [179]–[180]. See further W Seah, ‘Mispredictions, Mistake and the Law of Unjust Enrichment’ [2007] RLR 93. 225. (1911) 17 Com Cas 41; 81 LJKB 465 (HL). Recovery in this category of case extends to a payment of money in anticipation to discharge a liability for an uncertain amount which has not crystallised, to the extent that the creditor turns out to be overpaid: York Air Conditioning & Refrigeration (A/sia) Pty Ltd v Commonwealth (1949) 80 CLR 11 at 31. Cf [420]. 226. See [446]. 227. See [411] of the first edition. 228. Burrows, pp 206–7. 229. Virgo, pp 149–50. 230. Birks, Introduction, p 147. 231. The situation is identical in equity (see Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [109]–[113]). 232. See eg Dextra Bank & Trust Co v Bank of Jamaica [2002] 1 All ER (Comm) 193 and In re Griffiths [2009] Ch 162, as each case is analysed in Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [110]–[113]. 233. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 89; 126 ALR 1 at 26; Dextra Bank & Trust Co v Bank of Jamaica [2002] 1 All ER (Comm) 193 at [29]–[33]. 234. See also Frederick Wilmot-Smith, ‘Replacing Risk-Taking Reasoning’ (2011) 127 LQR

610; Andrew Burrows, ‘Restitution of Mistaken Enrichments’ (2012) 92 B U L Rev 767 at 779–82; Restatement, Third, § 5(3). 235. Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 410. See also Queensland Alumina Ltd v Alinta DQP Pty Ltd [2007] QCA 387. 236. Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [27] (Lord Hoffmann), [65] (Lord Hope); Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [114] (Lord Walker). See also Salib v Gakas [2010] NSWSC 505 at [332]. 237. Lord Hope in Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [65]. 238. Lord Hoffmann in Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [26]–[27]. 239. Lord Walker in Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [114]. 240. See also Goff and Jones §§ 9-28–9-30. 241. See [431]. 242. In Deutsche Morgan Grenfell Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [26] Lord Hoffmann suggested that the quiz contestant who said ‘it sounds like Haydn, but then it may be Mozart’ would still make a mistake if the wrong answer is given. See also Stiassny v Commissioner of Inland Revenue [2013] 1 NZLR 453 at [62] (NZSC). 243. As in Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 (see [2018]). 244. See [415]. See also Salib v Gakas [2010] NSWSC 505 at [333]. 245. See [447]. See also Maskell v Horner [1915] 3 KB 106. 246. Marine Trade SA v Pioneer Freight Futures Co Ltd [2010] 1 Lloyd’s Rep 631; [2009] EWHC 2656 (Comm). 247. See [447]. 248. [2007] QCA 387. 249. At [72] per Holmes JA, Fryberg J agreeing. McMurdo P dissented. The Court took as the test the passage from David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 373–4 (set out and criticised as to its ‘voluntary’ reasoning at [415]). 250. See generally S Scott, ‘Mistaken Bank Payments: Commercial Certainty Counts’ (2006) 11 Otago LR 209; Ellinger’s Modern Banking Law, Chapter 12. 251. See further [842]. 252. Cf Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157 (not a cheque case, but the principles apply). 253. Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444; Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677; K J Davies (1976) Ltd v Bank of New South Wales [1981] 1 NZLR 262; Bank of New South Wales v Murphett [1983] 1 VR 489; Lloyds Bank Plc v Independent Insurance Co Ltd [2000] 1 QB 110; Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505. 254. After a thorough discussion of the authorities, Hunter J suggested that Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd should be treated as authority for the entitlement to recover moneys paid under a mistake of fact, on an agreed assumption that the payment

did not discharge the customer’s obligation to the payee: see Majesty Restaurant Pty Ltd (in liq) v Commonwealth Bank of Australia (1999) 47 NSWLR 593. As to when an unauthorised payment discharges a debt, see [842]. 255. As occurred in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677. 256. Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 703. 257. See R M Goode, ‘The Bank’s Right to Recover Money Paid on a Stopped Cheque’ (1981) 97 LQR 254 at 262–4, who argues that the payee has changed position by giving up the cheque. But see Tyree, Banking Law in Australia, 4th ed, §35.4.2. 258. See [842]; R M Goode, ‘The Bank’s Right to Recover Money Paid on a Stopped Cheque’ (1981) 97 LQR 254 at 262–4; B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] 1 KB 48; Associated Midland Corp v Bank of New South Wales [1980] 1 NSWLR 533. But see A Burrows, ‘Understanding the Law of Restitution: A Map Through the Thicket’ (1995) 18 UQLJ 149 at 164–5 for criticism of this aspect of Barclays Bank v Simms. As to subrogation, see [640]. 259. Cheques and Payment Orders Act 1986 (Cth), s 30. 260. See [434]–[435]. As to ignorance and mistake, see [430]. 261. [1980] 1 QB 677 at 699. 262. Price v Neal (1762) 3 Burr 1354; 97 ER 871; Cocks v Masterman (1829) 9 B & C 902; 109 ER 335; London and River Plate Bank Ltd v Liverpool Ltd [1896] 1 QB 7. 263. (1762) 3 Burr 1354; 97 ER 871. 264. Imperial Bank of Canada v Bank of Hamilton [1903] AC 49 at 58. 265. Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 701; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 578–9 (Lord Goff). 266. National Westminster Bank Ltd v Barclays Bank International Ltd [1975] QB 654; Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 701–3; Cheques and Payment Orders Act 1986 (Cth), s 70. See also Westpac Banking Corp v ATL Pty Ltd [1985] 2 Qd R 577 (cheque invalidly signed); Westpac Banking Corp v Dawson [1992] 1 NZLR 338. 267. Imperial Bank of Canada v Bank of Hamilton [1903] AC 49. 268. See [433]. 269. Chambers v Miller (1862) 13 CB(NS) 125; 143 ER 50 (an action in assault, but in which two judges, Byles and Williams JJ, held that the bank’s mistake as to the customer’s balance was immaterial); Pollard v Bank of England (1871) LR 6 QB 623 (a decision whose authority is weakened by reasoning about mistakes as between payer and payee that is no longer good law: see [412]). 270. [1980] 1 QB 677 at 699–700. See also Griffiths v Commonwealth Bank of Australia (1994) 123 ALR 111 at 123. 271. See Ellinger’s Modern Banking Law, p 548. For a contrary view (with which we disagree), see K G Nicholson, ‘Recovery of Money Paid Under a Mistake of Fact’ (1986) 60 ALJ 459 at 462–4. 272. (2009) 25 VR 139; [2009] VSCA 211. The existence of contractual or restitutionary rights of recoupment against the customer were, in principle, irrelevant in light of the Australian

law on ‘passing on’ (see at [83]). As to ‘passing on’, see [444]. 273. See [431]. 274. But see Chapter 3. Mistaken payments within the scope of the present chapter may also lead to title-based restitution and proprietary remedies (see Chapter 3 and [451]–[454]). 275. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673; 78 ALR 157 at 162. 276. See [425]. 277. See [423]. 278. Taylor v Smith (1926) 38 CLR 48. See also Chapter 3 (esp [308]) for certain examples or categories of ‘fundamental’ mistake. 279. See, eg Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; Agip (Africa) Ltd v Jackson [1990] Ch 265. 280. Agip (Africa) Ltd v Jackman [1991] Ch 547; Niru Battery Manufacturing Co v Milestone Trading Ltd (No 1) [2002] 2 All ER (Comm) 705. 281. (1964) 111 CLR 177; 78 ALR 157. See also Champaiporn Nagamwasusiri v Murray (1993) Unreported, SC(NSW) (Bryson J), 24 September; Clarke v Abou-Samra [2010] SASC 205. 282. But see [425]. 283. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673; 78 ALR 157 at 162. Cf Barton v Commissioner for Motor Transport (1957) 97 CLR 633 at 662–5; Mason v New South Wales (1959) 102 CLR 108 at 142 which suggest a different principle in relation to Crown agents. 284. Cary v Webster (1721) 1 Stra 480; 93 ER 647. 285. See Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 677; 78 ALR 157 at 165, citing British American Continental Bank v British Bank of Foreign Trade [1926] 1 KB 328 at 338, 342, 346–7. Cf Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 177, 199. 286. See [318]. 287. (1988) 164 CLR 662; 78 ALR 157. 288. (1816) 1 Mer 572; 35 ER 781. 289. That is, $114,000 less the $14,000 intended. A similar result may be achieved through the application of the change of position defence, which may operate pro tanto (see [2413]). 290. Portman Building Society v Hamlyn Taylor Neck (a firm) [1998] 4 All ER 202 at 207. 291. [1991] 2 AC 548 at 578–9. See further [2408]. 292. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 682; 78 ALR 157 at 168. See generally as to payment over Elise Bant, ‘Payment Over and Change of Position: Lessons from Agency Law’ [2007] LMCLQ 225. 293. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 674; 78 ALR 157 at 162 per Mason CJ, Wilson, Toohey, Gaudron JJ, quoting Collins MR in Continental Caoutchouc & Gutta Percha Co v Kleinwort, Sons & Co (1904) 9 Com Cas 240 at 248. See also Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505. 294. (1988) 164 CLR 662 at 681–4; 78 ALR 157 at 168–70.

295. Bunge (Australia) Pty Ltd v Ying Sing (1928) 28 SR (NSW) 265 at 273; Port of Brisbane Corp v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661 at 675–7. 296. Kleinwort Sons & Co v Dunlop Rubber Co (1907) 97 LT 263. 297. Gowers v Lloyds & National Provincial Foreign Bank Ltd [1938] 1 All ER 766 (applied Koster’s Premier Pottery Pty Ltd v Bank of Adelaide (1981) 28 SASR 355); Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505. 298. Newall v Tomlinson (1871) LR 6 CP 405; Portman Building Society v Hamlyn Taylor Neck [1998] 4 All ER 202. The agent of an undisclosed principal may however be able to rely on a change of position defence: Portman. See generally Chapter 24. 299. King v Stewart (1892) 66 LT 339. 300. Portman Building Society v Hamlyn Taylor Neck [1998] 4 All ER 202; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 107 [165]ff. 301. (1988) 164 CLR 662 at 674; 78 ALR 157 at 162, citing Buller v Harrison (1777) 2 Cowp 565; 98 ER 1243; Cox v Prentice (1815) 3 M & S 344; 105 ER 641; and Colonial Bank v Exchange Bank of Yarmouth (1886) 11 App Cas 84. See also Bank of New Zealand v Westpac Banking Corp (1991) 3 NZBLC 99,243. 302. Elise Bant, ‘Payment Over and Change of Position: Lessons from Agency Law’ [2007] LMCLQ 225 at 232. See also [2416] (change of position must be legally or practically irreversible). 303. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157. 304. Continental Caoutchouc & Gutta Percha Co v Kleinwort, Sons & Co (1904) 9 Com Cas 240 at 248; Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 680; 78 ALR 157 at 167. Cf Stephens Travel Service International Pty Ltd v Qantas Airways Ltd (1988) 13 NSWLR 331 at 366; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75 at 107 [165]ff. 305. See [441]. 306. [1913] 1 Ch 127. 307. See generally Chapter 24. 308. Cf Thomas v Houston Corbett & Co [1969] NZLR 151 at 161, 172. 309. Nizam of Hyderabad v Jung [1957] Ch 185 at 239, 248; Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 682; 78 ALR 157 at 168. See further Elise Bant, ‘Payment Over and Change of Position: Lessons from Agency Law’ [2007] LMCLQ 225 at 234–8. See also [2417]. 310. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383–4; Mercedes-Benz (NSW) Pty Ltd v ANZ and National Mutual Royal Savings Bank (1992) Unreported, SC(NSW) (Palmer AJ), 5 May (noted [1993] RLR 55); and Goff and Jones, §27-39–27-44. See generally Chapter 24, esp [2419]. 311. See [407]. 312. As to onus, see [409]. 313. For a fuller discussion, see Part VIII. 314. See [416]. 315. Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. See also Deutsche Morgan

Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at [122]. 316. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51; 126 ALR 1; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. 317. KAP Motors Pty Ltd v Commissioner of Taxation [2008] FCA 159. 318. As had been suggested in relation to mistake of law by Brennan J in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 399. This is rejected by Lord Goff in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 384–5 and by the Victorian Court of Appeal in Hookway v Racing Victoria Ltd (2005) 13 VR 444; [2005] VSCA 310 at [48]–[60], [99]–[103]. See also Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2011] NSWSC 267 at [23]; Focus Metals Pty Ltd v Babicci [2014] VSC 380 at [119]. 319. See [442]. 320. (1992) 175 CLR 353; 109 ALR 57. 321. See [2405]. 322. See [2417], [2419]. 323. As in Norwich Union Fire Insurance Society Ltd v Wm H Price Ltd [1934] AC 455. 324. Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 695. Court-ordered rescission may be on terms as to counter-restitution. 325. See generally [215]. 326. Re Magarey Farlam Lawyers Trust Accounts (No 3) (2006) 96 SASR 337 at 390 [177]. 327. As with a tax actually due: see Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2010] EWCA (Civ) 103 at [181]. 328. (1992) 175 CLR 353 at 392; 109 ALR 57 at 86. See also at 376, 73 per Mason CJ, Deane, Toohey, Gaudron, McHugh JJ; Platemaster Pty Ltd v M & T Investments Pty Ltd [1973] VR 93 at 96; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 408; Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners [2007] 1 AC 558 at 590–2 (Lord Scott, dissenting); Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (2009) 254 ALR 661; [2009] QCA 75. See Restatement, Third, §§ 62, 67. 329. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 376, 392; Supercar International Holdings Ltd v Sommers [2011] NSWSC 336 at [202]. 330. Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 6; (2006) Vic ConvR 54-713; Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (2009) 254 ALR 661; [2009] QCA 75. 331. Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 (see [440]). Cf R E Jones Ltd v Waring & Gillow Ltd [1926] AC 670; Australian Financial Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. 332. Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 385–7. 333. [1980] 1 QB 677. 334. [1980] 1 QB 677 at 695, cited with apparent approval in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 380, 405. See also [448] and, as to the final words in the passage quoted, [435]. See also Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1993] 1 Lloyd’s Rep 443 (affirmed [1994] 1 WLR

161); Griffiths v Commonwealth Bank of Australia (1994) 123 ALR 111 at 123; Lloyds Bank Plc v Independent Insurance Co Ltd [2000] 1 QB 110; Crantrave Ltd (in liq) v Lloyds Bank Plc [2000] QB 917; Clarke v Abou-Samra [2010] SASC 205; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 408; [448]. 335. Platt v Bromage (1854) 24 LJ Ex 63 at 65. 336. (1856) 1 H & N 210; 156 ER 1180 (see [429]). 337. Moses v Macferlan (1760) 2 Burr 1005 at 1012; 97 ER 676 at 680; Farmer v Arundel (1772) 2 W Bl 824; 96 ER 485; Bize v Dickason (1786) 1 TR 285; 99 ER 1097; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539 at 548–9; 61 FLR 108 at 120. 338. Farmer v Arundel (1772) 2 W Bl 824 at 825–6; 96 ER 485 at 486 per De Grey CJ. See generally as to the inability to recover payment of an honest but unenforceable debt, Stoljar, pp 28–31. 339. Harper v Gaynor (1893) 19 VLR 675 at 679; Werrin v Commonwealth (1938) 59 CLR 150 at 159; Re Magarey Farlam Lawyers Trust Accounts (No 3) (2007) 96 SASR 337 at [174]. See also [415]. 340. Callisher v Bischoffsheim (1870) LR 5 QB 449. 341. For a review of older cases, including South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65, explicable on the narrower basis of being authority for the limited proposition that a ‘voluntary’ payment in settlement of an honest claim is irrecoverable, see David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 370–4; 109 ALR 57 at 68–72. 342. See Chapter 5, especially [513]–[515]. 343. See [702]–[703]. 344. Marriott v Hampton (1797) 7 TR 269; 101 ER 969 per Lord Kenyon CJ. See also Mason v New South Wales (1959) 102 CLR 108 at 135, 144; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539 at 556–7; 61 FLR 108 at 129; Riessen v South Australia (2001) 79 SASR 82. 345. [1895] 1 QB 399 at 401–2. 346. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375; 109 ALR 57 at 72. 347. J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 41 ALR 539 at 556; 61 FLR 108 at 129, per curiam. As to moneys paid under a judgment that is later reversed, see Chapter 7. 348. Ormiston JA pointed to several sub-categories of ‘voluntary’ payments in satisfaction of an honest claim: see Hookway v Racing Victoria Ltd (2005) 13 VR 444; [2005] VSCA 310 at [41]. As to dishonestly made claims, see eg Shelley v Paddock [1980] 1 QB 348. As to duress and undue influence and the settlement of claims, see [504], [513]–[515]. 349. Kelly v Solari (1841) 9 M & W 54 at 59; 152 ER 24 at 26 per Parke B. See also South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65 at 74–5; Mason v New South Wales (1959) 102 CLR 108 at 143. 350. See, eg Cook v Wright (1861) 1 B & S 559; 121 ER 822; Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 at 737. This notion is now generally regarded as a form of legal shorthand, ie a conclusion: see eg Damberg v Damberg (2001) 52 NSWLR 492 at 530; Goff

& Jones § 9-121. See also the extended discussion by Ormiston JA in Hookway v Racing Victoria Ltd (2005) 13 VR 444; [2005] VSCA 310 at [22]–[60]. 351. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 395; 109 ALR 57 at 88 per Brennan J. 352. See [215], [446], [506], [908]. See also N H Andrews, ‘Mistaken Settlements of Disputable Claims’ [1989] LMCLQ 431; Sue Arrowsmith, ‘Mistake and the Role of Submission to an Honest Claim’ in Burrows, Essays, p 17. Cf Law Commission of England and Wales, Restitution of Payments Made Under a Mistake of Law, Consultation Paper No 120, 1991, para 3.66. 353. (1992) 175 CLR 353 at 373–4; 109 ALR 57 at 71. See also Re Magarey Farlam Lawyers Trust Accounts (No 3) (2006) 96 SASR 337 at 386–90. 354. Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 695. See also Re Magarey Farlam Lawyers Trust Accounts (No 3) (2007) 96 SASR 337 at [172]– [173]. 355. See further [432]. 356. (1802) 2 East 469; 102 ER 448. 357. (1992) 175 CLR 353 at 371; 109 ALR 57 at 69 per Mason CJ, Deane J, Toohey J, Gaudron J and McHugh J. 358. O’Neill v Mincher [1926] St R Qd 250. 359. See generally Chapter 25. 360. [1980] 1 QB 677 at 695. See [446]. 361. See, eg Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379–81, 405–6; 109 ALR 57 at 76–7, 97–8; Keith Murphy Pty Ltd v Custom Credit Corp Ltd (1992) 6 WAR 332 at 341; Griffiths v Commonwealth Bank of Australia (1994) 123 ALR 111; Prudential Assurance Co Ltd v C M Breedon Pty Ltd [1994] 2 VR 452 (distinction between a new bargain and a mistaken attempt to perform the old one); Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 6; Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123. See also Hills Industries Ltd v Australian Financial Services and Leasing Pty Ltd [2012] NSWCA 380; 295 ALR 147 at [80]–[147], esp [112], [131]–[132] (Allsop P) (emphasising that the rules as to discharge of a debt when there is payment by a third party (see [842]) need to be satisfied). Meagher JA (at [209]–[211]) accepted these principles but held that they did not apply on the facts. On appeal, the High Court agreed with Meagher JA that AFSL’s payments were not made to discharge TCP’s debts to third parties with the result that Goff J’s principle did not engage. The principle was, however, stated with approval by the High Court: see (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [101]. See also Focus Metals Pty Ltd v Babicci [2014] VSC 380. Cf Andrew Burrows, ‘Is There a Defence of Good Consideration?’ in Charles Mitchell and William Swadling (eds), The Restatement Third: Restitution and Unjust Enrichment, Chapter 7. 362. (1987) 8 NSWLR 585 (see [2521]). 363. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 405; 109 ALR 57 at 97. 364. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at

379–84, 400, 407; 109 ALR 57 at 76–80, 92–3, 98. For an alternative explanation, see P Watts, ‘Mistaken Payments and the Law of Restitution’ [1993] LMCLQ 145 at 149. See also criticism by Peter Birks, ‘Modernising the Law of Restitution’ (1993) 109 LQR 164 at 167. See also Council of the City of Sydney v Burns Philp Trustee Co Ltd (in liq) (1992) Unreported, SC(NSW) (Rogers J), 13 November. See also [2520]. 365. Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 at 575. 366. (2011) 246 CLR 498; [2011] HCA 7. See generally [2608]. Equuscorp was not a mistake case, but the principle is of general application. 367. [1960] AC 192 (see [2639]). 368. [1985] 1 Lloyd’s Rep 259. 369. [1914] 3 KB 607. 370. [1985] 1 Lloyd’s Rep 259 at 264. 371. [1938] 1 KB 49. 372. See Chapter 26. 373. See Chapter 27, esp [2717]. 374. See [2741]. 375. See [2039]. 376. See generally [2736] and Pitt v Holt [2013] 2 AC 108; [2013] UKSC 26 at [141]–[142]. 377. (1988) 164 CLR 662 at 673; 78 ALR 157 at 162. See also Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75. 378. (1988) 164 CLR 662 at 673 (passage quoted at [244]). See also Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 379–80, 389–90; Hartogen Energy Ltd v Australian Gas Light Co (1992) 36 FCR 557 at 573; Opus Productions Pty Ltd v Popwing Pty Ltd (1995) Unreported, SC(NSW) (Santow J), 28 February. As to the need to find unconscientious behaviour, see [256]. 379. See [308]. 380. Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 183; Ilich v R (1987) 162 CLR 110 at 139. See also [303]. 381. See Chapter 3. 382. See discussion [1612]. 383. See Orr v Lane (1951) 52 SR (NSW) 37; Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581; Doulton Potteries Pty Ltd v Bronotte [1971] 1 NSWLR 591. 384. See [313]–[316]. 385. See Australia & New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673 (see [451]). As to proprietary remedies generally, see [242]–[257]. 386. See [248]. 387. [1981] Ch 105 (see [454]). 388. [1981] Ch 105 (discussed by P Butler (1981) 12 UQLJ 99). See generally R H Maudsley, ‘Proprietary Remedies for the Recovery of Money’ (1959) 75 LQR 234; C E F Rickett, ‘Banks and the Recovery of Mistaken Payments’ (1994) 16 NZULR 105 at 117–22. See also [244].

389. See [250], [303]; Black v S Freedman & Co (1910) 12 CLR 105. See further [1633]. See further as to constructive trusts, [249]. 390. See [249]–[250]. 391. [1981] Ch 105 at 124–5. See also [248], [257]. As to the American law, see Restatement Third: Restitution and Unjust Enrichment §§ 55–56; Keith Mason, ‘The Distinctiveness of Law and Equity and the Taxonomy of the Constructive Trust’ in Charles Mitchell and William Swadling (eds), The Restatement Third, Chapter 8. 392. See [1981] Ch 105 at 114. Cf Eldan Services Ltd v Chandag Motors Ltd [1990] 3 All ER 459. 393. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 (noted [1993] RLR 135). If this is the case, the principles discussed in Chapter 3 apply, noting that title-based restitution does not necessarily exclude restitution stemming from unjust enrichment (although the latter is generally available only as between payer and payee). 394. [1996] AC 669 at 714–15. 395. Liggett v Kensington [1993] 1 NZLR 257. Cf the remarks of the Privy Council on appeal: Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 103. See also Bishopsgate Investment Management v Homan [1994] 3 WLR 1270; [1995] 1 All ER 347. 396. See Wambo Coal Pty Ltd v Stuart Karim Ariff (2007) 63 ACSR 429; [2007] NSWSC 589 esp at [42] (White J). 397. See Daly v The Sydney Stock Exchange Ltd (1985) 160 CLR 371 at 390 (Brennan J); Ilich v The Queen (1986) 162 CLR 110 at 129 (Wilson and Dawson JJ); Re Hartogen Energy Ltd (in liq) (1992) 36 FCR 557 at 573 (Gummow J). 398. [2014] VSC 380. 399. [2008] NSWCA 268. 400. See [308]. 401. See [256]. 402. See generally Australian Financial Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. See also Dixon v Barton [2011] NSWSC 1525. 403. See [247]–[253]. 404. But cf the current Meagher, Gummow and Lehane at [14-010]. The view of the learned authors is, we submit, erroneous because (a) they place inappropriate weight on the absence of a pre-existent fiduciary relationship (as to which, see [303]); (b) they cite a passage in the reasoning of Mummery LJ in Re Polly Peck International plc (No 2) [1998] 3 All ER 812 at 826–7 which actually recognises the correctness of Chase Manhattan (albeit that other aspects of Re Polly Peck inexplicably overlook well-established principles of insolvency law, see [257]); (c) their views in this regard do not accord with the modern Australian approach to proprietary remedialism (as to which, see [247]–[249]); and (d) they ignore the seriously considered dictum of the High Court in Australia & New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673 (passage quoted at [244]). 405. See, eg County of Carleton v City of Ottawa (1965) 52 DLR 2d 220; Restatement, Third, § 7.

406. See Chapter 8, especially [841]–[847]. 407. See eg Dixon v Barton [2011] NSWSC 1525. 408. See generally Part V. See, eg Craven-Ellis v Canons Ltd [1936] 2 KB 403. 409. See [157], [158]. 410. See generally [1023]–[1041]. 411. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27. See generally [215]. 412. See Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) 38 FCR 501; Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122 at 173– 4. See also [431]. 413. Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775 (valuable right to personalised number plate transferred by mistake along with car); ABB Power Generation Ltd v Chapple (2001) 25 WAR 158. See also [157], [457]. Generally as to free acceptance, see [157]–[158]. 414. [1973] 1 QB 195. The decision is discussed critically by P Matthews, ‘Freedom, Unrequested Improvements, and Lord Denning’ [1981] CLJ 340. See also Ewan McKendrick, ‘Restitution and the Misuse of Chattels: The Need for a Principled Approach’ in Palmer and McKendrick, Interests in Goods, Chapter 35, p 897. Greenwood was followed in Johnson Matthey (Aust) Pty Ltd v Dascorp Pty Ltd (2003) 9 VR 171 at [222]. 415. See [1973] QB 195 at 202 (Lord Denning MR), 203 (Cairns LJ). 416. See Svenson v Payne (1945) 71 CLR 531; Brand v Chris Building Co Pty Ltd [1957] VR 625; Commonwealth v A E Goodwin Ltd (1961) 62 SR (NSW) 315; Roy v Lagona [2010] VSC 250. 417. The terms of the legislation vary across the jurisdictions. See NSW: Encroachment of Buildings Act 1922, s 3 (no specific reference to mistake (although see s 3(3)(f)), adjoining land only: see Amatek Ltd v Googoorewon (1993) 176 CLR 471); NT: Encroachment of Buildings Act, ss 13, 14; Qld: Property Law Act 1974, ss 196, 197 (discussed Oakwood Constructions Pty Ltd v Wyndon Properties Pty Ltd [2010] QCA 323); SA: Encroachments Act 1944, s 4 (limited as in New South Wales: see Bolton v Clutterbuck [1955] SASR 253 at 264); WA: Property Law Act 1969, s 123. 418. (1866) LR 1 HL 129. See generally Handley, Estoppel, Chapter 11; Meagher, Gummow and Lehane, Chapter 17. 419. Plimmer v The Mayor, Councillors and Citizens of the City of Wellington (1884) 9 App Cas 699 at 713; Hamilton v Geraghty (1901) 1 SR NSW) 81; Strang Patrick Stevedoring Pty Ltd v The ‘Sletter’ (1992) 38 FCR 501 at 521–4. See generally R J Sutton, ‘What Should be Done for Mistaken Improvers?’ in Finn, Essays, p 241. See also Yeoman’s Row Management Ltd v Cobbe [2008] 1 WLR 1752; [2008] UKHL 55. 420. The appropriate response need not involve the giving of a proprietary remedy: see [153]; Chapter 2 and [1025] (acceptance of benefit). See also Sidhu v Van Dyke (2014) 251 CLR 505; 308 ALR 232. 421. Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26; Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214; Clancy v Salienta (2000) 11 BPR 20,425; [2000] NSWCA 248.

422. (1991) Unreported, SC(SA) (FC), 30 May; 160 LSJS 160. See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27.

[page 195]

PART IV

Claims Based on Legal or Moral Compulsion

[page 197]

Chapter Five

Improper Pressure 1.

2.

3.

General ….

[501]

(a) Introduction ….

[501]

(b) Relevance of Contract ….

[506]

Elements of Claim to Restitution for Improper Pressure ….

[508]

(a) General ….

[508]

(b) Establishing Improper Pressure ….

[509]

(c) Benefit Recoverable ….

[519]

(d) Causation ….

[521]

(e) Defences ….

[524]

(f) Remedies ….

[525] [526]

Categories of Improper Pressure ….

1. General (a) Introduction [501] Objects. In this chapter we deal principally with the right to restitution for a payment made as a result of ‘improper pressure’. The main concern — as in relation to mistake — is to identify what a plaintiff must show in order to establish a prima facie right to

restitution. In our view, as in the case of mistake, most such claims can be brought within the conceptual framework of unjust enrichment. In addition, we identify the relationship between these claims and claims in relation to ineffective contracts. We also identify the role of defences. ‘Improper pressure’ is not a term of art, but a convenient description of compulsion that the law does not countenance if the pressure leads to benefits being conferred on persons not otherwise entitled to receive them. We shall examine various categories of improper pressure, and the overlapping remedies offered by the common law, equity and statute for the recovery of money or other value transferred to the defendant or a third party. Where a money payment is at issue, the plaintiff will generally establish a prima facie case for restitution on the basis of: (1) payment by the plaintiff to the defendant or at the defendant’s direction; (2) improper pressure; and (3) a sufficient causal connection between the payment and the pressure. The concept of ‘improper pressure’ is broad and difficult to define. It encompasses not only cases of unlawful pressure actionable in tort or subject to criminal sanction, but also conduct contrary to limits set by public [page 198] law, statute or equity. The concept of ‘unconscientious’ (or ‘unconscionable’) conduct entails exploitation of the other party’s position of disadvantage. It too may sometimes be used to establish a category of improper pressure leading to restitution of benefits conferred. The analysis in this chapter follows the conventional approach of

distinguishing improper pressure to a person’s physical wellbeing from improper pressure to a person’s assets or other rights (including contractual rights). However, it is also necessary to deal with other categories. One of these — ‘duress colore officii’ — has an ancient and respectable history. So too is conduct amounting to the abuse of process. Another — the concept of ‘economic duress’ — is a recent phenomenon and it lacks clear definition in the cases and texts. We are critical of its utility and note recommendations for its abandonment.1 [502] The concept of improper pressure. Pressure may consist of acts or threats hostile to the person, to property, to economic interests, or to other categories of rights and freedoms recognised under statute or the general law. If the pressure leads to the payment of money or conferral of other benefits, then the law will provide an appropriate measure of restitution where it regards the pressure to be improper. This is done to reverse the unjust enrichment of the defendant (or sometimes a third party) at the plaintiff’s expense. One of the oldest ‘unjust enrichment’ cases concerned improper pressure that led to the payment of money.2 It is convenient to consider separate categories of pressure, recognising that the one situation may generate rights stemming from more than one category, as well as alternative claims based on mistake, exploitation, restitution for wrongs etc.3 After setting out a general framework for all improper pressure claims we will address (improper) pressure: (1) to the person;4 (2) to property;5 (3) by refusal to perform a public duty (duress colore officii);6 (4) by other unlawful interferences with legal rights;7 (5) by threats to repudiate contracts;8 (6) by the abuse of legal process;9 and (7) by undue influence, unconscientious exploitation and breaches of

related statutory norms protective of private and economic interests.10 [page 199] Pressure alone is insufficient to lead to a restitutionary remedy. Many forms of pressure are recognised as legitimate in the law: these include the proper application of legal process,11 a mere refusal to do further business and/or to enter into a contract desired by the plaintiff,12 and the application of what is compendiously termed ‘mere commercial pressure’.13 To establish a basis for restitution, the victim must show that the law does not countenance the pressure applied as a method of extracting the benefit obtained. [503] Restitutionary issues. Where improper pressure leads to the conferral of a benefit on the defendant, the defendant’s receipt and consequential enrichment is unjust. Like mistake, improper pressure can be viewed as an unjust factor that prima facie leads to a restitutionary remedy designed to reverse any consequential enrichment.14 But if the defendant (or a third party) had authority to apply the pressure concerned, the necessary unjust factor is absent. Sometimes, as with blackmail, the illegitimacy of the pressure is disclosed by the demand for money or some other benefit (like signing a guarantee) that accompanies an otherwise lawful threat such as a threat to report misconduct to the proper authorities.15 Such conduct is unlawful in the most basic sense of involving a breach of the criminal law. The victim who pays has a restitutionary cause of action. It may not be possible to explain all situations where restitution is given for improper pressure in terms of reversing the defendant’s unjust enrichment. Where a robber or blackmailer directs the victim to pay money to a third party, the victim may seek restitution from either the criminal or the recipient.16 The restitutionary claim against the robber or blackmailer in these examples is derived from the common money count for money paid17 but, since it is available whether or not the

recipient is an agent for the criminal, recovery cannot always be explained on the basis of reversing the unjust enrichment of the defendant.18 In the cases where restitution lies against a defendant who did not receive any enrichment as the result of his or her criminal or tortious wrong there appears to be a limited exception (based on the quasi-contractual count for money paid and the clear justice of the case) to the general principle that the unjust enrichment compartment19 [page 200] of the law of restitution is concerned with reversing an unjust enrichment obtained by the defendant at the plaintiff’s expense.20 In the context of a robber or blackmailer it would be surprising if restitution was not available to reverse the outcome of the very conduct which the criminal law punishes. Improper pressure need not, however, involve a crime or even a tort.21 To the extent that a tort or crime is committed,22 the plaintiff would have alternative rights to bring a dependent claim23 that are analysed according to the principles of restitution for wrongs discussed in Part VI. We are concerned in this chapter with direct or independent claims in restitution. It will be seen that several categories of improper pressure involve conduct that is neither tortious nor actionable (in the sense of sounding in damages). [504] Common law, equity and statute. Both the common law (through the money counts for money had and received and money paid)24 and equity (through relief from undue influence and unconscionable conduct) have fashioned remedies capable of dealing with improper pressure,25 whether applied ad hoc or over the course of a relationship26 and whether or not leading to a contract (or deed) or directly to a transfer of benefit. For example, a plaintiff who pays a blackmailer can recover the value of the payment. The restitutionary claim would lie against the blackmailer at common law, under a cause of action derived from the count for money had and received,27 and in

equity, under the doctrine of actual undue influence. In this field both common law and equity look to the quality of the consent or assent of the weaker party.28 The cases discussed below under the rubrics of duress (of the person, of property, colore officii etc) involve causes of action derived from the common money counts of money had and received and money paid.29 In the modern taxonomy of restitution for unjust enrichment, they involve independent claims in which one of the categories of improper pressure is the unjust factor or basis for restitution.30 The equitable doctrines relating to undue influence and unconscionable conduct are also available to protect against the deprivation of money or other property by improper pressure (not that they are confined to such circumstances).31 [page 201] In Australia & New Zealand Banking Group v Karam32 the New South Wales Court of Appeal declined to set aside guarantees and mortgages entered into by shareholders and directors of a cashstrapped company. None of the traditional categories of improper pressure at common law discussed below33 were involved. Rejecting the debtor’s rather glib invocation of the notion of ‘economic duress’,34 the court discussed the (limited) availability of relief based upon the equitable principles of unconscionable conduct in this context. Beazley, Ipp and Basten JJA said:35 That approach will allow the weaker party to invoke principles of undue influence, or rights to relief based on unconscionable conduct in circumstances where the weaker party suffers from a ‘special disadvantage’, in the sense identified in Commercial Bank of Australia Ltd v Amadio.36 In addition, relief may be granted where permitted by statute.37

A leading case illustrating equity’s reach into the field of improper pressure is Williams v Bayley38 that we discuss below in the context of improper threats to prosecute.39 Where actual undue influence is proved,40 and probably where it is

presumed as well,41 it is not necessary under Australian law to prove that the transaction was manifestly disadvantageous. If undue influence or unconscientious conduct leads to a contract, equitable relief extends to rescission with consequential restitution according to the principles of failure of consideration.42 In a proper case equitable compensation may be awarded in addition to or instead of rescission.43 We explain below why this chapter confines itself to the restitution of uncontracted benefits conferred as the result of improper pressure.44 Since, however, the equitable jurisdiction in relation to undue influence and unconscionable behaviour extends to uncontracted benefits (especially gifts), and may be invoked to address various species of pressure, the equitable principles touching improper pressure can also apply in the present context. Undue pressure is an area where a significant amount of conscious fusion of legal and equitable rules has taken place.45 With legal development and [page 202] maturity, there is much overlap between the principles of common law duress and of actual influence in equity.46 In the seminal case of Moses v Macferlan,47 Lord Mansfield consciously melded legal and equitable principles, both generally48 and in the present context, when he referred49 to the action for money had and received as embracing ‘money got through imposition (express or implied); or extortion; or oppression’. Equity (as part of a broader concern to prevent exploitation through unconscientious dealings) developed several doctrines dealing with pressure that it was not prepared to countenance, doctrines that could be invoked to set aside a contract or transaction.50 In Barton v Armstrong51 Lord Cross (speaking for the majority) said:52 The scope of common law duress was very limited and at a comparatively early date equity began to grant relief in cases where the disposition in question had been procured by the exercise of pressure which the Chancellor considered to be illegitimate — although it did not amount to common law duress.

The remedy considered in Barton was said to be based on the equity decisions.53 Acknowledgement that restitution is awarded where a finding of undue influence or unconscientious conduct is made and a benefit is ordered to be returned is consistent with viewing undue influence and unconscientious behaviour as unjust factors in the taxonomy of unjust enrichment when invoked to strip an enrichment derived from exploitation of which equity disapproves. In the seminal undue influence case of Allcard v Skinner54 it was pointed out that the court interferes on the simple principle that no one is allowed to retain any benefit arising from his or her own fraud or wrongful act. The Australian Consumer Law55 confers power to make a wide range of discretionary orders, including orders in the nature of restitution, where improper pressure has been applied. There are statutory prohibitions of duress, applicable to the use of physical force or undue harassment or coercion in connection with the supply of goods or services, or in connection with a sale or grant of an interest in land.56 [page 203] There is also a prohibition on conduct in trade or commerce that is ‘unconscionable’ in connection with the supply or possible supply of goods or services.57 In addition, under the Australian Consumer Law there is a more general prohibition on conduct in trade or commerce which is ‘unconscionable’ ‘within the meaning of the unwritten law’.58 Although these provisions are in no way confined to the realm of improper pressure, they are capable of providing access to discretionary relief in circumstances involving improper pressure in a variety of forms.59 As indicated, restitutionary orders stemming from breaches of these norms are discretionary. But the statutory powers may be available in circumstances where the common law is not.60 [505] Improper pressure as a defence. Just as duress may form the basis for a restitutionary claim to a payment made, so also may

duress provide a defence to a claim to recover a payment said to be due, for example pursuant to a contract. In order to prevent circuity of action,61 the improper pressure may be put forward as a defence to the claim on the basis that restitution would be available if the payment were made. In B & S Contracts and Design Ltd v Victor Green Publications Ltd62 the plaintiff was bound by contract with the defendant to prepare a hall for an exhibition. However, it was experiencing industrial difficulties with employees who had been made redundant. The employees were seeking payment from the plaintiff, who sought help from the defendant in circumstances where it could be inferred that unless the defendant paid the redundancy money the plaintiff would not perform the contract. The defendant made a substantial payment which it subsequently deducted from the amount due under the contract. Although there was merely a veiled threat and no demand,63 the defendant’s payment was held to be made under duress. It was then held that the defendant had a good defence to the plaintiff’s contractual claim for payment.

(b) Relevance of Contract [506] Contracts vitiated by improper pressure. Until fairly recently, English law doubted whether threats to break a contractual duty could [page 204] ever be sufficient to give rise to restitution of a payment so extorted.64 The furthest it clearly went in such a context was to treat a promise to pay a surcharge for contractual performance as unenforceable for want of consideration (the existing duty rule).65 One reason given for the existing duty rule was that the enforcement of promises to pay more for that to which one was already entitled might lead to extortion. But the rule was a rather blunt weapon for this purpose, since it invalidated non-extortive as well as extortive renegotiations.66 In any event, the

existing duty rule could be evaded by a peppercorn consideration, or a promise made to a third party,67 renegotiation of contract or (possibly) through the doctrine of promissory estoppel.68 By contrast to the situation in England, Australian law has long regarded a threat to break an existing contractual duty as improper pressure that may vitiate any fresh or amended contract thereby procured and as capable of giving rise to an obligation to make restitution of a payment extorted thereby.69 This development occurred well before the late twentieth century flowering of restitution for unjust enrichment. A series of cases, including a 1925 decision of the High Court, recognised that a ‘compulsive threat … to refrain from performing merely a contractual duty’ can ground the setting aside of a fresh or amended contract and consequential restitution of additional benefits handed over in consequence of that contract.70 These principles were adopted in England in 1976 in Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre).71 Skeate v Beale72 had long stood for the proposition that duress of the person73 was the only form of improper pressure that the common law [page 205] recognised as vitiating an otherwise valid contract. However, by the early 1990s this restrictive principle had been definitively abrogated in a series of appellate decisions in Australia and England holding that a contract could be rescinded for any category of duress,74 thereby leading to restitution of moneys paid thereunder in a proper case75 and/or removing the contract from the field of possible defences to a direct restitutionary claim relating to the payment of money.76 A leading Australian case is T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd.77 The defendant threatened to break its contract to sell a quantity of iron to the plaintiff at a fixed price per ton unless the plaintiff paid a higher price. The plaintiff yielded to the defendant’s ‘practical compulsion’ by agreeing to increase its letter of

credit and thereafter paid the higher price. When sued to repay the excess, the defendant relied on the variation agreement. The Full Court of the Supreme Court of New South Wales held that, even if the alleged variation agreement had been made, it was not supported by consideration because the defendant had merely promised to perform its original contract.78 The variation agreement could therefore be ignored, the original contract stood, and the (excess) money paid under the variation agreement was recovered as on a total failure of consideration.79 Sundell also held that, even if the variation agreement had been supported by consideration, it would have been vitiated by the ‘practical compulsion’ that induced it. The defendant had argued that compulsion in the form of a threat to withhold performance of the original contract was not a form of duress known to the law. This argument was rejected, with the court applying an oft-quoted statement by Isaacs J in Smith v William Charlick Ltd80 that we set out below. In Sundell, the variation ‘contract’ could be ignored on each basis referred to. In other situations the vitiating factor may only render the contract voidable, in which event the necessary claim for its rescission may be lost due to affirmation,81 delay etc, or may only be granted on terms including [page 206] terms as to counter-restitution. If pressure (even improper pressure) leads to the formation of a contract, restitution is not available to recover the value of any money or other benefit transferred pursuant to that pressured contract unless it is void or unless (if merely voidable) it is rescinded or set aside.82 We discuss this fundamental principle elsewhere.83 We offer two reasons for adverting in this chapter to the principles governing restitution of benefits transferred under ineffective contracts. The first is to emphasise that, where improper pressure leads to a

contracted payment, restitution of that payment is usually subject to the principles governing recovery of money paid on a consideration that fails, that is those set out in Part V (Claims Arising out of Ineffective Contracts).84 Second, restitution and contract have borrowed extensively from each other in identifying and defining categories of improper pressure. As indicated, improper pressure may both vitiate a contract (in the sense that the pressure is a ground for rescission) and be the unjust factor in a direct claim to restitution of an uncontracted payment.85 While there are indications that the courts will apply similar principles in identifying improper pressure in each case, it does not necessarily follow that the test for identifying improper pressure should be the same in a contractual and non-contractual context. After all, recovery of money paid under mistake proceeds under more liberal principles than those governing the avoidance of contracts on this ground. [507] Defence of compromise. Restitutionary claims may be defeated by a binding contract whereby they are abandoned. Thus, a claim based on improper pressure may be lost if the defendant can establish a binding compromise.86 Many cases involving assertions of improper pressure associated with the invocation of legal process fail because the outcome of the posturing was a binding contract of settlement.87 The absence of good faith may invalidate a compromise agreement.88 [page 207]

2. Elements of Claim to Restitution for Improper Pressure (a) General [508]

Introduction. Subject to various defences, the plaintiff must

establish three matters to qualify for restitution in this area: (1) improper pressure; (2) conferral of a benefit; (3) a causal link between (1) and (2). The first inquiry goes to the nature of the pressure. We outline some general principles below.89 Various (sometimes overlapping) categories will be considered in detail later.90 The second inquiry is easily satisfied in most instances, because the claim is to recover a payment of money, usually but not invariably to the defendant.91 The value of other benefits (such as services) conferred under improper pressure is equally recoverable in restitution.92 The third inquiry involves a subjective investigation (as to a causal link).93 Together, these render the defendant’s enrichment unjust, thereby establishing a prima facie right to restitution. Certain defences are available.94 In Smith v William Charlick Ltd,95 Isaacs J described the broad principle in the following terms:96 ‘Compulsion’ in relation to a payment of which refund is sought, and whether it is also variously called ‘coercion,’ ‘extortion’, ‘exaction,’ or ‘force,’ includes every species of duress or conduct analogous to duress, actual or threatened, exerted by or on behalf of the payee and applied to the person or the property or any right of the person who pays or, in some cases, of a person related to or in affinity with him. Such compulsion is a legal wrong, and the law provides a remedy by raising a fictional promise to repay.

Another useful general statement was made by La Forest J in Air Canada v British Columbia:97 There must be some natural or threatened exercise of power possessed by the party receiving it over the person or property of the [other] for which he has no immediate relief than to make the payment.

[page 208]

(b) Establishing Improper Pressure

[509] Improper pressure. Some types of improper pressure are themselves criminal, for example robbery at gunpoint or blackmail, or tortious, for example false imprisonment.98 But conduct does not have to be criminal or tortious to enliven a right to restitution.99 Nor does it have to sound in damages. It may simply be unconstitutional, or prohibited or unauthorised by an applicable statute, or contrary to equitable or statutory norms against undue influence or unconscionable conduct. It may merely take the form of a breach or threatened breach of contract. Often, the same conduct is capable of being applied with or without justification. For example, in the category of pressure (to the person), money paid to procure the plaintiff’s release is irrecoverable if it discharged a valid fine the non-payment of which had put the plaintiff in lawful custody, but recoverable if it was the price demanded to release the plaintiff from an unlawful imprisonment.100 In both examples the ‘threat’ of continued imprisonment may have caused the payment, but only in the latter situation was the threat improper. Frequently, when refusing relief, a court brands the pressure involved as ‘mere commercial pressure’. This conclusory label does little more than flag a case with a commercial flavour that falls outside the established categories for relief. But given the currency of the expression, we discuss the cases below.101 [510] Exploitation contrasted. In this chapter we use the concept of improper pressure to include various categories of compulsion102 which caused the plaintiff to confer a benefit on the defendant in circumstances where the law characterises the receipt itself as unjust. The plaintiff’s right to restitution is a direct one where the pressure which led to the conferral of the benefit is the basis of the claim, as distinct from one where the plaintiff relies upon a legal or equitable wrong that may generate a right to compensation or the disgorgement of benefits extracted in consequence of the wrong.103 ‘Improper pressure’ in this primary sense includes: (1) duress, in all forms recognised at common law; (2) actual (or express) undue influence or other forms of pressure that

equity views as unconscionable; and (3) pressure that contravenes some statutory norm.104 The same pressure may overlap one or more of these three legal bases. We distinguish conduct that consists merely of exploiting or taking advantage of the plaintiff’s weakness. There is a difference recognised in law between exerting pressure by making or carrying out an improper threat; and merely exploiting another person’s weakness, whether or not [page 209] that exploitation generates a remedy.105 Exploitation in this wider category, with which we are not presently concerned, may include abuse of a fiduciary relationship, undue influence based on one of the established categories of relationship of influence and unconscionable conduct where the advantage taken does not come about by actual pressure. [511] Implied threats and reasonable conduct contrasted. Improper pressure may be actual or implied.106 The idea of an implied or veiled threat may arise in any context,107 but it is frequently encountered in relation to public utilities that demand payment of outstanding moneys, without spelling out explicitly that non-payment will result in the electricity, gas or other service being turned off.108 But there is a distinction between an (improper) implied threat and a frank indication of a realistic position. An insolvent debtor that tells its creditor that the debtor may go under unless an indulgence is negotiated is not thereby making an implied threat.109 Nor does a statement by a bank that it will withdraw its support for an unsatisfactory debtor unless there is an early inflow of funds in itself represent a veiled threat to start an adverse rumour in the marketplace.110 The necessary distinction between a veiled threat and

the mere provision of information may be difficult to draw in concrete situations. Good faith does not preclude a case based on improper pressure.111 [512] Threats and offers. A threat to commit a lawful or unlawful act may be either express or implied. But, as regards intimated conduct that is lawful, both life and the law distinguish at times between threats and offers. The crux of the distinction between threats and offers lies in the fact that ‘A threatens B by proposing to make B worse off relative to some baseline; A makes an offer to B by proposing to make B better off relative to some baseline’; offers augment a party’s alternatives, whereas threats reduce them.112

[page 210] The distinction will, however, become question-begging if and insofar as determining the very baseline of acceptable conduct itself involves a legal decision as to the plaintiff’s positive or negative legal rights in a particular situation. An offer to do further business on new, harsher terms, will seldom entail improper pressure unless, of course the supplier is already bound as to the future.113 [513] Use of legal process. The use of legal process will seldom be regarded as an improper form of pressure.114 ‘Legal proceedings are undoubtedly coercive, but they are provided by the State for that very purpose.’115 Legal process is recognised as a threat to apply pressure to a person, or a person’s property, but ‘it is the business of all legal systems to make sure that such pressure is available and effective’.116 A threat to sue unless money is paid is almost always regarded as legitimate, ‘for the payer might have defended the proceedings and relied upon the unlawfulness of the demand’.117 A bona fide threat by a secured creditor to exercise rights conferred by the security is similar in legal effect to a threat to sue.118 However, the law recognises a tort of collateral abuse of legal process,119 so, for this and other reasons, it is

necessary to contemplate exceptional circumstances where the use or threatened use of legal process might amount to improper pressure.120 Benefits extracted by threats to prosecute are viewed with particular wariness by the law.121 And if the threatened application of legal process is accompanied by conduct that constitutes a recognised species of improper pressure, then the latter conduct may ground a good claim.122 [514] Threats to sue. Resort to law is seldom improper in itself, although the recent development of the tort of collateral or malicious abuse of legal process123 demonstrates that this is not an absolute proposition. Money paid pursuant to a judgment entered by a court with jurisdiction is irrecoverable so long as the judgment stands, because ‘there must be an end of litigation, [page 211] otherwise there would be no security for any person’.124 In one sense, the policy against allowing unjust enrichment is displaced by ‘the policy in favour of the finality of dispute resolution’.125 This latter policy is qualified by the availability of restitution to the party who pays under a judgment but later has it set aside.126 Almost invariably, payment made in this context is by way of compromise and supported by consideration in the form of the payee’s promise not to sue, or to discontinue on the agreed terms. An agreement to compromise can seldom be impugned on the ground of mistake as to the true legal situation127 or improper pressure (if all that was involved was a bona fide threat to prosecute or defend legal proceedings).128 So long as the agreement itself stands, restitution is denied because of the principle that restitution is generally unavailable where a valid contract covers the field.129 A threat to sue that results in the payment of money130 will be improper pressure, and lead to restitution, if the threat is made illegally or in bad faith or is accompanied by pressure that is itself improper. All

of these situations involve an abuse of process. In Smith v Cuff,131 the defendant had stood out against a composition between the plaintiff and his creditors until he received a promissory note for an extra payment to himself. After the plaintiff had paid the note, he recovered back the sum as money had and received. In response to a plea of illegality based on fraudulent defeating of creditors, Lord Ellenborough CJ said:132 This is not a case of par delictum; it is oppression on one side, and submission on the other: it can never be predicated as par delictum, when one holds the rod, and the other bows to it.

Smith v Cuff is usually cited as an exception to the par delictum principle in cases of oppression. It is equally authority for the principle that illegality133 may taint the otherwise proper threatened application of legal process. Bad faith in the invocation of legal process may allow the recovery of money paid to avoid it,134 just as it may taint any compromise.135 [page 212] If a threat to institute legal proceedings is accompanied by an unlawful demand or threat it may constitute improper pressure grounding restitution.136 The commonest example of impropriety in this context is the threat to prosecute the plaintiff or a member of the plaintiff’s family coupled with a promise not to do so in return for payment.137 But other categories of improper pressure may also be involved. An illegitimate threat does not become legitimate because the person making the threat states that legal proceedings may be brought, and a threat to bring legal proceedings to recover a creditor’s entitlement may therefore be illegitimate pressure in some circumstances. Thus, in J & S Holdings Pty Ltd v NRMA Insurance Ltd,138 a creditor claimed an excessive amount of interest139 and refused to discharge a mortgage unless it was paid. The creditor also served a notice of demand under s 222 of the Companies Ordinance 1962 (ACT) and threatened to wind

up the debtor if the claim was not met. It was argued that this was the use of lawful process. Since the debtor succumbed to both the threat of a winding-up petition and refusal to discharge the mortgage, the excessive sum was held to have been paid under compulsion and to be recoverable.140 According to the Full Court of the Federal Court of Australia (Blackburn, Deane and Ellicott JJ):141 … while the threat or institution of legal proceedings will not, in itself, ordinarily constitute compulsion in the relevant sense … the fact that such legal proceedings are threatened or on foot does not operate to alter the character of a payment extracted by compulsion or, in a case where the payee was under no obligation to pay all or part of the money paid, preclude the payee from recovering that to which the payee was not entitled. Were it … otherwise, every calculating highwayman, bushranger and robber would take out the insurance of instituting an action against any potential victim. The position may well be different if the money paid was paid in actual settlement of legal proceedings.

[515] Threats to prosecute. In contrast to threats to sue, a payment induced by threat to prosecute the plaintiff, or a near relative of the plaintiff, will usually be recoverable. This is a category of ‘lawful’ pressure that will usually not be tolerated, on equitable grounds discussed under the rubric of undue influence.142 The criminal law is not a legitimate debt-collecting agency. The leading case is Williams v Bayley143 where a son gave to a bank promissory notes [page 213] on which he had forged his father’s endorsement. The bank inferred to the father that, if some settlement was not reached, the son would be prosecuted. Under this pressure the father agreed in writing that, in consideration of the return of the promissory notes, he would pay the bank the amount advanced by it on the notes, and provide security for this payment. The House of Lords held the contract invalid as procured by undue influence. The agreements were ordered to be delivered up to the father to be cancelled. The forged promissory notes were ordered to be delivered back to the defendant.144

The threat to inform the police of a crime unless money is paid is also, generally, an improper pressure.145 It is the crime of blackmail, a clearly unlawful act. If it results in the payment of money the victim has a restitutionary cause of action for its recovery.146 But the objection to compromising criminal claims by paying money is not absolute. The offence that is the subject matter of the compromised prosecution must be one in which ‘the public had an interest’.147 In Kerridge v Simmonds148 the High Court instanced assault and criminal defamation as falling within the realm of private rights where a compromise could be valid. Presumably this means that money paid to avoid or terminate such proceedings may be irrecoverable in some circumstances. Some cases hold that a creditor’s threat to prosecute for an available offence will not in itself taint any agreement to pay or compound the debt, or lead to restitution. These turn upon the fact that there was no suggestion or promise of stifling the prosecution.149 Given that threats of improper pressure of this nature may be implied,150 the line is a very fine one. In any event we would have thought that the threat itself is improper, if linked in any way with the recovery of a civil debt.151 By contrast, a plaintiff who chose to pay an ‘expiation notice’, thereby electing not to be prosecuted, could not sue to recover the fine upon later discovering an available defence, especially since she adverted to the defence but thought it would be unsuccessful.152 Most of these cases involve threats to prosecute someone other than the payer. The distinction between a threat to prosecute the plaintiff and a threat to prosecute a third party may be critical. If P pays D a debt which is owing by P to D, P cannot usually recover it back by pointing to an improper threat which led to the payment.153 [page 214] [516] Refusal to do future business seldom improper. Freedom of contract entails the freedom to choose not to contract. Subject to

any rights flowing from Part IV of the Competition and Consumer Act 2010 (Cth),154 a person who enters into a disadvantageous contract with another, because the other was the only supplier of the goods or services in question, cannot on that account alone impeach the contract or recover payments made under it. The leading case is Smith v William Charlick Ltd155 where a milling company failed in its claim for reimbursement of surcharges paid to the Wheat Harvest Board as a result of the latter’s threats not to make future supplies to it if they were not paid. The High Court156 dismissed the miller’s claim. It was, in Knox CJ’s words,157 made with: … full knowledge of all material facts. The respondent knew that the Board was not, and did not claim to be, legally entitled to demand the money. It was paid, not in order to have that done which the Board was legally bound to do, but in order to induce the Board to do that which it was under no legal obligation to do.

According to Starke J, the miller:158 … chose to pay a further sum for wheat already sold to [it] rather than to be shut out from full trade with the mandatory of the owners of wheat. The money was, no doubt, paid unwillingly, and the payment was dictated by the trade interests of the petitioner. But it was, nevertheless, paid voluntarily, in the legal sense, with full knowledge of the facts and without any unlawful compulsion, extortion, undue influence, or the absence of any duty which the Wheat Board owed to the petitioner.

Where a landlord, having reasonable grounds for withholding consent to an assignment of lease, negotiated in good faith for the payment of a consideration for the giving of consent, the money paid was not recoverable. The plaintiff, who was legally represented throughout, knew that she could not compel the defendant to do anything; but she was also aware of her right to test the parties’ respective rights by taking an assignment and opposing any ejectment action.159 CTN Cash and Carry Ltd v Gallaher Ltd160 is a decision of the English Court of Appeal rejecting a claim that was based on ‘economic duress’. A dispute that had arisen out of a past supply of a consignment of cigarettes was settled by the purchaser submitting unhappily to the supplier’s demands as the price of continuing credit facilities for future dealings. The claim failed, primarily because no breach of a contractual or other duty

[page 215] was involved in the defendant withdrawing credit facilities in respect of future transactions.161 The defendant had flexed its muscle, but was held to have acted in good faith in insisting upon the compromise of the dispute according to its terms.162 In none of these cases was there any actual or threatened interference with any legal right or any accompanying form of recognised improper pressure. If there had been, restitution would be available on wellestablished grounds. There is, we believe, little reason to doubt that Smith v William Charlick Ltd163 still represents the law, especially since the Wheat Harvest Board was simply taking the opportunity arising from the precontractual relationships of the parties.164 Nevertheless, if the facts of Smith v William Charlick Ltd occurred today, the Board’s conduct would be closely scrutinised to see that it did not entail any form of duress colore officii165 and that it satisfied equitable and statutory standards governing dealings with those who are vulnerable.166 The fact that the Board exercised public functions would permit the validity of its conduct to be examined according to the principles of administrative law,167 not that restitution follows automatically upon a quashing or declaration of invalidity.168 Nevertheless, if statute fixes the price for the performance of some obligation and an excessive charge is levied upon someone having the legal right to performance at the lower rate, any excess paid is recoverable.169 [517] ‘Mere commercial pressure’. From time to time one encounters statements that (mere) commercial pressure will not amount to (economic) duress.170 We doubt, however, that the notion is very helpful given both that commercial pressure may be lawful or unlawful and that ‘mere commercial pressure’ tends to be used as the label associated with a conclusion that restitution does not lie in the particular case. If (to use Kirby P’s expression) ‘there is no doubt that in some circumstances commercial pressure may constitute duress’,171

then the analysis has really only come to the start of the inquiry. The use of ‘mere commercial pressure’ as an antonym for ‘economic duress’ also suffers from the deficiencies of the latter term.172 [page 216] Cases rejecting claims on the basis that they involved no more than ‘mere commercial pressure’ include Pao On v Lau Yiu Long173 and Equiticorp Finance Ltd (in liq) v Bank of New Zealand.174 Each involves unsuccessful attempts to set aside a contract, but (as already indicated) the courts are likely to apply similar principles to claims for the restitution of uncontracted payments. In Pao On, the plaintiffs refused to complete a share purchase from the defendants unless a subsidiary agreement, by which the defendants were to buy back the shares at the end of the year at $2.50 per share, was replaced by the plaintiffs being guaranteed $2.50 by way of indemnity. This left the plaintiffs free to sell back at a higher price at the end of the year. The threat placed very considerable pressure on the defendants, who feared a loss of confidence in the company if the deal, which had been publicised, fell through. They were also concerned at the delay that would result from litigation. As against this, the defendants also believed that the risk in giving the indemnity was more apparent than real. Although the defendants yielded to the plaintiffs’ threat to breach the existing contract, the Privy Council upheld the resulting new contract and allowed the plaintiffs to enforce the indemnity when the market had unexpectedly dropped. The case really involved contract and not restitution. The existing duty rule175 was avoided by finding that the real consideration for the provision of indemnity was the plaintiffs’ promise to the defendants to perform their contractual obligations with a third party under a different contract.176 Speaking for the Board, Lord Scarman said that ‘in a contractual situation commercial pressure is not enough’.177 On the facts ‘there was commercial pressure, but no coercion’ of the will.178 We refer elsewhere to the later rejection of this notion of the

overbearing of will.179 But in the present context one should note the matters that were apparently critical to the conclusion that (mere) commercial pressure was present: they were that the defendants ‘considered the matter thoroughly, chose to avoid litigation, and formed the opinion that the risk in giving the guarantee was more apparent than real’.180 The defendants had had legal advice. The case demonstrates that a threatened breach of contract made in the course of its attempted renegotiation will not invariably lead to a successful claim for restitution. [page 217] In Equiticorp, the bank insisted that a debt be repaid by July 1988 notwithstanding that it had previously consented to extend the repayment date to September 1988. (This previous consent was not contractually binding.) Giles J held that there was no ‘economic duress’, and was upheld on appeal to the New South Wales Court of Appeal. The allegation of ‘economic duress’ in Equiticorp failed on the facts. Giles J cited New Zealand cases to the effect that such duress should not be found lightly.181 There was no doubt that the effective decision-maker on the plaintiff’s part ‘considered himself under pressure in the sense that there was (as he saw it) compelling reason to do something that he did not want to do. There was commercial pressure, but was it illegitimate pressure?’182 The pressure related to loss of support and credibility, because the debtor was anxious to maintain its credibility with the bank and the bank’s continuing support for its group. The bank’s insistence on payment in July was, in these circumstances, held not to be illegitimate.183 [518] A note on ‘economic duress’ and ‘lawful act duress’. In our view, the descriptions ‘economic duress’ and ‘lawful act duress’ that are encountered in some cases184 and several texts are not in themselves helpful.185 Commentators record economic duress as having arrived into the

English common law in the 1970s, with the decision of Kerr J in The Siboen,186 Mocatta J in The Atlantic Baron187 and the Privy Council in Pao On v Lau Yiu Long.188 In 1979 Lord Scarman referred to these cases as providing ‘indications … that economic duress in a commercial setting may well constitute a good cause of action’,189 although his Lordship did not pause to outline the elements of that cause of action. Many traditional cases of undoubtedly unlawful pressure arise in economic and commercial contexts. Thus, threats to burn down a shop or slash a valuable picture of the contracting party will, if they influence the payer, lead to restitution on the standard ground of duress of property, [page 218] because of the illegal nature of the defendant’s conduct.190 So too, a threat to make a damaging defamatory statement about a trading entity.191 In Barton v Armstrong192 threats to murder were applied to induce one shareholder to buy out another, but the case was decided according to orthodox principles relating to duress of the person. Conversely, the case law recognising a limited right of restitution where benefit is conferred in situations that do not involve common law duress goes beyond the ‘economic’ context, including, for instance, threats to prosecute.193 ‘Economic duress’ is widely used by some commentators to describe or at least pigeon-hole contractual or restitutionary claims involving pressure falling outside the traditional ‘common law’ duress categories.194 Yet many of the cases involve the application of standard principles of contract law to impugn or sustain a pressured variation of an existing contract.195 Others involve the application of equitable principles allowing rescission of transactions involving unconscionable pressure. A leading example of the latter category is Williams v Bayley which we have discussed in the context of threats to prosecute.196 Most if not all claims invoking ‘economic duress’ have been rejected

because the conduct involved fell outside established categories of improper pressure or failed to satisfy their requirements. Claims have also been rejected because the conduct complained of was no more than a legitimate refusal not to enter into further business with the plaintiff,197 or amounted to no more than ‘mere commercial pressure’.198 Use of the term ‘economic duress’ as an ex post facto rationalisation of cases not falling within the traditional categories of duress of the person, duress of property and duress colore officii is unhelpful and potentially misleading. We nevertheless assume that a contract may be rescinded for economic duress for the purposes of Chapter 13 in recognition of this broad category of contract vitiation that is frequently referred to in modern cases and texts. In 2005 the New South Wales Court of Appeal proposed the abandonment of the terms ‘economic duress’ and ‘illegitimate pressure’.199 We note below [page 219] and we reject suggestions in the English cases to the effect that claims based on ‘economic duress’ may attract special rules of proof and causation.200 Some Australian cases contain obiter dicta recognising a concept of ‘economic duress’.201 But in none of them has the claim been successful. And, like the English decisions, the reasoning does not support any notion of pressure that can be illegitimate because (in an economic context) it offends some standard invoked solely for the purpose of restitution. This leads us to the even more unhelpful concept of ‘lawful act duress’, a term endorsed if not coined by Steyn LJ in CTN Cash and Carry Ltd v Gallaher Ltd.202 The cases his Lordship cited involved unlawful conduct in the form of blackmail, where the gravamen of the illegality is a demand without reasonable cause,203 undue influence in the form of a threat to prosecute a family member,204 and unlawful

trade union activity.205 Edelman and Bant see these examples (together with abuse of legal process and ‘emotional pressure’)206 as supporting a notion of ‘lawful, but illegitimate, pressure’ that entails a ‘requirement of disproportionality’.207 We firmly disagree. Anything suggesting that restitution for improper pressure may follow from such vague and malleable criteria of modern invention should be resisted. All of the examples said to support the notions of ‘lawful act duress’ or ‘lawful yet illegitimate’ pressure involve conduct that (if it leads to benefits being transferred) is vulnerable according to well-established norms.208 The defendant’s conduct may not necessarily have been actionable in damages, but it certainly was liable to be frustrated by the application of established principles external to the law of restitution.209 ‘“Illegitimate pressure” in this context should be [page 220] understood and confined to conduct which is unlawful or wrongful, by reference to some external legal standard.’210

(c) Benefit Recoverable [519] Types of enrichment. Money is the usual benefit conferred as the result of improper pressure. But there is no reason why the defendant who uses improper pressure to procure the conferral of services or the transfer of goods should not also be required to make restitution.211 The defendant’s conduct will generally remove any possibility of asserting that the plaintiff freely accepted the benefit conferred, as well as precluding the defendant from arguing that the benefit it received was not valuable.212 Since the law of restitution is concerned with matters of substance and not form,213 a claim based on the principles discussed here will not succeed or fail simply because of the livery in which it is cloaked. A payment by way of gift that is untainted by improper pressure cannot,

by definition, be recovered. It may have been ‘given’. But ‘a donation to a beggar who presents a pistol’214 is obviously recoverable because of duress of the person. Many cases involving undue influence relate to gifts. But where the benefit is conferred under a contract procured by pressure, the contract must (unless itself void) be set aside as a step towards restitution.215 [520] Money already due and recovery of excess. If D by the use of pressure obtains from P that which is already due under an obligation owed by P to D, P cannot rely on the principles discussed in this chapter to get it back again except perhaps in cases involving duress of the person.216 D is not enriched by merely getting what is owed.217 Furthermore, the principles relating to circuity of action preclude P’s claim.218 Similarly, if and to the extent that counter restitution is available, this constitutes an effective defence.219 If, on the other hand, D obtains payment of a debt that is not enforceable (such as a gambling debt), then the presence of duress may allow recovery.220 [page 221] Where money is due by P to D, but an excessive amount is demanded and paid, the excess is recoverable,221 provided the pressure is improper.222 Conversely, the application of improper pressure may confer a benefit whose true value is something less than the amount paid, because P would have had to pay D the money anyway (albeit later in time).223

(d) Causation [521] Plaintiff’s will need not have been overborne. Earlier authority suggested that duress ‘must amount to a coercion of will, which vitiates consent’.224 But this test is neither useful nor accurate. Provided the pressure caused the payment (according to the relatively relaxed criteria indicated in Barton v Armstrong),225 it is not necessary

that the plaintiff shoulder the philosophically difficult task of proving that his or her will was overborne. Citing from the criminal law,226 McHugh JA expressed the matter thus in Crescendo Management Pty Ltd v Westpac Banking Corp:227 In my opinion the overbearing of the will theory of duress should be rejected. A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate?

The typical case of duress today involves, not the lack of will to submit, but the victim’s intentional submission arising from the realisation that there is no other practical choice open.228 [page 222] There is no reason in principle why the overborne will theory should not be banished from both the common law and equitable ‘sides’ of the law of improper pressure. McHugh JA was speaking in a general context and his remarks were directed, in part, at English ‘economic duress’ cases.229 [522] Pressure need only be a cause. Nevertheless, the plaintiff must still establish a causal link between the improper pressure and the (excessive) payment. The plaintiff failed in Crescendo Management Pty Ltd v Westpac Banking Corp,230 because it was found that the execution of the impugned mortgage had preceded the application of the pressure. The causation test is not unduly difficult to satisfy. Although the well-known case of Barton v Armstrong231 involved a contract induced by a threat to murder, its principles relevant to causation are, we believe, applicable to non-contractual payments made as the result of various forms of improper pressure.232 In Barton, the Privy Council held that the plaintiff need show no more than that the threats to his person were ‘a reason (not the reason, nor the predominant reason, nor the clinching reason)’.233 There is an analogy between rescission for

duress or undue influence and rescinding a contract for fraud,234 in that it is sufficient for the misrepresentation or duress to be an inducement.235 A remote possibility of pressure being used is not sufficient.236 If the threat has been withdrawn at the time of the payment, or if it never operated or is no longer operating upon the mind of the payer, restitution on this ground is not available.237 Delay in claiming restitution may be evidence negating causative duress.238 [page 223] There is English and New Zealand authority239 that the more stringent ‘but for’ test of causation must be satisfied in cases of ‘economic duress’,240 but (as we explain below) this is difficult to justify in principle and does not represent the law in this country.241 In 1998, Mance J suggested in Huyton SA v Peter Cremer GmbH & Co242 that the ‘relaxed view of causation’ applicable to what he described as the ‘special case of duress to the person’ could not prevail for economic duress. He thought that Lord Goff’s reference in The Evia Luck243 to ‘a significant cause’ indicated that the minimum test of subjective causation in economic duress ought to be a ‘but for’ test.244 Mance J was contrasting this test with the reference in Barton v Armstrong245 to ‘a’ cause being sufficient for duress in the form of threats to kill. In 2000, Dyson J suggested that the ingredients of actionable duress246 required proof that the illegitimate pressure must have been ‘a significant cause’ inducing entry into the contract.247 Unlike Mance J, Dyson J did not exegete this phrase, nor did he confine it to any particular category of duress. Writers including Goff and Jones248 and Virgo249 have viewed these obiter dicta as indicating that a special rule of causation applies in socalled ‘economic duress’ cases. Yet, no one, to our knowledge, explains why this should be so beyond Professor Virgo’s debatably relevant

statement250 that economic threats tend to be much less blameworthy than threats to interfere with the person or property. In any event, there are fundamental difficulties with the idea that a special tighter rule of causation is called for in this area. In the first place, this reasoning reads far too much into Lord Goff’s passing reference to ‘significant cause’ in Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck).251 Lord Goff had himself cited the very passage from Barton v Armstrong that Mance J invoked to draw the suggested distinction. Lord Goff also cited passages in Pao On252 and Crescendo Management253 each of which (in an ‘economic duress’ context) [page 224] had clearly opted for the relaxed test of causation requiring only that the pressure be one of the reasons inducing the contract. The second difficulty with Mance J’s proposition is that it draws a false dichotomy between ‘but for’ causation and the sufficiency of proof that the improper pressure was a cause. This is not the place to plunge into matters philosophical or the immense volume of recent case law and literature that seeks to tease out how to address causation issues. Suffice it to say that in the tort of negligence the two propositions are not alternatives, they march hand in hand. A plaintiff must show that the defendant’s negligent act contributed to the injury, although it need not be the sole or predominant cause. But it must also be shown, at least, that the injury would not have occurred ‘but for’ the defendant’s conduct. According to Fleming, The Law of Torts:254 ‘The [“but for”] formula postulates that the defendant’s fault is a cause of the plaintiff’s harm if such harm would not have occurred without, or “but for” it.’ There are also unhelpful obiter dicta in English cases about the significance of absence of alternative legal redress.255 Likewise, talk about the absence of a ‘reasonable alternative’ or a ‘real choice’.256 No one denies the need for the plaintiff to show that the unlawful pressure

caused the contract and/or payment, or the materiality of investigating whether there was protest or the availability of alternative remedies. But these matters are evidentiary, not dispositive.257 In Astley v Reynolds,258 it was held that the availability of an alternative remedy in trover did not rule out recovery in quasi-contract because ‘the plaintiff might have such an immediate want of his goods that an action of trover will not do his business’. Once the evidence establishes that the pressure exerted on the victim was improper, an evidentiary onus lies on the defendant to show that the pressure made no contribution to the plaintiff’s conduct.259 Where it is clear that the defendant’s coercion operated on the mind of the plaintiff, the defendant will not be heard to say that the threat was unlawful or negligible and should have been disregarded.260 [page 225] [523] Protest. An express protest is not necessary where compulsion is evident on the facts or where a protest would be useless.261 In Lord Scarman’s words, ‘the victim’s silence will not assist the bully, if the lack of any practicable choice but to submit is proved’.262 In Mason v New South Wales,263 Windeyer J summarised the law on protest as follows:264 A protest at the time of payment may of course afford some evidence, when accompanied by other circumstances, that the payment was not voluntarily made to end the matter. But there is no magic in a protest; for a protest may accompany a voluntary payment or be absent from one compelled. Moreover the word ‘protest’ is itself equivocal. It may mean the serious assertion of a right or it may mean no more than a statement that payment is grudgingly made. In some early cases a protest accompanying payment had more than an evidentiary importance. It was, and in some parts of the United States still is, a notice to the collector of a challenged levy that if he pays it over to the state he does so at his own risk. In these cases the payer, by protesting before payment over, may preserve a right to sue the collecting officer personally — a matter of importance wherever a civil action cannot be brought against a state. The plaintiffs’ protests do provide some evidence that their payments were not voluntary; but they do not prove that they were compelled by duress or coercion.

It does not matter that the plaintiff’s belief as to the basis of the

protest was mistaken.265 One situation in which absence of protest will be fatal is if statute creates a right of recovery, makes protest at the time of payment a condition of recovery, and is held to be an exclusive code.266

(e) Defences [524] Defences. Restitutionary ‘defences’ are discussed in Part VIII of this book. Some special statutory defences available to the Executive are also discussed in Chapter 20. Some ‘defences’ merely represent the denial of a prima facie right to restitution. We would include, in this category, defences that payments were made ‘voluntarily’ or ‘to close’ a transaction.267 It is now clear that it is no answer to a claim based on yielding to improper pressure that the plaintiff [page 226] acted under a mistake of law.268 Nor is it helpful to use the label ‘voluntary’, particularly since (in this context) it appears to mean no more than non-compulsory. As long ago as 1853, Martin B said in Steele v Williams269 that ‘to call it a voluntary payment is an abuse of language’. The same criticism can be levelled at the use of ‘compulsory’ as an overly glib label in the opposite direction.270 The compulsion operating on the plaintiff may be the same whether or not the demand is ‘legitimate’. For true defences, the onus of pleading and proving them rests upon the defendant. We confine the discussion here to aspects of restitutionary defences that have special application to improper pressure. Where the pressure is illegal, in the sense of being tortious or criminal, it will almost certainly be regarded as illegitimate. The

illegality provides the defendant with no defence, because the plaintiff, as the victim, will not be in pari delicto.271 The defence of payment over by an agent or intermediary272 is unavailable when the agent or intermediary was the source of the improper pressure.273 It is otherwise if the agent or intermediary was not privy to the improper pressure and paid over before notice of the plaintiff’s claim.274 Indeed, when payment is made to a known agent (such as a revenue officer for the Crown) then, so long as it appears that the principal has the least colour of right to the money, the plaintiff must sue the principal whether or not the agent has paid over.275 By similar reasoning, the defence of change of position should not be available to the defendant whose improper pressure caused the plaintiff’s payment.276 This is because the defence is not available to a ‘wrongdoer’, although the scope of that concept is rather uncertain.277 But the defence should be available to the innocent recipient of money who changes position after having been paid as the result of improper pressure by a third party.278 If the defendant has an entitlement to counter-restitution279 then, to that extent, the retention of money paid under compulsion is not unjust.280 If the plaintiff needs to rescind a contract as a step towards obtaining restitution he or she must be able to offer counterrestitution.281 [page 227]

(f) Remedies [525] Personal and proprietary remedies. Most of the cases discussed in this chapter involve personal as distinct from proprietary remedies.282 Professor Burrows argues that there is no reason why proprietary remedies ought to be withheld, if required against an insolvent defendant who has been enriched by his or her improper pressure on the plaintiff and who retains the property in question.283

We agree. If, as we have already indicated,284 Chase Manhattan Bank NA v Israel-British Bank (London) Ltd285 was correct in imposing a trust in relation to the particular mistaken payment, the same should apply to a payment made under improper pressure a fortiori because the improper pressure tainted the payment from the outset.286 A gift or improvident transaction procured by improper pressure regarded as involving unconscionable conduct may be set aside with a consequential order for the property to be transferred back.287

3. Categories of Improper Pressure [526] Introduction. In this section, we discuss the established categories of improper pressure. If such pressure caused the enrichment of the defendant or a third party, then an appropriate restitutionary response is available. In those cases where the improper pressure involves an actionable wrong there may be alternative gain-based remedies under the principles of restitution for wrongs that we address in Part VI. [527] Duress of the person. Benefit transferred as a result of actual or threatened duress to the person is recoverable if the pressure was unlawful.288 Duress includes actual or threatened violence or restraint of liberty.289 In Pitt v Coomes290 the plaintiff was irregularly arrested for debt. He obtained his liberty by paying money into court on account of the judgment creditor’s debt. Since the arrest was illegal, the money paid to obtain liberty was, in Lord Denman CJ’s words, ‘improperly extorted’ and ordered to be returned to the plaintiff, despite there being no apparent dispute about the money [page 228] being owed. Obviously a threat to murder,291 or to arrest, imprison or

detain wrongfully292 would be an improper threat which, if a reason for the payment, would render it recoverable. Impropriety in this area is usually determined according to the principles of the criminal law or tort, although it may not be so confined. For example, a person whose drunkenness was so extreme as to negate mens rea in an assault ought still to be required to disgorge any money thereby extorted. The harm or threatened harm need not be directed at the plaintiff. It is sufficient if it is directed at members of the plaintiff’s close family, or perhaps even a wider category of person.293 Indeed common humanity suggests that a plaintiff who can establish that the threat to injure anyone caused the payment should be entitled to restitution. Restitution may be available even if the benefit is directed to be conferred on a third party.294 The cases in this particular area would appear to constitute an understandable exception to the principle that restitution is not available in relation to payment of a sum that is due. [528] Duress of property. Money paid to obtain the release of, or prevent the wrongful seizure or detention of, or other wrongful damage to, the plaintiff’s property is recoverable. Here property extends to goods to which the plaintiff is entitled to possession.295 In Windeyer J’s words in Mason v New South Wales:296 … a payment made under pressing necessity to avoid a seizure of goods, or to obtain the release of goods unlawfully detained, or to prevent some interference with or withholding of a legal right, is compelled and not voluntary and is recoverable in an action for money had and received.

These principles also extend to duress of land.297 Depending on the facts, wrongful interference with land may (if it involves the seizure or detention of title deeds) also be treated as an interference with goods.298 Alternatively, the facts may fall concurrently within the categories of duress of property and a wrongful threat to break a contract.299 Thus, a defendant holding a security

[page 229] over the plaintiff’s goods or land cannot retain an excessive sum demanded for their redemption.300 In Sargood Bros v Commonwealth,301 customs duties were collected under a proposed tariff which was later not enacted. If the tariff had not been paid, Customs would not have released its control over the goods. The case was treated by the High Court as involving duress colore officii,302 but the present relevance is that what turned out to be unlawful pressure was applied to the plaintiff’s goods. In Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd,303 it was held that there was vitiating duress when the plaintiff was entitled to take its helicopter away from the defendant’s premises but was not permitted to do so unless it signed a particular agreement, in circumstances where it was known that the plaintiff had an urgent need for the helicopter and had no practical choice but to sign the agreement. The interference with property may be actual or threatened, but the plaintiff must demonstrate a link between the improper pressure and the payment, according to the liberal test of causation discussed above.304 The interference or threatened interference with the plaintiff’s property must be unlawful.305 For example, a debtor who paid the correct and presently owing amount of money to avoid a lawful mortgagee sale or sale by way of execution could not bring a restitutionary claim to recover it.306 Since a person detaining property may do so under a claim of right, the possibility is open that a payment or agreement to pay for the release of property constituted a valid compromise307 in which event a restitutionary claim cannot be raised that ignores the contract.308 Apparent instances of duress of property may turn out, on closer examination, to involve nothing more than the mere application of lawful process in good faith, or (more frequently) a contract of compromise of a disputed claim. We have addressed above those

categories of almost invariably proper pressure.309 The cases on duress of goods do, however, acknowledge the possibility that, if the [page 230] defendant’s claim to retain them was known to be bad, any contract by way of compromise to pay for their release would not be enforceable.310 In our view, this involves no more than recognition that bad faith may invalidate certain contracts of compromise.311 [529] Refusal to perform a public law duty (duress colore officii). Duress colore officii occurs when a public officer demands and is given what is not due, or more than what is due, for the performance of a public duty or the proper exercise of a public discretion.312 Where:313 … a person or body having power to grant or withhold a permission for another to pursue a course which he cannot lawfully pursue without that permission has used the power in order to exact a payment which he or it is not authorised to exact … [the] law holds that the involuntariness of the payment is established, because the parties were not on equal terms.

Windeyer J pointed out in Bell Bros Pty Ltd v Shire of SerpentineJarrahdale314 that the case in which the remarks were made was strictly speaking not one of demand colore officii, because it was made by a corporation and not an office holder. Nevertheless the principles are the same.315 Implicit in these statements and in the case law is the proposition that the relevant duty must be owed to the plaintiff.316 As with other categories of improper pressure, this right extends to an excessive demand (to the extent of the excess) as well as a demand that is wholly unauthorised.317 This well-established category of duress illustrates why it is unhelpful to use a term such as ‘unlawful’ to summarise the common law duress cases. Many, but not all, of the duress colore officii cases involve no more than an ultra vires act, something which is not in itself a tort and does not sound in damages per se.318

Examples of money recoverable under this principle include licence fees paid to obtain a licence to authorise conduct which was constitutionally protected;319 the charging of a licence fee pursuant to a by-law that was ultra vires its statute;320 or simply pursuant to an unauthorised demand by a public body or official.321 In Ochberg v Commissioner of Stamp Duties322 the threatened interference was the withholding of probate because of [page 231] non-payment of (an excessive) assessment of death duty. The money was recoverable. There are many other cases.323 In Bayview Gardens Pty Ltd v Mulgrave Shire Council324 and Pioneer Homes Pty Ltd v Liverpool City Council325 the failure to exercise a right of appeal to challenge an invalid condition of a development consent requiring a monetary payment was held to make that payment ‘voluntary’.326 Much of the reasoning in these cases is coloured by a pre-David Securities Pty Ltd v Commonwealth Bank of Australia327 attitude to mistakes of law. In the light of Mason v New South Wales,328 we would question whether the availability of a right of appeal to challenge the (invalid) condition should (especially in a public law context) have been regarded as sufficient to make the payments ‘voluntary’, notwithstanding Lord Scarman’s reference in Pao On v Lau Yiu Long329 to the availability of an alternative course such as an adequate legal remedy as a factor negativing duress. Perhaps the two cases referred to at the start of this paragraph are better seen as involving payments that were not caused by the improper pressure,330 and as turning on the holding in each of them that the payment was made despite legal advice that the condition was invalid. The public officer may have had a corrupt motive, or may simply have mistaken his or her authority, or the validity of the regulation or statute under which it was exercised. And the licence cases show that money requested (without justification) in respect of the exercise of a public law discretion is also recoverable.331 The right of recovery

extends to cases where the defendant is an arbitrator or umpire who fixes an unauthorised or excessive fee and demands it as the condition of releasing the award.332 Recovery under similar principles is available against suppliers of goods or services who are under some public duty to supply, or who enjoy a monopolistic position as the result of statute.333 In the case of public utility undertakings (like water, gas and electricity utilities) it should be relatively easy for the plaintiff to establish fear of an implicit threat to cut supply unless the demanded (and invalid) charge was paid. But there must be some evidence of such a threat (or an operative mistake).334 [page 232] [530] Other unlawful interferences with legal rights. All of the foregoing are examples of a more general principle, expressed by Jordan CJ in Ochberg v Commissioner of Stamp Duties.335 He said that ‘if one person constrains another to pay him money by actual or threatened interference with a legal right belonging to the other’, the compulsion constitutes what we would today term a basis for the restitution. Thus, a demand for excessive death duty as the condition of the release of probate attracted a right of recovery.336 A threatened breach of equitable duty is in the same situation.337 In Smith v William Charlick Ltd,338 Isaacs J spoke of ‘duress, actual or threatened, exerted by or on behalf of the payee and applied to … any right of the person who pays’. It is clear that statutory rights are included, and that it is not just a breach of a public law duty owed by a public official (duress colore officii) that will ground recovery. In Great Western Railway v Sutton,339 Willes J declared340 that: … when a man pays more than he is bound to do by law for the performance of a duty which the law says is owed to him for nothing, or for less than he has paid, there is compulsion or concussion in respect of which he is entitled to recover the excess by condictio indebiti, or action for money had and received.

He was there deciding a case involving overcharging by a railway

company, in breach of a statutory formula. The threat was to refuse to carry the plaintiff’s goods, not in itself duress of goods or falling within any of the other categories discussed herein. This line includes threats made by private bodies but it is obviously analogous to the colore officii cases, especially those dealing with public utilities.341 The ‘economic duress’342 that vitiated the contracts considered in the English trade union cases fell into a similar category. Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel)343 and Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck)344 each involved the blacking by the International Transport Workers Federation (ITF) of ships sailing under flags of convenience. The pressure [page 233] was not duress of goods but involved tugmen being procured by the union to refuse to operate their tugs thereby preventing ships from leaving port. In the Universe Sentinel, the ban occurred in Britain and it was lifted upon the shipowners agreeing to pay money to the ITF’s seamen’s ‘welfare fund’. Once the ship was at sea the owner sought to recover the money on the basis of duress and it was successful in the claim. However — and this is critical — it had been conceded that the pressure was unlawful and that the payment was recoverable unless restitution was barred by the statutory immunity conferred on the trade union.345 The concession was clearly correct when it is recognised that, subject to the scope of the statutory immunity conferred on trade unions, many forms of industrial action are unlawful and tortious.346 The ‘industrial torts’ include inducing breach of contract, intimidation, conspiracy and interference with trade or business by unlawful means.347 Provisions of the British industrial relations laws348 immunised unions as regards liability to damages flowing from activity taken in

furtherance of a dispute connected with ‘terms and conditions of employment’. The House of Lords construed the relevant sections narrowly and held that the coerced payment to the ITF welfare fund was not of this nature. In other words, the union’s statutory immunity from tortious liability did not extend that far. The case did not involve a claim to recover other types of payment, such as additional wages to seamen, where trade union activity to force such payment fell within the statutory immunity. In The Evia Luck, the blacking and its withdrawal subject to payments by the shipowner occurred in Sweden, and those payments were clearly contracted for. This threw up an issue of private international law that was resolved in favour of English law as the agreed proper law of the relevant contract. But, as in the earlier case, it was common ground that under English law the pressure exerted by the trade union which induced the owners to enter into the contract under which they made the payments to the union would amount to duress unless such pressure was legitimised under the relevant system of law.349 A subsidiary argument that the legitimacy of the pressure itself had to be addressed according to the tort law of Sweden, where the union conduct was lawful, was rejected350 by reference to the English attitude to the double actionability rule in Phillips v Eyre.351 This casts no useful light on the topic of this chapter. The discussion about economic duress in these trade union cases barely explored the nature of the duress involved, in particular its impropriety. The cases did not involve duress of goods because it was the tugmen, not the ITF, who were keeping the ship in port and they were doing so, presumably, by the simple expedient of not putting them out to sea. But the concession about the pressure being improper acknowledged that illegal conduct was involved unless saved by statute. [page 234] In exceptional situations, a refusal to enter into a contract or to do business has led to a successful claim to restitution of benefits extorted

thereby.352 Such cases also fit the present analysis because restitution is grounded upon finding unconscientious conduct or some breach of trade practices norms. [531] Threats to breach contracts. The wrongful repudiation of a contract is a further context in which conduct that is not otherwise unlawful may entail improper pressure capable of generating a claim in restitution if it does not lead to a valid contract of variation and if it causes the plaintiff to hand over a benefit to which the recipient is not already entitled. This proposition was established in a series of cases in which a threat of this nature was held to render voidable a new contract formed in response to the threat.353 There is no reason why such a threat would not ground a restitutionary claim to recover money paid over without an intervening contract.354 The belated but entirely orthodox recognition of this category of duress by the threatened repudiation of contract reflects the significance of intangible property rights and choses of action in the modern law. Not every threat to break a contract amounts to improper pressure (at least in the context of considering whether the ensuing contract is voidable).355 This important qualification was emphasised in Pao On v Lau Yiu Long.356 In taking this stance, the law declines to take either of two extreme positions. It rejects the view that a party to a contract can never be allowed to obtain greater remuneration for the performance already promised.357 The law also rejects the view that a contracting party is effectively confined to choosing between two duties, either to perform or to pay damages.358 The economic justification for refusing to regard all threats to breach a contract as illegitimate is that protection against opportunism (in the sense of legitimate self-interest) would be obtained at too high a cost. ‘Contractual flexibility would have to be sacrificed and meritorious, non-opportunistic modifications would be rendered unenforceable.’359 [page 235]

The external standard of contract law should, nevertheless, determine the impropriety of the contractual breach or threatened breach. Although the cases do not seem to address this in terms, it appears that this category of duress requires the defendant’s conduct to be such as to justify termination of the prior contract for substantial breach or repudiation. None of the cases involve minor breaches that would sound only in damages.360 Good faith will not be determinative, but its absence may be significant. Restitution stemming from improper pressure is not confined to bad faith.361 Some of the leading cases arose out of attempts to renegotiate when the circumstances prevailing at the time of the original contract had changed markedly.362 Nevertheless, motivation has been examined when courts wrestled with whether ‘mere commercial pressure’ was to be countenanced363 and whether an alleged compromise is valid.364 A person who refuses to perform an existing contract with intent to procure an additional payment that he or she knows is not due is usually exploiting the vulnerability of the other party. Such a defendant is also exposed to the equitable principles that extend to this aspect of improper pressure under Australian law.365 Although rare in practice, duress can occur where the suggestion of an alteration to contractual relations comes first from the party who subsequently seeks to rely on duress.366 [532] Abuse of legal process. The corollary of the proposition that, in exceptional cases, a threat to invoke legal process will be improper367 is the recognition that in those cases there is a further category of improper pressure recognised by the common law.368 In 1836 Lord Denman CJ referred to ‘an extortion by legal process’ to describe a judicial arrest procured by a person knowing that the alleged debt was not due.369 [page 236] [533]

Undue influence, unconscionable exploitation and

related statutory claims. At the risk of repetition, but for the sake of completeness, we repeat that the recognised categories of improper pressure are not restricted to (common law) duress. Equity and statute offer remedies in the form of rescission with consequential relief, including restitution and compensation.370 In so observing, we are not suggesting that the equitable and statutory remedies referred to are confined to situations involving pressure. The doctrines concerned with undue influence and unconscionable dealings are distinctive, although each may be seen as a species of that genus of equitable intervention to refuse enforcement of or to set aside transactions which, if allowed to stand, would offend equity and good conscience.371 The leading Australian case on unconscionable dealing, Commercial Bank of Australia Ltd v Amadio,372 contains strong statements by Mason J373 and Deane J374 against conflating the two doctrines, a conflation that has received both support375 and opposition in academic circles.376 In Amadio, Mason J referred to equitable relief being available ‘wherever one party by reason of some condition or circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is taken of the opportunity thereby created’.377 Unlike undue influence and common law duress (which look to the quality of the consent or assent of the weaker party), ‘unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances when it is not consistent with equity or good conscience that he should do so’.378 1.

See [518].

2. 3.

Moses v Macferlan (1760) 2 Burr 1005 at 1012; 97 ER 676 at 680 (discussed [120]–[123]). As to the plaintiff’s general right to select between alternative causes of action, see Deutsche Morgan Grenfell Group Plc v Her Majesty’s Commissioners of Inland Revenue [2007] 1 AC 558 at [51], [136]–[137]; [2006] UKHL 49 and generally Chapter 23.

4. 5.

See [527]. See [528].

6. 7.

See [529]. See [530].

8.

See [531].

9.

See [532].

10. See [533]. 11. See [504]. 12. See [516]. 13. See [517]. 14. See Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [150]. Note, however, the High Court’s use of ‘duress’, a term that signals the common law doctrine. Given the court’s chariness about the equitable side of restitution for unjust enrichment, the use of ‘duress’ was probably intentional. In our view, there is no justification for excluding the equitable side of unjust enrichment where analysis is assisted by seeing close analogies. See [504]. 15. Thorne v Motor Trade Association [1937] AC 797 at 806 (‘What [the blackmailer] has to justify is not the threat, but the demand of money’: Lord Atkin). See also [519]. 16. Presumably not both. Cf [1536]. As to a claim against the recipient, see O’Connor v Isaacs [1956] 2 QB 288. 17. See [116], [2925]. 18. Except in the fictional sense of concluding that what the defendant requested must have been a benefit to the defendant. Cf [155] (requested benefits capable of generating a restitutionary remedy). 19. As to the others, see [111]. 20. See generally [160]–[163], [219], [239], [1513]–[1518]. 21. Dimskal Shipping Co SA v International Transport Workers’ Federation (The Evia Luck) [1992] 2 AC 152 at 166, 167. Conduct amounting to duress colore officii may be ultra vires, but not in itself tortious or otherwise actionable. Likewise pressure that is merely in the form of a threatened repudiation of a contract. 22. For example, a robber’s assault accompanied by a demand to pay money. 23. As to the distinction between a dependent and an independent claim, see [219]. 24. See [116]–[117], [2923]–[2924]. 25. Of course, they deal with much more, just as the common money count of money had and received addressed much more than instances of improper pressure. 26. See generally on the relation between common law and equity [221]. 27. Or money paid if the blackmailer directed payment to a third party. See [117], [503], [2925]. 28. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474; 46 ALR 402 at 423 per Deane J. 29. As to these counts, see [116], [117]. 30. See [168], [503]. 31. See Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 46. See further [533]. 32. (2005) 64 NSWLR 149. 33. See [526]–[532].

34. As to which see further [518]. 35. (2005) 64 NSWLR 149 at 167; [2005] NSWCA 344 at [62]. As to the inutility of the concept of ‘economic duress’, see [518]. 36. (1983) 151 CLR 447; 46 ALR 402. 37. The court referred later (64 NSWLR at 168; [2005] NSWCA 344 at [66]) to provisions of the Trade Practices Act 1974 (Cth) and the Contracts Review Act 1980 (NSW) (the Trade Practices Act provisions are now found in the Australian Consumer Law; see below). See also Canon Australia Pty Ltd v Patton (2007) 244 ALR 759; [2007] NSWCA 246. 38. (1866) LR 1 HL 200 (see [515]). See also Mutual Finance Co Ltd v John Wetton & Sons Ltd [1937] 2 KB 578. 39. See [515]. 40. CIBC Mortgages Plc v Pitt [1994] 1 AC 200. 41. Maguire v Makaronis (1997) 188 CLR 449 at 465; 144 ALR 729 at 738. See generally Meagher, Gummow & Lehane, [15-020]. 42. See generally Part V. 43. See [1722]. 44. See [506]. 45. Generally as to fusion in restitution, see [123], [221]. See also Keith Mason, ‘Fusion; Fallacy, Future or Finished’ in Degeling and Edelman, Chapter 3. As to the converging nature of common law and equity in their response to pressure, see I J Hardingham, ‘Unconscionable Dealing’ in Finn, Essays in Equity, pp 19–24. See also Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 243–5. 46. Royal Bank of Scotland Plc v Etridge (No 2) [2002] 2 AC 773 at 795. 47. (1760) 2 Burr 1005; 97 ER 676. 48. See [123]. 49. (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681. 50. But different principles apply as to wills. See Bridgewater v Leahy (1998) 194 CLR 457 at 475; 158 ALR 66; [1998] HCA 66 at [63]; Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] NSWCA 136. 51. [1976] AC 104. 52. [1976] AC 104 at 118. 53. [1976] AC 104 at 118. See also Lord Wilberforce and Lord Simon (dissenting), referring to ‘the law, under the influence of equity, has developed from the old conception of duress — threat to life and limb — and it has arrived at the modern generalisation expressed by Holmes J — “subjected to an improper motive for action”: Fairbanks v Snow, 13 NE Reporter 596, 598’. In Barton, the claim to set aside the contract on the ground of improper pressure in the form of a threat to kill failed because the threat had not caused the plaintiff to enter into the impugned contract (see [522]). 54. (1887) 36 Ch D 145 at 171, 181. 55. See Competition and Consumer Act 2010 (Cth), Sch 2. 56. See Australian Consumer Law, s 50. A mere refusal to supply further goods or credit that

does not involve any breach of an existing contract will not entail unconscionable conduct under this provision; see Canon Australia Pty Ltd v Patton (2007) 244 ALR 759; [2007] NSWCA 246. 57. See Australian Consumer Law, s 21. 58. See Australian Consumer Law, s 20. 59. See Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149 at 168; [2005] NSWCA 344 at [66]. Australian Consumer Law, s 22 permits the court, when determining if there has been unconscionable conduct, to have regard to a range of factors including whether any undue influence or pressure was exerted and the extent to which the parties acted in good faith. 60. See, eg [516] (refusal to do future business). 61. See [911]. 62. [1984] ICR 419 (see N E Palmer and Louise Catchpole (1985) 48 MLR 102). See also Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833 (duress a valid defence to claim for payment under variation not supported by consideration); Ampol Ltd v Caltex Oil (Australia) Pty Ltd (1982) Unreported, SC(NSW) (Foster J), 22 December, on appeal (1986) 63 ALR 540 the question did not arise, (payments for petrol surcharges made following unlawful demands under refinery exchange agreement were recoverable as having been made under duress). 63. As to implied threats see [511]. 64. Birks, Introduction, p 176. As to the present law on this category of duress, see [531]. 65. Stilk v Myrick (1809) 6 Esp 129; 170 ER 851; 2 Camp 317, 170 ER 1168. See also Wigan v Edwards (1973) 47 ALJR 586 at 594. Cf Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1; Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723. See [511]. 66. Cf [1321]. 67. See, eg Pao On v Lau Yiu Long [1980] AC 614 at 635–6. 68. D & C Builders Ltd v Rees [1966] 2 QB 617 at 624–5 (Lord Denning MR); Collier v P & M J Wright (Holdings) Ltd [2008] 1 WLR 643. Handley, Estoppel states (p 211) that Lord Denning’s suggestion in D & C Builders that a promissory estoppel may outflank the existing duty rule is incorrect. 69. In Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 302 Priestley JA saw no reason why the ‘underlying idea’ identified in Isaacs J’s frequently cited summary in Smith v William Charlick Ltd (1924) 34 CLR 38 at 56 (see [508]) should not apply both to a payment under duress and a contract made under duress. See also Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366 at 385. A mistaken belief of entitlement is irrelevant: Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [30], [44], [183]–[197] (an appeal to the High Court was determined on contractual, not restitutionary, grounds: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7). 70. Wright v Kelly (1884) 5 NSWLR 297; Furphy v Nixon (1925) 37 CLR 161 at 170, 172, 179 affirming Nixon v Furphy (1925) 25 SR (NW) 151; McClintock v Commonwealth (1947) 75 CLR 1 at 40; Re Hooper & Grass’ Contract [1949] VLR 269; T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323; Magnacrete Ltd

v Douglas-Hill (1988) 48 SASR 565. The words in quotations are taken from the judgment of the Full Court in T A Sundell at 328. 71. [1976] 1 Lloyd’s Rep 293. See also Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 165. 72. (1841) 11 Ad & El 983; 113 ER 688. See also Sternbeck v Sternbeck (1968) 11 FLR 360. 73. As to this category, see [527]. 74. Rescission is of course subject to the rules relating to that right, as to which see [1306]–[1318] (general contractual background), [2314]–[2323] (defence of election in relation to exercise of right), [2324]–[2335] (defence that restitutio in integrum impossible). See also [2322] (defence of estoppel in relation to exercise of right), [2323] (defence that goods accepted), [2333] (rule in Seddon’s case), Chapter 26 (illegality), Chapter 27 (delay). 75. Under the principles relating to restitution of payments made under ineffective contracts (see generally Part V). 76. The cases that despatched Skeate v Beale were Pao On v Lau Yiu Long [1980] AC 614; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298; Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 142. The ensuing restitutionary claim in such a situation need not itself be based on improper pressure. As to the primacy of contract, see [215]. 77. (1955) 56 SR (NSW) 323. 78. This is the existing duty principle associated with Stilk v Myrick (1809) 6 Esp 129; 170 ER 851; 2 Camp 317; 170 ER 1168. 79. See further [1321]. 80. (1924) 34 CLR 38 at 51, cited and applied in Nixon v Furphy (1925) SR (NSW) 151 at 160 (set out at [508]). 81. As occurred, for example in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705 where the varied contract was supported by a smidgen of fresh consideration, its entry was vitiated by duress in the form of an unjustified threat to breach the original contract, but the victim by its conduct affirmed the varied contract after the pressure had passed. 82. Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 165 per Lord Goff. As to the distinction between void and voidable in this context, and its consequences, see North Ocean Shipping Co Ltd v Hyundai Construction Co (The Atlantic Baron) [1979] QB 705 at 718–19; Pao On v Lau Yiu Long [1980] AC 614 at 636; Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [31]–[33], [44], [201]–[205] (an appeal to the High Court was determined on contractual, not restitutionary, grounds: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7). 83. See [215], [909] and generally Chapter 13. 84. See esp [1312]. 85. See further [531]. In Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 302 Priestley JA saw no reason why the ‘underlying idea’ identified in Isaacs J’s frequently cited summary in Smith v William Charlick Ltd (1924) 34 CLR 38 at

56 (see [508]) should not apply both to a payment under duress and a contract made under duress. 86. See [441], [518]. See further [2038] as to the compromise of claims based on the principle established by Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. See also [215]. 87. See further [514]. 88. Miles v New Zealand Alford Estate Co (1886) 32 Ch D 266 at 291–2; Wigan v Edwards (1973) 1 ALR 497; 47 ALJR 586 at 595. 89. See [508]–[518]. 90. These are improper pressure (1) to the person ([527]); (2) to property ([528]); (3) by refusal to perform a public duty (duress colore officii) ([529]); (4) by interference with legal (including statutory) rights ([530]); (5) by contractual repudiation ([531]); (6) by abuse of legal process ([532]); and (7) by undue influence, unconscionable exploitation and breaches of related statutory norms ([533]). 91. As to recovery from the defendant of money paid to a third party see [503]. 92. See [519]. 93. See [521]. 94. See [524]. And see generally Part VIII. 95. (1924) 34 CLR 38. 96. (1924) 34 CLR 38 at 56. The passage has been frequently cited with approval in later cases: see the review in Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 302. However, the last sentence contains two unhelpful propositions because compulsion is not necessarily a legal wrong, in the sense of being tortious (see [509]), and because the fictional promise is no longer part of the law of restitution. 97. (1989) 59 DLR (4th) 161 at 199. 98. For these categories restitution for wrongs (Part VI esp Chapter 16) provides an alternative jurisprudential basis for recovery. 99. Dimskal Shipping Co SA v International Transport Workers’ Federation (The Evia Luck) [1992] 2 AC 152 at 166, 167. 100. See [527]. 101. See [517]. 102. Usually applied by the defendant, but not invariably. See [503]. 103. See Part VI. 104. As to statutory grounds, see [504]. 105. Westpac Banking Corporation v Cockerill (1998) 152 ALR 267; Royal Bank of Scotland Plc v Etridge (No 2) [2002] 2 AC 773. See further [1310], [1314]. 106. Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 165. See also Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [180]–[182] (an appeal to the High Court was determined on contractual, not restitutionary, grounds: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7). 107. See, eg Mutual Finance Ltd v John Wetton & Co Sons Ltd [1937] 2 KB 389; B & S

Contracts & Design Ltd v Victor Green Publications Ltd [1984] ICR 419 at 424. As to implied threats, see also Northern Territory of Australia v Mengel (1995) 185 CLR 307 at 351, 371–2; 129 ALR 1 at 21–2, 38. 108. See [529]–[530]. See also Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298. 109. Beatson, pp 118–20. See also McIntyre v Nemesis DBK Ltd [2010] 1 NZLR 463 at [32]. 110. Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 298–9; (1993) 32 NSWLR 50 at 150–1. 111. See, eg Nixon v Furphy (1925) 25 SR (NSW) 151 (affirmed sub nom Furphy v Nixon (1925) 37 CLR 161); Mason v New South Wales (1959) 102 CLR 108 at 141; Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209 at [46]. 112. Rick Bigwood, ‘Coercion in Contract: The Theoretical Constructs of Duress’ (1996) 46 Univ of Toronto LJ 201 at 212, quoting A Wertheimer, Coercion, Princeton University Press, 1987, p 204. See also S Smith, ‘Contracting under Pressure: A Theory of Duress’ (1997) 56 CLJ 343 at 346–9. 113. See [516]. 114. Because there are exceptional cases, we include abuse of legal process as a category of improper pressure: see [532]. See Goff and Jones, §10-08. 115. Grantham & Rickett, p 182. 116. Birks, Introduction, p 185. 117. Mason v New South Wales (1959) 102 CLR 108 at 144 per Windeyer J. See also Werrin v Commonwealth (1938) 59 CLR 150 at 157; Fischer & Copley Ltd v Bank of Adelaide [1938] SASR 489; Air India v Commonwealth [1977] 1 NSWLR 449; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108 at 129; 41 ALR 539 at 556–7; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 164–5, 184; Northern Territory v Mengel (1995) 185 CLR 307 at 351; 129 ALR 1 at 21–2; McKay v National Australia Bank Ltd [1998] 4 VR 677; Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209. 118. McKay v National Australia Bank Ltd [1998] 4 VR 677. 119. See, eg Little v Law Institute (Vic) [1990] VR 257; Williams v Spautz (1992) 174 CLR 509 at 522–6, 551–2; 107 ALR 635 at 643–6, 666–7. 120. See Drew v Daniel [2005] EWCA Civ 507 at [40]; Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209 at [46]. See further [532]. 121. See further [519]. 122. See [514]. 123. See [513]. 124. Marriott v Hampton (1797) 7 TR 269; 101 ER 969 per Lord Kenyon CJ. See also Mason v New South Wales (1959) 102 CLR 108 at 135, 144; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108 at 129; 41 ALR 539 at 556–7. See generally Chapter 7. 125. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375; 109 ALR 57 at 72. See further [707], [2511]–[2514]. As to the distinction between a payment responding to a threat to sue and a payment in consequence of a court order made within jurisdiction, where the doctrine of res judicata has application, see

Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 546–7; 185 ALR 235; [2001] HCA 68 at [79]–[80]. 126. See Chapter 7. 127. See [441]. 128. See [513]. 129. See [215], [597]. 130. As to the test of causation, see [522]. 131. (1817) 6 M & S 160; 105 ER 1203. See also Unwin v Leaper (1840) 1 Man & G 747; 133 ER 533. 132. (1817) 6 M & S 160 at 165; 105 ER 1203 at 1205. See generally Chapter 26. 133. In the form of abuse of process, here consisting of conduct designed to frustrate the proper distribution of assets amongst creditors. 134. Duke de Cadaval v Collins (1836) 4 Ad & El 858; 111 ER 1006. 135. See [508], [1312], [2514]. 136. International Packers Pty Ltd v Harvey [1969] Qd R 159 at 176. 137. See further [515]. 138. (1982) 61 FLR 108; 41 ALR 539. Cf Fischer & Copley Ltd v Bank of Adelaide [1938] SASR 489. 139. It was excessive because of a breach of money lending legislation. 140. See also Maskell v Horner [1915] 3 KB 106 at 121–2. 141. (1982) 61 FLR 108 at 129; 41 ALR 538 at 556. 142. See generally [504], [533]. 143. (1866) LR 1 HL 200 (cited on this point in Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 298–9; (1993) 32 NSWLR 50 at 106). See also Kaufman v Gerson [1904] 1 KB 591; Kerridge v Simmonds (1906) 4 CLR 253; Societe des Hotels Reunis v Hawker (1913) 29 TLR 578; Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389; Public Service Employees Credit Union Co-op Ltd v Campion (1984) 75 FLR 131; 56 ACTR 39; Glynis Carrier v John Georges [2013] NSWSC 401. Generally as to compounding and compromising crimes, see C Howard, ‘Misprisions, Compoundings and Compromises’ [1959] Crim LR 750, 822. 144. See Bayley v Williams (1864) 4 Giff 638 at 662; 66 ER 862 at 872 (on appeal (1866) LR 1 HL 200). This is an example of counter-restitution, as to which see generally [1431]–[1439], [2324]–[2332]. 145. Universe Tankships Inc of Monrovia v International Transport Workers’ Federation (The Universe Sentinel) [1983] 1 AC 366 at 401 per Lord Scarman. See also the analogy of threats to publish defamatory material (Norreys v Zeffert [1939] 2 All ER 187). 146. See [503], [530]. 147. Kerridge v Simmonds (1906) 4 CLR 253 at 262 per Barton J. See also at 260 per Griffith CJ. 148. (1906) 4 CLR 253. 149. See Flower v Sadler (1882) 10 QBD 572; Scolio Pty Ltd v Cote (1992) 6 WAR 475 at 482, 484–5; Glynis Carrier v John Georges [2013] NSWSC 401.

150. See [511]. 151. See Public Service Employees Credit Union Co-op Ltd v Campion (1984) 75 FLR 131 at 138– 9; 56 ACTR 39 at 46–7. 152. Riessen v South Australia (2001) 79 SASR 82. 153. See [520]. For the corresponding principle in relation to mistaken payments, see [446]. 154. For contravention of which the remedies include an action for damages (s 82) and discretionary orders (s 87). 155. (1924) 34 CLR 38. See also Nixon v Furphy (1925) 25 SR (NSW) 151 at 159 (affirmed sub nom Furphy v Nixon (1925) 37 CLR 161); Fischer & Copley Ltd v Bank of Adelaide [1938] SASR 489; Eric Gnapp Ltd v Petroleum Board [1949] 1 All ER 980 at 986; Peanut Marketing Board v Cuda (1984) 79 FLR 368; Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44; Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209. 156. Higgins J dissenting. 157. 1924) 34 CLR 38 at 51. 158. (1924) 34 CLR 38 at 70. 159. Lord v Proctor [1923] VLR 524. Cf Bayview Gardens Pty Ltd v Mulgrave Shire Council [1989] 1 Qd R 1; 65 LGRA 122; Pioneer Homes Pty Ltd v Liverpool City Council (1992) 77 LGRA 237, discussed [529]. 160. [1994] 4 All ER 713 (see R Baxt (1995) 69 ALJ 320; J W Carter and G Tolhurst (1996) 9 JCL 220). 161. See [1994] 4 All ER 713 at 717–18. See also Canon Australia Pty Ltd v Patton (2007) 244 ALR 759; [2007] NSWCA 246. 162. In other words, the contract of compromise was valid, even though, with hindsight, the defendant was shown to have been in the wrong. As to good faith and contractual compromise, see [507]. See also Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209 at [46]. Viewed thus, CTN Cash and Carry gives no support to a wider proposition that bad faith may render an otherwise ‘legitimate’ threat ‘illegitimate’. Cf Virgo, p 205; Goff & Jones, § 10-83. 163. (1924) 34 CLR 38. 164. See R Halson, ‘Opportunism, Economic Duress and Contractual Modifications’ (1991) 107 LQR 649 at 661. 165. See [529]. 166. See [504], [533] as to equity. See also Australian Consumer Law, ss 20 and 21. 167. R v Lewisham London LBC; Ex parte Shell UK Ltd [1988] 1 All ER 938 at 941. 168. See generally [529]–[530]. 169. Great Western Railway v Sutton (1869) LR 4 HL 226 (see [530]). Cf Esso Australia Resources Ltd v Gas & Fuel Corp of Victoria [1993] 2 VR 89. See [2028]. 170. See, eg Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 297 per Giles J. 171. Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 106. 172. As to which see [518]. 173. [1980] AC 614. See also Occidental Worldwide Investment Corp v Skibs A/S Avanti (The

Sibeon and The Sibotre) [1976] 1 Lloyd’s Rep 293, which on its facts is a harsh result given the fact that the pressure to renegotiate was created by fraud. 174. (1993) 32 NSWLR 50 (and at first instance (1992) 29 NSWLR 260 (Giles J)). For other examples of action which was harsh and commercially exacting but held not to be ‘economic duress’ or unconscionable behaviour, see Wardley Australia Ltd v McPharlin (1984) 3 BPR 97214; Bayview Gardens Pty Ltd v Mulgrave Shire Council [1989] 1 Qd R 1; 65 LGRA 122; Pioneer Homes Pty Ltd v Liverpool City Council (1992) 77 LGRA 237; Deemcope Pty Ltd v Cantown Pty Ltd [1995] 2 VR 44. 175. Referred to at [506]. 176. Applying New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154 at 168 177. [1980] AC 614 at 635 (citing Kerr J in Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Sibeon and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 336). 178. [1980] AC 614 at 635. 179. See [521]. 180. [1980] AC 614 at 635. 181. (1992) 29 NSWLR 260 at 297–8 (citing Moyes & Groves Ltd v Radiation New Zealand Ltd [1982] 1 NZLR 368 at 372; Aotearoa International Ltd v Scancarriers A/S [1985] 1 NZLR 513 at 538, 550; Walmsley v Christchurch City Council [1990] 1 NZLR 199 at 208). See also Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544. See further [518]. 182. (1992) 29 NSWLR 260 at 298 per Giles J. 183. See (1992) 29 NSWLR 260 at 298–300. This analysis was upheld by Clarke and Cripps JJA on appeal: see 32 NSWLR 50 at 149–51. 184. See, eg the cases discussed in [517]. See also Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 74; 197 ALR 153; [2003] HCA 18 at [45]; Tofilau v R (2007) 238 ALR 650 at 737; [2007] HCA 39 at [330] (passing reference to economic duress being recognised as a ground of rendering a contract ‘void’. We suggest that ‘void or voidable’ would be more accurate. See [506]). 185. See further Keith Mason, ‘Economic Duress’ in Degelman and Edelman. 186. Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd’s Rep 293. While Kerr J applied the Australian line of cases holding that a contract induced by a threat to repudiate an earlier contract was voidable, he did not use the term ‘economic duress’. 187. North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705. 188. [1980] AC 614 (discussed [517]). See also Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366 at 385 (Lord Diplock). 189. Burmah Oil Co Ltd v Bank of England [1980] AC 1090 at 1140. 190. Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Sibeon and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 335 per Kerr J. See [528] (duress of property). 191. Cf Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 298–9; (1993) 32 NSWLR 50 at 150. See [530] (other unlawful interferences with legal rights).

192. [1976] AC 104. 193. See [515]. 194. In addition to the general works on restitution and unjust enrichment (including the first edition of this work), see R Halson, ‘Opportunism, Economic Duress and Contractual Modifications’ (1991) 107 LQR 649; Andrew Phang, ‘Whither Economic Duress? Reflections on Two Recent Cases’ (1990) 53 MLR 107; Andrew Phang, ‘Economic Duress Uncertainty Confirmed’ (1992) 5 JCL 147; J W Carter and Gregory Tolhurst, ‘Restitution for Duress’ (1996) 9 JCL 220; M P Sindone, ‘The Doctrine of Economic Duress’ (1996) 14 Aust Bar Rev 114; Andrew Phang, ‘Economic Duress: Recent Difficulties and Possible Alternatives’ [1997] RLR 53; R McKeand, ‘Economic Duress — Wearing the Clothes of Unconscionable Conduct’ (2001) 17 JCL 1. See also [1312]. 195. See [506] where we refer to contracts that fail for want of consideration, usually by application of the existing duty rule, and contracts rescinded for misrepresentation, fraud, duress, undue influence and other (sometimes statutory) grounds. 196. (1866) LR 1 HL 200. See [515]. 197. See [516]. 198. See further [517]. 199. Australia & New Zealand Banking Group v Karam (2005) 64 NSWLR 149 at 165; [2005] NSWCA 344 at [57], as explained in Canon Australia Pty Ltd v Patton (2007) 244 ALR 759 at [3]; [2007] NSWCA 246. See also Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [1], [44], [159], [176] (an appeal to the High Court was determined on contractual, not restitutionary, grounds: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7). 200. See [522]. 201. See, eg the cases discussed in [517]. The concept of economic duress was taken up and applied by Judge Eccles QC, sitting as a Judge of the High Court in Harrison v Landau [2004] EWHC 1316 (QB) at [90]–[98]. See also Cadbury Schweppes Pty Ltd v ALHMWU (2000) 106 FCR 148 at 153; [2000] FCA 1793 at [19] (Finkelstein J). 202. [1994] 4 All ER 713 at 385. The facts of CTN are set out at [516]. 203. Thorne v Motor Trade Association [1937] AC 797 at 806–7. 204. Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389, applying Williams v Bayley (1866) LR 1 HL 200, discussed [504], [515]. 205. The Universe Sentinel [1983] 1 AC 366, discussed [530]. 206. As existed in Bank of Scotland v Bennett [2005] EWCA Civ 1965 (where a wife obtained the setting aside of a guarantee signed under pressure from her husband that, unless she did so, he would leave her and the family would be split up), a textbook case of undue influence. 207. Edelman and Bant, p 204. 208. The norms are to be found in the common law (including the law of blackmail), equity and statute; see [504]. The crime of blackmail embraces threats to do otherwise lawful things if accompanied with an improper demand (usually for money). Persons who demand and receive payments when not acting to protect their own (legitimate) interests may not retain a benefit obtained thereby: Robertson v Robertson [1930] QWN 41 (husband’s threat to inform friends of wife’s alleged infidelities). See also Thorne v Motor

Trade Association [1937] AC 797 at 822–3; Universe Tankships Inc of Monrovia v International Transport Workers’ Federation (The Universe Sentinel) [1983] 1 AC 366 at 384, 401. 209. See also [166] (injustice and discretion contrasted). 210. Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [176] per Murphy JA, McLure P and Newnes JA agreeing (an appeal to the High Court was determined on contractual, not restitutionary, grounds: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7). 211. By claims derived from quantum meruit and quantum valebat. See generally [118], [1305], [1318]. Cf Peter Kiewit Sons’ Co of Canada Ltd v Eakins Construction Ltd (1960) 22 DLR (2d) 465, where a claim for the value of work done under protest during a contract dispute failed because the work was in fact covered by the existing contract. 212. See [153]. 213. See [126]. 214. Carter v Carter (1829) 5 Bing 406 at 409; 130 ER 1118 at 1119 per Best CJ. 215. See [506] and generally Chapter 13. 216. See Pitt v Coomes (1835) 2 Ad & El 459; 111 ER 178. As to duress to the person see [527]. 217. Although early payment may be a benefit in some cases: see Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 300–1; (1993) 32 NSWLR 50 at 151. See also [446] for a similar principle in relation to mistaken payments. 218. Munro v Perry (1874) 5 AJR 46; Scolio Pty Ltd v Cote (1992) 6 WAR 475; Gordon v Roebuch (1992) 92 DLR (4th) 670 (Ont CA). 219. Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 5; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [33]. 220. Societe des Hotels Reunis v Hawker (1913) 29 TLR 578. 221. See, eg Great Western Railway Co v Sutton (1869) LR 4 HL 226; Ochberg v Commissioner of Stamp Duties (1943) 43 SR (NSW) 189; South of Scotland Electricity Board v British Oxygen Co (No 2) [1959] 1 WLR 587; [1959] 2 All ER 225; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108; 41 ALR 539. See also [1321]. Recovery may be based on one or more of improper pressure, failure of agreed return (‘total failure of consideration’) or mistake, depending on the facts. See Kolmar Group AG v Traxpo Enterprises PVT Ltd [2010] 2 Lloyd’s Rep 653. 222. Cafferky v Nepean Co-operative Dairy & Refrigerating Society Ltd (1959) 60 SR (NSW) 57. 223. Cf Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 300–1 (Giles J); (1993) 32 NSWLR 50 at 151 (Clarke and Cripps JJA). 224. See, eg Pao On v Lau Yiu Long [1980] AC 614 at 635–6; Universe Tankships Inc of Monrovia v International Transport Workers’ Federation (The Universe Sentinel) [1983] 1 AC 366 at 383, 400; Peanut Marketing Board v Cuda (1984) 79 FLR 368 at 377; Andrew Phang, ‘Economic Duress Uncertainty Confirmed’ (1992) 5 JCL 147 at 150–1. Some of the reasoning in Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 at 289–90 is open to criticism for adopting this language. 225. [1976] AC 104. See [522].

226. Director of Public Prosecutions for Northern Ireland v Lynch [1975] AC 653. 227. (1988) 19 NSWLR 40 at 45–6. See also Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 166; Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1992) 29 NSWLR 260 at 296; (1993) 32 NSWLR 50 at 106; Attorney-General for England and Wales v R [2002] 2 NZLR 91; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [33], [44], [175]. 228. See Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366 at 400; Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 45. In the words of Holmes J, in Union Pacific RR v Public Service Commission 248 US 67 at 70 (1918): ‘It always is for the interest of a party under duress to choose the lesser of two evils. But the fact that a choice was made according to interest does not exclude duress. It is the characteristic of duress properly so called’. 229. See also Denmeade v Stingray Boats [2003] FCFCA 215 at [14]; ‘R’ v Her Majesty’s Attorney-General for England and Wales [2004] 2 NZLR 577; [2003] UKPC 22 at [15] (discussed [2003] RLR 110 (Phang and Tjio)). But cf the dictum of Gummow and Hayne JJ in Australian Competition and Consumer Commission v Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 70; 197 ALR 153; [2003] HCA 18 at [36]. As to whether a category of ‘economic duress’ exists and whether, if it does, it merits special privileges, see [518]. 230. (1988) 19 NSWLR 40. This, like most of the ‘economic duress’ cases, involved an application to rescind a contract on the basis that it had been procured by improper pressure. 231. [1976] AC 104. 232. See further [506]. 233. [1976] AC 104 at 121 per Lord Wilberforce and Lord Simon. See also Lord Cross at 119. See also Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 46. When Lord Goff spoke, in Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 165, of economic pressure being a ‘significant cause inducing the plaintiff to enter into the relevant contract’ he was not, we believe, intending to cut across this principle or to create an exception for that particular category of improper pressure, because he cited Barton v Armstrong [1976] AC 104 at 121. Cf however Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620; Haines v Carter [2001] 2 NZLR 167. 234. See Barton v Armstrong [1976] AC 104 at 118. 235. See Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561 at 569–70. 236. See Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 especially at 173, a case which shows that pressure may be irrelevant where money is demanded without authority by the Revenue: see Chapter 20. 237. Cf Barton v Armstrong [1976] AC 104 at 123; Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 46; Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565; Bank of Credit & Commerce International SA v Aboody [1990] 1 QB 923 at 970–1; Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 at 589; Esso Australia Resources Ltd v Gas and Fuel Corporation of Victoria [1993] 2 VR 99; News Ltd v Australian Rugby Football League Ltd (1996) 58 FCR 447 at 536; 135 ALR 33 at 116–17; McKay v

National Australia Bank Ltd [1998] 4 VR 677; Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544. 238. Fischer & Copley Ltd v Bank of Adelaide [1938] SASR 489. Cf [2708]. 239. Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620 at 636; Haines v Carter [2001] 2 NZLR 167. 240. As to ‘economic duress’ generally, see [518]. 241. See Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 46; Ford Motor Co of Australia Ltd v Arrowcrest Group Pty Ltd (2003) 134 FCR 522 at 543; Schipp v Cameron [1999] NSWSC 997 at [690]; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [24]. 242. [1999] 1 Lloyd’s Rep 620 at 636. 243. [1992] 2 AC 152 at 165. 244. See also Alf Vaugan & Co Ltd (in receivership) v Royscot Trust Plc [1999] 1 All ER (Comm) 856 at 860, where a ‘but for’ test was applied to economic duress/duress of goods. 245. [1976] AC 104 at 119, 121. 246. He was speaking of ‘actionable duress’ generally, albeit in a case involving an ‘economic duress’ claim. 247. DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530 at [131]. See also Harrison v Landau [2004] EWHC 1316 (QB) at [92] Judge Eccles QC). 248. Goff and Jones, §10-49. 249. Virgo, p 222. 250. Virgo, p 223. 251. [1992] 2 AC 152 at 165. 252. [1980] AC 614 at 635 per Lord Scarman. 253. (1988) 19 NSWLR 40 at 46 per McHugh JA. See also Haines v Carter [2001] 2 NZLR 167 at 190 (duress must be ‘an appreciable factor’, citing Barton). 254. Fleming, p 228, citing Hotson v East Berks AHA [1987] AC 750 and Tabet v Gett (2010) 240 CLR 537. 255. See Hennessy v Craigmyle & Co Ltd [1986] ICR 461, a decision soundly criticised in Burrows, p 271; Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620 at 638. 256. DSND Subsea Ltd v Petroleum Geo-Services ASA [2000] BLR 530 at [131] (Dyson J); Harrison v Landau [2004] EWHC 1316 (QB) at [91]–[98] (Judge Eccles QC). 257. See generally Sargood Bros v Commonwealth (1910) 11 CLR 258 at 276; Re Hooper & Grass’ Contract [1949] VLR 269; Mason v New South Wales (1959) 102 CLR 108 at 143–4 (Windeyer J). See also [523]. See also Maskell v Horner [1915] 3 KB 106. We agree with Burrows (p 272) that for this and other reasons causation alone should govern this aspect of the right. This implicitly and, we believe, correctly endorses the sufficiency of a subjective test of causation. Contra Virgo, pp 227–8 where the reasoning proceeds, in part, upon acceptance of the overborne will theory (as to which see [521]). This said, if there were an additional requirement that the plaintiff establish the absence of an alternative practical choice, it will usually be easy to prove. 258. (1731) 2 Stra 915 at 916; 93 ER 939.

259. Barton v Armstrong [1976] AC 104 at 120; Peanut Marketing Board v Cuda (1984) 79 FLR 368 at 378; Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 46; Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565 at 589–90. The dicta are less than clear as to whether the defendant’s onus is substantive or evidentiary, but it seems correct in principle to leave the substantive onus with the plaintiff (see Mason v New South Wales (1959) 102 CLR 108 at 142. Cf Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620 at 638–9). 260. Valpy v Manley (1845) 1 CB 594; 135 ER 673; Furphy v Nixon (1925) 37 CLR 161 at 172. 261. Sargood Bros v Commonwealth (1910) 11 CLR 258 especially at 276; Maskell v Horner [1915] 3 KB 106; Brocklebank Ltd v R [1925] 1 KB 52 at 62. See also Recovery of Imposts Act 1963 (NSW), s 7(1) (Act applies whether or not payment made under protest). 262. Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366 at 400. 263. (1959) 102 CLR 108. 264. (1959) 102 CLR 108 at 143–4 (citations omitted). See also, as to protests and their absence, Re Hooper & Grass’ Contract [1949] VLR 269; Deacon v Transport Regulation Board [1958] VR 458. Cf Pao On v Lau Yiu Long [1980] AC 614 at 635. 265. Intercontinental Packers Pty Ltd v Harvey [1969] Qd R 159 at 177. 266. Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12. See also ComptrollerGeneral of Customs v Kawasaki Motors Pty Ltd (No 2) (1991) 32 FCR 243. Section 167 of the Customs Act 1901 (Cth) was held to be such a code. 267. Cf Mason v New South Wales (1959) 102 CLR 108 at 143; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 165. We agree with Burrows, p 256 that such ‘defences’ are ‘probably best viewed as synonymous with saying that causation has not been satisfied or that a threat to sue is not illegitimate’. Cf [441], [2034]. 268. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (see generally [414]–[416]). 269. (1853) 8 Ex 625 at 632; 155 ER 1502 at 1505. See generally D Cuthbertson, ‘The Principles of Voluntary Payment in Quasi-Contract’ (1987) 5 UQLJ 288. 270. This point is made forcefully in Stoljar, pp 66–7. 271. See further Chapter 26. 272. Discussed [442]. 273. Snowdon v Davis (1808) 1 Taunt 359; 127 ER 872; Oates v Hudson (1851) 6 Exch 346; 155 ER 576; Steele v Williams (1853) 8 Ex 625; 155 ER 1502. 274. D Owen & Co v Frank [1895] 1 QB 265; Sargood Bros v Commonwealth (1910) 11 CLR 258 at 310. 275. Barton v Commissioner for Motor Transport (1957) 97 CLR 633 at 662–5; Mason v New South Wales (1959) 102 CLR 108 at 142. Cf Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673–4; 78 ALR 157 at 162. 276. As to the wrongdoing bar to accessing the change of position defence, see [2419]. 277. See [2419].

278. See [503]. See further Chapter 24. 279. See generally [1431]–[1439]. 280. Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 6. 281. Halpern v Halpern (Nos 1 and 2) [2008] QB 195. 282. For the distinction, see [234]. As to statutory personal remedies under the Australian Consumer Law see [504]. 283. Burrows, pp 262–3. As to proprietary remedies in restitution, see [242]–[258]. 284. See [454]. 285. [1981] Ch 105. 286. See further [251]. 287. See Louth v Diprose (1992) 175 CLR 621; 110 ALR 1. See also Williams v Bayley (1866) LR 1 HL 200; Chalmers, Resulting Trusts, pp 133–5. 288. The threat to return a SAS member to his unit coupled with the indication that he would be returned unless he signed a confidentiality contract was held lawful in R v AttorneyGeneral for England and Wales [2003] UKPC 22. Further as to the need for pressure to be unlawful, see [518]. 289. As to the distinction between threats and reasonable conduct, see [511]. 290. (1835) 2 Ad & El 459; 111 ER 178 (cf [520]). See also Duke de Cadaval v Collins (1836) 4 Ad & El 858; 111 ER 1006 (a case involving a fraudulent claim); Dandoroff v Rogozinoff [1988] 2 NZLR 588. Duress or threats of this kind have always been sufficient to allow the setting aside of any contract thereby procured: Skeate v Beale (1841) 11 Ad & El 983; 113 ER 688; Dimskal Shipping Co SA v International Transport Workers Foundation (The Evia Luck) [1992] 2 AC 152 at 165. 291. Cf Barton v Armstrong [1976] AC 104. 292. Newdigate v Davy (1694) 1 Ld Raym 742; 91 ER 1397; Smith v Monteith (1844) 13 M & W 427; 153 ER 178. As to the lawful application of legal process, see [513]. 293. Williams v Bayley (1866) LR 1 HL 200; Smith v William Charlick Ltd (1924) 34 CLR 38 at 56 (see [514]). Cf Kaufman v Gerson [1904] 1 KB 591; Liberian Insurance Agency Inc v Mosse [1977] 2 Lloyd’s Rep 560. 294. See [503]. 295. Fell v Whittaker (1871) LR 7 QB 120. 296. (1959) 102 CLR 108 at 144. In Mason, the plaintiff relied upon duress colore officii (see [529]), but could (as the High Court acknowledged) have relied upon duress of goods. See also McKay v National Australia Bank Ltd [1988] 4 VR 677 at 686. 297. See, eg Criterion Theatres Ltd v Melbourne & Metropolitan Board of Works [1945] VLR 267; Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748. Nixon v Furphy (1925) 25 SR (NSW) 151 (affirmed sub nom Furphy v Nixon (1925) 37 CLR 161) could be viewed as analogous because the purchaser who paid the excessive sum in response to the vendor’s threat to sue had an equitable interest in the land under the enforceable contract. 298. See Goff and Jones, §10-19. 299. See, eg North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron)

[1979] QB 705 at 716–17. As to threats to break a contract, see [531]. As to the plaintiff’s general right to pursue alternative claims, see Deutsche Morgan Grenfell Group Plc v Her Majesty’s Commissioners of Inland Revenue [2007] 1 AC 558; [2007] 1 All ER 449; [2006] UKHL 49. 300. Astley v Reynolds (1731) 2 Str 915; 93 ER 939; Somes v British Empire Shipping Co (1860) 8 HLC 338; 11 ER 459; Fraser v Pendlebury (1861) 31 LJCP (NS) 1; Wright v Kelly (1884) 5 LR (NSW) 297; GA Investments Pty Ltd v Standard Insurance Co Ltd [1964] WAR 264 at 265–6, 268; J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108 at 129; 41 ALR 539 at 556. Gemmell v Brienesse (1933) 33 SR (NSW) 472 (see [628]) also illustrates this type of compulsion, albeit in a different restitutionary context. 301. (1910) 11 CLR 258. 302. Discussed [529]. 303. (1991) 22 NSWLR 298. 304. See [522]. See Valpy v Manley (1845) 1 CB 594; 135 ER 673; Maskell v Horner [1915] 3 KB 106 at 120; Nixon v Furphy (1925) 25 SR (NSW) 151 (affirmed sub nom Furphy v Nixon (1925) 37 CLR 161); Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137. 305. Valpy v Manley (1845) 1 CB 594; 135 ER 673; Liverpool Marine Credit Co v Hunter (1868) LR 3 Ch App 479 at 487–8. 306. See [514]. 307. See [507]. See also Wakefield v Newbon (1844) 6 QB 276; 115 ER 107. Compare Atlee v Backhouse (1838) 3 M & W 633; 150 ER 1298; Valpy v Manley (1845) 1 CB 594; 135 ER 673. 308. See [215]. 309. See [514], [507]. 310. Cf D & C Builders Ltd v Rees [1966] 2 QB 617 at 625. 311. See Miles v New Zealand Alford Estate Co (1886) 32 Ch D 266 at 291–2; Wigan v Edwards (1973) 1 ALR 497; 47 ALJR 586 at 595. 312. Cf Mason v New South Wales (1959) 102 CLR 108 at 140. See also [2026]. 313. Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 at 145 per Kitto J. 314. (1969) 121 CLR 137 at 147. 315. For the history of the colore officii principle, see Mason v New South Wales (1959) 102 CLR 108 at 139–42 per Windeyer J. 316. Grantham & Rickett, p 182, n 20. 317. See [520]. 318. McClintock v Commonwealth (1947) 75 CLR 1 at 19; Park Oh Ho v Minister for Immigration & Ethnic Affairs (1988) 20 FCR 104; 81 ALR 288; Northern Territory of Australia v Mengel (1995) 185 CLR 307. 319. Mason v New South Wales (1959) 102 CLR 108. See generally [2011]. 320. Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137. 321. Morgan v Palmer (1824) 2 B & C 729; 107 ER 554; Great Western Railway v Sutton (1869) LR 4 HL 226; South of Scotland Electricity Board v British Oxygen Co Ltd (No 2) [1959] 1

WLR 587. 322. (1943) 43 SR (NSW) 189. 323. A list of English cases is found in Goff and Jones, §10-31. 324. [1989] 1 Qd R 1; (1987) 65 LGRA 122. 325. (1992) 77 LGRA 237. 326. We doubt if this is a helpful label, for reasons given in [168], [416], [524]. 327. (1992) 175 CLR 353. As to the present law, see [414]–[417]. 328. (1959) 102 CLR 108. 329. [1980] AC 614 at 635. See also Lord v Proctor [1923] VLR 524. 330. See [441], [524] where we prefer this explanation rather than treating the payments as having been made with the intention of closing the transaction. 331. See, eg Morgan v Palmer (1824) 2 B & C 729; 107 ER 554. 332. See Goff and Jones, §10-34; Edelman and Bant, p 201. Under s 35 of the (uniform) Commercial Arbitration Acts the court may order delivery of the award and taxation of the fees and expenses demanded. 333. Betts v Municipality of Manly (1923) 23 SR (NSW) 249; Criterion Theatres Ltd v Melbourne & Metropolitan Board of Works [1945] VR 267; South of Scotland Electricity Board v British Oxygen Co (No 2) [1959] 1 WLR 587; [1959] 2 All ER 225; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 165. Cf also White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) 18 ALJR 324 (a contract case where the monopolistic status of the defendant appeared to influence the reasoning). 334. Cf South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65. 335. (1943) 43 SR (NSW) 189 at 190. Jordan CJ spoke (unhelpfully, in our view) of compulsion constituting a legal wrong (see also Smith v William Charlick Ltd (1924) 34 CLR 38 at 56) and of the law implying a fictional promise to repay. See also Payne v R (1901) 26 VLR 705. See also Nurdin & Peacock Plc v D B Ramsden & Co [1999] 1 WLR 1249 at 1258–9. 336. Ochberg v Commissioner of Stamp Duties (1943) 43 SR (NSW) 189. 337. Ellis v Barker (1869) LR 4 HL 226. 338. (1924) 34 CLR 38 at 56, quoted [514]. 339. (1869) LR 4 HL 226. Distinguished in Cafferky v Nepean Co-operative Dairy & Refrigerating Society Ltd (1959) 60 SR (NSW) 57 where there was no more than a bona fide assertion of right to which the plaintiff submitted. 340. (1869) LR 4 HL 226 at 249. See also Re Hooper & Grass’ Contract [1949] VLR 269 at 272; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 302; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 165. These public utility cases will often also involve a threatened breach of contract (as to which see [531]) and North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] 1 QB 705 at 715–16. 341. See, eg South of Scotland Electricity Board v British Oxygen Co Ltd (No 2) [1959] 1 WLR 587; [1959] 2 All ER 225. See [529]. 342. See [518] where we are critical of this concept.

343. [1983] 1 AC 366. 344. [1992] 2 AC 152. 345. See [1983] 1 AC 366 at 372, 410D. 346. See Seven Network (Operations) Ltd v CEPU (2001) 109 FCR 378 at 388; [2001] FCA 456 at [40]. 347. See generally Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots [1991] 1 VR 637. 348. Sections 13 and 29 of the Trade Union and Labour Relations Act 1974 (UK). 349. See [1992] 2 AC 152 at 164C, 166B per Lord Goff. 350. See [1992] 2 AC 152 at 168–9 and Burrows, pp 721–2. 351. (1870–71) LR 6 QB 1. 352. See [516]. 353. Wright v Kelly (1884) 5 LR (NSW) 297; Nixon v Furphy (1925) 25 SR (NSW) 151 (affirmed sub nom Furphy v Nixon (1925) 37 CLR 161); White Rose Flour Milling Co Pty Ltd v Australian Wheat Board (1944) 18 ALJR 324; Carr v Gilsenan [1946] QSR 44; Footwear Design & Marketing (Aust) Pty Ltd v JAS Forwarding (Aust) Pty Ltd (1988) 7 SR (WA) 160. See also [506]. Several English cases following this Australian line coined the phrase ‘economic duress’ to describe the improper pressure involved (see [518]). 354. See Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 302; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [23]–[26] (an appeal to the High Court was determined on contractual, not restitutionary, grounds: see Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7). To be recoverable, the money must not already be due under a valid obligation (see [215], [520]). 355. See also [517]. 356. [1980] AC 614 (discussed [517]). Cf also Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1. 357. In other words, the existing duty rule does not always prevail. Cf Stilk v Myrick (1809) 6 Esp 129; 170 ER 851; 2 Camp 317; 170 ER 1168. 358. See R Halson, ‘Opportunism, Economic Duress and Contractual Modifications’ (1991) 107 LQR 649 at 661–2. 359. R Halson, ‘Opportunism, Economic Duress and Contractual Modifications’ (1991) 107 LQR 649 at 662. 360. English cases that have allowed restitution and/or rescission of a contract procured by duress in the form of a threat to breach an earlier contract have all involved repudiatory breaches: see B & S Contracts and Designs Ltd v Victor Green Publications Ltd [1984] ICR 419; Atlas Express Ltd v Kafco Ltd [1989] QB 833; Vantage Navigation Corp v Suhail & Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138; Carillion Constructions Ltd v Felix (UK) Ltd [2001] BLR 1. 361. Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209 at [46]; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2013] WASCA 36 at [27]–[30]. 362. See, eg Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56 SR

(NSW) 323 (rise in the market price of imported iron); North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705 (devaluation of US dollar). Nixon v Furphy (1925) 25 SR (NSW) 151, affirmed on appeal sub nom Furphy v Nixon (1925) 27 CLR 161, was a case of mistaken calculation. 363. See [517]. See also Cafferky v Nepean Co-operative Dairy & Refrigerating Society Ltd (1959) 60 SR (NSW) 57; Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 at 743–4; CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 at 718–19. Cf also D & C Builders Ltd v Rees [1966] 2 QB 617 at 626. 364. See [507]. 365. See [533]. 366. See B & S Contracts and Design Ltd v Victor Green Publications Ltd [1984] ICR 419. Contrast Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 (initiative for increased payment came from payee, but there was on the facts no duress). See further [516] as to implied threats. 367. See [513]–[515]. 368. See Drew v Daniel [2005] EWCA Civ 507 at [40]; Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1; [2012] VSCA 209 at [46]; Goff and Jones, §10-08. 369. Duke de Cadaval v Collins (1836) 4 Ad & El 858 at 864; 111 ER 1006 at 1009. 370. See [504], [1312], [1313]. 371. Bridgewater v Leahy (1998) 194 CLR 457 at 477; 158 ALR 66; [1998] HCA 66 at [73]– [76]. 372. (1983) 151 CLR 447; 46 ALR 402. 373. (1983) 151 CLR 447 at 461; 46 ALR 402 at 412. 374. (1983) 151 CLR 447 at 474; 46 ALR 402 at 423. 375. See David Capper, ‘Undue Influence and Unconscionability: A Rationalisation’ (1998) 114 LQR 479. 376. Birks and Chin, ‘On the Nature of Undue Influence’, in Beatson and Friedmann, Good Faith and Fault in Contract Law. The authors claim that undue influence is ‘plaintiff-sided’ and concerned with the weakness of the plaintiff’s consent owing to an excessive dependence upon the defendant whereas unconscionability is ‘defendant-sided’ and concerned with the defendant’s exploitation of the plaintiff’s weakness. As to this distinction and its impact, see (2006) 69 Mod LR at 133 (Edelman). 377. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462; 46 ALR 402 at 413 per Mason J. See also Deane J at 474; 422–3. 378. Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474; 46 ALR 402 at 422–3 per Deane J. The Privy Council decision of Boustany v Pigott (1993) 69 P & CR 298 is an example of improper pressure leading to an ‘unconscionable’ bargain. See at 302–3 for a helpful set of propositions. See further [175].

[page 237]

Chapter Six

Bearing Others’ Burdens: Contribution, Recoupment and Subrogation 1. 2.

3.

General …. Contribution ….

[601] [610]

(a) General ….

[610]

(b) Categories ….

[612]

(c) Alleged Requirement of Common Demand …. [620] Recoupment …. [625] (a) General ….

[625]

(b) Who May Seek Non-statutory Recoupment? …. [626] (c) Claims …. 4. 5.

Subrogation …. Detailed Rules of Liability ….

[632] [637] [641]

1. General [601] Introduction. In this chapter we discuss three related concepts, contribution, recoupment and subrogation. The first two are rights enjoyed by a plaintiff who is required to pay money or bear an

obligation owed by the defendant. If the defendant’s obligation was shared with the plaintiff, the right is contribution. But if, as between plaintiff and defendant, the obligation was wholly the defendant’s, then the plaintiff is entitled to recoupment. The third is a remedy that precludes unjust enrichment by the remedy of substituting one party for another to enable the substituted party to enjoy the other’s personal or proprietary rights against a third party. The plaintiff’s intervention in each case must have been ‘unofficious’ in the sense that it was because of a present or imminent legal obligation owed by the plaintiff to the payee. Unlike Chapter 8 (on necessitous intervention), this chapter is concerned with payments that the plaintiff was legally obliged to make, albeit that the liability to the payee was shared or (as between plaintiff and defendant) wholly the responsibility of the defendant. To the extent that the plaintiff has paid the defendant’s obligation, the defendant will have benefited such that the defendant’s enrichment at the plaintiff’s expense is unjust unless reversed by the defendant recompensing the plaintiff wholly or in part. After a general outline of the common principles, we discuss and illustrate contribution, recoupment and non-consensual subrogation. Finally, in this chapter, we outline the detailed rules concerning these categories of restitutionary liability. [page 238] [602] Contribution and recoupment. A creditor may have the right of recourse against two persons (P and D) for the repayment of a single obligation. If the creditor (X) recovers payment from P, D will be effectively released, either because the liability to X will be formally discharged or because proceedings by X for recovery from D would result in double payment. Whatever the formal situation, D will almost invariably benefit from P’s payment if only because it is unlikely that X will pursue D after having been paid by P. D may have contracted with P to bear or share the burden of X’s

demand. Sometimes such a contract may be implicit in D’s request that P pay X. Absent express or implied contract, P may still have restitutionary rights of contribution or recoupment against D. The relationship between P and D at the time of the payment by P to X may make it just that D should recoup P or at least contribute to P’s outlay because otherwise D will receive an unjust benefit at P’s expense. As between P and D, recoupment will be just where the primary liability for the obligation fell on D. Contribution will be just where it was fair that the burden should be borne equally. In some situations, including joint or several tortfeasors, statute may permit a more finelytuned apportionment stemming from relative blameworthiness or causative impact. [603] Subrogation. Subrogation occurs when rights against a third party are transferred by agreement or operation of law. It is a process by which one party is substituted for another to enable enforcement for his or her own benefit of that other’s personal or proprietary rights against the third party. For example, a surety who pays the principal debt in full is subrogated to the creditor’s contractual rights against the debtor, including taking the benefit of any securities held by the creditor. The remedy may be conferred by contract or by operation of general or statute law.1 [604] Common source. The law of suretyship illustrates these principles in various contexts. A guarantor who meets the creditor’s demand may recoup the payment in full from the principal debtor. One of two guarantors who pays the debt may obtain contribution from the other, or full recoupment if there was an agreement to that effect or if one was in substance a surety for the other. A detailed discussion of these principles in this and other areas follows. For the moment it should be noted that rights of recoupment and of contribution derive from a single source. This is a general principle described by Willes J in Moule v Garrett:2 … where two persons are under an obligation to the same performance, though by different instruments, if both share the benefit which forms the consideration they must divide the burden; if one only gets the benefit he must bear the whole.

Where a surety pays the principal debt in full he or she is subrogated to the creditor’s contractual rights against the debtor, including any securities held by the creditor. [page 239] The similarity and common derivation of the principles of contribution and recoupment are well attested.3 While non-consensual subrogation operates in a not dissimilar manner to prevent unjust enrichment, its historical and conceptual location is more contested.4 [605] Dering v Earl of Winchelsea. Many of the cases, including Moule v Garrett5 (itself a recoupment case), trace the origin of the relevant principle back to Dering v Earl of Winchelsea.6 A man entered into three separate bonds of £4000, each bond with a different surety guaranteeing the individual debt due. The creditor recovered judgment for its total debt of £3800 from one guarantor (P). P’s claim for contribution from the two other guarantors was resisted on the ground that no contract to contribute could be implied since each surety was involved with only one bond. Speaking for the Court of Exchequer in its equitable jurisdiction, Lord Eyre CB held that the right of contribution was not founded on contract (although contract could qualify the right).7 The basis of the right of contribution between sureties was ‘equality’ and it did not matter whether they were jointly bound, jointly and severally bound, or severally bound by the same or different instruments:8 In every one of those cases sureties have a common interest and a common burthen. They are bound as effectually quoad contribution, as if bound by one instrument, with this difference only that the sums in each instrument ascertain the proportions, whereas if they were all joined in the same engagement they must all contribute equally.

This passage suggests that the contribution/recoupment right arises out of the sharing/inequality of the respective initial arrangements vis-a-vis the creditor. For, although the right only arises when the creditor presses P to bear the debt which, as between P and D, should be shared or borne entirely by D, the mere fact of P’s payment benefiting D will

not suffice. Normally the law will not require a person ‘to contribute to an outlay merely because he has obtained a material benefit from it’.9 In Mahoney v McManus,10 Brennan J said:11 It is not the common benefit derived by co-sureties from the payment but the inequality of burden resulting from the enforcement or satisfaction of the creditor’s rights against the sureties which gives rise to the equity.

[page 240] Referring to subrogation, Gibbs ACJ said in Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq):12 The principle underlying the doctrine is that it would be inequitable for a creditor, by choosing not to resort to remedies in his power, to cast the whole of the obligation on the surety …

[606] Unjust enrichment. While these statements are a reminder that a purely officious payment by P of D’s debt will not allow contribution, recoupment or subrogation by P, they should not obscure the operation of general restitutionary principles in this area. In restitutionary analysis, the right or remedy arises out of the unjust enrichment which would otherwise occur if the person who assumed more than the proper share of the common burden did not get contribution, recoupment or subrogation.13 Where there is double insurance the payment by one insurer that provides another insurer with a defence to a claim by the insured will entitle the first insurer to contribution from the second, because the first payment is ‘made for the benefit of both, and, contribution is equity’.14 In many cases the relationship between the parties seeking and resisting restitutionary relief of this nature is easily recognised and labelled. The case law marks out the appropriate result in the specific area. For that reason we shall refer to well-recognised areas before drawing the general principles together and showing how they have been and can be applied in less clearly recognisable categories of relationship.

[607] Absence of flexibility. Even equity seemed unable to fashion rules other than those which led to equal or pro rata contribution, or full recoupment, depending on the circumstances.15 At times the refusal of all relief seemed appropriate. For these reasons statute law is increasingly modifying the principles discussed in this chapter by conferring a judicial discretion to allow contribution or recoupment where none exists at common law or in equity, and disproportionate sharing of a burden where that is seen to be appropriate. Perhaps a clearer recognition of the role of unjust enrichment will mean that more finely crafted remedies will become available under the general law in appropriate cases.16 [page 241] [608] Tortfeasors. The common law set its face against contribution between tortfeasors in Merryweather v Nixon.17 The reason given by Lord Kenyon was that one’s own wrong should not provide the basis upon which to bring an action against another person. This much criticised explanation is at odds with the principles underlying contribution rights in other areas. However, the continued refusal of common law or equity to recognise a claim for contribution in this area led to statutory intervention, with the various Australian jurisdictions adopting the English statute of 1935.18 The specific terms of this legislation and the body of specialist case law built upon it suggest little scope for cross-fertilisation between tort and the principles discussed in this chapter.19 Defendants who owe concurrent and co-extensive duties in tort and contract have been allowed to claim under the statute even where they have been sued solely in contract.20 In Jones v Mortgage Acceptance Nominees Ltd,21 Davies J applied the statute to a claim for contribution by a person in breach of fiduciary duty. Differing views have been expressed as to whether statutory tortfeasor contribution is available in relation to liability under what is now s 18 of the Australian Consumer Law.22

[609] Statutory reform in some jurisdictions and proportionate liability. Since 1979 the English law of contribution has been substantially altered by the passing of the Civil Liability (Contribution) Act 1978 (UK) which gives effect, with some modifications, to recommendations of the Law Commission.23 It extends statutory contribution rights to ‘any person liable in respect of any damage suffered by another person’, whether for tort, breach of contract, breach of trust or otherwise. Where the Act applies it permits the burden of liability to be divided other than pro rata, because it adopts the pre-existing statutory rules for tort, namely determining what is ‘just and equitable having regard to the extent of that person’s responsibility for the damage in question’. With minor modifications, the English statute of 1978 was adopted in Victoria in 1985 with the passing of the Wrongs (Contribution) Act 1985 (Vic)24 and South Australia with the passing of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA). Since the Victorian and South Australian statutes, like their English counterpart, leave areas untouched by the statute, we discuss them after addressing the nonstatutory regime which applies elsewhere in Australia.25 We do not discuss the principles dealing with the statutory contribution and indemnity rights of tortfeasors, save where they impinge on the position [page 242] of other categories of claimants. We also leave to specialist works the topic of contribution in admiralty matters.26 There is also now legislation throughout Australia establishing a scheme of proportionate liability with reference to claims under statute for misleading or deceptive conduct, and in tort or contract for economic loss and damage to property that impacts upon contribution rights touching apportionable claims.27

2. Contribution (a) General [610] Basis of liability. A general doctrine of contribution has been recognised at common law and in equity since at least the eighteenth century.28 There used to be differences between law and equity where one of several co-obligors became insolvent or died.29 However, the equitable principles flowing from Dering v Earl of Winchelsea30 now prevail.31 The essence of the right to contribution lies in the payment of more than (P’s) ‘proper share towards discharging a common obligation’.32 Despite the clear analysis in Dering’s case itself, nineteenth-century cases explained contribution on the basis of implied contract.33 This is now seen as a fiction. Other grounds such as ‘equitable principles’,34 natural justice’35 and ‘doctrines of equity’ in the sense of ‘reason, justice and law’36 are, we suggest, unhelpful except as a pointer to a non-contractual analysis. The leading authority on the doctrine of contribution is the judgment of Kitto J in Albion Insurance Co Ltd v Government Insurance Office (NSW).37 After tracing the historical origins, he drew attention to the underlying doctrine of equality as the basis of the common law and equitable rules:38 The right arises at law when one of several persons has paid more than his proper share towards discharging a common obligation … and it arises in

[page 243] equity when a liability of one of several to pay more than his share has been ascertained; but for present purposes this difference is immaterial: what is important is the reason, namely that payment by the one discharges not only himself but each of the others, and qui sentit commodum sentire debet et onus.

As Gibbs CJ later pointed out in Mahoney v McManus:39 … a surety is entitled to contribution from his co-sureties so that the common burden is

borne equally and so that no surety is required, as between himself and his co-sureties, to pay more than his due share.

These principles have been recently discussed and applied in the High Court.40 The equitable maxim that ‘equity is equality’41 and the principles of marshalling42 underpin the right of contribution. It is possible to have a common obligation where the obligation of two obligors has a different source, such as statute and contract, provided the obligations can be characterised as ‘of the same nature and to the same extent’.43 [611] Who may seek non-statutory contribution? Subject to the detailed rules set out below44 non-statutory contribution may be obtained in a wide range of cases where one person (P) pays or is liable to pay a liability of D which, as between P and D, ought to be shared equally or proportionately according to their respective liabilities to a third party. There are naturally some differences in the working out of the respective rights of P and D which reflect the different types of relationships subject to contribution claims. The clearly recognisable categories of relationships are identified before we draw the common threads together and discuss cases which illustrate that contribution will apply to a wider group of innominate relationships. The detailed rules of liability are discussed later.45

(b) Categories [612] Co-sureties.46 Co-sureties (such as co-guarantors) have contribution rights inter se when one bears the whole burden of a default by the principal debtor who is primarily liable.47 It does not matter that the co-sureties became bound by different contracts or in different amounts or even in ignorance of each other’s presence.48 Contribution lies against a co-guarantor who is not [page 244]

personally liable for the principal debt but who has pledged or charged property with payment of the debt.49 Joint endorsers of a bill of exchange are co-sureties with rights of contribution50 because each is liable on the bill.51 But successive endorsers are not (in the absence of special agreement), because each is entitled to indemnity from the one ahead in temporal priority.52 In this and other areas equity (and restitution) look to the substance, not the form. Extrinsic evidence may show that one debtor is principally liable and the other is a surety only.53 Or it may show that two persons are in substance each sureties for another’s debt.54 Unless co-sureties have that relationship as between themselves they cannot claim contribution.55 A sub-surety (one who is a surety for a surety) who pays the principal debt is entitled to recoupment against the person for whom he or she was the sub-surety,56 and (by subrogation) contribution against other co-sureties in a prior degree (an example of the combined operation of the principles of recoupment and contribution).57 A guarantor who pays the whole of the principal debt and claims contribution from the solvent co-sureties may be required to share with them any dividends later received on proving in the estate of an insolvent co-surety for that person’s share of the principal debt.58 If a person is a collateral surety, in the sense of one whose liability is limited to payment of the debt upon the default of the principal and the other sureties, contribution will be denied. A party (A) who is a surety for a surety (B) cannot be required to contribute to B’s liability to the creditor (C). As between A and B, B is in the position of a principal.59 Accordingly, a surety for a surety is entitled to the release of secured property when the person above the surety in the liability tier has paid the debt.60 [613] Joint contractors. A contractor who pays more than the due share of a common contractual obligation is entitled to contribution61 unless there was an agreement or common intention between the contractors

[page 245] that one alone would bear the burden.62 The obligation may be liquidated or unliquidated; joint; or joint and several.63 It includes a secured debt.64 Liabilities can be coordinate even when one is secured and the other not.65 It extends to a liability imposed in invitum the parties by a revenue law or statutory liability. In Armstrong v Commissioner of Stamp Duties66 a donor and donee were jointly and severally liable to gift duty, neither being under a primary liability. The estate of a donor who had incurred the whole duty with respect to an inter vivos gift was held entitled to recover half from the donee. Rights of contribution among co-debtors are independent of the present right of the creditor. They are thus unaffected by the creditor’s covenant not to sue67 or by the creditor’s debt becoming statutebarred.68 This right of contribution between contractors may be excluded by express or implied agreement, or even, it appears, by evidence showing that the parties intended otherwise.69 Since fault is disregarded and (absent express agreement) there is probably no basis upon which a court may apportion liability according to the respective responsibilities of the parties for giving rise to the claim,70 there have been calls for statutory reform to enable this to be done. Controversial and complex statutory provisions now allow for proportionate liability in relation to claims for breach of the statutory prohibition on misleading and deceptive conduct, economic loss and damage to property caused by breach of contract or tort.71 Contractors whose respective liabilities to a common creditor are several only will generally not be able to seek contribution inter se.72 The unfairness of this result has led to a benign judicial stretching of the literal wording of the statutes permitting contribution between tortfeasors. Thus, A an architect and B an engineer may contract with X. If the building collapses in circumstances which entail negligent performance by A and B of their respective independent contractual obligations then, even if they are severally sued in contract alone, they

may be able to invoke statutory rights of contribution or indemnity73 unless their situation is qualified by the recent legislation establishing a scheme of proportionate liability.74 [page 246] [614] Partners. Partners are jointly liable for partnership debts and obligations.75 Liability for torts and other wrongs is joint and several.76 The partner who discharges more than a rateable proportion has (subject to agreement) a statutory right of equal contribution against the others,77 unless, of course, that partner’s fault made it just that the other partners have a full indemnity.78 There are special rules for distribution of assets and liabilities on final settlement of partnership assets.79 By contrast with joint contractors, partners of a business which is a going concern may only enforce a right of contribution in (equitable) proceedings for a general partnership account.80 This will ensure that their several liabilities correspond to the partnership agreement as to the division of profits, whether equal or not. [615] Trustees. Trustees are jointly and severally liable to the beneficiaries for any loss caused by a breach of trust. From this common equitable obligation flows the right of contribution in favour of a trustee who pays the whole of the liability.81 The right to contribution arises once the trustee’s liability is ascertained. It is not necessary to make good the beneficiary’s loss before contribution can be sought.82 Save in South Australia and Victoria,83 where there is a general statutory power to apportion contribution having regard to the extent of the trustee’s responsibility for the damage in question, apportionment is on an equal basis except where an ‘innocent’ trustee can make good a claim to a complete indemnity. It has been held that rights of indemnity may arise where: (1) the trustees agreed to that effect;84

(2) one trustee has got the benefit of the breach of trust in connection with the same trust;85 (3) where the relationship between the two trustees was such that the court is justified in treating the indemnifying trustee as solely liable for the breach of trust;86 and [page 247] (4) where a trustee who did not actively participate in the breach of trust committed the breach merely because of the advice of a trustee who was a solicitor87 or trustee company.88 The mere fact that a breach causing loss is committed by an active trustee does not give rise to a duty to indemnify a passive trustee who left the management of the trust to the former. If it were otherwise, there would be a premium on neglect of duty, to the disadvantage of the beneficiaries.89 Nevertheless, the categories of exception may not be closed.90 [616] Directors. Contribution rights exist between directors liable for breach of duty.91 If, however, one has benefited from the breach, then that person may not recover contribution even where the other director assented to the wrongful act.92 It is likely that the principles relating to trustees are applicable by analogy in this area, despite statements in the nineteenth century suggesting that directors who absent themselves from critical meetings can escape liability.93 On the authority of Spika Trading Pty Ltd v Harrison,94 the statutory civil obligations imposed by the Corporations Act 2001 (Cth) in relation to particular breaches thereof95 will attract the doctrine of contribution. [617] Joint tenants and tenants in common. A co-owner who makes improvements or effects repairs without the assent of other coowners has no active right of contribution in the absence of agreement, unless the improvements or repairs are required by law.96 The co-

owner is, however, entitled to a ‘defensive’ allowance on partition or in an administration suit, to the extent that the expenditure has enhanced the value of the property, subject to the payment of an occupation rent.97 Similar rights to an allowance apply where the property is resumed;98 or sold by way of a judicial sale or mortgagee’s sale.99 The allowance is, however, limited to the cost of the improvements and the present value of the investment to the property, whichever is the lesser.100 [page 248] Joint ownership of a property will not give rise to a duty to contribute to a debt relating to that property (for example, rates) unless P and D incurred such liability. In Didmore v Leventhal,101 P and D were the registered proprietors of Torrens title land. Although in fact D had sold his interest to X, the memorandum was not registered. Because notices of sale had been given to the local council P and X were shown in the rate book as the owners of the land. P paid the rates and sought contribution from D. He failed because D had not incurred a liability to pay the rate. As Jordan CJ put it:102 … to obtain contribution at common law, it is necessary, apart from agreement, express or implied, to establish that one of several persons has paid more than his proper share towards discharging a common obligation … In the present case, since the defendants have not been rated, they never came under any obligation to the council at all.

[618] Insurers. With the exception of life insurance, most contracts of insurance are contracts of indemnity, with the result that the insured cannot recover more than the actual loss. An insured may, however, insure twice over, sometimes inadvertently. When two or more insurers under indemnity contracts find themselves liable in respect of the same loss, they are bound as between themselves to contribute rateably to the loss.103 Their relationship is analogous to that between several sureties for a debt.104 This is not the place to provide a detailed exposition of the Australian law on the right of contribution between insurers.105 Since, however, insurance and suretyship are the paradigms of the right

to contribution, it is appropriate to note some cases which cast light on the broader concern of this chapter. Although most of the cases deal with what is described as ‘double insurance’, and notwithstanding that the statutory provisions and cases speak of ‘separate’ liability in respect of the ‘same loss’, it is important to note exactly what is involved. For contribution to apply, it is only necessary for the relevant policies to cover the same loss in the sense that each insurer turns out to be liable to provide indemnity against the same risk. It is not necessary that the insurers have issued policies covering the same range of risks. It suffices that the risk which comes home is a common one. Thus, in the leading case of Albion Insurance Co Ltd v Government Insurance Office (NSW),106 an employee was injured in a motor vehicle accident during the course of his employment. The accident resulted from the negligent driving of a fellow employee. The Government Insurance Office had insured the employer under a compulsory third party motor policy, and Albion had insured the employer under a common law extension to its workers [page 249] compensation policy. It was irrelevant to their rights of contribution that the two policies concerned very different risks. Liability to contribute flowed from the fact that each was liable for the same loss that in fact occurred. As Kitto J put it:107 What attracts the right of contribution between insurers … is not any similarity between the relevant insurance contracts as regards their general nature or purpose or the extent of the rights and obligations they create, but is simply the fact that each contract is a contract of indemnity and covers the identical loss that the identical insured has sustained.

The relevant time for determining whether double insurance exists is not when the claim for contribution is made, but the date of the casualty.108 It has been suggested by Priestley JA in Australian Eagle Insurance Co Ltd v Mutual Acceptance (Insurance) Pty Ltd109 that this right of

contribution on the ground of double insurance will only arise if a positive answer can be given to two questions: (1) Did the two insurers have a common burden? (2) If the insured were to be paid under both policies would the insured be paid twice in respect of the same damage? His Honour explained that:110 Although the two questions may in substance be the same, it seems to me to be useful to state them both because it emphasises that two distinct principles are at work each of which must be satisfied before the insurer claiming contribution can succeed. If the first question is answered no, then a claimant will fail because the contribution principle does not apply. If the second question is answered no then there would be nothing for the rule against double insurance to operate on. It will only be if both questions are answered yes that one insurer will be entitled to contribution from another.

If the payment by one insurer would provide another insurer under an indemnity policy with a defence to a claim by the insured, the payment by the first is ‘made for the benefit of both, and, contribution is equity’.111 The obligation of rateable contribution looks to the number of insurers and not the number or nature of the overlapping policies. This means that if one insurer is liable under one policy and another is liable under two different policies they still share equally in the usual case.112 The right of contribution is not, however, confined to cases of double insurance. In Borg Warner (Aust) Ltd v Switzerland General Insurance Co Ltd113 an employer had successive workers’ compensation insurers (National Employers’ Mutual and Switzerland General). Its employee suffered separate work injuries during the period of cover of the different insurers. Each injury led to a distinct and continuing partial incapacity which was deemed to be total incapacity by reason of the employer’s failure to provide suitable work. The novel issue confronting Cole J involved the rights as between [page 250] insurers where separate insurers provided workers compensation insurance to an employer in respect of different periods during which injuries occurred giving rise to concurrent existing partial incapacities

which were deemed total incapacity by reason of the employer’s failure to provide suitable work, and where the employee claimed against the employer upon the basis of two continuing partial incapacities. It was not a case of double insurance because the two policies did not cover the same loss. They covered the same loss only in the sense of the payment to the employee of moneys resulting from deemed total incapacity flowing from two separate injuries coupled with the nonprovision of suitable work. To have let the loss lie where it fell would have involved an ‘inequity. Liability would depend upon the whim or discretion of the employee’.114 Hence the insurers were to share equally, in accordance with the broad principles discussed by Kitto J’s judgment in Albion Insurance. The right of contribution between insurers depends upon the claimant establishing the legal liability of itself and the defendant under their several policies.115 An insurer cannot recover contribution when it has made an ex gratia payment, but a bona fide compromise of a claim by one insurer (even involving waiver of a condition about rateable contribution) will not deprive an insurer of a right to contribution.116 However, the insurer which makes a bona fide ex gratia payment may become subrogated to the insured’s rights against the insurer which is liable.117 Contribution does not lie between the insurer of a mortgagee and the insurer of a mortgagor, nor between the respective insurers of lessor and lessee, or vendor and purchaser (assuming, in each case, that the respective insurers covered only one of the interests).118 Similarly, it has been held that the insurer of a bailee’s interest (alone) in goods could not recover contribution from the insurer of the owner’s interest (alone) in the same goods, at least in a case where the bailee was liable for the loss vis-a-vis the bailor.119 Since multiple insurers cannot obtain contribution unless there is a co-ordinate liability in respect of the same risk, those who offer ‘layered’ insurance (for example, when A undertakes to pay losses up to $10,000 and B losses covering the next $100,000) cannot seek contribution from each other.120

[page 251] The presence of subrogation rights121 or other special facts122 may lead to the situation where only one insurer is ultimately responsible to indemnify the insured in which event contribution is not available. The situation is analogous to that involving two co-sureties where one is in substance a principal debtor.123 Once a right of contribution has been shown to exist there may be debate as to how liability is to be apportioned. To say that contribution must be based upon ‘reason, justice and law’124 will be rather unhelpful in a case where an insurer wishes to depart from the usual rule of proportionality.125 The case law presents no clear answer.126 However, no insurer can recover by way of contribution an amount that exceeds the sum insured under the contract between the insured and that insurer.127 [619] Other categories: co-ordinate liabilities generally. Rights of contribution are not confined to particular categories of co-ordinate liability.128 In Spika Trading Pty Ltd v Harrison,129 contribution was held to arise in relation to a statutory liability imposed on the directors of an insolvent company who allowed it to trade while insolvent. As Kitto J pointed out in Albion Insurance Co Ltd v Government Insurance Office (NSW),130 what all these relationships have in common is that they involve persons ‘under co-ordinate liabilities’. The source of the liability is not critical to the application of the relevant principles.131 Liabilities will not be co-ordinate when, for example, one party has the right to full recoupment from the other. However, the mere fact that the respective obligations might be discharged differently does not prevent liabilities being treated as co-ordinate.132 [page 252]

(c) Alleged Requirement of Common Demand

[620] No requirement of ‘common demand’. Contribution may occur even if the parties were liable to a third party under separate and independent contracts. There does not have to be a ‘common demand’.133 It is true that P cannot recover from D for having paid X if D was not liable to X. This is the reason why P failed in Bonner v Tottenham & Edmonton Permanent Investment Building Society.134 P was a lessee who assigned the term to an assignee, who in turn mortgaged by sub-demise to D. Although D had promised the mortgagor-assignee to pay the head rent out of rents and profits if D entered into possession, D did not do so. P was compelled to sue D on the basis that D had the benefit of P’s payment which saved the estate from forfeiture. P failed because D was under no obligation to the lessor when P paid. In this sense and in no other was there no ‘common liability’.135 There was some support for the ‘common demand’ view in the reasoning in older cases. In Johnson v Wild,136 a lessee assigned part of the land to A for the residue of the term, and sublet another part to B for the residue of the term less 10 days. The lessee covenanted to pay the rent due to the head lessor and to indemnify A and B against his demands. The lessee became bankrupt. Upon the head lessor threatening to distrain A’s goods, A paid the whole rent under the original lease. A’s claim for contribution from B failed. Chitty J held that there was no liability to a ‘common demand’ because B, as sublessee, was not liable to be sued for the rent demanded by the lessor. This, despite the fact that B was, like A, liable to distress.137 However, for the reasons which follow, this was not an essential part of the reasoning and is unsupportable in principle. [621] Commonality of interest and burden sufficient. It is clear that contribution will not lie unless there is a commonality of burden or loss. As we pointed out in the discussion of contribution between insurers,138 Albion Insurance Co Ltd v Government Insurance Office (NSW)139 demonstrates that liability to contribute flows from the fact that P and D are liable for the same loss that in fact occurred, regardless of the separate contractual paths by which that came about.

(The irrelevance of privity notions is further illustrated by the cases where a proprietary interest alone was sufficient to give rise to rights of recoupment or contribution.140) Nor need the position of P and D completely overlap, as is illustrated by contribution rights between insurers covering a differing (but overlapping) range of risks, excesses or [page 253] limits of liability. These differences may affect the amount of contribution recoverable, but not the right itself. As Kitto J put it in Albion Insurance:141 What attracts the right of contribution between insurers … is not any similarity between the relevant insurance contracts as regards their general nature or purpose or the extent of the rights and obligations they create, but … that each contract is a contract of indemnity and covers the identical loss in which ‘the insured is to receive but one satisfaction’ (to use Lord Mansfield’s expression) and accordingly all the insurances are ‘regarded as truly one insurance’.

Similarly, P and D can severally guarantee a floating overdraft, each guarantee containing a different limit of maximum exposure. This will not preclude contribution, although no guarantor can be required to pay more than the limit of the guarantee.142 If, however, P and D are liable for distinct and specific portions of a principal debt, contribution will not lie because what P paid was not something for which D might have been liable.143 Nor is contribution available to guarantors who are liable for different debts or obligations of the same principal debtor.144 The reason why these situations do not attract rights of contribution is not, however, related to the absence of a common demand in the sense of an in solidum debt. Rather, it is because P’s payment did not benefit D, who remained liable for D’s distinct part of the principal debt. A person who is a surety for a surety has no duty to contribute.145 If A and P are co-sureties and D is surety to A, then P cannot claim contribution from D. But D’s exemption is explicable without

supporting a doctrine of contribution based on essential requirements of common obligation and common demand. It turns upon the fact that P has not discharged that which, as between P and D, is P’s ‘proper share’ of a ‘common obligation’.146 There is simply no common obligation. Johnson v Wild147 is explicable on this basis.148 Reference to a ‘common demand’ should not be confused with a liability to be sued, although most of the cases involve such a liability. P can get contribution even if property is at risk without liability to be sued.149 What is needed is, as Bray CJ pointed out in Floreani Bros Pty Ltd v Woolscourers (SA) [page 254] Pty Ltd,150 a common risk or ‘community of interest’. He cited Vaughan Williams LJ in Bonner v Tottenham & Edmonton Permanent Investment Building Society151 who had said:152 The equitable principle seems to me based upon natural justice requiring that equity should neutralise ‘inter se’ the accident that the burden has been borne by one for the benefit of others associated with him in interest, whether such incidence of burden is the result of election of a plaintiff who might have sued all those interested, or whether it is the result of the requirements of the law as to the parties to actions, or whether it is the result of what may be more properly called ‘accident’ like the ‘jettison’ of a part of a cargo severally owned, or the seizure of wines on behalf of the Crown in right of prisage. In each of these cases the application of the equitable principle depends on community of interest in something in respect of which one has borne a burden for the benefit of another or others.

In Smith v Cock,153 Lord Mersey, delivering the judgment of the Judicial Committee said:154 Without attempting to give a comprehensive definition of the expression ‘equitable contribution’, it is clear that the present case does not fall within it. Before there can be any question of contribution there must be a common obligation upon those who are required to contribute. Here there is none.

That case involved two estates in which the trustees acted in breach of trust in the execution of a commonly worded discretionary trust in favour of the same beneficiary. Orders requiring the proper exercise of the several trusts were held not to import obligations of contribution as

between the respective trusts. The language used did indeed affirm the need to show a ‘common obligation’ in the sense of the same, not a similar, liability. But this does not support the proposition that P and D’s liability must always be in solidum. Clearly, the trusts in question were different in their terms and each trust required a separate and independent exercise of discretion by the trustees of the particular estate. It was said that the separate obligation arising upon the proper exercise of the discretion had ‘no connection with the obligation upon the testators of the other estate’.155 In Burke v LFOT Pty Ltd McHugh J said that:156 … the relationships between the parties [in the traditional cases] exhibit the characteristics commonly regarded as essential to establishing an entitlement to contribution, namely ‘a common interest and a common burden’. The nature of the relevant interest and burden is such that the discharge of the burden by one party constitutes a benefit to the other or others which, in fairness, the law cannot countenance them keeping.

The respective liabilities need not be identical for contribution to apply. It does not matter that the parties became bound by different contracts [page 255] or in different amounts,157 or that one derived from contract and the other statute.158 Indeed the debtors need not have been aware of each other’s existence at the time of their commitment to the creditor.159 In the seminal case of Dering v Earl of Winchelsea,160 contribution was ordered amongst persons with several liabilities assumed under separate instruments and in ignorance of each other. The decision in Borg Warner (Aust) Ltd v Switzerland General Insurance Co Ltd161 is also inconsistent with a requirement of a common demand in the sense previously suggested by Goff and Jones. So too are the cases relating to contribution amongst directors.162 A creditor’s covenant not to sue a co-surety does not release the common liability of the co-sureties or their obligation to contribute.163 The principles of contribution and recoupment stem from a common

source and are based on common principles. There are several cases which clearly establish that common demand in the sense of an in solidum liability is not required as an essential precondition of recoupment.164 [622] Enrichment not dependent on discharge of debt. One view, recently taken by the English Court of Appeal, is that a compelled payment effects a discharge automatically.165 Another view, which we favour, is that P’s right does not depend upon formal discharge of D’s debt,166 but rather upon D’s enrichment (in an objective sense) because of the unlikelihood (verging on a certainty) that the original creditor will sue D for the debt which P has paid unofficiously in consequence of the creditor’s lawful pressure on P.167 Australian cases support the proposition (upon which Professor Sutton168 relies by analogy) that one part-owner who pays off the debt of another partowner is presumed to intend to stand in the shoes of the creditor.169 If D is sued by the original creditor, D can affirm P’s payment and thereby obtain a discharge of the original debt. [page 256] [623] Scope of co-ordinate liabilities. Kitto J’s notion, in Albion Insurance Co Ltd v Government Insurance Office (NSW), of ‘co-ordinate liabilities’170 defies exclusive or narrow definition. Situations outside the established categories discussed above need examination against the background of the general principles expounded by Vaughan Williams LJ in Bonner v Tottenham & Edmonton Permanent Investment Building Society171 and Kitto J in Albion Insurance. Normally the law will not require a person ‘to contribute to an outlay merely because he has obtained a material benefit from it’.172 We would suggest that there must at least be an involvement of the parties in a common design to achieve a common end. If the debt or loss that eventuates and is borne by one party falls fairly within the scope of that common design such that it would be inequitable for the loss to be

borne solely by one party, contribution should lie. The Full Federal Court refused contribution to a once wealthy horse trainer who incurred debts in acquiring horses on his own account. Contribution had been sought from two firms of accountants who prepared ‘tax effective packages’ relating to the horses which they attempted to market on their own account without success. The trainer was not a client of either firm and no fiduciary relationship existed between them.173 And French J has denied that the concept of co-ordinate liabilities attracts rights of contribution to obligations merely because they are owed to the same party and related to the same transaction or otherwise connected in time or circumstances.174 There can be a common obligation despite the presence of different causes of action against the co-obligors so long as the respective liabilities are ‘of the same nature and the same extent’.175 This is apt to include notions of ‘equal or comparable culpability and equal or comparable causal significance’.176 There must be a common burden and it is not enough that the claimant’s payment operates to the financial benefit or relief of the other party.177 [page 257] The liabilities were not co-ordinate in Burke v LFOT Pty Ltd.178 The purchaser of real estate suffered loss due to misleading and deceptive conduct by the vendor. The purchaser’s solicitor was also negligent in failing to make proper enquiries. Although the damages payable by each defendant were identical the vendor was denied contribution. Some of the High Court’s reasoning turned on a refusal to countenance the vendor taking advantage of its own wrong.179 However, the reasoning of McHugh J in particular180 explained the principles of coordinate liabilities and why they were not satisfied on the facts. [624] Statutory contribution in South Australia and Victoria. In Victoria, the general principles relating to statutory contribution

between tortfeasors now extend to every ‘legal basis of liability, whether tort, breach of contract, breach of trust or otherwise’.181 The South Australian provision extends to liabilities arising under the law of torts, a liability in damages for breach of a contractual duty of care and a liability in damages that arises under statute.182 The general rule is that the amount of contribution recoverable shall be such as is found to be just and equitable having regard to the extent of the responsibility for the damage of the person against whom contribution is sought. As with tortfeasors, the court may throw the entire burden on one or more parties to the exclusion of others. However, parties remain free to contract expressly or impliedly in relation to including or excluding rights of contribution or indemnity.183

3. Recoupment (a) General [625] Basis of liability. Rights of contribution and recoupment derive from a single source, namely the injustice of the defendant having had its burden relieved by the plaintiff.184 But a right of recoupment differs in its application from contribution because there is no ‘equality’: rather the respective positions of P and D are such that it is just that P should throw the whole burden of P’s liability to X upon D’s shoulders. If it were otherwise, D would be seen to have received an unjust benefit (that is, [page 258] the effective release of the burden to X) at the expense of P who bore it.185 Thus, in the standard guarantee situation a guarantor (P), who is forced to meet the creditor’s (X’s) claim, is entitled as against the principal debtor (D) to recoupment in full for the outlay. This is one example of a broader principle, as Lord Wright MR demonstrated in Brook’s Wharf and Bull Wharf Ltd v Goodman Bros:186

The essence of the rule is that there is a liability for the same debt resting on the plaintiff and the defendant, and the plaintiff has been legally compelled to pay, but the defendant gets the benefit of the payment, because his debt is discharged either entirely or pro tanto, whereas the defendant is primarily liable to pay as between himself and the plaintiff.

The classic statement of the general principle was given by Cockburn CJ in Moule v Garrett:187 Where the plaintiff has been compelled by law to pay, or being compellable by law, has paid money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability; under such circumstances the defendant is held indebted to the plaintiff in the amount.

These principles are the same as those underpinning the doctrines of marshalling.188 Before examining the principles which lie behind these statements and, indeed, contradict them in certain respects, it is helpful to illustrate the general principles of recoupment by some common categories. We return to the requirements for a successful recoupment claim below.189 The detailed rules regulating the manner and scope of contribution and recoupment claims are addressed later in the chapter.190

(b) Who May Seek Non-statutory Recoupment? [626] Introduction. The right of recoupment is not based on an express or implied contract, although sometimes a contractual remedy is also available. Examples of truly contractual rights are those in favour of the surety who has given a guarantee at the request of the principal debtor, or the implied indemnity that arises where P at D’s request191 does something which is not manifestly tortious but which turns out to injure a third party who sues P192 or otherwise results in P acting to his or her detriment.193 In purely restitutionary claims P may be limited to reimbursement to the extent [page 259]

that P’s unrequested payment has conferred a benefit on D, unless the necessitous intervention principles discussed in Chapter 8 are satisfied. [627] Sureties required to pay their principal’s debt. A guarantor who is required to pay the principal’s debt may, upon doing so, seek recoupment from the principal. The same principle applies to a case of money paid by one party at the request and for the benefit of another.194 Indeed, recourse may be had quia timet in appropriate cases.195 The right is available to all who are in effect in a relationship of surety to the principal debtor, and regardless of whether there is any privity of contract between them. It extends to purely proprietary liabilities if they are in effect secondary.196 In Pownal v Ferrand,197 an indorser of a bill of exchange recovered from an acceptor the amount he had had to pay to the holder in due course. In the leading case of Moule v Garrett,198 P leased premises subject to a covenant to keep in repair. The lease was assigned to a third party who subsequently assigned to D. There was thus no privity, let alone express agreement, between P and D whereby D promised to indemnify P for any liability incurred towards the landlord by reason of D’s acts or omissions. Nevertheless, P obtained recoupment from D for the damages which the landlord had recovered from P by reason of D’s breach of the repair covenant. P had been required to pay damages to the landlord (thereby rendering P’s payment ‘unofficious’ in modern restitution analysis) and D obtained a ‘benefit’ by reason of P’s discharge of the burden of the liability under the repair covenant.199 In Brook’s Wharf and Bull Wharf Ltd v Goodman Bros,200 P was a bonded warehouse that incurred a statutory liability to pay customs duties on a consignment of imported squirrel skins that were stolen from P. The theft was not due to any negligence by P. The skins had been imported by D and this had given rise to a primary statutory liability to pay the duty. P’s liability to the Customs was thus ‘ancillary to and by way of security for’ the due payment of the duty.201 This was held sufficient by the English Court of Appeal to allow the application of the principle stated by Cockburn CJ in Moule v Garrett which Lord

Wright MR restated in the terms set out above.202 Later in his judgment Lord Wright explained that:203 The defendants would be unjustly benefited at the cost of the plaintiffs if the latter, who had received no extra consideration and made no express bargain, should be left out of pocket by having to discharge what was the defendants’

[page 260] debt … The defendants as actual importers have obtained the benefit of the payment made by the plaintiffs and they are thus discharged from the duties which would otherwise have been payable by them.

It can be seen how closely this reflects a modern restitutionary analysis of the principles. [628] Occupiers of property required to meet the owner’s obligation. In Armstrong v Commissioner of Stamp Duties,204 Wallace P spoke of a category of reimbursement cases ‘where a person occupying property is compelled to pay a claim in respect thereof which should have been paid by another’. The classic example is the case where an occupier is required to comply with a statutory demand to abate a nuisance or perform some work where the matter giving rise to the liability is a structural defect whose responsibility as between landlord and tenant rests upon the landlord.205 The principle is not confined to landlord and tenant. In Gemmell v Brienesse,206 a mortgagee in possession paid overdue municipal rates to a council in order to avoid proceedings by the council to enforce payment by sale of the property. This was held by Harvey ACJ to be sufficient to constitute the mortgagee’s payment ‘not a voluntary, unauthorised, unjustifiable payment … but, in the eyes of the law, a payment under practical compulsion’.207 [629] Payment for defendant’s benefit to release plaintiff’s property or agent from liability. When distress for non-payment of rent was an available remedy, the landlord’s right sometimes extended to the goods of a third party. The ‘innocent’ third party would be

forced to pay the landlord to obtain the release of the goods from the distress or lien lawfully exercised thereon. In these circumstances the payment could be recouped from the defaulting tenant.208 The same principle applies where P’s goods are lawfully seized in execution for D’s debt.209 An immediate threat of such seizure is also sufficient.210 Not surprisingly, these principles have been extended to a case where P’s agent was arrested and imprisoned (in Liberia) as a form of execution for a judgment debt incurred as agent for D and where P paid the debt to obtain the release of its hapless agent.211 The (threatened) seizure must be lawful,212 otherwise the remedy lies against the creditor. If P paid while under no legal obligation to do so, any right of recoupment is subject to different principles discussed in Chapter 8 (Necessitous Intervention). [page 261] [630] Liabilities incurred in the discharge of an office and other categories. Other cases involve persons such as directors or trustees who incur expenses and liabilities in the proper exercise of their offices.213 The obligation duly discharged by P ‘on account of’ D need not be a debt or even contractual in nature.214 An example of the generality of the principles involved is Brown v Hodgson,215 where P, a carrier, had to compensate an owner whose goods he had misdelivered to D. They were irrecoverable in specie because D had disposed of them. D was held liable to P in an action for money paid for his use because ‘this was not a case of a man officiously and without reason paying money for another’,216 since here both P and D were liable to the owner. [631] Statutory recoupment in South Australia and Victoria. This is discussed above.217

(c) Claims

[632] Introduction. Absent an express or implied promise to recoup or indemnify, the right of P to recoupment from D for moneys paid to X in relation to D’s liability to X appears to depend on three requirements discussed below.218 These are (1) the need for P’s payment to relate to a liability falling upon P and D; (2) P’s payment benefited D; and (3) absence of officiousness on the part of P. We also discuss, and reject, a fourth requirement, that P’s payment must have discharged D’s liability. The right of recovery does not, in our view, turn upon the need for P to show that the payment discharged D’s liability. Our reasons for this conclusion are given below.219 [633] P’s payment must relate to a liability falling upon P and D. The cases discussed in this chapter all involve payments by a person who acted under the ‘practical compulsion’220 of an immediate or imminent legal liability to be sued or to have P’s goods or person221 seized or detained. Cases involving payment by P who is under no legal liability are addressed in Chapter 8 on ‘necessitous intervention’. It is not always enough that the payer was contractually bound to a third party to make the payment to the recipient.222 For the present, it is sufficient to observe that practically any type of liability may give rise to a right of recoupment where the liability is discharged by [page 262] an intervener acting unofficiously. It will frequently be a common legal debt (including a debt imposed in invitum, like a revenue obligation).223 But recoupment extends to the liability to pay damages for breach of contract,224 relieving enforceable threats to property interests,225 tortious liabilities226 and statutory liabilities (such as the duty to abate nuisances or carry out work ordered by a statutory authority).227 What these have in common is the fact that P was under legal compulsion (actual or threatened). If P was under no actual or threatened liability, payment will not ground recovery under the

principles discussed herein because ‘to fall within the principle goods must have been lawfully seized’.228 However, the principles of ‘necessitous intervention’229 may assist in an appropriate case. So far as D’s liability is concerned, it is irrelevant that D’s obligation arose from ‘different instruments’,230 that is, that there is no privity between P and D. This is illustrated by Moule v Garrett231 itself where P, who was a lessee, sued D, the assignee of his assignee to recover damages paid to the lessor for D’s breaches of the covenant for repair. D must, however, have been under some liability.232 [634] P’s payment benefited D. It must be shown that, as between P and D, D was primarily liable, with the result that P’s payment benefited D. The need for this is found in the general statements of principle cited at the commencement of our discussion on recoupment,233 and illustrated by the categories of cases in which recoupment is available.234 This principle usually creates no difficulty. There are, however, cases where what starts out as co-ordinate liability changes by reason of one party taking over an active role. For example, assume that A and B are shareholders of a company who give their personal guarantees. If A sells out, and the debt is incurred by the company after B has assumed sole ownership, A should be entitled to recoupment from B if A, as a shareholder, enjoyed the substantive benefit of the advance to the company.235 [page 263] [635] P must not have been officiously exposed to the liability. Tort law recognises a defence of necessity in answer to an action for trespass to property, but the defence is unavailable to the person by whose own fault the necessity arose.236 Similarly, there are (as yet uncertain) limits to the right to seek recoupment if P’s earlier officiousness exposed P to the liability which was subsequently met on D’s behalf.237 Naturally, P will not have acted officiously if the liability was incurred at the request of D.238

The leading modern authority is the difficult case of Owen v Tate,239 in which P, at the request of a person whose property was charged to secure another person’s debt, agreed with the creditor bank to substitute his own undertaking for the security. This was done by P behind the back of D and in order to procure the release of the charge given by P’s employee. P was then forced to pay the bank. P’s claim to be reimbursed by the original debtor was rejected by the English Court of Appeal. Since P had intervened in order to assist an employee, and not due to any necessity, he was treated as a ‘volunteer’ and denied recovery. Yet in one sense D had accepted the benefit of P’s actions when D, being pressed by the bank, requested the bank to have recourse to P’s security. This is what makes the case a difficult and controversial one,240 particularly in the light of modern attitudes to the assignment of debts and the line of cases allowing a stranger to pay off another’s debt with the intention of obtaining the benefit of the security given over it.241 Nevertheless, the principle discussed in Owen v Tate is not destroyed by its doubtful application to the facts of the case.242 [636] Must or does P’s payment formally discharge D’s liability? The general rule is that payment of another’s debt does not discharge it unless made on behalf of the debtor and with the debtor’s authority.243 Recognition of this principle has triggered a lively debate amongst English commentators as to whether a person seeking contribution or recoupment (as distinct from subrogation) must demonstrate the formal discharge of the principal debt obligation;244 or whether, alternatively, a compelled payment attracting the principles of contribution and recoupment has the legal effect of triggering a discharge.245 [page 264] We suggest that any premise about needing to show formal discharge is inapplicable (at least in Australia).246 The unjust enrichment concept

does not preclude reference to practical as well as formal legal benefits.247 There is a reference to ‘discharge’ in the classic statement by Lord Cockburn CJ in Moule v Garrett.248 In that, as in most cases, the facts showed that this was the benefit conferred. A discharged debt is an incontrovertible benefit,249 subject to the possibility of officious intervention by P previously discussed.250 However, the elevation of this to an essential requirement lacks justification, and is inconsistent with the broad ethical principles of the law of restitution. It is also inconsistent with a statement of the High Court to the effect that it would be an abuse of process for a later action to be brought in relation to the debt by the benefited creditor.251 In our view it will be enough if P, being under an immediate or threatened liability, unofficiously pays D’s liability in circumstances where D obtained a practical benefit thereby.252 If D adopts that benefit, D may be estopped from repudiating liability.253 So long as, between P and D, it is just that D recoup P, the question whether D’s debt has been formally discharged is irrelevant. There will seldom be any good reason why D would choose not to adopt the benefit by ratifying the previously unauthorised payment, thereby becoming formally armed with a defence against being sued twice by the creditor.254 The vast majority of cases have (like Moule v Garrett) involved a payment by P which has effected the legal discharge of D’s liability to X. But not all recoupment cases have involved a discharge of D’s liability. For example, in Pownal v Ferrand255 P, the indorser of a bill, was sued by the holder. Although P only paid part of the amount of the bill, he recovered all of his outlay from the acceptor as money paid to the acceptor’s use.256 The common underlying principles relating to contribution and recoupment also serve to deny any absolute requirement. It should be remembered that, when speaking of contribution at common law, Vaughan [page 265]

Williams LJ said in Bonner v Tottenham & Edmonton Permanent Investment Building Society:257 The common law principle requires a common liability to be sued for that which the plaintiff had to pay, and an interest of the defendant in the payment in the sense that he gets the benefit of the payment, either entirely, as in the case of the assignee of a lease, or pro tanto, as in the case of a surety who has paid, and has his action for contribution against his co-surety.

In referring to getting ‘the benefit of the payment’, Vaughan Williams LJ could not have been requiring that benefit to be expressed in the discharge of D’s debt, because no such discharge necessarily occurs in the contribution cases. It is well established that a right to contribution arises as soon as P has paid more than P’s fair share of the common liability with D. Indeed, the classic expression of principle by Lord Wright MR in Brook’s Wharf and Bull Wharf Ltd v Goodman Bros,258 which we have quoted above,259 speaks of D getting the benefit of P’s payment ‘because his debt is discharged either entirely or pro tanto’ in the context of a discussion about recoupment. The principle underlying rights of contribution and recoupment does not base itself upon the discharge by P of D’s obligation in the sense of a formal extinguishment thereof. Rather, the right arises from the application of the principles expressed by the maxim qui sentit comodum sentire debet et onus.260 We shall see below261 that equity does not require P to have paid anything before entitlement to quia timet relief in the nature of partial (contribution) or total (recoupment) exoneration. This further emphasises the irrelevance of speaking in terms of the formal extinguishment of D’s obligation.262 The cases where P paid to redeem goods which had been lawfully seized by way of distress on account of D’s debt do not turn upon P’s payment having extinguished D’s debt. The distrainee (P) could not have been sued for the debt, yet is entitled to recover what was paid to rescue the goods, regardless of the amount of the debt.263

4. Subrogation [637]

Introduction. Subrogation occurs when rights against a third

party are transferred by operation of law. It is a process by which one party is substituted for another to enable enforcement for his or her own benefit of that other’s personal or proprietary rights against the third party. For example, a surety who pays the principal debt in full is subrogated to the creditor’s contractual rights against the debtor, including any securities held by the creditor. The remedy may be conferred by contract or by operation of general or statute law.264 [page 266] [638] Consensual subrogation. Subrogation may arise from express or implied contract and has often been viewed in this way in contracts of indemnity insurance.265 Sometimes the implication of contract has verged on the fictional. As indicated below, that fiction has now been abandoned in many areas, in favour of analysis based on the unjust enrichment concept. The boundaries between consensual and non-consensual subrogation are contestable but one is dealing with ‘radically different institutions’.266 This chapter is concerned only with non-consensual subrogation. [639] Equity and unjust enrichment. Non-consensual subrogation was a remedy developed in the Court of Chancery and it is frequently referred to as ‘an equity’. It is undoubtedly an historical ‘creature of equity’.267 And it is a remedy not granted as a right, but only where circumstances make it appropriate to do so.268 The speeches in Lord Napier & Ettrick v Hunter269 demonstrate the equitable provenance of the remedy, rejecting Lord Diplock’s views to the contrary.270 Their Lordships’ historical analysis nevertheless shows clearly that these principles were applied by common law courts well before the Judicature Act 1873 (UK).271 Subrogation may arise in a variety of contexts including the ultra vires borrowings of corporations, the lending of funds to complete a purchase or pay off an existing mortgage, the subrogation of creditors of a trustee to the trustee’s lien over trust property, as well as the basis

of a surety taking over the security and other rights of the principal debtor.272 This span should caution against any search for a universal metwand, be it ‘equitable principles’ or the unjust enrichment concept.273 One finds many statements to the effect that the remedy of subrogation lies to prevent inequitable conduct.274 Such language is, of course, frequently encountered in early cases addressing what are today clearly recognised as bases for restitution.275 Such potentially circular reasoning is invariably accompanied by warnings against idiosyncrasy, just as it must for working with the unjust enrichment concept itself. There is an authoritative Australian statement that ‘subrogation may be seen as preventing the unjust enrichment of the principal debtor who [page 267] otherwise might escape carriage of ultimate liability’.276 This too is the position of the Third Restatement.277 Nevertheless, in Bofinger v Kingsway Group Ltd,278 the High Court determined that the ‘principles of equity’ were well developed in this area and that they have the vitality to permit further development ‘in an orthodox fashion’. In other words, the unjust enrichment concept was seen as casting no useful light upon the well-established, yet complex, sets of relationships capable of generating claims of subrogation. Earlier case law sometimes spoke of subrogation arising from the presumed mutual intentions of the relevant parties.279 Such use of fiction is frequently encountered in restitution’s pre-history.280 In truth, many instances of subrogation involve the remedy being imposed to frustrate the defendant’s attempt to benefit unjustly from unconscientious behaviour. The weight of modern scholarship recognises the equitable derivation of the subrogation remedy while finding the unjust enrichment concept as a more transparent and conceptually useful basis for understanding a

common theme underpinning the non-contractual subrogation case law.281 In Boscawen v Bajwa Millett LJ said:282 Subrogation … is a remedy, not a cause of action … It is available in a wide variety of different factual situations in which it is required in order to reverse the defendant’s unjust enrichment. Equity lawyers speak of a right of subrogation, or of an equity of subrogation, but this merely reflects the fact that it is not a remedy which the court has a general discretion to impose whenever it thinks it just to do so. The equity arises from the conduct of the parties on well-settled principles in defined circumstances which make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff. A constructive trust arises in the same way.

In Banque Financiere de la Cite v Parc (Battersea) Ltd,283 Lord Hoffmann, with whose reasons Lords Steyn, Griffiths and Clyde agreed, described non-contractual subrogation as:284 … an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived.

[page 268] Later, after citing various cases, he said:285 These cases seem to me to show that it is a mistake to regard the availability of subrogation as a remedy to prevent unjust enrichment as turning entirely upon the question of intention, whether common or unilateral. Such an analysis has inevitably to be propped up by presumptions which can verge upon outright fictions, more appropriate to a less developed legal system than we now have. I would venture to suggest that the reason why intention has played so prominent a part in the earlier cases is because of the influence of cases on contractual subrogation. But I think it should be recognised that one is here concerned with a restitutionary remedy and that the appropriate questions are therefore, first, whether the defendant would be enriched at the plaintiff’s expense; secondly, whether such enrichment would be unjust; and thirdly, whether there are nevertheless reasons of policy for denying a remedy.

In Bofinger v Kingsway Group Ltd286 the High Court explained that it could not accept the (latter portion of) this passage. The first reason was the difficulty of identifying the ‘unjust’ enrichment in subrogation cases, which necessarily involve multilateral, rather than bilateral relationships. (Similar reasoning has led various courts and scholars —

including ourselves — to reject the application of the unjust enrichment concept in the want of title cases addressed in Chapter 3.) The High Court’s second reason was that invoking unjust enrichment does not explain why subrogation can in some situations require the party benefited to hold the payer secured, as when a third party pays off the debt of a mortgagor and thereby becomes entitled to stand in the latter’s shoes with the benefit of the security.287 We find this to be entirely unconvincing unless, by definition, restitution for unjust enrichment can never lead to a proprietary outcome.288 Non-contractual subrogation effects the non-voluntary assignment of rights to go against another person (ie choses in action) or that person’s property. But its underlying rationale is similar to that driving the doctrines of contribution and recoupment discussed earlier in this chapter. As Gibbs ACJ put it in Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq):289 The principle underlying the doctrine is that it would be inequitable for a creditor, by choosing not to resort to remedies in his power, to cast the whole of the obligation on the surety …

In Cochrane v Cochrane,290 Kearney J described the principle underlying subrogation by paying out of securities291 as ‘based on equity’s concern to prevent one party obtaining an advantage at the expense of another which in the circumstances is unconscionable’. [page 269] This burden/benefit analysis is acknowledged in several of the cases in which there is musing about the underlying rationale of subrogation.292 Subrogation, like contribution and recoupment, exists to ensure that financial benefits and burdens are shared appropriately between parties and to prevent unjust enrichment at another’s expense.293 This is not to deny that subrogation is a remedy that must be fashioned to the particular facts.294 [640]

Varieties of non-consensual subrogation. We leave the

detail of the topic to specialist works.295 The main categories296 in which subrogation may be available as a restitutionary remedy are indemnity insurance, suretyship where the creditor is paid in full,297 bills of exchange, trading trusts and executors who carry on business,298 lenders to borrowers who use the money to pay off their secured debt to a third party, including situations where the debt is invalid299 and where a bank, in the mistaken belief as to a valid mandate, discharges its customer’s debt to a third party.300 Professor Mitchell and Dr Watterson distinguish ‘subrogation to subsisting rights’ and ‘subrogation to extinguished rights’.301 The latter involves the transfer of subsisting rights from one party to another, the clearest example being the subrogation that occurs when an insurer indemnifies its insured against a loss arising out of a tort committed by a third party. ‘Subrogation to extinguished rights’ recognises that some types of assistance actually discharge the primary liability.302 Nevertheless, the court treats the right as fictionally revived so that the person conferring the benefit may step into [page 270] the shoes of the party benefited and exercise personal or proprietary rights. An example is Thurston v Nottingham Permanent Benefit Building Society303 where an unpaid lender lending to a home purchaser pursuant to a void loan contract was subrogated to a vendor’s lien when in reality the lien never arose because the lender’s loan paid out the vendor in full. The categories are not closed.304 A restitutionary framework for understanding and testing the subrogation case law is both encouraged and assisted by observing that several of the principles dealing with contribution and recoupment apply in this field as well. Thus, claimants who act officiously in discharging the obligations of another will not obtain subrogation.305 Conduct that is not legally compelled, but that is driven by strong

moral obligation or the need to protect a commercial reputation may suffice.306 This arguably is a form of necessitous intervention.307 As with contribution and recoupment, rights of subrogation can be excluded or modified by contract,308 waived,309 or lost by misconduct.310

5. Detailed Rules of Liability [641] Introduction. In the remaining part of this chapter, we endeavour to summarise the rules, common to non-contractual contribution, recoupment and subrogation, which regulate the rights of the respective parties. Most of the principles are worked out in detail in the case law about the rights of co-sureties and co-insured to contribution.311 [642] P must be presently or imminently liable. In the absence of an express or implied request to pay by D, P cannot claim contribution, recoupment or subrogation if P was under no present or imminent legal liability to submit to the creditor’s demand.312 Thus, in insurance law, a policy which is unenforceable for breach of a condition cannot give rise to a claim for contribution by the insurer who meets a claim,313 nor can an insurer who made an ex gratia payment not involving an element of [page 271] compromise recover contribution: although it may become subrogated to the insured’s rights against the insurer which is liable in certain cases.314 Payment pursuant to a purely moral obligation will not satisfy the principles discussed in this chapter, although there are circumstances where such an obligation will ground a right of action.315 An obligation arising from a contract with a third party to make the payment to the

recipient will not establish legal compulsion within the principles discussed in this chapter.316 It follows that P cannot recover contribution or recoupment if P paid ‘officiously’, that is otherwise than under circumstances of ‘practical compulsion’.317 A person liable to be sued who pays the creditor under threat of the commencement of proceedings can seek recoupment/contribution for the payment, if otherwise qualified.318 P need not even wait to be called on by the creditor to pay the debt at least so long as the creditor has put P on notice that P would be held liable for interest on a principal debt which would become immediately due ‘when called upon’.319 Indeed, a real possibility that the creditor would call on the surety to pay a principal debt which has fallen due has been held to entitle the paying surety to contribution.320 We have reservations about the correctness of this decision in point of precedent, though not of principle. If valid, the same principle would doubtless apply in the case of a claim for recoupment from the principal debtor. Other forms of pressure capable of being properly exerted on P will render P’s payment of the principal debt (or D’s share thereof) unofficious, and will thus ground recovery. This includes lawful pressure in the form of ‘a threat to interfere with (P’s) property to his detriment, either by seizing it, or by selling it, and by imposing on it a charge which will take priority to his rights in the property’.321 Similarly a lawful threat to imprison P or P’s agent under a form of execution will suffice.322 A right to contribution or recoupment will arise in favour of a person who pays more than the fair share of the liability, provided the payer is presently liable to the creditor or would, if the money were demanded, be liable forthwith.323 If, on the other hand, P’s liability to the creditor is merely contingent at the time of payment, P may not recover in respect of an unrequested [page 272]

payment.324 P’s payment must not be premature in the sense that it was made before the time P was under an imminent liability to pay,325 or unjustified in the sense that P was never under a legal obligation to pay.326 This last-mentioned principle is illustrated by Sydney Real Estate Bank v Weiss.327 D, who was P’s tenant, had agreed to pay rates. Although rate notices were served on D, he refused to pay and delivered them to P who subsequently paid them. P sued D, not under the lease agreement, but on the common money count for money paid at D’s request. P recovered in relation to water rates because they were recoverable by action or distress from either the owner or occupier at the option of the Water Board, and because P met a liability which was ultimately D’s as between P and D. But P failed to recover under the common money count its payment of council rates because they were primarily recoverable from the occupier, with the council only having a right against the owner if it failed to recover from the occupier. Darley CJ held that ‘the plaintiffs were not primarily liable for these rates; the payment was purely voluntary, since there had been no failure on the part of the council to recover from the defendant’.328 Where the amount paid by P to the creditor is excessive D may, by proving this, seek to reduce a claim for contribution or recoupment.329 [643] No recovery at law until actual payment by P. P’s right at law to recover recoupment or contribution arises as soon as P has paid more than the fair share of the principal debt.330 The broad principles of contribution are such that their ‘operation … should not be defeated by too technical an approach to the question whether the surety has paid the creditor, when he has supplied moneys to the principal debtor for the purpose of making such payment’.331 In the absence of agreement, a right of contribution at law does not arise until after actual payment.332 Where P pays less than the proper share of the principal debt, contribution will not be allowed unless and until the payment becomes more than the due proportion of the principal debt, as the result of a subsequent payment by the debtor or another contributor.333

[page 273] [644] Equitable relief quia timet. This need for P to wait until presently or imminently liable,334 and the inability to recover at law until after payment,335 are capable of causing severe and unnecessary damage to P where there is a solvent debtor who will be liable and able to provide contribution or recoupment when the time arises. To meet this, equity has provided P with a right of exoneration by allowing ‘an equitable right, even before payment, to protect[ion]’.336 The leading case which established this right is Wolmerhausen v Gullick.337 It has been followed in Australia whether contribution or full recoupment is sought.338 The remedies which equity provides consist of a declaration of the right of contribution/recoupment and an order quia timet against D to provide appropriate contribution (or recoupment) at the appropriate time. It necessarily follows that the right to seek such equitable relief arises when P’s liability has been ascertained, as distinct from discharged as the common law requires.339 The rationale for equitable intervention is that a person should be able to remove the cloud hanging overhead before it starts to rain.340 Its aim is to protect P from having to pay more than the fair share of the debt, as between P and D. If P is entitled to recoupment from D on payment, P’s right is to be relieved entirely of the debt; if P is entitled to contribution, the right is to obtain proportionate exoneration.341 A number of detailed rules as to parties, when relief is available, and the effect of insolvency regulate the equitable remedy.342 These include the following: (1) P must be liable for an ascertained sum due and owing,343 although it may require the taking of an account or the taking of an inquiry to determine the precise amount.344 (2) P need not, however, wait until the creditor institutes proceedings;345 or even until demand is made or threatened.346 It is enough that payment

[page 274]

(3)

(4)

(5) (6)

or loss by P is imminent,347 for example where the creditor could enforce the claim against P forthwith or after making a demand.348 The court will not, however, require D to pay before the due date.349 It is desirable that the creditor should be joined in the proceedings, because only thereby will P be able to obtain an order compelling D to pay all or part of the debt (as the case requires) direct to the creditor.350 P need not, however, prove that the creditor has refused to sue the principal debtor.351 Quia timet relief will be tailored to the particular circumstances of each case so as to protect P from having to pay more than what is fair, as between P and D.352 No doubt relief could be supported by a Mareva order in an appropriate case. P’s right will extend to claiming to share the benefit of securities held by D as against the creditor.353 When seeking equitable relief, P must be prepared to do equity. Any declaration of P’s right to actual payment will be conditioned upon P meeting P’s obligations under the guarantee etc or proving readiness, willingness and ability to do so.354

[645] Modification of contribution/recoupment rights. By express or implied agreement between P and D, the right to contribution or recoupment or subrogation can be modified or excluded.355 So too can ancillary rights, such as the surety’s right to be protected from the impairment of any security.356 Conversely, arrangements between two persons may bring themselves into a relationship of co-sureties when they might otherwise not be in that position.357 Alternatively, one party may agree to indemnify the other.358 Authoritative statements indicate that evidence showing a common intention, even falling short of agreement, will be sufficient to exclude or modify a right of contribution or recoupment otherwise arising.359 An example is where two insurers cover

[page 275] the same risk by policies which provide that, in the case of double insurance, the liability of the insurer will not exceed one half of the loss. Those concurrent arrangements will mean that there will be no contribution.360 Equity will not permit the enforcement of legal rights of contribution or indemnity by one party to a contract against another contracting party where, subsequent to the contract, it is established that a common intention arose between those parties contrary to such legal rights.361 Where there is no agreement or common intention expressed as between the two persons whose general rights to contribution or recoupment are modified, the respective arrangements with the creditor will need examination to determine whether these have affected the rights inter se of P and D.362 Thus, when two sureties agreed with the principal that each should be answerable only for a specified and separate portion of the sum guaranteed;363 or that neither would exercise a right of contribution until the creditor is satisfied in full,364 this would prevent contribution rights accruing. On the other hand, where two guarantors independently guaranteed a debtor’s bank account up to fixed sums of £2000 plus interest and £3000 plus interest respectively, a claim that each was a surety for an independent debt was rejected and contribution allowed (prorated on a maximum liability basis). Each contract was construed as a guarantee in respect of the whole floating balance for principal and interest of the debtor, with a definite limit on the amount of liability of each guarantor.365 [646] Impact of insolvency on contribution. Except where modified as part of a statutory scheme of proportionate liability, all solvent co-obligors are required to divide the burden equally if their liability is unlimited, and otherwise rateably and in proportion to the amounts for which they are respectively liable under the terms of their obligations to the creditor.366 Where one is insolvent, the others’ share of the burden is proportionately increased because those ‘who can pay must not only contribute their own shares, but they must also make

good the shares of those who are unable to furnish their own contribution’.367 Parties who would be obliged to contribute were they solvent need not be joined if insolvency can be proved or inferred.368 The joinder of all solvent contributors will avoid multiplicity of suits against different parties for their respective proportions thereby [page 276] precluding the risk of the same question being litigated two or more times with possibly different results.369 [647] Loss of right to contribution or recoupment. The law will not permit legal rights of contribution or recoupment to be enforced where it would be inequitable to do so.370 A surety may lose the right to contribution or recoupment in certain cases including: dealings between the creditor and the principal debtor;371 the release (as distinct from a mere covenant not to sue)372 of one of a number of joint sureties or joint and several sureties373 (but not in the case of several sureties);374 and certain conduct of P which disentitles P to equitable relief on general principles.375 As Eyre CB pointed out in Dering v Earl of Winchelsea,376 a person may not bore a hole in a ship and then claim general average contribution. Where a person has made a payment in discharge of a liability incurred in consequence of his or her own breach of duty, or of a transaction known or suspected to be unlawful, no claims of recoupment will succeed.377 Disentitling conduct may include acts of P which prejudice the rights of other sureties to participate in securities,378 and lack of clean hands.379 Reflecting restitution law’s general concern about officious intervention, there is authority that P may lose an otherwise available right to contribution or recoupment if P officiously exposed itself to the liability to make the payment. This represents a relevant principle, but it is doubtful whether there is a hard and fast rule to this effect. The leading modern case is the much criticised Owen v Tate.380 Whatever

the correctness of the result, we would not disagree with the principle stated by Scarman LJ as follows:381 [T]he fundamental question is whether in the circumstances it was reasonably necessary in the interests of the volunteer or the person for whom the payment was made, or both, that the payment should be made whether in the circumstances it was ‘just and reasonable’ that a right of reimbursement should arise.

[page 277] Rights of contribution or recoupment will also be unavailable to those involved in an illegal joint enterprise.382 [648] Interest and the costs of defending claims. Restitutionary claims for contribution or recoupment will carry interest, although the authorities are divided as to whether this is at the rate recoverable in proceedings for breach of trust383 or at commercial rates384 or some alternative basis.385 Interest runs from the date of payment and even though the principal debt did not carry interest.386 Contribution and recoupment extend to costs reasonably incurred in defending or settling the principal claim.387 [649] Right to securities and hotchpot. The surety who discharges the principal debtor’s debt is subrogated to the benefit of any securities held by the creditor.388 Similar equitable principles require those claiming contribution to bring into hotchpot any benefits, such as securities, recovered from the principal debtor.389 The weight of Australian authority supports the proposition that the only condition precedent to the crystallisation of the surety’s right to subrogation is that the principal creditor has been paid in full in respect of the debt secured by the securities in question. It is not necessary that the surety discharge the whole of the debt secured by the securities concerned.390 [650] Equitable lien. A claim to contribution by one co-owner upon the other to recoup expenditure which benefits their joint property may be supported by an equitable lien upon the undivided

share of the other co-owner.391 The remedy of ‘subrogation to extinguished rights’ may also result in the creation of an equitable lien.392 1.

Contribution and subrogation were contrasted in Di Mella v Rudaks (2008) 102 SASR 582.

2. 3.

(1872) LR 7 Ex 101 at 103. See also Bonner v Tottenham & Edmonton Permanent Investment Building Society [1899] 1 QB 161 at 174 per Vaughan Williams LJ. Edwards v Wallingford (1885) 14 QBD 811 at 814–15; Whitham v Bullock [1939] 2 KB 81 at 87; Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38; Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335 at 348; 22 ALR 1. See generally, Mitchell, Contribution, esp Chapter 3.

4. 5.

See [639]. (1872) LR 7 Ex 101.

6. 7.

(1787) 2 Bos & Pul 270; 126 ER 1276. See [645].

8.

(1787) 2 Bos & Pul 270 at 273; 126 ER 1276 at 1278. See also Ellesmere Brewery Co v Cooper [1896] 1 QB 75 at 79. For a more recent example demonstrating that privity is irrelevant, see Becton Dickinson UK Ltd v Zwebner [1989] 1 QB 208. Mahoney v McManus (1981) 180 CLR 370 at 387; HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; 280 ALR 1 at [42], in each case quoting Ruabon Steamship Co v London Assurance [1900] AC 6 at 12. See generally the discussion of Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 in [810].

9.

10. (1981) 180 CLR 370; 36 ALR 545. 11. (1981) 180 CLR 370 at 388. 12. (1978) 141 CLR 335 at 348; 22 ALR 1 at 14–15. 13. Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221; James Hardie & Co Pty Ltd v Wyong Shire Council (2000) 48 NSWLR 679 at 686 (Giles JA, Heydon JA agreeing at 690); Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624; AMP Workers’ Compensation Services (NSW) Ltd v QBE Insurance Ltd (2001) 53 NSWLR 35; Burke v LFOT Pty Ltd (2002) 209 CLR 282; 187 ALR 17; [2002] HCA 17; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; 260 ALR 70; [2009] HCA 44 at [88]; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4 at [41]. As to unjust enrichment and subrogation, see [639]. 14. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 346 per Barwick CJ, McTiernan and Menzies JJ. See also Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534 at 545, 546 (quoted [625]). As to the equitable notion of equality underpinning contribution, see HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; 280 ALR 1 at 88 [39]. 15. See Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 12–13; Hampic Pty Ltd v Adams (2000) ATPR ¶41-737; Glenmont Investments Pty Ltd v O’Loughlin (No 3) (2001) 79 SASR 288 at 291. Although see [618] as regards insurers.

Cf AGC (Advances) Ltd v West (1984) 5 NSWLR 590 at 604–5. See also Burke v LFOT 16. Pty Ltd (2002) 209 CLR 282 at 324–5; 187 ALR 612; [2002] HCA 17 at [119] per Kirby J. 17. (1799) 8 TR 186; 101 ER 1337. 18. For a general review, see Fleming, pp 306–16; Balkin and Davis, Law of Torts, 5th ed, pp 838–44. 19. See Idameneo (No 123) Pty Ltd v Gross (2012) 83 NSWLR 643. 20. Employer’s Corporate Investments Pty Ltd v Cameron (1977) 3 ACLR 120 at 123–6; Rap Industries Ltd v Royal Insurance Aust Ltd (1988) 5 ANZ Ins Cas 60-876 at 75,519; R W Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1992) Unreported, SC(NSW) (Giles J), 9 June at 223–4. Cf Brown v Sevrup Fisheries Pty Ltd [1970] Tas SR 1. 21. (1996) 63 FCR 418; 142 ALR 561, a bold decision that would surely vex anti-fusionists. 22. See Australia and New Zealand Banking Group Ltd v Turnbull and Partners Ltd (1991) 33 FCR 265; 106 ALR 115; Acohs Pty Ltd v R A Bashford Consulting Pty Ltd (1997) 144 ALR 528; Johnston v Nicholson (2003) 58 NSWLR 223. 23. Report on Contribution, 1977. 24. This resulted from the Chief Justice’s Law Reform Committee, Report on Contribution, 1979. 25. See [624]. 26. See The Cairnbahn [1914] P 25. 27. See Barbara McDonald, ‘Proportionate Liability in Australia: The Devil in the Detail’ (2005) 26 Aust Bar Rev 29; Wayne Courtney, ‘Problems with the New Regime of Proportionate Liability for Misleading and Deceptive Conduct’ (2005) 32 UWAL Rev 164. 28. See Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350–2. 29. See Phillips and O’Donovan, §12.1360; Meagher, Gummow and Lehane, §10-035. 30. (1787) 2 Bos & Pul 270; 126 ER 1276. 31. Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38 at 48; Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 299; 187 ALR 612; [2002] HCA 17 at [39]. Cf also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 553; 185 ALR 335; [2001] HCA 68 at [97]–[100]. 32. Didmore v Leventhal (1936) 36 SR (NSW) 378 at 385 per Jordan CJ. 33. Craythorne v Swinburne (1807) 14 Ves Jun 160 at 164, 169; 33 ER 482 at 483–4; Shire of Windsor v Enoggera Divisional Board [1902] St R Qd 23 at 30 per Griffith CJ. 34. See, eg Moulton v Roberts [1977] Qd R 135 at 139. See further [123]. 35. See, eg Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350–1; Mahoney v McManus (1981) 180 CLR 370 at 385; 36 ALR 545 at 557. 36. Marsack v Webber (1860) 6 H & N 1 at 6; 158 ER 1 at 3; Borg Warner (Aust) Ltd v Switzerland General Insurance Co Ltd (1989) 16 NSWLR 421 at 432. 37. (1969) 121 CLR 342. 38. (1969) 121 CLR 342 at 350–1. Various English and Australian authorities were cited. The

maxim means, literally, ‘the person who enjoys the benefit ought also to bear the burden’. 39. (1981) 180 CLR 370 at 376; 36 ALR 545 at 549. Murphy and Aickin JJ agreed. See also Brennan J at 387, 559; Cummings v Lewis (1993) 41 FCR 559 at 593; 113 ALR 285 at 318; Bond v Larobi Pty Ltd (1992) 6 WAR 489. 40. See HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; 280 ALR 1; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4. 41. See Meagher, Gummow and Lehane, [3-130]–[3-135]. 42. Ramsay v Lowther (1912) 16 CLR 1 at 23–4. 43. HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; 280 ALR 1 at 88 [40]. See further [621]. 44. See [641]–[650]. 45. See [641]–[650]. 46. Generally, see Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4. 47. The person primarily liable may, of course, be a surety for another. 48. Dering v Earl of Winchelsea (1787) 2 Bos & Pul 270; 126 ER 1276; Mahoney v McManus (1981) 180 CLR 370 at 376; 36 ALR 545 at 549; Capita Financial Group Ltd v Rothwells Ltd (1993) 30 NSWLR 619. See also [610]. 49. McLean v Discount & Finance Ltd (1939) 64 CLR 312; Re Hodgetts (1949) 16 ABC 201. 50. Godfrey v Hennelly (1893) 19 VLR 70. 51. Bills of Exchange Act 1909 (Cth), s 60(2). 52. Bills of Exchange Act 1909 (Cth), s 62; Phillips and O’Donovan, §13.2180. But as to the relationship between an accommodation acceptor and the party accommodated, see Coles Myer Finance Ltd v Commissioner of Taxation (1993) 176 CLR 640; 112 ALR 322. 53. Tate v Crewdson [1938] 1 Ch 869; AGC (Advances) Ltd v West (1984) 5 NSWLR 590 affirmed at 610, sub nom West v AGC (Advances) Ltd without reference to the point; Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116. See also HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72; 280 ALR 1 at 87 [37]. 54. Sherwin v McWilliams (1921) 17 Tas LR 9. 55. Molson’s Bank v Kovinsky [1924] 4 DLR 330. 56. See [627]. 57. Standard Brands Ltd v Fox (1974) 44 DLR (3d) 69 (on appeal sub nom Fox v Royal Bank of Canada (1975) 59 DLR (3d) 258). 58. Re Hendry [1905] SALR 116. 59. Craythorne v Swinburne (1807) 14 Ves Jun 160; 33 ER 482; Re Denton’s Estate [1904] 2 Ch 178; Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562; Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588; 135 ALR 168. 60. Raffle v AGC (Advances) Ltd (1989) ASC 55-933. 61. Boulter v Peplow (1850) 9 CB 493; 137 ER 984; Shepherd v Bray [1906] 2 Ch 235 at 253; Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460 at 480; Muschinski v Dodds (1985) 160 CLR 583 at 596–7; 62 ALR 429; Bartels v Behm (1990) 19 NSWLR 257 at 260. See generally Williams, Joint Obligations, Chapter 9. 62. Chidiac v Maatouk [2010] NSWSC 386. See [645].

63. As to several liabilities, see [620]–[624]. 64. Re Mainwaring [1937] Ch 96; Scapinello v Scapinello [1968] SASR 316. 65. Chidiac v Maatouk [2010] NSWSC 386. 66. (1967) 69 SR (NSW) 38. See also Spika Trading Pty Ltd v Harrison (1990) 19 NSWLR 211 (see [619]) and Spiers & Son v Troup (1915) 84 LJKB 1986. 67. Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4. 68. Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4 at [39]. 69. See further [645]. 70. See [607]. 71. See [609]. 72. The reason is discussed [620]–[623]. 73. See [608]. 74. See [609]. 75. ACT: Partnership Act 1963, s 13; NSW: Partnership Act 1892, s 9; NT: Partnership Act 1891 (SA), s 9; Qld: Partnership Act 1891, s 12; SA: Partnership Act 1891, s 9; Tas: Partnership Act 1891, s 14; Vic: Partnership Act 1958, s 13; WA: Partnership Act 1895, s 16. 76. See Higgins and Fletcher, Chapter 6. 77. Higgins and Fletcher, Chapter 6. See also Bartels v Behm (1990) 19 NSWLR 257; Cummings v Lewis (1993) 41 FCR 559 at 593; 113 ALR 285 at 318. 78. Thomas v Atherton (1878) 10 Ch D 185 at 189. See generally [647]. 79. Higgins and Fletcher, Chapter 6. 80. Boulter v Peplow (1850) 9 CB 493; 137 ER 984; Sedgwick v Daniell (1857) 2 H & N 319; 157 ER 132; Bartels v Behm (1990) 19 NSWLR 257 at 260; Gye v Davies (1995) 37 NSWLR 421 at 428; Stratti v Stratti (2000) 50 NSWLR 324; Friend v Brooker (2009) 239 CLR 129; 255 ALR 601. 81. Chillingworth v Chambers [1896] 1 Ch 685 (see further [644]). 82. Robinson v Harkin [1896] 2 Ch 415. 83. See [624]. 84. Warwick v Richardson (1842) 10 M & W 284; 152 ER 477. 85. Chillingworth v Chambers [1896] 1 Ch 685; Palmer v Permanent Trustee Co (1915) 16 SR (NSW) 162; Harris v Harris (1919) 20 SR (NSW) 61; Goodwin v Duggan (1996) 41 NSWLR 158. 86. Wentworth v Tompson (1859) 2 Legge (NSW) 1238; Bahin v Hughes (1886) 31 Ch D 390. 87. Re Linsley [1904] 2 Ch 785. 88. Blair v Canada Trust (1986) 32 DLR (4th) 515. 89. Bahin v Hughes (1886) 31 Ch D 390. 90. See generally Heydon and Leeming, Jacobs’ Law of Trusts in Australia, 7th ed, §§2117– 2120; Ford and Lee, Principles of the Law of Trusts, Looseleaf, §§13-020–13-030. 91. Ramskill v Edwards (1885) 31 Ch D 100; Cummings v Lewis (1993) 41 FCR 559 at 594–9;

113 ALR 285 at 319–23. 92. Walsh v Bardsley (1931) 47 TLR 564. 93. Cf Cummings v Lewis (1993) 41 FCR 559 at 594–9; 113 ALR 285 at 319–23. 94. (1990) 19 NSWLR 211. See also Hall v Poolman (2007) 215 FLR 243. 95. See, eg ss 232, 588G, 592, 1005. See also Corporations Act 2001 (Cth), s 254T (paying dividends from profits). 96. Bonner v Tottenham & Edmonton Permanent Investment Building Society [1899] 1 QB 161 at 175. 97. Luke v Luke (1936) 36 SR (NSW) 310; Scapinello v Scapinello [1968] SASR 316; Squire v Rogers (1979) 39 FLR 106 at 125; Forgeard v Shanahan (1994) 35 NSWLR 206 (discussed (1995) 69 ALJ 316 by Peter Brereton, who is critical of the absence of restitutionary analysis). See generally Heather Conway, ‘Partition Actions and Accounting Adjustments Between Co-Owners’ (1999) 7 APLJ 207; Lee Aitken, ‘Re-calibrating Interests: Co-ownership in Equity’ (2007) 81 ALJ 266 at 273–4. 98. Brickwood v Young (1905) 2 CLR 387; Re Byrne (1906) 6 SR (NSW) 532. 99. Re Cook’s Mortgage [1896] 1 Ch 923; Boulter v Boulter (1898) 19 LR (NSW) (Eq) 135. 100. McMahon v Public Curator [1952] St R Qd 197; Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46. See generally Butt, Land Law, 5th ed, §§1426–34. 101. (1936) 36 SR (NSW) 378. 102. (1936) 36 SR (NSW) 378 at 385. 103. Insurance Contracts Act 1984 (Cth), s 76; Marine Insurance Act 1909 (Cth), s 86. 104. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350. 105. See generally Kelly and Ball, Principles of Insurance Law in Australia and New Zealand, Chapter 10; Sutton, Insurance, §§12.35ff. 106. (1969) 121 CLR 342. See also Accident Compensation Commission v Baltica General Insurance Co Ltd [1993] 1 VR 467; AMP Workers’ Compensation Services (NSW) Ltd v QBE Insurance Ltd (2001) 53 NSWLR 35; Workcover Queensland v Suncorp Metway Insurance Ltd [2005] 2 Qd R 210; Collyear v CGU Insurance Ltd (2008) 227 FLR 121; Zurich Australian Insurance Ltd v GIO General Ltd (2011) 16 ANZ Insurance Cases 61889; [2011] NSWCA 47. 107. (1969) 121 CLR 342 at 352. 108. AMP Workers’ Compensation Services (NSW) Ltd v QBE Insurance Ltd (2001) 53 NSWLR 35. 109. [1983] 3 NSWLR 59. 110. [1983] 3 NSWLR 59 at 64. 111. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 346 per Barwick CJ, McTiernan J and Menzies J. 112. John v Rawlings (1984) 36 SASR 182. 113. (1989) 16 NSWLR 421. This case is discussed in The Insurers’ Guarantee Fund NEM General Insurance Association Ltd (in liq) v GIO General Ltd (1994) 8 ANZ Insurance Cases 61-213.

114. (1989) 16 NSWLR 421 at 429. See Drayton v Martin (1996) 67 FCR 1; 137 ALR 193 (insurer seeking contribution can invoke s 54 of the Insurance Contracts Act 1984 (Cth)). 115. Floreani Bros Pty Ltd v Woolscourers (SA) Pty Ltd (1976) 13 SASR 313. 116. GRE Insurance Ltd v QBE Insurance Ltd [1985] VR 83; Saccardo Constructions Pty Ltd v Gammon (1991) 56 SASR 552 at 559–60; Dowthwaite Holdings Pty Ltd v Saliba [2006] WASCA 72; Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47; QBE Insurance (Australia) Ltd v CGU Workers Compensation (NSW) Ltd (2012) 17 ANZ Insurance Cases 61-931; [2012] NSWSC 377. 117. Sydney Turf Club v Crowley [1971] 1 NSWLR 724 at 730; Wabbits Pty Ltd v Godfrey [2009] NSWSC 1299. 118. Cf Nichols v Scottish Union and National Insurance Co (1885) 2 TLR 190. 119. North British & Mercantile Insurance Co v London, Liverpool and Globe Insurance Co (1876) 5 Ch D 569, cited with approval in Commercial & General Insurance Co Ltd v Government Insurance Office (NSW) (1973) 129 CLR 374 at 382. 120. Cf Lord Napier & Ettrick v Hunter [1993] AC 713. 121. See, eg Northern Assurance Co Ltd v Coal Miners Insurance Pty Ltd (1970) 91 WN (NSW) 293. 122. See, eg South British Insurance Co Ltd v Norwich Winterthur Insurance (NZ) Ltd (1983) 2 ANZ Ins Cas 60-499. 123. See [634]. 124. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351 per Kitto J. 125. See, eg Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342; Commercial & General Insurance Co Ltd v Government Insurance Office (NSW) (1973) 129 CLR 374; Eagle Star Insurance Co Ltd v Provincial Insurance Corp [1994] AC 130. 126. See Government Insurance Office of NSW v Crowley [1975] 2 NSWLR 78; Commercial Union Assurance Co Ltd v Hayden [1977] QB 804; Kelly and Ball, Principles of Insurance Law in Australia and New Zealand, §§10.0060–10.0060.1; Sutton, Insurance, §12.35ff. 127. Insurance Contracts Act 1984 (Cth), s 76(2)(a). 128. Toohey v McCulla (1890) 10 LR (NSW) (Eq) 264; Spiers & Son v Troup (1915) 84 LJQB 1986 at 1992; Accident Compensation Commission v Baltica General Insurance Co Ltd [1993] 1 VR 467 at 482. 129. (1990) 19 NSWLR 211. See also Eagle Star Insurance Co Ltd v Provincial Insurance Plc [1994] 1 AC 130. See also Trade Practices Commission v Manfal Pty Ltd (No 3) (1991) 33 FCR 382; 105 ALR 520 as to contribution rights between persons liable to orders under the Trade Practices Act 1974 (Cth). Cf South British Insurance Co Ltd v Brown’s Wharf Pty Ltd [1966] 1 NSWR 80. 130. (1969) 121 CLR 342 at 350. 131. Eagle Star Insurance Co Ltd v Provincial Insurance Corp [1994] AC 130 at 139; HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72 at 88 [39]. See also [610]. 132. Capita Financial Group Ltd v Rothwells Ltd (1993) 30 NSWLR 619; Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588; 135 ALR 168. 133. As Goff and Jones contended for in their 7th edition, which we challenged in our 2nd

edition (see [620]ff), and which Goff and Jones now acknowledges to be unnecessary (8th ed, § 20-06). 134. [1899] 1 QB 161. See also Didmore v Leventhal (1936) 36 SR (NSW) 378, discussed [617]. 135. See Bonner v Tottenham & Edmonton Permanent Investment Building Society [1899] 1 QB 161 especially at 167–8 per A L Smith LJ and at 174–5 per Vaughan Williams LJ. 136. (1890) 44 Ch D 146. 137. Cf Whitham v Bullock [1939] 2 KB 81 at 88. 138. See [618]. 139. (1969) 121 CLR 342 at 351 per Kitto J. 140. See, eg Exall v Partridge (1799) 8 TR 308; 101 ER 1405; Johnson v Royal Mail Steam Packet Co (1867) LR 3 CP 38; Spiers & Son v Troup (1915) 84 LJKB 1986. See also R Derham, ‘Set-Off Against an Assignee’ (1991) 107 LQR 126. 141. (1969) 121 CLR 342 at 352. 142. Dering v Earl of Winchelsea (1787) 2 Bos & Pul 270; 126 ER 1276; Molson’s Bank v Kovinsky [1924] 4 DLR 330; Cornfoot v Holdenson [1932] VLR 4 (approved Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562 at 573). 143. Pendlebury v Walker (1841) 4 Y & C (Ex) 424; 160 ER 1072; Molson’s Bank v Kovinsky [1924] 4 DLR 330. Cf Lord Napier & Ettrick v Hunter [1993] AC 713. 144. Coope v Twynam (1823) 1 Turn & R 426; 37 ER 1164. 145. Craythorne v Swinburne (1807) 14 Ves 160; 33 ER 482; Re Denton’s Estate [1904] 2 Ch 178; Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562. 146. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350, per Kitto J, citing Davies v Humphreys (1840) 6 M & W 153 at 168–9; 151 ER 361 at 367–8. 147. (1890) 44 Ch D 146 (see [620]). 148. See P St J Langan, ‘Is There an Equitable Right of Contribution Between Sub-lessees?’ (1967) 31 Conv 38 at 45–6. See also Electricity Supply Nominees Ltd v Thorn EMI Retail Ltd (1991) 63 P & CR 143. 149. Whitham v Bullock [1939] 2 KB 81; Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624 at 632 [27]. 150. (1976) 13 SASR 313 at 320. 151. [1899] 1 QB 161. 152. [1899] 1 QB 161 at 176. 153. [1911] AC 317. 154. [1911] AC 317 at 326. See also Isaacs J in the High Court: (1909) 9 CLR 773 at 831–2. 155. [1911] AC 317 at 326. 156. (2002) 209 CLR 282 at 300; 187 ALR 612; [2002] HCA 17 at [41] citing Ellesmere Brewery Co v Cooper [1896] 1 QB 75 at 79 per Lord Russell CJ. 157. Mahoney v McManus (1981) 180 CLR 370; 36 ALR 545; McLean v Discount & Finance Ltd (1939) 64 CLR 312.

158. HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72 at 88 [39]. 159. Mahoney v McManus (1981) 180 CLR 370 at 376; 36 ALR 545 at 549–50; Albion Insurance Co Ltd v Government Insurance Office of NSW (1969) 121 CLR 342 at 350–2. 160. (1787) 2 Bos & Pul 270; 126 ER 1276 (see [605]). 161. (1989) 16 NSWLR 421 (see [618]). 162. See Cummings v Lewis (1993) 41 FCR 559 at 594–9; 113 ALR 285 at 319–23. 163. Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4, affirming Carr v Thomas [2009] NSWCA 208. 164. Exall v Partridge (1799) 8 TR 308; 101 ER 1405; Whitham v Bullock [1939] 2 KB 81; Metropolitan Police District Receiver v Croydon Corp [1956] 1 WLR 1113 (reversed on other grounds [1957] 2 QB 154). 165. See Ibrahim v Barclays Bank plc [2013] Ch 400. 166. See further [636]. As to when uncompelled payment of a third party’s debt discharges that debt, see [846]. 167. See further [636]. 168. Richard Sutton, ‘Payment of Debts Charged upon Property’ in Burrows, Essays, p 71. 169. See Lapin v Abigail (1930) 44 CLR 166 at 190, 207; Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR 177 at 202; Re Hill (1974) 23 FLR 329. The leading English case is Butler v Rice [1910] 2 Ch 277. For this type of subrogation, see further [840]–[846]. 170. (1969) 121 CLR 342 at 350. 171. [1899] 1 QB 161 at 176. 172. Mahoney v McManus (1981) 180 CLR 370 at 376–7; 36 ALR 545 at 550 per Gibbs CJ, quoting Ruabon Steamship Co v London Assurance [1900] AC 6 at 12; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4 at [41]. See generally the discussion of Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 in [810]. 173. Cummings v Lewis (1993) 41 FCR 559; 113 ALR 285. See also Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588; 135 ALR 168. 174. Re La Rosa; Ex parte Norgard (1991) 31 FCR 83; 104 ALR 237 (approved by McHugh J in Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 301; 187 ALR 612; [2002] HCA 17 at [44]). 175. BP Petroleum Development Ltd v Esso Petroleum Co Ltd [1987] SLT 345 at 348; Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588 at 597; Sky Channel Pty Ltd v Tszyu [2000] NSWSC 838; Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 293, 303, 317–18; 187 ALR 612; [2002] HCA 17 at [16], [49], [92]; Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291; HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72. 176. Burke v LFOT Pty Ltd (2002) 209 CLR 283 at 293; 187 ALR 612; [2002] HCA 17 at [16] per Gaudron ACJ and Hayne J. 177. Friend v Brooker (2009) 239 CLR 129; HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72 at [44]–[48]. 178. (2002) 209 CLR 283; 187 ALR 612; [2002] HCA 17. See also Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624; Alexander v Perpetual Trustees WA Ltd [2001] NSWCA 240; HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72 at 89

[43]. 179. (2002) 209 CLR 283, see per Gaudron ACJ and Hayne J at 293–4; [2002] HCA 17 at [18], per McHugh J at 308; [2002] HCA 17 at [66], per Callinan J at 336; [2002] HCA 17 at [143]. See [647] below. 180. (2002) 209 CLR 283 at 298–303; [2002] HCA 17 at [38]–[50]. See also Callinan J at 336–7; [2002] HCA 17 at [142]–[145]. 181. Wrongs Act 1958 (Vic), s 23A(1). 182. Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), ss 4, 6(1). 183. Wrongs Act 1958 (Vic), s 24AD; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), ss 6(9) and (3). 184. This opening paragraph was quoted with approval by Giles JA (Handley JA and Stein JA concurring) in Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 97843 at [239]; [2000] NSWCA 313. 185. Cf Pavey v Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256–7; 69 ALR 577 at 604 per Deane J. 186. [1937] 1 KB 534 at 544, cited with approval by Walsh JA in Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38 at 47. See also The Pindaros [1983] 2 Lloyd’s Rep 635. 187. (1872) LR 7 Ex 101 at 104 (quoting from Leake on Contracts, p 41). 188. Tombs v Roch (1846) 2 Coll 490 at 499–500; 63 ER 828 at 832; Duncan Fox & Co v North and South Wales Bank (1880) 6 App Cas 1 at 12–13. 189. See [632]–[636]. 190. See [641]–[650]. 191. See further [842]. 192. Sheffield Corp v Barclay [1905] AC 392; R v Henrickson (1911) 13 CLR 473. 193. Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261; Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177. 194. Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177 at 182–3; Israel v Foreshore Properties Pty Ltd (in liq) (1980) 54 ALJR 421; Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116. See further as to payments by request [116], [155], [842], [2925]. 195. See [644]. 196. Exall v Partridge (1799) 8 TR 308; 101 ER 1405; Johnson v Royal Mail Steam Packet Co (1867) LR 3 CP 38; Whitham v Bullock [1939] 2 KB 81. 197. (1827) 6 B & C 439; 108 ER 513. 198. (1872) LR 7 Ex 101. See also Becton Dickinson UK Ltd v Zwebner [1989] 1 QB 208. 199. See especially passage from Cockburn CJ’s judgment in Moule v Garrett (1872) LR 7 Ex 101 at 104, quoted [625]. 200. [1937] 1 KB 534. 201. [1937] 1 KB 534 at 543 per Lord Wright MR. 202. See [625].

203. [1937] 1 KB 534 at 545, 546. 204. (1967) 69 SR (NSW) 38 at 44. 205. Gebhardt v Saunders [1892] 2 QB 452. 206. (1933) 33 SR (NSW) 472. See also Johnson v Royal Mail Steam Packet Co (1867) LR 3 CP 38. 207. (1933) 33 SR (NSW) 472 at 476. 208. Exall v Partridge (1799) 8 TR 308; 101 ER 1405; Noyes v Ellis (1877) 3 VLR 307. 209. Edmunds v Wallingford (1885) 14 QBD 811. 210. Sydney Real Estate Bank v Weiss (1891) 12 LR (NSW) 170 (see [642]). 211. Liberian Insurance Agency v Mosse [1977] 2 Lloyd’s Rep 560. 212. Edmunds v Wallingford (1885) 14 QBD 811 at 816–17. See also The Pindaros [1983] 2 Lloyd’s Rep 635. 213. See, eg, Young v The Naval, Military, and Civil Service Co-operative Society of South Africa [1905] 1 KB 687; Davis v Hueber (1923) 31 CLR 583. 214. Monmouthshire County Council v Smith [1956] 1 WLR 1132 at 1141 (on appeal [1957] 2 QB 154). The claim was dismissed because D had no liability to the person paid by P. 215. (1811) 4 Taunt 189; 128 ER 301. 216. (1811) 4 Taunt 189 at 190; 128 ER 301 at 302 per Mansfield CJ. 217. See [624]. 218. As to the detailed rules regulating the manner and scope of recoupment claims, see [641]–[650]. 219. See [636]. 220. North v Walthamstowe Urban Council (1898) 67 LJ QB 972 at 975 per Channell J. 221. Liberian Insurance Agency v Mosse [1977] 2 Lloyd’s Rep 560 (plaintiff’s agent imprisoned for debt). 222. Esso Petroleum Co Ltd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] AC 643. 223. Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534; Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38; Halgido Pty Ltd v DG Capital Company Ltd (1996) 34 ATR 582; 97 ATC 4060. 224. Moule v Garrett (1872) LR 7 Ex 101. 225. Exall v Partridge (1799) 8 TR 308; 101 ER 1405; Gemmell v Brienesse (1933) 33 SR (NSW) 472; Whitham v Bullock [1939] 2 KB 81. 226. See [630]. 227. Gebhardt v Saunders [1892] 2 QB 452. Cf South British Insurance Co Ltd v Brown’s Wharf Pty Ltd [1966] 1 NSWR 80. 228. Edmunds v Wallingford (1885) 14 QBD 811 at 816 per Lindley LJ. 229. Discussed in Chapter 8. 230. Moule v Garrett (1872) LR 7 Ex 101 at 103 per Willes J. See also [610]. 231. (1872) LR 7 Ex 101. 232. See Didmore v Leventhal (1936) 36 SR (NSW) 378; Bonner v Tottenham & Edmonton

Permanent Investment Building Society [1899] 1 QB 161. The liability may arise under a foreign law: Liberian Insurance Agency v Mosse [1977] 2 Lloyd’s Rep 560. 233. See [625]. 234. See [626]–[630]. 235. Bater v Kare [1964] SCR 206; Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242; Robinson v Campbell (No 2) (1992) 30 NSWLR 503 at 508; Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116. Cf Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467 at 476–7. 236. Rigby v Chief Constable of Northamptonshire [1985] 2 All ER 985 at 994–6. See also [647]. 237. See Aetna Insurance Co v Canadian Surety Co (1994) 114 DLR (4th) 577 at 627. 238. Moule v Garrett (1870) LR 5 Ex 132 at 138; (1872) LR 7 Ex 101 at 104. Further as to requested payments, see [116], [155], [842], [2925]. 239. [1976] 1 QB 402. The case is distinguished in Johnston v Arnabold [1990] 2 Qd R 138 at 145. It is criticised cogently by Phillips and O’Donovan, §12.110. 240. See generally Beatson, pp 197–9; Goff and Jones, §20-02; Burrows, pp 449–52. 241. See [622]. 242. See further our discussion in [642] of the loss of rights to contribution or recoupment. 243. See [846]. 244. As Goff and Jones contended for, at least prior to the latest edition which states (in §§4-18, 5-58) a general requirement for discharge, without previous editions’ references to the case law about formal discharge of debt. 245. See Burrows, pp 460-68. This is the position of the English Court of Appeal: see Ibrahim v Barclays Bank Plc [2013] Ch 400. 246. See Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 430–1; 147 ALR 1 at 14–15; Limit (No 3) Ltd v ACE Insurance Ltd (2009) 15 ANZ Insurance Cases 6-823; [2009] NSWSC 514. See also Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 at 514–15; 154 ALR 1; [1998] HCA 33 at [23]. 247. Cf Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB at 16, 23. See [146]–[148]. 248. (1872) LR 7 Ex 101 at 104 (quoted [625]). See Ibrahim v Barclays Bank Plc [2013] Ch 400 at [44]. 249. See [151]. 250. See [635]. 251. See Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 430–1; 147 ALR 1 at 14–15 per Dawson, Gaudron and Gummow JJ. See also [846]. 252. See also Halgido Pty Ltd v DG Capital Company Ltd (1996) 34 ATR 582; 97 ATC 4060, where the tax liabilities were distinct but equivalent in amount, with the consequence that payment by one debtor effectively, but not legally, discharged the tax debt. 253. City Bank of Sydney v McLaughlin (1909) 10 CLR 615 at 625–6 per Griffith CJ. See also China-Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961 per Lord Diplock. 254. See Johnston v Arnabold [1990] 2 Qd R 138.

255. (1827) 6 B & C 439; 108 ER 513 (approved in Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534 at 544). 256. See also Dawson v Linton (1822) 5 B & Ald 521; 106 ER 1281, discussed in Jackson, p 53. See also Restatement, Third, § 23, Comment f. 257. [1899] 1 QB 161 at 174. 258. [1937] 1 KB 534 at 544. 259. See [627]. 260. See Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350–2 and generally [604]–[606]. 261. See [644]. 262. See also Westpac Banking Corporation v Rae [1992] 1 NZLR 338; Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 430–1; 147 ALR 1 at 14–15. 263. See Noyes v Ellis (1877) 3 VLR (L) 307; Edmunds v Wallingford (1885) 14 QBD 811. 264. See, eg Marine Insurance Act 1909 (Cth), s 85. 265. See, eg Hobbs v Marlowe [1978] AC 16 at 39. 266. See Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 at 231–2 per Lord Hoffmann. 267. See, eg Morganite Ceramic Fibres Pty Ltd v Sola Basic Australia Ltd (1987) 11 NSWLR 189 at 194–5. See generally Bofinger v Kingsway Group Ltd (2009) 239 CLR 269. 268. Re Trivan Pty Ltd (1996) 134 FLR 368 at 376 (Young J). 269. [1993] AC 713. 270. Hobbs v Marlowe [1978] AC 16 at 39. 271. See, eg Lord Goff [1993] AC 713 at 742. 272. See Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [6]. 273. As to the unjust enrichment concept and equity not being mutually exclusive, see [123]. 274. See, eg Morris v Ford Motor Co Ltd [1973] 1 QB 792 at 801, 807; Highland v Exception Holdings Pty Ltd (in liq) (2006) 60 ACSR 223; [2006] NSWCA 318 (see [255]). See also Boscawen v Bajwa [1996] 1 WLR 328 at 335; [1995] 4 All ER 769 at 777 (approved in Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [94]). 275. See [120]. 276. Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [88] per Gummow, Hayne, Heydon, Kiefel and Bell JJ, citing Cochrane v Cochrane (1985) 3 NSWLR 403. See further Mark Leeming, ‘Subrogation, Equity and Unjust Enrichment’ in Jamie Glister and Pauline Ridge, Fault Lines in Equity, Hart Publishing, 2012. 277. See Restatement, Third, § 24. 278. (2009) 239 CLR 269; 260 ALR 70; [2009] HCA 44 at [89]. Cf [123]. 279. See, eg Orakpo v Manson Investments Ltd [1978] AC 95 at 104 (Lord Diplock). 280. See [124]–[132] as to the implied contract theory. 281. See, eg Mitchell and Watterson, Subrogation, esp pp 8–15; Grantham and Rickett, pp 426–7; David Wright, ‘The Rise of Non-consensual Subrogation’ [1999] Conv 113; Restatement, Third, § 57; Menelaou v Bank of Cyprus Plc [2015] 3 WLR 1334; [2015] UKSC 66.

282. [1996] 1 WLR 328 at 335, citations omitted. See also Re Trivan Pty Ltd (1996) 14 ACLC 1654; Halifax Mortgage Services Ltd v Muirhead (1997) 76 P & CR 418; Equiticorp Industries Group Ltd (in statutory management) v R (No 47) [1998] 2 NZLR 481 at 750–1. 283. [1999] 1 AC 221. See also Orakpo v Manson Investments Ltd [1978] AC 95 at 104; Austin v Royal (1999) 47 NSWLR 27; Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] 2 Lloyd’s Rep 319; [2004] EWCA Civ 487; Menelaou. 284. [1999] 1 AC 221 at 231. See also Lord Steyn at 228, Lord Hutton at 239, 243, 245. 285. [1999] 1 AC 221 at 234. 286. (2009) 239 CLR 269 at [97]. A restitutionary underpinning of subrogation had been recognised in Woodside Petroleum Development Pty Ltd v H & RE & W Pty Ltd (1999) 20 WAR 380 at 388. 287. The High Court cited with approval the observations of Bryson J in Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452; 12 BPR 22,257 at 22,269. 288. Contrast [242]–[256]. 289. (1978) 141 CLR 335 at 348. One authority he cited was Goff and Jones, Law of Restitution, 1st ed, p 376. See also Re Trivan Pty Ltd (1996) 14 ACLC 1654 at 1656–7. 290. (1985) 3 NSWLR 403 at 405. 291. See, eg Ghana Commercial Bank v Chandiram [1960] AC 732. 292. See Re Johnson (1880) 15 Ch D 548 at 552; Morganite Ceramic Fibres Pty Ltd v Sola Basic Australia Ltd (1987) 11 NSWLR 189 at 194–5; Stratti v Stratti (2000) 50 NSWLR 324 at 330–1. 293. See Jacqueline D Lipton, ‘Equitable Rights of Contribution and Subrogation: Recent Australian Judicial Approaches’ (1995) 13 Aust Bar Rev 21; David Wright, ‘The Rise of Non-consensual Subrogation’ [1999] Conv 113. 294. See Atco Controls Pty Ltd (in liq) v Stewart [2013] VSCA 132 at [234] (Redlich JA) (on appeal Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307). 295. See Mitchell and Watterson, Subrogation; Ong on Subrogation; Meagher, Gummow & Lehane, Chapter 9; Parkinson, Chapter 15. 296. See generally Grantham & Rickett, pp 424–6. 297. Craythorne v Swinburne (1807) 14 Ves 160; 33 ER 482; Equity Trustees Executors & Agency Co Ltd v New Zealand Loan & Mercantile Agency Co Ltd [1940] VLR 201 at 207; Austin v Royal (1999) 47 NSWLR 27 at 31; Clout v Klein [2003] QSC 152 at [18]. Subrogation arising out of suretyship has been partially codified in each Australian jurisdiction, following the Mercantile Law Amendment Act 1856 (Imp), s 5. See Phillips & O’Donovan, §12.2600. The remedy extends to the benefit of securities, even those of which the plaintiff was unaware when the payment was made: Duncan, Fox & Co v North and South Wales Bank (1880) 6 App Cas 1. 298. Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at 324; Re Staff Benefits Pty Ltd [1979] 1 NSWLR 207. 299. Chetwynd v Allen [1899] 1 Ch 353; Butler v Rice [1910] 2 Ch 277; Orakpo v Manson Investments Ltd [1978] AC 95; State Bank of South Australia v Rothschild Australia Ltd (1990) 8 ACLC 925; Divitkos, in the matter of ExDVD Pty Ltd (in liq) [2014] FCA 696;

Menelaou v Bank of Cyprus plc [2015] 3 WLR 1334; [2015] UKSC 66. There must be something more than the mere payment of the borrower’s debt: Paul v Speirway Ltd [1976] Ch 220 at 230. Cases where invalidity stems from statute or statutory policy will now need to be tested against the principles expounded in Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498. See generally Grantham & Rickett, p 425. See further [840]–[846]. 300. B Liggett (Liverpool) Ltd v Barclays Bank Ltd [1928] 1 KB 48. See also Dixon v Barton [2011] NSWSC 1525 as to the availability of subrogation in a mistake context. 301. Mitchell and Watterson, Subrogation, Chapter 1. 302. Cf Brett LJ’s reference to ‘fulfilled’ rights in Castellain v Preston (1883) 11 QBD 380. 303. [1902] 1 Ch 1 (affd [1903] AC 6), applied Coras v Webb [1942] St R Qd 66; Horvath v Commonwealth Bank of Australia [1999] 1 VR 643; Menelaou v Bank of Cyprus plc [2015] 3 WLR 1334; [2015] UKSC 66. 304. Re Trivan Pty Ltd (1996) 14 ACLC 1654 at 1656–7. 305. See Owen v Tate [1976] 1 QB 401; Macclesfield Corporation v Great Central Railway [1911] 2 KB 528; Re Cleadon Trust Ltd [1939] 1 Ch 286 at 315, 321–2. Cf [635]. 306. Gill v Registrar General (1991) 5 BPR 11,587. 307. See Chapter 8. 308. O’Day v Commercial Bank of Australia Ltd (1933) 50 CLR 200 at 213, 220; Austin v Royal (1999) 47 NSWLR 27. 309. New Zealand Society of Accountants v ANZ Banking Group (New Zealand) Ltd [1996] 1 NZLR 283 at 286; Woodside Petroleum Development Pty Ltd v H & R-E & W Pty Ltd (1999) 20 WAR 380. 310. Morris v Ford Motor Co Ltd [1973] QB 792. 311. For a more detailed exposition of the position of guarantors, on which we have extensively drawn, see Phillips and O’Donovan, Chapters 11 and 12. 312. McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 341. See also Re an Arbitration between Nott and Corp of Cardiff [1918] 2 KB 146; Gill v Registrar General (1991) 5 BPR 11,587. Indeed, at common law there must have been actual payment (see [643]). 313. Austin v Zurich [1945] 1 KB 250. 314. See [618]. 315. See, eg Alexander v Vane (1836) 1 M & W 511; 150 ER 537 and, generally, Chapter 8 (necessitous intervention). 316. Esso Petroleum Co Ltd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] 1 AC 643. 317. North v Walthamstowe Urban Council (1898) 67 LJ QB 972 at 975 per Channell J. See Re Gasbourne Pty Ltd [1984] VR 801 at 844–5. 318. Gemmell v Brienesse (1933) 33 SR (NSW) 472. 319. Green v Parr (1870) SALR 126. Cf also Legal & General Assurance Society Ltd v Drake Insurance Co Ltd [1992] QB 887; Re Hayes (1996) 138 ALR 54. 320. Moulton v Roberts [1977] Qd R 135, where Williams J reasoned on the basis of the equitable right to seek exoneration established in Wolmerhausen v Gullick [1893] 2 Ch 514 and the cases which followed it: see [644]. See also Re Hayes (1996) 138 ALR 54; Stimpson v Smith [1999] Ch 340.

321. Gemmell v Brienesse (1933) 33 SR (NSW) 472 at 476–7 per Harvey ACJ. 322. Liberian Insurance Agency v Mosse [1977] 2 Lloyd’s Rep 560. 323. See Goff and Jones, §20-04. It is possible that this principle requires modification in cases of contribution as between co-sureties: see Friend v Brooker (2009) 239 CLR 129; 255 ALR 601 at [59]. Cf Stimpson v Smith [1999] Ch 340; Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242; Re Gasbourne Pty Ltd [1984] VR 801 at 844–5. 324. See generally Re an Arbitration between Nott and Corp of Cardiff [1918] 2 KB 146; McLean v Discount & Finance Co Ltd (1939) 64 CLR 312 at 341; Austin v Zurich [1945] 1 KB 250. 325. McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 335. But as to a liability to pay on demand see Green v Parr (1870) 4 SALR 126. 326. Although P might obtain equitable orders for exoneration, see [644]. 327. (1891) 12 LR (NSW) 170. 328. (1891) 12 LR (NSW) 170 at 173–4. As to the effect of a compromise between the creditor and P upon P’s rights, see Phillips and O’Donovan, §12.600. 329. C E Heath Underwriting and Insurance (Australia) Pty Ltd v State Government Insurance Commission (1983) 34 SASR 1 at 9. 330. McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 328, 336–7, 341; Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351; Friend v Brooker (2009) 239 CLR 129; 255 ALR 601 at 152; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 44 at [48]–[52]. 331. Mahoney v McManus (1981) 180 CLR 370 at 378; 36 ALR 545 at 551 per Gibbs CJ. 332. Walker v Bowry (1924) 35 CLR 48 (where this principle precluded a claim for contribution being statute-barred); Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351; Didmore v Leventhal (1936) 36 SR (NSW) 378 at 385; Re Bruce David Realty Pty Ltd (in liq) [1969] VR 240; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 528; 182 ALR 321; [2001] HCA 53 at [16]. As to instalments of a debt, see Stirling v Burdett [1911] 2 Ch 418; Tucker v Bennett [1927] 2 DLR 42. 333. Davies v Humphreys (1840) 6 M & W 153; 151 ER 361; A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481 at 491. 334. See [642]. 335. See [643]. 336. Walker v Bowry (1924) 35 CLR 48 at 56 per Isaacs ACJ. 337. [1893] 2 Ch 514. 338. Holden v Black (1905) 2 CLR 768 at 784; McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 343; National Commercial Bank v Wimborne (No 2) (1978), Unreported, SC(NSW) (Holland J), 25 April; Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242; Abigroup Ltd v Abignano (1992) 39 FCR 74; Bond v Larobi Pty Ltd (1992) 6 WAR 489; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 529; 182 ALR 321; [2001] HCA 53 at [17]; Harpur v Levy [2011] VSC 653; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4 at [53]–[54]. 339. McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 341; Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351.

340. Thomas v Nottingham Inc Football Club Ltd [1972] Ch 596 at 606. 341. The equitable right to enforce an indemnity does not constitute a debt that would sustain a bankruptcy notice: Abigroup Ltd v Abignano (1992) 39 FLR 74. As to equitable relief and contracts of indemnity, see McIntosh v Dalwood (No 4) (1930) 30 SR (NSW) 415; Federal Commissioner of Taxation v Unilever Australia Securities Ltd (1995) 56 FCR 152 at 170; 127 ALR 437 at 453–4. 342. See Phillips and O’Donovan, Chapter 12. 343. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 351; Moulton v Roberts [1977] Qd R 135 at 138. 344. Holden v Black (1905) 2 CLR 768 at 783–4; Tucker v Bennett [1927] 2 DLR 42 at 47. 345. National Commercial Bank v Wimborne (No 2) (1978) Unreported, SC(NSW) (Holland J), 25 April. 346. Moulton v Roberts [1977] Qd R 135 at 138; Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242. 347. Abigroup Ltd v Abignano (1992) 39 FCR 74 at 82. 348. Tate v Crewdson [1938] 1 Ch 869; Moulton v Roberts [1977] Qd R 135 at 138. 349. Ascherson v Tredegar Dry Dock & Wharf Co Ltd [1909] 2 Ch 401 at 409; Drager v Allison (1959) 19 DLR (2d) 431. 350. Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242. 351. Holden v Black (1905) 2 CLR 768. 352. National Commercial Bank v Wimborne (No 2) (1978) Unreported, SC(NSW) (Holland J), 25 April; Salcedo v Mawarie Mining Co Pty Ltd (1991) 6 ACSR 197. 353. Phillips and O’Donovan, §11.450. See [649]. 354. Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4 at [53]–[54]. 355. Shire of Windsor v Enoggera Divisional Board [1902] St R Qd 23; O’Dea v Commercial Bank of Australia (1933) 50 CLR 200 at 220, 223; Australian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335; Hong Kong Bank of Australia Ltd v Larobi Pty Ltd (1991) 23 NSWLR 593; Bond v Larobi Pty Ltd (1992) 6 WAR 489; Leigh-Mardon Pty Ltd v Wawn (1995) 17 ACSR 741; Chidiac v Maatouk [2010] NSWSC 386. 356. Johnson v Australian Guarantee Corp Ltd (1992) 59 SASR 382. 357. Sherwin v McWilliams (1921) 17 Tas LR 94. 358. Warwick v Richardson (1842) 10 M & W 284; 152 ER 477. For a borderline case, see Paconowski v Wygoda (1992) Unreported, FCA (FC), 18 December. 359. Coulls v Bagot’s Executor & Trustee Co Ltd (1967) 119 CLR 460 at 480, 488; Gadsden v Commissioner of Probate Duties [1978] VR 653 at 660–1; Muschinski v Dodds (1985) 160 CLR 583 at 597; 62 ALR 429 at 438; Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467; Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116. 360. Panorama Plant Hire Pty Ltd v Mercantile Mutual Insurance Co Ltd [1980] 2 NSWLR 618. 361. Robinson v Campbell (No 2) (1992) 30 NSWLR 503 at 508. 362. Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562. 363. Pendlebury v Walker (1841) 4 Y & C (Ex) 424; 29 ER 1072.

364. Hong Kong Bank of Australia Ltd v Larobi Pty Ltd (1991) 23 NSWLR 593. 365. Cornfoot v Holdenson [1932] VLR 4 (approved Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562 at 573). See Phillips and O’Donovan, §12.2020. 366. Ellesmere Brewery Co v Cooper [1896] 1 QB 75. 367. Lowe & Sons v Dixon & Sons (1885) 16 QBD 455 at 458 per Lopes J. See also Mahoney v McManus (1981) 180 CLR 370 at 376; 36 ALR 545 at 549 (solvency assessed at time contribution is sought); Newberry v Harrop [1986] 1 Qd R 187; Ellesmere Brewery Co v Cooper [1896] 1 QB 75 at 80–1. See further Phillips and O’Donovan for examples of more complicated situations. 368. Hay v Carter [1935] Ch 397; McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 325; Israel v Foreshore Properties Pty Ltd (in liq) (1980) 54 ALJR 421. 369. Craythorne v Swinburne (1807) 14 Ves Jun 160 at 164; 133 ER 482 at 484; Re Salmon (1889) 42 Ch D 351 at 360; A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481. 370. Robinson v Campbell (No 2) (1992) 30 NSWLR 503 at 508; Staples v Baker [1999] 1 Qd R 317 at 327–8. 371. Farrow Mortgage Services Pty Ltd (in liq) v Slade (1996) 38 NSWLR 636. 372. See Carr v Thomas [2009] NSWCA 208; Lavin v Toppi (2015) 254 CLR 459; 316 ALR 366; [2015] HCA 4. 373. Ward v National Bank of New Zealand (1883) 8 App Cas 755; Walker v Bowry (1924) 35 CLR 48 at 50, 58; Mahoney v McManus (1981) 180 CLR 370 at 378. 374. Molson’s Bank v Kovinsky [1924] 4 DLR 330 at 335–7. 375. Shire of Windsor v Ennogera Divisional Board [1902] QSR 23; AGC (Advances) Ltd v West (1984) 5 NSWLR 590 (affirmed at 610, sub nom West v AGC (Advances) Ltd without reference to the point). 376. (1787) 2 Bos & Pul 270 at 271; 126 ER 1276 at 1277. See also Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 293, 336; 187 ALR 612; [2002] HCA 17 at [18], [143]. 377. Re Gasbourne Pty Ltd [1984] VR 801 at 850; Burke v LFOT Pty Ltd (2002) 209 CLR 282 at 293, 336; 187 ALR 612; [2002] HCA 17 at [18], [143]. 378. Monk v Smith (1893) 14 LR (NSW) (Eq) 311; Greenwood v Francis [1899] 1 QB 312; Traders Finance Corp Ltd v Marks [1932] NZLR 1176; Griffith v Wade (1966) 60 DLR (2d) 62; Brookes v Marshall, (1996) Unreported, SC NSW (CA), 1 February. 379. Charaneka v Gallagher, (1993) Unreported, SC NSW (CA), 17 August; Carr v Resource Equities Ltd (2010) 275 ALR 366; [2010] NSWCA 286. 380. [1976] QB 402 (see [635]). 381. [1976] QB 402 at 409–10, discussed in Re Gasbourne Pty Ltd [1984] VR 801 at 848–9. 382. Everet v Williams (the Highwayman’s Case (1725)) discussed (1893) 9 LQR 197; Spika Trading Pty Ltd v Harrison (1990) 19 NSWLR 211. 383. A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481; McColl’s Wholesale Pty Ltd v State Bank of New South Wales [1984] 3 NSWLR 365. Generally as to interest see Chapter 28. 384. Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467. 385. Maio v Sacco (No 2) [2009] NSWSC 742.

386. A E Goodwin Ltd (in liq) v A G Healing Ltd (in liq) (1979) 7 ACLR 481 at 492. 387. Wolmerhausen v Gullick [1893] 2 Ch 514 at 529–30; Commercial & General Insurance Co Ltd v Government Insurance office (NSW) (1973) 129 CLR 374 at 384; McColl’s Wholesale Pty Ltd v State Bank of New South Wales [1984] 3 NSWLR 365; Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467. Cf James Hardie & Coy Pty Ltd v Wyong Shire Council (2000) 48 NSWLR 679; CSR Ltd v Amaca Pty Ltd [2007] NSWCA 107. 388. Duncan Fox & Co v North & South Wales Bank (1880) 6 App Cas 1. 389. Re Arcedeckne (1883) 24 Ch D 709. 390. Equity Trustees Executors & Agency Co Ltd v New Zealand Loan & Mercantile Agency Co Ltd [1940] VLR 201; A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481; McColl’s Wholesale Pty Ltd v State Bank of New South Wales [1984] 3 NSWLR 365 at 378. Cf Ex parte Brett; Re Howe (1871) LR 6 Ch App 838 at 841; Ex parte Turquand; Re Fothergill (1876) 3 Ch D 445 at 450. See also [636]. 391. Calverley v Green (1984) 155 CLR 242 at 263; 56 ALR 483 at 497; Muschinski v Dodds (1985) 160 CLR 583 at 598; 62 ALR 429 at 439. See also Coates v Hewgley 581 P 2d 929 (Okla App, 1978). See also [249], [839]. 392. See Menelaou v Bank of Cyprus plc [2015] 3 WLR 1334; [2015] UKSC 66.

[page 279]

Chapter Seven

Judgments Reversed or Set Aside [701] Objects. In this chapter we examine the right to recover money or other benefits transferred in obedience to a court order that is later set aside. Like the earlier chapters in this Part, the payment was compelled, but nevertheless it resulted in the unjust enrichment of the payee in the event which happened. Public policy in encouraging submission to law and the unjust enrichment concept converge in requiring the temporarily successful litigant to disgorge the (ultimately) unjust enrichment of the fruits of a judgment that is later set aside.1 [702] Rationale. There are obvious reasons why litigants should be encouraged to submit their disputes to legal resolution, and to abide by the outcome. One tool in this quest for the rule of law is the protection of those who obey an adverse judgment only to find themselves vindicated by appellate or other review. ‘Acts done according to the exigency of a judicial order afterwards reversed are protected: they are acts done in the execution of justice, which are compulsive.’2 The corollary of the obligation to obey an unstayed judgment or order3 is the right to be restored if it is reversed. By this means, obedience to the law is both encouraged and protected, and the ultimately unsuccessful litigant deprived of a short-term enrichment which is necessarily unjust in the light of the later ruling. The whole basis upon which the money was paid has ceased to exist and in this sense there is a further analogy with the principles of restitution of money paid on a consideration that fails.4 [703]

Judgments and their effect. The judgment of a court is the

order it makes, as distinct from its reasons.5 The order may follow a contested hearing or be made by consent, it may be final or interlocutory, but in any [page 280] form it must be obeyed, unless it is stayed, until it is set aside.6 An order of a superior court provides authority for what is commanded, and the setting aside of that order on appeal does not automatically undo what has already been done. A money judgment gives rise to what is known as a judgment debt, and it is this form of judgment (usually a final judgment) with which this chapter is primarily concerned. However, restitutionary issues may arise out of other forms of judgment, including judgments commanding the transfer of goods or land and even, perhaps, prohibitory injunctions.7 Unless statute or a rule of court otherwise provides, the institution of an appeal does not in itself operate as a stay of execution, or provide an excuse for disobedience. Indeed, special circumstances must be shown before a stay will be granted, in other words to justify departure from the ordinary rule that a successful litigant is entitled to the fruits of the litigation pending the determination of any appeal.8 Conversely, the successful party is entitled to enforce the judgment or order, unless execution is stayed. Indeed that party is not liable in damages for having procured or enjoyed the fruit of the judgment or order that is later set aside, unless an undertaking as to damages has been extracted (something only done as the price of interlocutory relief).9 [704] Effect of a successful appeal. Since an appeal is a statutory remedy, its scope and effect must in the end be governed by the terms of the enactment creating it. However, the universally conferred jurisdiction to ‘set aside’ the judgment or order in the court below carries the power to reverse it ab initio. The appellate process is the means whereby regularly obtained judgments can be corrected. Reversal generally annuls a judgment ab initio, although there is much

ancient learning which suggests that a person who acted under the authority of the judgment did not become liable as a trespasser on its reversal.10 Outside the right to restitution discussed in this chapter, power to undo the effect of compliance with the order itself must find clear statutory authority.11 [705] Setting aside judgments. Where an order has been made ex parte, the party against whom it has been made is entitled to apply for its discharge irrespective of irregularities in the making of it.12 Rules of court may also [page 281] allow orders to be set aside in particular circumstances. There is also an inherent jurisdiction to set aside even final orders in limited circumstances.13 Even a consent order may be set aside in particular circumstances.14 [706] Restitution upon reversal of judgment. A party who has satisfied a judgment for the payment of money is entitled, on the reversal of the judgment,15 to repayment of the money paid, with interest. Reversal may occur because of appeal or the setting aside of a judgment. The reason for reversal is irrelevant to the right to restitution, just as the law of restitution has itself nothing to do with such questions as validity of judgments, rules relating to appeals, or actions to set aside judgments. The leading case as to the right of restitution is Commonwealth v McCormack,16 where the Commonwealth was held entitled to the repayment with interest of a judgment debt it had satisfied before obtaining the reversal of the judgment on appeal. Another example is Lee v Mallam,17 where a successful plaintiff in a District Court action obtained from the defendant payment of his taxed costs. Subsequently on review a certain portion of the costs was taxed off, but the plaintiff refused to refund the amount received in excess. The defendant

recovered the excess in a Supreme Court action for money had and received. The right has been referred to as a right of ‘restitution’,18 and it is related to the accused person’s right, upon reversal of judgment of conviction, ‘to be restored to all things which he may have lost by such erroneous judgment and proceedings’.19 In the criminal law, there is a corresponding right to recover back a fine and costs paid under a conviction which is later quashed.20 The principle is not confined to money judgments, because ‘restitutio in integrum is the right of every successful litigant’.21 Thus, a person who is evicted under a judgment in ejectment is, at least against the respondent, entitled to be reinstated after a successful appeal, by obtaining what used [page 282] to be called a writ of restitution.22 Mesne profits may also be recovered where appropriate.23 It does not matter that the appellant satisfied the judgment voluntarily without waiting for execution.24 This follows from the policy that persons should be encouraged to submit to judgments entered against them and from the fact that ‘one of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors’.25 A proprietary remedy has been rejected in this situation.26 [707] Principle extends to all types of appeal and review. It does not matter that the order pursuant to which the benefit was conferred was set aside on appeal;27 quashed in proceedings for judicial review,28 or any other way in which an erroneous or interim29 judgment is overturned;30 varied;31 or (in the case of an irregular or default judgment) set aside by the court which first entered it. If a judgment is set aside on appeal and a new trial ordered, whether as to

liability or merely as to quantum, restitution should be given in the meantime.32 In a proper case the court will stay execution of the judgment for restitution, especially if security is provided.33 [708] Restitution confined to restoration of benefit directly ordered. The court’s duty to restore a litigant to the position occupied prior to the payment of money or transfer of property pursuant to the court order does [page 283] not extend to ordering compensation for losses suffered in complying with the order that was later set aside.34 But the power should, in principle, extend to profits made by the ultimately unsuccessful party.35 In National Australia Bank Ltd v Bond Brewing Holdings Ltd36 the bank obtained an ex parte order appointing receivers and managers of a group of companies. Contrary to what was held (on appeal) to have been requisite, no undertaking as to damages was sought or given. The orders were set aside on appeal.37 The companies then sought an order that the bank pay the loss and damage suffered by reason of the making of the orders. This was refused.38 Brooking J summarised the principles as follows:39 [The] principle on which the courts have for centuries acted is that when an erroneous judgment or order is overturned, whether by means of appeal or by any other procedure, the court will achieve a just result by requiring anything that has been taken from him by the other party by virtue of a wrong decision to be restored. Interest is for this purpose treated as the fruit of money and he who has had the use of money will not be heard to say that there were not fruits. The principle is, as it was in the reign of the first Elizabeth,40 one of restitution or restoration. The court is seeking to restore to one party what it has wrongly taken from him and given to the other. It does not seek to restore the successful party to his former position by awarding damages to compensate him for loss flowing from the erroneous judgment or orders. There is no basis for an award of damages. No right of the party suffering loss has been infringed. … [The] principle of Rodger’s Case41 allows no more than the passing back to that party of what has been taken from him.

The Supreme Court of Victoria, Appeal Division held that, since the original orders were made by the Supreme Court acting within

jurisdiction, the absence of an undertaking as to damages meant that there was no power to award damages to the companies by reason of the erroneous order appointing the receivers. It follows that a defendant faced with a mandatory order at first instance should seek a stay pending appeal if there is a risk that third party rights may frustrate the respondent’s capacity to give restitution if the appeal succeeds.42 Amongst the precedents cited in National Australia Bank Ltd v Bond Brewing Holdings Ltd was Greenwood County v Duke Power.43 This United States authority was not followed by the Supreme Court of Israel in the [page 284] interesting decision in Palimport v Ziba Geigi.44 Palimport was apparently not cited or referred to in the Victorian case. In Palimport the plaintiff and the defendant each marketed a chemical product used for the protection of plants. In a previous action the defendant obtained a final injunction in the District Court restraining the plaintiff from selling its product on the ground that it infringed the defendant’s patent. The injunction was reversed on appeal. But, in the period between the date of the District Court judgment and its reversal, the plaintiff was unable to sell its product. The plaintiff sued in restitution to recover the profits which the defendant realised by selling to the plaintiff’s customers during this period. It was claimed that the parties were the only major sellers of this type of product in Israel, so that while the injunction was in force the plaintiff’s customers had no choice but to purchase from the defendant. The Supreme Court held that the plaintiff had a valid cause of action in restitution. Sussman J referred to Rodger v Comptoir D’Escompte de Paris45 and stated that:46 … unless the court decides otherwise the defendant must pay a judgment debt in accordance with the judgment. But if the judgment is reversed on appeal, the cause under which the plaintiff obtained the money is avoided, and if he does not restore it, he is unjustly enriched. In accordance with general principles of the law of unjust enrichment, the plaintiff who collected the money is liable in restitution.

National Australia Bank Ltd v Bond Brewing Holdings Ltd is at least distinguishable on the basis that the District Court judgment in Palimport was a final judgment, and thus the (temporarily) successful party could not have been required to have given an undertaking as to damages. It is also possible to identify a monetary enrichment by the defendant in the Israeli case, being one that flowed fairly directly from the judgment later set aside. Nevertheless, the reasoning in the Israeli decision has been criticised in a more recent decision of the English Court of Appeal.47 [709] Restitution confined to the party to the judgment. The principles discussed in this chapter are confined to the restoration of benefits paid or transferred to the party to the overturned judgment.48 If, for example, the appellant’s property was sold under an execution or a judicial sale, the [page 285] appellant must proceed against the respondent, and cannot recover the property, or even its true value, but only the proceeds of the sale.49 As against a third party to whom the appellant’s property is transferred by the respondent during the pendency of the appeal, the position is more complicated. It is affected by the real property doctrine of lis pendens, and its continued or modified application in the context of the real property law of each State and Territory.50 Those who buy from court officers executing judgments and orders, and the officers themselves, are usually protected by statutory rules.51 Where a person pays money, relying on the principles established in a judgment to which he or she is not a party, the principles relating to mistaken payments apply.52 [710] Interest. Restitution carries with it the right to have money paid returned with interest.53 This extends to interest on costs paid.54 ‘Interest is for this purpose treated as the fruit of money and he who

has had the use of money will not be heard to say that there were no fruits.’55 Interest is payable as a common law entitlement from the date on which the money concerned was paid until repayment.56 The court will fix a rate that does justice between the parties in an endeavour to measure fairly the particular respondent’s enrichment.57 Often this will involve calculating interest against the respondent at the same rate as the respondent obtained interest from the appellant while the judgment stood. On this basis, the rate of interest on judgment debts in the court of judgment set aside is the rate applied in default of evidence pointing to the justice of a higher or lower rate.58 [page 286] Simple interest is usually awarded.59 Since the cause of action is a personal one, the successful appellant is not necessarily entitled to the respondent’s windfall gain from an extremely provident or speculative investment of the judgment entered into without recourse to the appellant. Neither is the court hostage to the appellant’s particular susceptibility or the respondent’s particular caution or carelessness in dealing with the funds pending appellate reversal.60 Where a personal injuries award is set aside or reduced, the court may nevertheless have regard to the actual interest earned by the plaintiff.61 [711] Time for seeking order. ‘Restitution’ under these principles may and should be sought as an order in the appeal itself62 or from a third tier appellate court, even when dismissing an appeal from a successful reversal order made by an intermediate appellate court.63 In some jurisdictions the right is expressly recognised in rules of court.64 Although it should be sought as an order in the appeal from the satisfied judgment,65 if it is not sought as an order in the appeal or given when judgment on appeal was pronounced, it has been held that it can subsequently be granted upon motion in the appeal itself.66 It may also be sought in substantive proceedings at first instance,

separately instituted after the respondent to a successful appeal or application has declined voluntarily to surrender the fruits of victory under the original order.67 Since an order for restitution follows as of course, the jurisdiction of a court exercising appellate or supervisory jurisdiction to order restitution in favour of a successful litigant is necessarily of a summary nature, and is inherently unsuitable for the determination of disputed questions of fact or the trial of cross claims.68 [page 287] [712] The juridical basis for restitution. The right discussed in this chapter is a common law right in which the remedy issues as of course, not as the product of a judicial discretion.69 It is not based on any wrongdoing, or mistake, or some failure of basis, or improper pressure. And it serves policy objectives including the effective functioning of judicial review and appeals procedures which do not attract the unjust enrichment concept without considerable forcing.70 Because restitution operates in the context of multiple layers of appeal and because its valuation is calculated (with interest) by reference to payments made in compliance with orders no longer operative, it is not strictly accurate to say that it aims to restore the parties to the situation in which they stood if the first instance judgment had not been given.71 [713] Defences. In principle, restitutionary defences should be available in proper cases.72 A respondent to a timely appeal or application for leave to appeal could hardly be heard to claim no expectation as to the possibility of appellate reversal. If, on the other hand, no appeal is lodged within time and if the judgment debtor at first instance pays without giving notice of intention to appeal, there is no reason why the defence of change of position may not be available.73 1.

See generally B McFarlane, ‘The Recovery of Money Paid Under Judgments Later

Reversed’ [2001] RLR 1. 2.

3. 4. 5.

6.

7. 8. 9.

Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225 per Rich, Dixon, Evatt and McTiernan JJ, quoting from Dr Drury’s Case (1610) 8 Co Rep 141b at 143a; 77 ER 688 at 691. See [703]. See John Holland Pty Ltd v Roads and Traffic Authority (NSW) (2006) 66 NSWLR 624 at 634 and generally Part V. R v Ireland (1970) 126 CLR 321 at 330. Sometimes, ‘order’ is used to describe a final ‘judgment’ in equitable proceedings. In this chapter the two terms will be used interchangeably. Westwood v Perrett (1887) 13 VLR 732; Leach v Leach [1965] VR 599 at 603; Jackson v Sterling Industries Ltd (1987) 162 CLR 612; Re M [1993] AC 377 at 423; Papas v Grave [2013] NSWCA 308 at [69]. Generally, as to the inability to go behind an unreversed judgment in restitution, see Daniel Friedmann, ‘Valid, Voidable, Qualified, and Nonexisting Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, p 247. As to the analogous principle regarding an inconsistent contractual promise see [506], [909]. See also [104] (effective transaction or valid legal obligation), [215] (restitution’s role in the face of effective contracts). See [706], [708]. Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220; 64 ALR 325. National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 571ff.

10. See generally Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220; D M Gordon, ‘Effect of Reversal of Judgment on Acts Done Between Pronouncement and Reversal’ (1958) 74 LQR 517; (1959) 75 LQR 85. The authors have drawn heavily on this article for the material in this chapter. 11. Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590 esp at 602–4; 34 ALR 148. 12. Owners of the SS Kalibia v Wilson (1910) 11 CLR 689 at 694; Farrell v Delaney (1952) 52 SR (NSW) 236 at 237–8; Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 676. 13. Wentworth v Attorney-General (NSW) (1984) 154 CLR 518; Commonwealth v McCormack (1984) 155 CLR 273. 14. General Credits Ltd v Ebsworth [1986] 2 Qd R 162; Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13. 15. Holdcroft v Market Garden Produce Pty Ltd [2001] 2 Qd R 381. 16. (1984) 155 CLR 273; 55 ALR 185. See also Heydon v Perpetual Executors, Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111; Central Electricity Board of Mauritius v Bata Shoe Co (Mauritius) Ltd [1983] AC 105; National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 591–2. 17. (1910) 10 SR (NSW) 876. See also TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 49 NSWLR 381 at 385; Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172. 18. Lissenden v C A V Bosch Ltd [1940] AC 412 at 430 per Lord Atkin; National Australia

Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 597 per Brooking J; Easterday v Western Australia [2005] WASCA 202 at [10]; Woolworths Ltd v Strong (No 2) [2011] NSWCA 72 at [25]. 19. Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225 per Rich, Dixon, Evatt and McTiernan JJ; MacIntosh v Lobel (1993) 30 NSWLR 441 at 459–60; Melesco Manufacturing Pty Ltd v Thompson (1996) 40 NSWLR 525 at 532–3. 20. R v Hellier (1851) 17 QB 229; 117 ER 1267; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220. 21. Commonwealth v McCormack (1984) 155 CLR 273 at 276 per curiam, citing Lord Field in Cox v Hakes (1890) 15 App Cas 506 at 547. See also Heavener v Loomes (1924) 34 CLR 306 at 323–4; Re Ryan (1992) 38 FCR 127; 111 ALR 246; A-Pak Plastics Pty Ltd v Merhone Pty Ltd (1995) 120 FLR 277; White v Tomasel [2004] 2 Qd R 438. 22. Doe d Wittington v Hards (1851) 20 LJQB 406; United Starr-Bowkett Co-op Building Society v Clyne (1967) 68 SR (NSW) 331. See generally R v Elliott [1955] VLR 126 and National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 593–4; Maher v Commonwealth Bank of Australia (No 2) (2004) 211 ALR 656 at 658 [6]. In White v Tomasel [2004] 2 Qd R 438 this was held to be an exception to indefeasibility under the Torrens system. As to third party rights acquired under a reversed judgment, see [709]. 23. Sympson v Juxon (1625) Cro Jac 699; 79 ER 607. See [1614] as to mesne profits. 24. See D M Gordon, ‘Effect of Reversal of Judgment on Acts Done Between Pronouncement and Reversal’ (1958) 74 LQR 517 at 523 n 33. See also Schwennen v Abell 471 NW 2d 880 (Ia, 1991). 25. Rodger v The Comptoir D’Escompte de Paris (1871) LR 3 PC 465 at 475 per Lord Cairns, cited in Commonwealth v McCormack (1984) 155 CLR 273 at 276. See also AttorneyGeneral v Wylde (1947) 47 SR (NSW) 99 at 111–12. 26. Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600 at 608 (see further [252]). 27. Commonwealth v McCormack (1984) 155 CLR 273. See also Holdcroft v Market Garden Produce Pty Ltd [2001] 2 Qd R 381 where restitution was ordered even though the judgment below was set aside on the basis of upholding a plea of illegality. 28. R v Hellier (1851) 17 QB 229; 117 ER 1267; Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 644. 29. Such as an adjudication order under the Building and Construction Industry Security of Payments Act 1999 (NSW) and its interstate counterparts: Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] NSWSC 517; B M Alliance Coal Operations Pty Ltd v B G C Contracting Pty Ltd [2013] QCA 394 at [77]; J Hutchinson Pty Ltd v Cada Formwork Pty Ltd [2014] QSC 63. 30. National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 593, 597. 31. Lee v Mallam (1910) 10 SR (NSW) 876 (see [706]); BHP Steel (JLA) Pty Ltd v Khan (No 2) [2001] NSWCA 269. 32. TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381; BHP Steel (JLA) Pty Ltd v Khan (No 2) [2001] NSWCA 269; Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172. Cf Gludeau v Gludeau (2013) 50 Fam LR 470. 33. TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 at 383; Woolworths Ltd v Strong (No 2) [2011] NSWCA 72 at [28].

34. Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 644 at 662; Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26; Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 31 at 34; Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600 at 607; S v State Administrative Tribunal of Western Australia (No 2) [2012] WASC 306 at [222]. 35. See Goff & Jones § 26-10. Cf Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600. 36. [1991] 1 VR 386. See also Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590; Stergiou v Citibank Savings Ltd (1998) 148 FLR 244; SmithKline Beecham plc v Apotex Europe Ltd [2007] Ch 71. 37. [1991] 1 VR 386 at 530ff. 38. [1991] 1 VR 386 at 571ff. 39. [1991] 1 VR 386 at 597–8. 40. Eyre v Woodfine (1592) Cro Eliz 278; 78 ER 533. 41. Rodger v The Comptoir D’Escompte de Paris (1871) LR 3 PC 465. 42. Zegluga Polska SA v TR Shipping Ltd [1996] 1 Lloyd’s Rep 337; Burger King Corp v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 558; [2001] NSWCA 187 at [493]–[500]. 43. 107 F 2d 484 (CA, 4th Cir, 1939). 44. (1975) 29(1) PD 592, noted [1993] RLR 154 and discussed by Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, pp 265–6. See also Fleer Corp v Topps Chewing Gum Inc 539 A 2d 1060 (Del, 1988). (This case was also not cited in National Australia Bank.) We acknowledge the assistance of Mr Joseph Zaresky, who is legally qualified in both Israel and New South Wales, and who read the Palimport judgment in its original language and advised that it is clear that the injunction was a final one. See also Jackson v Richards [2005] NSWSC 1295 where Young CJ in Eq indicated his readiness to follow Palimport had the plaintiff demonstrated that his profits had been taken by the defendant while the injunction was in force. 45. (1871) LR 3 PC 465. 46. (1975) 29(1) PD 592, as translated by Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, pp 265–6. 47. SmithKline Beecham plc v Apotex Europe Ltd [2007] Ch 71. 48. Burger King Corp v Hungry Jack’s Pty Ltd (2001) 69 NSWLR 558; [2001] NSWCA 187 at [493]; White v Tomasel [2004] 2 Qd R 438 at [67]; SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71. In Ralena Pty Ltd v VCAT (No 2) (2007) 25 VAR 373; [2007] VSC 11 this involved a party to judicial review proceedings that was not the moving party. 49. Goodyere v Ince (1610) 2 Brownl & Golds 208; 123 ER 901; National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 593; Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350. See also Halsbury’s Laws of Australia, ‘Practice and Procedure’ §325–9955. 50. ‘Lis pendens’ means, literally, ‘action pending’. The doctrine is discussed in Wigram v Buckley [1894] 3 Ch 483. If real property was in question in proceedings, it could not be alienated during their pendency, even to a purchaser without notice. The doctrine has been modified by statutory registration requirements. See Sykes and Walker, Law of

Securities, 5th ed, pp 442–3, 522. 51. See, as to the position in New South Wales, Helmore, Law of Real Property in New South Wales, 2nd ed, pp 433–5. 52. See [413]–[414]. 53. Commonwealth v McCormack (1984) 155 CLR 273; Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600. See generally Chapter 28. 54. JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237 at 249. Cf Rodger v The Comptoir d’Escompte de Paris (1871) LR 3 PC 465 at 477. 55. National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 597 per Brooking J. See also [2807]. 56. Central Electricity Board of Mauritius v Bata Shoe Co (Mauritius) Ltd [1983] AC 105; Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26 at 40, 46; Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd [1997] 1 WLR 1627; Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600. 57. See Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600 at 607–10; Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 19 at 35. 58. Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 659; Haig v Minister Administering the National Parks & Wildlife Act 1974 (No 3) (1996) 90 LGERA 408; Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600; Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727; Holdcroft v Market Garden Produce Pty Ltd [2001] 2 Qd R 381; Ambulance Service of New South Wales v Worley (No 2) (2006) 67 NSWLR 719; Woolworths Ltd v Strong (No 2) [2011] NSWCA 72; Bunnings Group Ltd v CHEP Australia Ltd (No 2) [2011] NSWCA 384; B M Alliance Coal Operations Pty Ltd v B G C Contracting Pty Ltd [2013] QCA 394. 59. See Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 31 where Callaway JA discusses the cases and suggests that this may flow from the common law right involved. Cf Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26 at 52 where compound interest reflected the benefit gained by the respondent under its investment of the judgment proceeds. As to the power to award compound interest by way of restitution in a proper case, see Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561. 60. See Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600 at 608–9, and cases cited. See also Woolworths Ltd v Strong (No 2) [2011] NSWCA 72. 61. AMP General Insurance Ltd v Roads & Traffic Authority of New South Wales [2001] NSWCA 186; Goode v Thompson [2002] 2 Qd R 572. 62. Osenton v Johnston [1942] WN 75 (HL); Central Electricity Board of Mauritius v Bata Shoe Co (Mauritius) Ltd [1983] 1 AC 105. 63. Commonwealth v McCormack (1984) 155 CLR 273 at 277. 64. For example, Uniform Civil Procedure Rules (NSW) r 51.54. 65. Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 659. 66. Government Insurance Office of New South Wales v Healy (No 2) (1991) 22 NSWLR 380; Burke v Gillett [1996] 1 VR 196. Unnecessary costs may be awarded against the party that failed to make the claim in the appeal itself: Haig v The Minister Administering the National

Parks & Wildlife Act 1974 (1996) 90 LGERA 408. Such a claim may be entertained by a differently constituted court: Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600. 67. Lee v Mallam (1910) 10 SR (NSW) 876; Burke v Beatty [1928] IR 91; Melesco Manufacturing Pty Ltd v Thompson (1996) 40 NSWLR 525. The court must, of course, have jurisdiction in the matter: see New South Wales State Brickworks v Abi-Arraj (1995) 38 NSWLR 95, where a confined statutory power to order repayment was held to exclude the common law remedy. 68. Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1991) 27 NSWLR 659 at 662. 69. Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659 (appellate court has no jurisdiction to entertain cross-claims); Melesco Manufacturing Pty Ltd v Thompson (1996) 40 NSWLR 525; Heydon v NRMA Pty Ltd (No 2) (2001) 53 NSWLR 600; Woolworths Ltd v Strong (No 2) [2011] NSWCA 72 at [25]; Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] FCAFC 141. 70. See White v Tomasel [2004] 2 Qd R 438 at 453 [68]; Woolworths Ltd v Strong (No 2) [2011] NSWCA 72 at [35]; Goff & Jones §§ 26-03–26-05. It does not necessarily follow that the change of position defence is excluded (see [713]). 71. Woolworths Ltd v Strong (No 2) [2011] NSWCA 72 at [36]. 72. Cf Lissenden v CAV Bosch Ltd [1940] AC 412 at 430. 73. See [2401].

[page 289]

Chapter Eight

Necessitous Intervention: Restitution for Unsolicited Services or Payments 1.

2. 3. 4.

5. 6.

General ….

[801]

(a) Introduction ….

[801]

(b) Policy Considerations ….

[805]

(c) Restitution and Unjust Enrichment ….

[808] [811]

Summary of Principles …. From ‘Agency of Necessity’ to ‘Necessitous Intervention’ Intervention to Protect Life or Health of Another ….

[821] [825]

(a) Medical Services ….

[825]

(b) Supply of Necessaries Without Request ….

[830] [834] [841]

Preservation of Property …. Fulfilment of Another’s Duty ….

(a) Preservation of Credit and Payment of Another’s Debt …. [841] (b) Situations Where There Is a Positive Public Interest …. [848]

1. General (a) Introduction [801] Objects. In this chapter we examine restitutionary claims for unsolicited benefits. The general rule is that an intervener who spends money for the benefit of another without prior invitation will not be reimbursed, let alone recompensed for services rendered. However, noncontractual rights to recoup expenditure (and occasionally, earn remuneration) are sometimes available where the plaintiff intervenes to assist another. Unlike the situations considered elsewhere in this Part, we are not here concerned with benefits conferred as the result of a legal obligation. Indeed, it is assumed that there is no such obligation. It will nevertheless be seen that the law encourages certain types of assistance through providing restitutionary relief to those who provide it. Sometimes the remedy lies against the person assisted, at other times against those who had a superior obligation towards the person assisted, usually where it was their default that led to the plaintiff’s intervention. In this area the law’s policy is to reflect a broadly-held consensus about moral obligations, and to encourage well-intentioned intervention, even if no tangible benefit accrues. Fear of officious intermeddling sets firm limits on the exceptional rights discussed in this chapter. [page 290] [802] Concept. By necessitous intervention we mean intervention by a plaintiff who is not under a legal obligation, but where the necessity or emergency of the situation gives rise to restitutionary relief. The categories we shall examine involve intervention to protect the life or health of another; preservation of property; and fulfilment of another’s duty in particular instances.1 It should be noted that in some cases liability is imposed on the person upon whom a benefit has been directly conferred, and in others liability is imposed on a third party

whose legal or moral duty to respond to another’s emergency has been performed by the intervener. [803] Assumptions. In the situations dealt with here it is assumed that the plaintiff has no contractual or statutory right to recoup expenditure or earn remuneration. It is also assumed that the plaintiff acted without the request or encouragement of a legally competent defendant.2 Necessitous intervention is not based on estoppel. It is also assumed that the plaintiff’s action (whether payment of money or provision of goods or services) was not compelled by law or the result of mistake. [804] Issues. Is a doctor able to charge for treatment administered to an unconscious accident victim found by the side of the road? What if the doctor’s efforts fail to save the victim? If I summon the doctor and pay the bill, can I get reimbursement from the victim or from those responsible for the victim’s welfare? If I see your house burning or your dog starving and take appropriate steps in what I believe to be your interest can I recover my outlay? Does it matter, in the former case, that I could have left it to the fire brigade or that I initially acted with no intention to seek remuneration? Does it matter, in the latter case, that you may have intended not to feed your overweight dog for the weekend that you were away from your home? In all of these cases the service or payment was unsolicited, and for that reason there is no express or implied contract. Yet, lying behind these questions is a common factor: moral compulsion led to action which caused expense. It may not have resulted in benefit, for example if the patient died or the house burnt down. It may even have been unwanted, as in the example about feeding the dog. Yet, looked at from the point of view of the person who incurred the expense, the intervention fell short of officious intermeddling. Lying behind these factual questions are the legal issues. What should be regarded as unofficious intervention? Should the law adopt a broad or narrow approach? Should the law ever permit recovery when the defendant has issued instructions not to intervene? To what extent is unjust enrichment an explanation for the cases in which necessitous

intervention has been adopted as a basis for liability? How should we measure recovery? Are we concerned with the expenditure incurred, the value of intervention, or the increase in the wealth of the defendant? Should the rules change if the intervener is a professional person who would normally do the work for reward? [page 291]

(b) Policy Considerations [805] Introduction. This chapter concerns situations which raise various, and often conflicting, policy concerns. In terms of the right to restitution, there is a principled reluctance to allow restitution for unrequested benefits.3 However, even here there is an ambivalence. If (contrary to our view) the reluctance is to be accommodated to the unjust enrichment concept, the policy does not make clear whether the defendant should not be regarded as enriched, or the defendant’s enrichment should not be regarded as unjust.4 In any event, this policy has to take account of the countervailing policies in favour of necessitous intervention. These may include grounds based upon unjust enrichment, but other factors are also involved, notably the need, in the public interest, to encourage certain types of intervention. [806] Affirmative duties in tort. Tort law provides analogies. In that realm, the law has generally refused to create a duty of affirmative action.5 As Deane J remarked in Jaensch v Coffey:6 The common law has neither recognised fault in the conduct of the feasting Dives nor embraced the embarrassing moral perception that he who has failed to feed the man dying from hunger has truly killed him … The common law duty to a ‘neighbour’ has … scant in common with its New Testament equivalent; both priest and Levite ensured performance of any common law duty of care to the stricken traveller when, by crossing to the other side of road, they avoided any risk of throwing up dust in his wounds.

The law has, however, been prepared to recognise that ‘danger invites rescue’,7 and to give the good Samaritan a right to recover damages for injuries suffered from the person whose negligence created

a plight calling for assistance. The leading Australian case is Chapman v Hearse,8 where a motorist whose negligence left him lying injured on the roadway was held to owe a duty of care to a person who attended him and was run down by a second motorist. It was held that the first driver should reasonably have foreseen that his negligence could lead to the attendance of ‘persons fulfilling a moral and social duty to render aid’.9 While cases like Chapman v Hearse proceed on the assumption that rescue is a commendable activity which is to be encouraged and not penalised, what distinguishes a case like Chapman from tort law’s general rejection of a ‘duty to rescue’ is the breach of a duty of care to avoid a reasonably foreseeable injury. This is a species of fault that creates a liability in damages. By contrast, this chapter is more concerned with identifying the principles whereby restitution of moneys outlaid or the value of services rendered can be recovered independent of fault. The good Samaritan, like the biblical counterpart, may incur expenditure. Unlike the biblical counterpart, he or she may intend initially or seek subsequently to be reimbursed. However, before leaving tort, we note that necessity may be a shield against actions for [page 292] trespass to the person or to property. For example, a person may tow away a vessel to save damage to his or her wharf.10 [807] Reasons for reluctance to countenance intervener’s claims. Interveners may provide services to the defendant, or pay others to do so. These may be in aid of the defendant’s person or the defendant’s property. For unrequested services, it is understandable why the law should be reluctant to countenance restitutionary claims. Unlike money, which is an unequivocal and measurable benefit, services cannot simply be restored. And their value to the recipient is both problematical and subjective. It is therefore thought to be unfair, as a general matter, to force individuals to pay for services which they

do not request or freely choose to accept.11 In the homely words of Pollock CB: ‘One cleans another’s shoes; what can the other do but put them on?’12 There is also concern that to permit recovery purely on the basis of benefit received might encourage meddlesome intervention in another’s affairs by persons who act malevolently or who seek to put an unwilling beneficiary in their debt.13 Unlike services, money is a clear benefit.14 But it is difficult to envisage situations where an unrequested payment to the defendant is retained by the defendant, except if it was a loan or gift or was paid by mistake or a third party’s improper pressure, factors which themselves provide grounds for restitution. However, a plaintiff may seek to pay money to a third party in an attempt to discharge the defendant’s indebtedness. In this area, the traditional reluctance to allow restitution has tended to focus upon the rather sterile issue of the formal discharge of the debt, and overreactive concern about the risk that the plaintiff may have acted in order to put the defendant in the plaintiff’s debt, rather than to serve the defendant’s interests.15

(c) Restitution and Unjust Enrichment [808] Restitution appropriate in particular cases. Some writers have challenged the validity of fear of officious intermeddling voiced in the cases referred to above.16 They argue that it is most unlikely that the great majority of interveners would be motivated by the goal of their own enrichment.17 There are certainly areas where unrequested assistance will be rewarded. The idea of forcing liabilities on people ‘behind their backs’, against which Bowen LJ railed in Falcke v Scottish Imperial Insurance Co,18 is merely emotive language for imposing them against their will, and the whole of the law of [page 293]

restitution is involved in this very task.19 In many areas the law has provided a non-contractual remedy for interveners who incurred expenditure or provided services without any contractual or other legal basis for an obligation to do so. In earlier times the common money counts of quantum meruit, quantum valebat and money paid were used for these purposes.20 These were also available for truly contractual claims, something that has been a source of past confusion.21 Just as some types of intervention are to be discouraged, others need to be encouraged. Many commentators have argued that the conferral of an appropriately limited right of reimbursement is the best way to do this.22 Another reason supporting recovery in some cases is the realisation that many situations involve two ‘innocent’ parties. The plaintiff may have acted intending to benefit X, who had requested P’s services, yet by mistake D may have been benefited. The plaintiff’s intervention is unofficious, and at least provided some real benefit (enrichment) is conferred, it may be thought unjust to refuse a right of reimbursement in those cases. [809] Limited relevance of unjust enrichment. The limited availability of restitution in the present state of the law is not currently rationalised on the basis of unjust enrichment. That itself presents a difficulty. In some contexts, quasi-contract has been adopted, although we may now see these as good illustrations of the modern concept of unjust enrichment. In other contexts, equitable or even proprietary remedies were sought.23 It is clear that unjust enrichment is not a sufficient explanation of a body of older case law that is still valid. Nevertheless, some cases of necessitous intervention are explicable on this basis,24 especially if the saving of a necessary expense is a benefit in this context.25 Equally, however, just as restitution is not a response to reliance per se,26 so intervention by incurring expenses in the hope of being remunerated cannot be a sufficient justification for a claim. In many cases the basis for the claim is expenditure incurred, or the rendering of services, with no end product. Indeed, there are cases where the intervention is unsuccessful. We nevertheless reject the view that services cannot count as a benefit simply on the basis that there is

no end product.27 Equally, we would deny that unsuccessful intervention can never be the subject of a claim. An analogy is where a professional person, such as a doctor or lawyer, with due care renders services which do not cure the disease or win the case. If the services were requested and accepted under an ineffective contract they would be remunerated under general principles. In other words, if unjust enrichment is an appropriate rationalisation, benefit is not necessarily determined by success. [page 294] [810] General principle rejecting restitution in favour of interveners. There are strong statements in the cases to the effect that a person who intervenes cannot expect to be reimbursed for expenditure incurred or any benefit conferred upon another without prior invitation. In a frequently cited dictum in Falcke v Scottish Imperial Insurance Co,28 Bowen LJ said:29 The general principle is, beyond all question, that work or labour done or money expended by one man to preserve or benefit the property of another do not according to English law create a lien upon the property saved or benefited, nor even, if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced on people behind their backs any more than you can confer a benefit upon a man against his will.

This statement was obiter, so far as rejecting a claim to reimbursement not amounting to a lien. Falcke was also a case in which the payer acted only to protect himself. Nevertheless, Bowen LJ’s statement reflects a sentiment that has been frequently applied.30 The reasons for this robust attitude are partly historical. So long as restitution was seen as based on an implied contract, absent fiction there could be no contract with a party who did not truly request the service. Alternative routes to reimbursement, via equitable or proprietary estoppel, required proof of encouragement or acquiescence by the party benefited before a remedy would be granted. Restitution is no longer based on implied contract, yet as a general principle it remains true that ‘a mere stranger cannot compel an owner of goods to

pay for a benefit bestowed upon him against his will’.31 Gibbs CJ asserted in Mahoney v McManus32 that ‘there is no principle of law which requires a person to contribute to an outlay merely because he has obtained a material benefit from it’. The Chief Justice’s ‘merely’ reflects Bowen LJ’s ‘if standing alone’. This chapter explores what more is required to generate a restitutionary response. In Lumbers v W Cook Builders Pty Ltd (in liq)33 the High Court recognised that salvage and other cases of necessitous intervention represent qualifications to the Falcke principle.

2. Summary of Principles [811] Introduction. We start by stating how the various claims are capable of being rationalised. The mere conferral of a benefit on D or someone for whom D has financial responsibility will never be enough to establish a restitutionary claim. But there is a body of cases which support the right of a person who intervenes without legal compulsion to assist another to [page 295] recover moneys reasonably outlaid, and (in some cases) to earn reasonable remuneration. Indeed, it is clear that with certain types of intervention, proof of benefit in the form of increase of wealth is unnecessary. Some claims have succeeded even if intervention saved the defendant an expense which the defendant was not legally obliged to meet.34 The rendering of some services is of such public utility that it needs to be encouraged even if the anticipated result does not eventuate. Thus, a doctor who tends an unconscious patient will not be deprived of remuneration merely because the patient dies. Likewise with a lawyer who loses the client’s case. Ultimately the right to reimbursement or recompense is correlative to something equivalent to a duty (albeit often moral) to intervene.35

In Mollgaard v Accident Rehabilitation and Compensation Insurance Corp36 Hammond J referred to five historically accepted elements for recovery for necessitous intervention: (1) impossibility of adequate communication between the parties; (2) circumstances of necessity; (3) an agent acting in the interests of the principal; (4) overall action by agent reasonable and prudent; (5) burden must not have been undertaken gratuitously. [812] Difficulty in identifying principles involved. The law is still groping for a unifying principle to identify the situations where a person who responds without invitation to an emergency and who incurs expenditure may be reimbursed for that expenditure, or even remunerated. The Roman law of negotiorum gestio, which allowed recovery of benefits conferred in cases of necessity, stressed the social utility of encouraging intervention. This is the hallmark of the European civil law systems which grew out of Roman law.37 A further rationale for imposing liability is the unjust enrichment often (but not invariably) conferred on the person benefited by the intervention where it would be against conscience to withhold reimbursement. Prior to their latest edition, Goff and Jones suggested that agency of necessity and the comparatively rare cases where necessitous intervention by a stranger has been recognised were united by the same principle whereby ‘one who intervenes on another’s behalf in an emergency should, within the limits indicated, be treated as though he had the authority of that person to intervene’.38 This, with respect, seemed to state the conclusion rather than its basis. Agency of necessity is, as Latham CJ pointed out in Burns Philp & Co Ltd v Gillespie Bros Pty Ltd,39 ‘only a convenient expression used in rationalising to some extent the rights and obligations which are created in certain circumstances of emergency’. Deemed authority is also a rationalisation. Like ‘substituted consent’ it is ‘semantic legerdemain’.40 [page 296]

[813] Unjust enrichment not a sufficient explanation. What is clear is that the concept of unjust enrichment does not necessarily provide the key that unlocks all or perhaps any of the ‘necessity’ cases.41 This is because the benefit conferred seems incidental to the justice of the plaintiff’s right to recovery. The principles of ‘free acceptance’42 have no application in this field. The cases in this field where recovery is allowed all reflect a public interest in encouraging potentially meritorious intervention that may go beyond the enrichment of the defendant. And in many of them the defendant is required to pay the plaintiff even if the intervention turned out to confer no actual benefit beyond the provision of services for which a fee would usually be charged.43 Professor Stoljar suggested that the notion of ‘unjust sacrifice’ provided a better underlying principle. A plaintiff is said to have made an unjust sacrifice when he or she has expended time or effort for the benefit of the defendant in circumstances in which the defendant should be obliged to pay the plaintiff for the intervention. In an unjust sacrifice claim the conferral of the benefit is incidental.44 [814] Officiously conferred ‘benefits’, unrequested benefits and professional interveners. There is a strong policy against allowing recovery of the value of officiously conferred ‘benefits’, especially if they were thrust upon the defendant without consent with the intent of putting the defendant in the plaintiff’s debt. Respect for personal autonomy and private property rights explain the law’s general unwillingness to force liabilities upon people behind their backs.45 In principle there is a clear distinction between an officiously conferred benefit and one that is merely unrequested. The former is both unrequested and also provided by a plaintiff who seeks to advance his or her own interests, rather than respond to the moral pressure of the defendant’s exigencies. As regards merely unrequested benefits, the policy against restitution remains,46 but it is weaker, particularly if the defendant has actually benefited in a measurable way, or if public policy ought clearly to encourage intervention by the plaintiff. The law of maritime salvage is an analogy, based as it ultimately is on recognising the need to encourage rescue by providing reward. In the

context of ineffective transactions, the concepts of acceptance and incontrovertible benefit may lead to restitution,47 thereby demonstrating that the absence of prior request need not be crucial. In some respects the law distinguishes between interveners who are members of a profession and those who are not.48 However, not all doctors who intervene will recover for their services rendered; and in exceptional [page 297] circumstances, lay persons may be recompensed (especially if they incur the cost of retaining professional help) in an emergency. [815] Accepted and incontrovertible benefits. Even an unrequested benefit may be the subject of a claim for restitution, if it has been accepted.49 The shoes example offered by Pollock CB in Taylor v Laird50 shows the difficulty in establishing acceptance, but it is not clear whether the problem is lack of enrichment or injustice. Absence of choice goes to injustice only if the law adopts an objective approach to benefit.51 [816] Necessity. Intervention must be ‘necessary’ and appropriate. In this context ‘necessity’ is broadly defined and has no fixed context. Drawing on older cases relating to agency of necessity, Lord Goff said in Re F52 that: … not only (1) must there be a necessity to act when it is not practicable to communicate with the assisted person, but also (2) the action taken must be such as a reasonable person would in all the circumstances take, acting in the best interests of the assisted person.

Despite Lord Goff’s first principle, there may be cases where communication is possible but the intransigence of the defendant to acknowledge the plaintiff’s right to take truly necessary action will lead to a successful restitutionary claim, at least where the defendant later seeks to take the benefit of the plaintiff’s intervention.53

For some services, necessity is easily established. These include appropriate medical attention for an unconscious patient, a child or a mentally disabled person. But where the lesser interest of property is involved, the defendant’s autonomy is highly regarded. The traditional fear of the officious intermeddler is at its strongest in relation to the unrequested payment of another’s debt, although even here there are signs of recognition of the rights of the person who is genuinely moved to relieve another’s distress, albeit without intention to make a gift. [817] The ‘proper’ intervener. Even when reasonable necessity calls for intervention, the plaintiff must not be an inappropriate Samaritan.54 If others with a closer relationship are available to respond then there will be no necessity for the plaintiff’s intervention. At least where property is involved, recovery should also be denied where the intervener failed to make reasonable attempts to communicate with the owner,55 or had reason to believe the [page 298] owner did not want the assistance proffered.56 Perhaps in this area benefit in the form of enrichment is essential. This would adopt the analogy of maritime salvage, and is consistent with succession law’s limiting the executor de son tort to recovery out of the assets of the estate. [818] Reasonable intervention. Naturally the benefit provided must do no more than respond to the exigency.57 The view of the hypothetical reasonable person, not the plaintiff, is definitive.58 Mere inconvenience does not create a necessity.59 Costs will not be reasonably incurred if they are excessive to the needs of the defendant or the person for whom the defendant was financially responsible. The circumstances and means of the person involved are relevant.60 In all matters the conduct of the intervener must have been reasonable and

must have been undertaken for the benefit of and in the best interests of the assisted person.61 [819] The intention of the intervener.62 A person who ‘as a matter of bounty’ pays the debts and funeral expenses of an estate, intending at the time not to seek recompense, cannot later seek payment when his or her personal circumstances changed.63 In Sergeant Saunders’s words,64 ‘it is not reasonable that one man should do another a kindness, and then charge him with a recompense: this would be obliging him whether he would or not, and bringing him under an obligation without his concurrence’. Nor should recompense be available to a person who was under a duty to supply the service gratuitously.65 A dictum of Griffith CJ supports the view that the onus rests on the defendant to show that there was no intention to be repaid at the time the necessary assistance was provided by a professional service-provider such as a solicitor.66 This accords with the Roman law analogy and the position of the true agent of necessity.67 Perhaps altruism should be presumed in relation to the non-professional, with an intention to charge being presumed in favour of the person who is in the profession or business of providing the [page 299] service involved.68 In preference to the position suggested by Griffith CJ and later advocated by Goff and Jones, we suggest that the ultimate question should be whether it is just to provide reimbursement in the final analysis. Obviously the intent of the plaintiff is relevant, but it should not be determinative unless there was a positive decision to provide a gratuitous service, unaffected by any relevant misconception. But assume there was no intention to seek reimbursement for valuable services because of the belief that the estate of the disabled person assisted would ultimately pass to the person making the payments. Assume that the disabled person recovered as a result of the assistance

and then made a will in favour of a third person. It is hardly just that such third person should be enriched by the receipt of an estate swollen by the beneficence of the plaintiff who provided valuable assistance during the lifetime of the disabled person.69 If, however, the only changed circumstance is that the plaintiff’s position took a turn for the worse,70 there is no unjust enrichment of the defendant consequential upon that. A useful analogy may be found in the cases involving contracts which fail to materialise,71 where the intention that the value of extraordinary work would be covered in the contract price is not fatal to restitutionary recovery. In the present area there is support for this approach in Re Clabbon,72 where guardians of the poor supplied necessaries to an infant (obviously with charitable intent). When the infant later became entitled to a substantial legacy the guardians sued for recompense and were successful. Farwell J could not agree ‘that a pauper who takes that relief in the shape of necessaries which keep him alive, takes that relief so entirely of right, that he is not under a legal liability to pay if he afterwards comes into money’.73 An intervener who contributed to the emergency in breach of a contractual or tortious obligation will not qualify for restitution.74 [820] Measurement of recovery. Unlike many restitutionary contexts, the measure of recovery in the class of cases discussed in this chapter should not necessarily depend upon the value of the benefit conferred upon the defendant. The comatose patient who is treated may die. If the plaintiff’s unjust sacrifice is the touchstone of liability, not the defendant’s unjust enrichment, then some other measure is called for.75 But in relation to intervention to save property, the common law should perhaps follow maritime salvage law’s policy of ‘no cure, no pay’. [page 300] So long as plaintiffs seek only to recover moneys which they have

reasonably outlaid in circumstances giving rise to a claim recognised by the law there is little difficulty. It is hard to conceive of circumstances where recompense should be denied. If transporting a sick patient to a distant hospital, or building an expensive headstone was an unreasonable response to the relevant necessity, such excessive expenditure will be irrecoverable simply because the plaintiff falls outside the general principles discussed above. The law’s usual way of measuring the value of services is to determine what they would cost if freely ordered and reasonably charged for. The need to show ‘necessity’ for intervention is a further check upon greedy exploitation. The law of maritime salvage encourages certain types of subvention by remunerating those who respond to need (at least if successful).76 We have argued that such a measure of recovery should be permitted where it can be shown that, without such reward, others might be deterred from assisting in like cases in the future. Professor Honoré has suggested that it is relevant to consider the gravity of the peril, the chances of successful intervention, the attitude of the victim, and the likelihood that another better-qualified rescuer will act.77 We agree, and also adopt his reasons: ‘the rescue[e] benefits from being saved, and even if he is compelled to compensate the rescuer he will be, by and large, better off’.78 Having said this, we consider that reward by way of remuneration should be exceptional. It is difficult to see how it could ever exceed the value of the property preserved, although there is no such measure where services are provided in preservation of life and health.79

3. From ‘Agency of Necessity’ to ‘Necessitous Intervention’ [821] Agency of necessity. Many of the older cases have been discussed under the rubric ‘agency of necessity’. Most of them involved parties in an existing relationship of agency or bailment, where the agent or bailee took some action in an emergency which, unless ‘authorised’ by application of the fiction of agency of necessity, would

have constituted a tort or exposed the agent or bailee to liability for having pledged the principal’s credit without authority. The general principle is that the ‘agent’ is protected from personal liability provided it was impracticable to communicate with the principal, the action taken was necessary for the benefit of the principal, and the agent acted bona fide in the interests of the party involved.80 Many of these cases involved shipmasters who were driven to sell or hypothecate the ship or its [page 301] cargo in the era before instant communication. The general principles are discussed in Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd.81 The doctrine has been extended to cover land carriers and bailees, but apparently subject to strict restraints.82 Such ‘agents of necessity’ were entitled to reimbursement for expenditure properly incurred, this being a correlative right flowing from the ‘agency’ otherwise established by the doctrine.83 [822] Relevance to restitution. These cases may be noted, but they are not directly relevant to a work on restitution, where no question of defending a claim in tort or contract or seeking to make a third party liable in contract arises, and where the basis of liability to reimbursement or other relief is not contractual or an incident of an existing agency or bailment relationship. Nevertheless, in several of the leading cases discussed herein which impose liability in the absence of a relevant pre-existing relationship, the courts have drawn the applicable doctrine from these agency of necessity cases.84 To the extent that restitutionary principles create other bases of liability flowing from what scholars have termed ‘necessitous intervention’, the cases may assist in identifying when a genuine necessity arises, although the House of Lords has warned that the common law strictures for establishing an agency of necessity may not necessarily apply if the issue is one of reimbursement.85

There is a small group of cases where the right of reimbursement cannot possibly derive from a pre-existing relationship. In them, there was no contract or the contract entirely failed to address the emergency issue triggering the restitutionary claim. Some of the older cases in this group were labelled under the rubric of agency of necessity. In others,86 attempts were made to unify all of the ‘agency of necessity’ cases under a basic principle of necessity. For these reasons, ‘agency of necessity’ may be a useful tool at least as a signpost when delving into old digests and textbooks. [823] Necessitous intervention. The main impetus for seeing this ragbag of cases as reflecting a rough-hewn unity to be classified under a heading such as ‘necessitous intervention’ has come from the text writers.87 They in turn have encouraged judges to see analogies and underlying principles in a range [page 302] of apparently diverse authorities. Some writers, however, argue vigorously that the search for a broad principle is misconceived and doomed.88 The judgment of Latham CJ in Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd89 is a landmark in this area, all the more so because it predates much of the academic writing. He stressed the noncontractual nature of the agency of necessity cases and pointed out that the phrase ‘agent of necessity’ was ‘only a convenient expression used in rationalising to some extent the rights and obligations which are created in certain circumstances of emergency’. He demonstrated that the deserted wife’s ‘agency’ (in appropriate cases) may apply even if expressly repudiated by the husband, and that one class of agent of necessity (the master of a ship) has not only a power but a duty to act in certain circumstances in such manner as may be best. In view of these factors, he concluded that ‘the phrases of the law of agency are used to describe, not the means of constituting the relationship … but

the result which follows from the … relationship in certain circumstances of necessity’. More recently, the House of Lords in China-Pacific SA v Food Corp of India (The Winson)90 suggested that the term ‘agent of necessity’ should be confined to contexts in which the issue is whether a contractual relationship has been established. The reason given was that all of the strictures which the common law requires before an agency of necessity arises may not necessarily apply if the issue is one of reimbursement.91 This important reservation points to the truly restitutionary aspect of the doctrine in the reimbursement category. It also opens the way more plainly than before to the amalgamation of principles drawing on the disparate range of cases of ‘necessitous intervention’ when contractual issues are not involved. Although the House of Lords proceeded to find liability along contractual lines in the case before it, they expressed no disagreement with the approach suggested by Lloyd J at first instance where he would have granted a restitutionary claim ‘for the defendants have undoubtedly obtained a benefit at the plaintiff’s expense, and, in the circumstances, it is unjust that they should retain that benefit without compensation’.92 Indeed, Lord Diplock, with whom the other Law Lords concurred, cited with approval the Scottish case of Garriock v Walker.93 In that case a cargo owner was held liable to reimburse his bailee for expenses incurred in preserving a wasting cargo. The owner was available to give instructions, but declined to do so. The owner took the position that the bailee was responsible, and that any expenditure incurred was at the bailee’s expense. The bailee acted to the best of his discretion and saved the cargo. For this he was allowed recovery of his expenses for ‘he took the benefit of [the steps taken by the bailee] by taking delivery of the cargo thus preserved at the conclusion of the voyage’.94 These statements of principle in China-Pacific have been accepted in Australia.95 [page 303]

[824] Emergency assistance doctrine. In the United States a doctrine is developing (the ‘emergency assistance’ doctrine) whereby a person who provides certain types of valuable assistance which relieves another in an emergency may recover even if the party benefited had something less than a legally enforceable duty in the matter. Thus, in Peninsular & Oriental Steam Navigation Co v Overseas Oil Carriers Inc96 the owners of the SS Canberra recovered the cost of diverting its course in response to a radio message seeking medical assistance for a crewman of another ship suffering a heart attack.

4. Intervention to Protect Life or Health of Another (a) Medical Services [825] Introduction. The law gives the highest protection to human life and wellbeing. Statute and common law encourage accessibility to medical assistance from competent persons, and recognise that, in an emergency, the consent of the patient or the patient’s guardian may not be available. [826] Public interest. The public interest in encouraging intervention of this kind favours recompensing expenditure and remunerating the professional who performs appropriate services directed to the interests of the assisted person.97 But if the services are unwanted then it is not clear why the law should allow them to be remunerated in the absence of statute. In the third edition of their work, Goff and Jones argued that the doctor who treats an unconscious person who is believed not to want the service should still get recovery on the basis that the preservation of life is so important that the courts should encourage intervention in all circumstances.98 This stance is significantly modified in the current edition.99 In Malette v Shulman100 damages were awarded to a Jehovah’s Witness for blood transfusion administered to her while unconscious in the teeth of a written request

(found on her person) not to be transfused. If the comatose state of the patient means that the rescuer or doctor does not know for certain that the intervention is unwanted, the public interest favours intervention. If, however, the patient (being competent) declined the assistance when conscious, then we would strongly disagree with any suggestion that (absent statute) intervention would be authorised or should be rewarded. [page 304] Five Justices of the High Court101 have approved the ‘principle of personal inviolability’ echoed in the following statement of Cardozo J in Schloendorff v Society of New York Hospital:102 Every human being of adult years and sound mind has a right to determine what shall be done with his own body; and a surgeon who performs an operation without his patient’s consent commits an assault for which he is liable in damages.

In an individualistic age where suicide is to many not a moral wrong, it may be that the patient’s liberty should prevail at least to the extent that he or she does not have to pay for unwanted attention.103 [827] Rescue and the provision of medical services. The law of torts now readily recognises that ‘danger invites rescue’.104 Early attempts to treat rescuers as ‘volunteers’ have been swept aside: the person whose negligence put another at risk (whether the victim or a third party) may be liable to compensate a rescuer who is injured.105 The law also recognises the need to offer some degree of protection to the surgeon who encounters an unanticipated emergency in the course of a routine operation. For example, the doctor who exceeds a prior consent will escape liability for assault if the steps taken are ‘necessary to save the life or preserve the health of the patient’.106 As McHugh J put it in Secretary, Department of Health & Community Services v JWB & SMB (Marion’s Case):107 Consent is not necessary, however, where a surgical procedure or medical treatment must be performed in an emergency and the patient does not have the capacity to

consent and no legally authorised representative is available to give consent on his or her behalf.

Statute may provide justification.108 There are very few cases dealing with the right to reimbursement or remuneration of the rescuer or person who provides vital medical services.109 This is not surprising given that Good Samaritans frequently seek no reward or, if they do, may often be paid. It is doubtful that even a doctor has a legal duty at common law to provide treatment,110 although a New South Wales decision has held that there is [page 305] sufficient proximity to render a doctor subject to a duty of care in some situations.111 If the doctor’s obligation is problematical, and if it is clear that the non-professional has no duty to assist, there is a public interest in encouraging appropriate and disinterested intervention. For the nonprofessional that will usually be the summoning of aid from the professional. Where the issue does arise it will be because the participants gave no thought to entering a contractual relationship, or because this may have been precluded by the minority or unconsciousness of the person in distress or needing medical attention. The fact that a third party may have summoned the medical assistance is usually irrelevant, because a humane public policy encourages the summoning by others of medical aid for those who may be stricken and unable to act for themselves, without fear or hindrance that they might incur personal liability.112 The question may also arise because the person who provides the benefit may look to a third party, such as a parent, for recompense for the service provided.113 Recovery of expenses is permitted114 as well as remuneration in an appropriate case.115 Recovery of expenses may be claimed where someone has charge of a

sick person, because the right to recover expenses incurred is correlative to the duty to care for that person.116 But sometimes, in emergency situations at least, recovery of expenses and remuneration will be permitted even where there is no prior relationship. In Matheson v Smiley,117 a surgeon recovered remuneration from the estate of a suicide whom he unsuccessfully attempted to revive. In recording that ‘the common law takes notice of such emergencies and declares to be a duty what is almost invariably done upon human impulse’,118 the court recognised that recovery in the absence of a request was dependent upon the service being performed in circumstances amounting to a moral duty which created the necessity for action. The patient’s need for urgent medical services was seen as a specific example of ‘necessaries’ the supply of which to persons unable to contract119 may create a restitutionary obligation. [page 306] [828] Instructions not to render medical services. There is, however, other Canadian authority which suggests that the medical practitioner will be denied restitution if the medical services are rendered in the teeth of a sane patient’s instructions.120 This must be correct, otherwise the law would deny the right of every adult of sound mind to determine what shall be done with his or her own body.121 Nor can the practitioner necessarily expect recovery for services rendered, even to an unconscious person, where immediate attention is not required and free ambulance and medical attention is available.122 [829] Non-professional rescuer. It is not so clear whether a nonprofessional rescuer can recover any reward in circumstances that would justify recovery by a professional.123 The rescuer who is not a professional would usually not have an intention to seek remuneration for the emergency service. There is authority in an analogous area that this would be fatal to a claim for remuneration and perhaps even reimbursement for expense reasonably incurred.124 It has been said

that any other rule would be an affront to ‘the kindest and best effusions of the heart, to suffer them afterwards to be prevented by sordid avarice’.125 To many, virtue should be its own reward. However, it would be unfortunate if the law were never prepared to reimburse or even, in a deserving case, to reward. Salvors are rewarded for property salvage in maritime law (so long as something is ultimately saved) simply because this is seen to be just,126 and so too in some instances of carriage by land.127 The public interest in encouraging subvention should be greater where life and health is concerned, especially as regards the non-professional who is under no legal duty to provide assistance. If, in Matheson v Smiley,128 the friends of the suicide who called in the doctor had paid him, they at least should have been able to recover their outlay from the estate. American law favours recovery in those circumstances.129 And the fact that a victim can sometimes recover the reasonable value of material and other assistance gratuitously provided by family and friends (without indeed having to account for it) may reinforce the justice of allowing direct recovery.130 Some who seek to confine or distinguish the principle seen to be [page 307] derived from Falcke v Scottish Imperial Insurance Co131 point to the fact that the payment in that case was made in pursuit of self-interest rather than altruism, regarding this as an additional explanation for denying recovery.132 We agree with Professor Honoré:133 There is no neutrality. If the law does not encourage rescue, it is sure to discourage it. If it does not compensate, it will indirectly penalise. If the rescuer who suffers injury or incurs expense or simply expends his skill goes without compensation, the law, so far as it influences conduct at all, is discouraging rescue.

(b) Supply of Necessaries Without Request [830]

Introduction. Here we deal with the situation where a person

supplies necessary goods or services (‘necessaries’) to someone in need who lacked legal capacity to contract for them. However, we note at the outset our reservations as to whether proof of incapacity is truly necessary. Although the authorities134 equate the position of the person who requests with the one who does not, and thereby place emphasis on the incapacity, the cases involving preservation of life and health135 suggest that it is the necessity as such which provides the basis for recovery (in favour of the non-officious intervener). The incapacity provides the occasion for non-contractual analysis and the reason why protest at receipt is not fatal: it is not the true basis for recovery. Prior to the sale of goods legislation in relation to the supply of necessary goods, the balance of authority was in favour of a quasi-contractual liability to pay for necessaries, to be realised from and (limited by) the incompetent’s own property.136 [831] Supply to mentally incompetent person. The sale of goods legislation recognises the obligation of the mentally incapacitated to pay a reasonable price for ‘necessaries’ supplied.137 Even without statutory assistance, a person who supplies necessary services to a mentally disabled person is entitled to recover their value in a restitutionary claim.138 In the leading English case of Re Rhodes,139 the principle is stated, but the claim failed because the plaintiffs could not establish that they intended ever to be repaid. Members of the family of a woman of unsound mind topped up her own income to pay the expenses of a private asylum. They did this for several years, making no claim on the woman during her lifetime and keeping no accounts of the exact moneys paid. It was held that this showed [page 308] that there was no intention to be repaid, and for this reason the claim failed. Goff and Jones suggest140 that the onus should have been reversed, on the analogy of Roman law and the situation of an agent of

necessity. Although this may be the position in Australian law,141 we think it should not, for reasons already discussed.142 In the unusual Canadian case of Samilo v Phillips,143 a son negotiated with the Income Tax Department to reduce the taxes, fines and penalties imposed on his father who had retired from the family business following a paralysing stroke. To protect the father in his last illness the son did not tell his father of the substantial payments made out of his own pocket, which payments were able to be reimbursed by application of the principle of necessitous intervention after the father’s death. In a proper case reimbursement is available whether the necessaries were supplied at the request of a legally incompetent recipient,144 or simply because the intervener perceived the necessity to do so. There is disagreement amongst the Australian authorities as to whether these principles operate in favour of the Crown.145 [832] Supply to intoxicated person. Similarly, emergency medical assistance or other essential intervention in favour of someone who is so intoxicated as to be unable validly to seek necessary assistance is recompensable. In West Ham Union v Pearson,146 Fry LJ found for the plaintiff ‘simply upon the common law liability on the part of the defendant to repay the expenses necessarily incurred for the benefit of the defendant himself’. [833] Supply to minor. The same principle applies with minors who lack capacity to contract for ‘necessaries’, with recovery available (except in New South Wales) against the minor.147 The noncontractual basis of liability was recognised even when many other areas of ‘restitution law’ were still blinkered by contract. In Nash v Inman,148 Fletcher Moulton LJ said:149 [T]he real foundation is an obligation which the law imposes on the infant to make a fair payment in respect of needs satisfied. In other words the obligation arises re and not consensu.

[page 309]

No doubt the assistance must not be officious and must come from an appropriate source in circumstances where there is no intention simply to make ‘bounteous gifts’.150

5. Preservation of Property [834] Introduction. Property is at once distinguishable from human welfare because harm or risk to it seldom enlivens any legal or moral obligation to intervene. In this area ‘P’s preservation of D’s property thus exposes P’s intervention at its most voluntary or unsolicited; it is an intervention always bordering on the officious’.151 Yet the frequent repetition of the ‘general principle’ of non-recovery stated by Bowen LJ in Falcke v Scottish Imperial Insurance Co152 has both impeded and clouded the development of the law outside of the field of maritime salvage. [835] Influence of Falcke v Scottish Imperial Insurance Co. Despite the careful language used,153 Bowen LJ’s dictum in Falcke v Scottish Imperial Insurance Co154 has been seen by some to deny even the unsecured obligation to repay expenditure incurred for the purpose of protecting another’s property. Salvage on land is to be unrewarded unless it has been rendered at the invitation, express or implied, of the owner. This stringent view is supported by two much criticised English decisions which reflect a now discredited search for an implied agreement as the basis of a restitutionary claim,155 and many dicta.156 There appear to be no English or Australian cases establishing the right of a stranger with no previous relationship with the defendant whose property was saved, to be remunerated or even reimbursed expenses. But neither has such a claim been conclusively rejected in Australian law157 and there is support for such a position in the recently issued Third Restatement158 as well as pockets of Anglo-Australian law discussed below.159 It must also be recognised that Falcke v Scottish Imperial Insurance Co160 involved an asserted lien, because it was an unsuccessful claim by a mortgagor

[page 310] to priority over his mortgagee, based on payments of premiums made by the mortgagor to keep on foot a policy which would otherwise have been lost. The idea that such action, even by a stranger, could lead to loss of the true owner’s title has been consistently rejected for understandable reasons.161 They include the difficulty which the owner would be placed in if required to tender an uncertain amount in order to recover the goods,162 although this problem also faces the owner of goods which are distrained damage feasant.163 [836] Critique of the reasons said to justify the stringent approach. Four main reasons have been offered in support of the stringent approach suggested in the English cases. One of them is specific to finders or rescuers of goods, and three are of a more general nature. The specific one is the concern that owners need to be protected from ‘the wilful attempts of ill-designing people’ who might put their goods at risk in order that they might be paid for the easy task of finding or rescuing them.164 This seems to represent a case for caution, but not a justification for an absolute rule denying restitution.165 Of the three more general reasons, the first (conceptual) one required evidence of request in order to ground quasi-contractual recovery,166 and on that account may now be discarded, because restitution law is freed of such contractual shackles. The second (related to the first) stresses the absence of choice which the plaintiff presented to the owner. ‘One cleans another’s shoes; what can the other do but put them on?’167 The third (which narrowly conceives of restitution as confined to reversing unjust enrichment)168 is based on concern that not every rescue attempt confers a benefit. But as much can be said of many situations addressed in this chapter. More to the point, unjust enrichment is not the universal touchstone of liability for necessitous intervention.169 Until recently there was a consistent rejection of the analogy of

maritime salvage, explicable if not justifiable on the basis that salvage gives rise to a right in rem.170 Recent decisions have shown greater readiness to equate carriers on land with those at sea where there has been an undoubted benefit at P’s expense and where it would be unjust to leave P without restitution.171 [page 311] It is now clearly recognised that there are numerous areas within the (non-maritime) law of restitution where recovery is based on a policy of encouraging intervention to protect life, limb and (to a degree) property. There is also, in this particular area at least, often a real benefit conferred unofficiously in circumstances which make it reasonable, as events have turned out, that the plaintiff should be recompensed for reasonable expenditure, if not necessarily remunerated. Several examples appear in this chapter. [837] Possibility of restitution acknowledged. An early but much discussed case is Nicholson v Chapman,172 which was decided by Eyre CJ in 1793. Timber belonging to the plaintiff was placed in a dock on the banks of the Thames. It later floated loose and came to rest at low water mark on a towing path. Because it obstructed that path the defendant was instructed on behalf of the landowner to remove it to a place of safety. The defendant later refused to deliver up the timber to the plaintiff except upon payment of a sum for his services which was held to be excessive. The plaintiff successfully sued in trover for the conversion of his timber. The maritime salvage cases were held inapplicable and the services performed by the defendant did not establish any possessory lien or other right in the timber to deny the owner’s title. Eyre CJ contemplated that the owner’s moral duty to pay reasonable ‘recompense’ might lead to recognition in a court of justice, although he ultimately left the question open. One example about which Eyre CJ speculated was the situation of a good natured man who took care of a stray horse until, at some trouble

and expense, he found the owner.173 A not dissimilar case arose in Great Northern Railway Co v Swaffield,174 where the plaintiff railway company was delivering a horse on behalf of the defendant. On arrival at the station late at night there was no-one to meet it and, since there was nowhere on the railway premises to keep the horse pending delivery, the station master sent it to a livery stable. The plaintiff was held entitled to recover from the defendant its reasonable expenses incurred when the defendant declined to pick up the horse without the plaintiff first paying the livery charges. The plaintiff (at least initially) had no choice but to have the horse stabled at the livery because it would have been improper and dangerous to leave it at large. He was ‘bound, from ordinary feelings of humanity, to keep the horse safely and feed him’.175 Two of the Barons of Exchequer drew support from the analogous situation of the shipmaster who, by virtue of necessity, is entitled to act for the safety of a cargo in an emergency, with a correlative right to charge the cargo owner with expenses properly incurred in so doing.176 In several jurisdictions, courts have recognised that persons acting under police direction or authority to remove and store a vehicle belonging to [page 312] another might in extreme cases have a restitutionary claim against the owner, although ‘necessity’ was not established to the satisfaction of the court in the particular cases.177 [838] Bailment and other relationships of privity. Great Northern Railway Co v Swaffield178 and the cases which followed it all involved a pre-existing bailment or contractual relationship where the steps taken to preserve the property of the owner involved the taking of steps to meet an unforeseen situation. One finds statements in later cases that the existence of such a pre-existing relationship is critical,179 but they are unpersuasive.

Such views are difficult to accept because the terms of the preexisting relationship gave no authority for the expenditure to be incurred, and the invocation of the notion of agency of necessity was really a conclusion for a result reached by other means.180 Indeed, the defendant in Great Northern Railway v Swaffield181 seems to have at all times denied the railway company’s right to have his horse looked after, although he stood by and did nothing himself to protect its welfare. In China Pacific SA v Food Corp of India (The Winson),182 Lord Diplock drew attention to a Scots case,183 where the significant fact was that the cargo owner did not acquiesce in the steps taken to preserve the goods, although he was on the spot and aware of them. ‘Nevertheless [in Lord Diplock’s words] he took the benefit of them by taking delivery of the cargo thus preserved at the conclusion of the voyage’, this at least being sufficient to render him liable for the expenditure. These arguments and the stream of English obiter dicta favouring recovery in some situations suggest that there may be situations justifying a right to reimbursement in circumstances where a strict agency of necessity would not arise to authorise the bailee to dispose of the goods.184 More importantly, earlier attempts to deny categorically all claims for restitution involving the protection of property on land appear unprincipled, a fortiori when the analogies of the other types of necessitous intervention cases discussed in this chapter and nonEnglish overseas cases are taken into account.185 [page 313] [839] Liens to prioritise rights of remuneration. In a number of situations courts have recognised or crafted a lien over a fund to generate or protect the right to remuneration of the person whose sometimes uncontracted yet essential work has contributed to its creation. The basal principle appears to be that ‘[i]t is right that they who get the benefit of the recovery of money should bear the expense of recovering it’.186

Thus, a solicitor may have a particular lien over any property recovered or judgment obtained by his or her work.187 And a liquidator or similar officer of the court may obtain an equitable lien or charge over a fund, ranking in priority to even the interests of a secured creditor, if the fund was created by the liquidator’s efforts in the winding up. This lien or charge will secure the right to recover costs, expenses and remuneration.188 These officers may have no person against whom to assert a contractual or even restitutionary basis for recompense. Yet public policy supports the need for their reasonable efforts to be encouraged,189 at least when a real benefit in the form of realised assets190 has been generated. [840] Direct claims in personam. The right of a person intervening in good faith to protect another’s property to recover suitable remuneration in personam has been recognised in Canada,191 Ireland192 and the United States.193 There are also High Court of Australia dicta adverting to the possibility of such a claim.194 Many of the American cases involve the preservation of the property of a deceased person, usually at the request of the deceased’s relatives, pending the appointment of a personal representative.195 Succession law also recognises the right of the executor de son tort (a volunteer par excellence) to recoup legitimate expenses such as funeral expenses and debts in due course of administration.196 (The authorities contradict one aspect of the reasoning [page 314] in cases such as Re Cleadon Trust Ltd,197 because they involve an unratified request by a technical stranger to the ultimate defendant.) Lord Goddard CJ countenanced a right of recovery in lengthy dicta in Sachs v Miklos,198 although he stressed the need to show that there was a ‘real emergency’ such as a case where there were perishable goods or livestock or where an involuntary bailee had no means to look after another’s property.

In our view, the distinction between a gratuitous bailee who is unable to get proper instructions199 and a stranger should be irrelevant to the justice of a claim for reimbursement of expenses or remuneration if unofficious intervention saves property from destruction. Where there is an incontrovertible benefit, either in the form of a realisable financial gain200 or the saving of an expense that would otherwise have been occurred,201 there should in principle be a right of recovery in favour of the intervener who ‘preserves’ property by saving it from destruction.202 Where, however, the benefit involves something less than the preservation of the goods, P should fail on account of officiousness unless the equities of P’s claim are more compelling than D’s plea that it did not request or freely accept the services.203

6. Fulfilment of Another’s Duty (a) Preservation of Credit and Payment of Another’s Debt [841] Introduction. We now move to an even more controversial area, namely the circumstances in which a person (P) who pays another’s (D’s) debt to X may obtain reimbursement from D. What distinguishes these cases from those dealt with in Chapter 6 is the fact that P acted otherwise than under any actual or threatened legal compulsion. Naturally it is assumed that a contractual right of reimbursement is absent. Intervention here may have been motivated by a range of factors spanning from disinterested charity to conscious self-interest. Where P intervenes to pay D’s debt in an attempt to assist D or to save D’s commercial credit, this will often confer a real benefit even if the later imposition of a restitutionary obligation on D leaves D no better off than he or she would have been prior to the intervention.204 After all, P could

[page 315] have procured the assignment of D’s debt and thereby become D’s creditor. Nevertheless, fear of officious intervention and the questionable application of technical rules about the discharge of debts paid by strangers has left the law in this area fairly unclear,205 the onus being upon the plaintiff to plead and prove the basis for any restitutionary liability.206 [842] Payment by request and adopted payment. Where the payment is made at the defendant’s request, there could be an express or implied contract to reimburse. Absent contract or an intention to make a gift, restitution deriving from the count for money paid will lie.207 The plaintiff does not have to establish more than the request.208 And if an unauthorised payment is adopted or ratified, a restitutionary claim will also be available.209 [843] Payment without request. There have always been some cases where P could recover, even in the absence of contract, request or compulsion. In Alexander v Vane,210 P & D went to X’s shop where D placed an order. P told X that if D did not pay, he (P) would. This was not done at D’s request. D defaulted and P paid the debt, although the guarantee was unenforceable for want of writing. P succeeded in his claim against D for ‘although he was under no obligation to pay it, and had entered into no contract which bound him to do so, he had nevertheless made an engagement which bound him in point of honour’ to X.211 [844] Acceptance of bill of exchange. A person may, without prior request, accept a bill of exchange for the honour of the drawer. That person must not already be liable as a party to the bill, the bill must have been protested for dishonour by non-acceptance or for better security, and the acceptor for honour must have the consent of the holder.212 If the acceptor for honour is ultimately required to pay the bill, he or she is subrogated to the rights and duties of the holder with

respect to the party for whose honour payment is made and all parties liable to that party.213 ‘Thus, even [page 316] though the party whose liability has been discharged by the payment did not request this kindly intervention, an obligation to reimburse the intervener is imposed.’214 This was acknowledged as an instance of necessitous intervention as long ago as 1841, but it was said to be an exceptional category.215 [845] Apparent rejection of all unrequested or uncompelled claims. The English cases show a general reluctance in the courts to allow reimbursement to a third party who pays another’s debt other than on request or under legal compulsion.216 Some of them illustrate the undoubtedly correct proposition that the bare fact of conferral of a benefit will not establish an entitlement to restitution.217 Others are more problematical. In Hawtayne v Bourne,218 the manager of a mine borrowed money from a bank in order to pay labourers who had obtained warrants to distrain assets of the mine for unpaid wages. The agent did not have the authority of the mining company to borrow for this seemingly vital expenditure and the company denied its indebtedness to the bank when sued. A strong Court of Exchequer held it to have been a misdirection for the trial judge to have directed the jury that if it had become absolutely necessary to raise money to preserve the property of the principal the law would imply an authority to do so to the extent of that necessity. The only exceptions conceded were the shipmaster’s agency of necessity and the acceptor of a bill of exchange for the honour of the drawer.219 Re Cleadon Trust Ltd220 further illustrates this reluctance in the present context. A company had guaranteed the liabilities of its two subsidiaries. Each of the three companies had a common secretary and two directors. At the request of the secretary, and with the approval of

the other director, the second director (P) paid money to discharge these liabilities. P expected that the company whose debt was discharged with his money would reimburse him, and a resolution purporting to confirm P’s advance was passed. This resolution was, however, held invalid because the articles required a quorum [page 317] of two and P was unable to vote in respect of any contract in which he was interested. When the three companies went into liquidation P sought to prove for his debt but his claim was rejected by a majority of the English Court of Appeal. Because P was held to be under no legal compulsion to make the advance, and did so without the effective request (or subsequent ratification) of the debtor that was benefited, P was unable to recover. Falcke v Scottish Imperial Insurance Co221 was cited. [846] Doubtful justifications. What is the justification for this line of cases? Re Cleadon Trust Ltd222 and several other English cases are strongly influenced by the failure to find evidence of the consent of the benefited debtor. Yet it is hard to see the relevance of this now that restitutionary theory is once again freed of a false contractual gloss. Supporters of the ‘free acceptance’ concept223 are probably no better placed. Then it is said that such interveners are mere ‘volunteers’. This is a classical way of denying restitutionary recovery without necessarily giving a clear reason for doing so, and its unhelpful use in other contexts has been noted.224 Alternatively, there is concern that the plaintiff may, by paying, become the defendant’s creditor. Thus, in Exall v Partridge,225 Lord Kenyon CJ said:226 It has been said, that where one person is benefited by the payment of money by another, the law raises an assumpsit against the former; but that I deny: if that were so,

and I owed a sum of money to a friend, and an enemy chose to pay that debt, the latter might convert himself into my debtor, [sic, obviously creditor] nolens volens.

Of course, a person may become another’s creditor, by assignment, ‘nolens volens’, but perhaps the friendly creditor of whom Lord Kenyon spoke would decline to assign if he or she thought that the assignee would oppress the debtor. In one sense, the recognition of any restitutionary obligation has an element of something imposed on the obligor. [847] Whether debt must be discharged.227 The payment of another’s debt does not discharge it unless made on behalf of the debtor and with the debtor’s authority.228 But it is not self-evident why this should be the [page 318] touchstone of the non-officious payer’s right to restitution. The High Court has pointed out that later proceedings by the creditor against the debtor would be regarded as an abuse of process.229 As a practical matter, the debtor would benefit if only because the option of ratification is provided. We have criticised elsewhere Goff and Jones’s refusal to see the payment of an undischarged debt as a benefit.230 If compulsion or (presumably) mistake231 will allow the payer to obtain reimbursement from the debtor who has received the benefit of P’s payment, so long as that debtor chooses not to repudiate such benefit, it is hard to see why the unofficious payment of another’s debt by someone who does not intend to make an out and out gift should be any different. If D, upon learning of P’s intervention, has some particular objection to becoming P’s debtor (through a restitutionary claim), and chooses to repudiate the benefit of the P’s payment, D will continue to owe the original creditor. Absent this, there is in our view a sufficient ‘benefit’ to ground a restitutionary claim invoking the unjust enrichment concept. Alternatively, D’s conscience is bound by the knowledge that the payer made the payment not as a gift, but with the

intention of being repaid.232 In a real sense D has exercised an election to adopt the benefit of the payment.233 The case is distinguishable from the classic example of A cleaning B’s shoes without request. There D has no opportunity of exercising any option to reject the benefit of the service. But with a money payment there is a practical and ascertainable benefit.234 The real question should be whether P’s payment was so officious as to deprive P of the right to recover. An intervener who, acting in his or her own interest, pays off another’s secured debt is usually entitled to reimbursement from the debtor by standing in the former creditor’s shoes.235 It has recently been held by the Supreme Court of New South Wales that these principles should be confined to secured debts236 although there are contrary decisions in the Federal Court of Australia.237 The distinction is unsupportable in principle. In our view, it’s illogical that a person who intervenes in good faith to protect the [page 319] debtor’s position should be worse off merely by reference to the debt being unsecured or for necessaries. The rule, if it exists, that denies a right of reimbursement has been soundly criticised as being inconsistent with an unjust enrichment concept reinforced by the analogies discussed in this chapter.238 Provided the assistance has not been officious and the debtor is not prejudiced by the substitution of a new creditor, it is unjust that the debtor should be enriched at the intervener’s expense. A benefit should be considered as conferred unless subsequent events indicate that the creditor does not accept or act on the view that the debt is discharged. Dicta in Owen v Tate239 suggest that the law is moving towards that position, although the result in the case is difficult to understand. Perhaps the debtor is protected sufficiently if the rule is that the unexplained failure to contact the debtor and discover the debtor’s lack of consent will be fatal to a right of reimbursement.

Payment of another’s debt under practical compulsion where the payer is moved by a charitable impulse to provide temporary assistance to the debtor or by misapprehension about the legal or factual circumstances affecting recoupment240 should, in principle, ground a claim in restitution from the debtor benefited unless the debtor chooses to take steps to repudiate the transaction, thereby triggering P’s right to recover from the recipient on the ground of failure of basis (not that we are suggesting that this should be the limit of restitution).241

(b) Situations Where There Is a Positive Public Interest [848] Introduction. In several situations P may recover from D for having discharged D’s responsibility. These cases differ slightly from those considered above because there seems to be less relevance in discovering a moral obligation moving P: more important is the need to reward P for fulfilling D’s legal or moral obligation where there is a public interest that the act paid for should be performed promptly.242 [849] Fulfilment of another’s duty to bury the dead. It is clear that certain classes of persons have a legal duty to arrange the decent disposal of a dead body. The duty is one of imperfect obligation in that it is unclear how it may be directly enforced. Evidence of the duty’s existence is however found in those cases establishing (a) a correlative right to reimbursement out of the estate of the reasonable expenses of burial or cremation; and (b) the right in third persons to recover from those on which the duty falls reimbursement of their expenses when they have arranged the disposal.243 [page 320] Whatever the position in the nineteenth century, it is now established that the duty falls primarily upon the legal personal representative.244 If

the estate is insufficient, the ‘duty’ passes to the deceased’s spouse or parents, at least if they have sufficient means.245 An old case also suggests that the occupier of premises in which a person dies may be subject to the ‘duty’, at least in default of the estate being able to perform it.246 This work is not primarily concerned with enumerating an exact list of the persons on whom this duty falls. Rather, we identify those authorities establishing that persons on whom the duty clearly did not fall were held entitled to reimbursement for expenses reasonably incurred247 by suing the legal personal representatives or a person with a higher duty. Thus, in the early case of Jenkins v Tucker,248 a father successfully sued his son-in-law, who had gone to Jamaica deserting his wife during her lifetime, for recovery of funeral expenses that were held reasonable having regard to her husband’s fortune and station. According to Lord Loughborough, the plaintiff ‘acted in discharge of a duty which the defendant was under a strict legal necessity of himself performing, and which common decency required at his hands’.249 Most of the cases involve close relatives of the deceased or persons having a duty to bury, but not as high a one as the person sued. For example, in Pearce v Diensthuber,250 the parents of the deceased (who were entitled on intestacy because the husband had killed the deceased) recovered from the husband to the extent of the estate’s deficiency. But even a stranger may recover in appropriate circumstances, provided it was not practical to communicate with a person having the duty to bury or where that person declined to act.251 Indeed, an undertaker who was invited by a stranger to the deceased to supply services had a direct claim against the estate.252 This, with the pressing nature of the task itself, indicates that the basis for recovery is not simply the desirability of discharging another’s legal or moral duty,253 but the necessity of doing so promptly. While impulse to act comes from ‘common principles of decency and humanity, the common impulses of our nature’ the need to act quickly is ‘to do that which is immediately necessary … in [page 321]

order to avoid what, if not provided against, may become an inconvenience to the public’.254 Professor Birks showed that these cases have much in common with those like Exall v Partridge255 which deal with the compulsory discharge of the defendant’s liability. In each situation ‘the magic of their facts seems to be no more than that their combination of unequivocal benefit and unofficiousness creates a moral case for the plaintiff as strong as though the defendant actually had promised to pay’.256 While there are statements about the need to avoid officious intervention, we suggest that the incontrovertible benefit to the estate should induce the courts to look benignly upon the claims of those who incur this expense at times when there is uncertainty about the administration or reluctance to act on the part of those who should. Only in cases where intervention was to prevent those with the higher duty and right from arranging the funeral should reimbursement for reasonable expenses be refused.257 This cluster of cases is clear evidence of the fact that in the early nineteenth century what are now termed restitutionary claims were not seen as based upon an implied contract or request. Although this fictional justification later emerged,258 as did the equally fictional idea of an agency of necessity,259 it may be taken now to have been decently reinterred. Reimbursement will not be allowed if the expenditure was initially intended as a gift,260 although it would perhaps be otherwise if this intention flowed from a mistaken belief as to the size of the estate.261 [850] Support of spouse. A husband’s common law duty to support his wife could not be enforced directly so long as the law precluded actions between spouses. The duty was enforced indirectly by the wife’s ability to pledge her husband’s credit in the purchase of necessary items.262 A legal system wedded to fictions called the wife’s right an ‘agency of necessity’, but this was a convenient but misleading rationalisation, as Latham CJ pointed out in Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd.263 The so-called ‘agency’ was very atypical. It survived express repudiation. Indeed, it survived the death of the

‘agent’, because the wife’s estate could recover the cost of her funeral.264 The corollary of the wife’s ‘agency of necessity’ was the right of the person who supplied the necessaries to sue the husband. Thus it derived from the supplier’s performance of the husband’s primary duty. This doctrine has [page 322] now been abolished or modified, but these cases nevertheless represent further evidence of a doctrine of necessitous intervention. The device to control officious intermeddling was the need to show that the goods and services supplied were what the law treated as ‘necessaries’.265 [851] Support of infant child. At common law the father’s duty to support his children was probably moral rather than legal, at least unless his neglect brought the case within the criminal law.266 On this basis, there is authority that a stranger could not recover from the father even the cost of necessary assistance to a child.267 Even in the absence of statute it is, in our view, likely that a medical practitioner who supplied urgently needed medical services to a child could recover proper reimbursement from a parent.268 Naturally, the medical emergency must be such as to provide justification for not leaving the service to be arranged by the parents or incurred by another more appropriate agency.269 If the person requesting the service owes no legal duty to support the person for whom it is performed, any claim must rest in contract, and against the first person, rather than the second or the second person’s estate.270 [852] Statutory duty. Analogous to the funeral cases are those where reimbursement is awarded to persons who respond to an immediate need to preserve public health or safety and thereby discharge a statutory duty imposed on some other public agency. There

is English, American and Canadian authority allowing strangers who intervene, ‘under the pressure of immediate want’, to supply medical assistance to an indigent person to recover from parish officers and others whose duty to supply such services has thus been fulfilled.271 The check against officious intervention lies in having a requirement that would generally deny restitution where it was practicable to communicate with the public agency and the supplier did not do so.272 This should not be an absolute rule, because stony silence following such communication may only make the intervener’s perceived duty to act [page 323] seem all the more pressing.273 In any event, it may be possible to make out a case of ‘free acceptance’ of services known not to have been supplied gratuitously and by this means arrive at restitutionary recovery.274 The principle is not confined to cases of medical necessity. Reimbursement was allowed in Holborn Union v Vestry of St Leonard,275 where a property owner recovered its costs in removing dust and ashes from a workhouse which it was the statutory duty of the local authority to perform. Had the plaintiff not acted promptly the health of its inmates would have suffered. An American case has acknowledged the restitutionary basis of recovery by the United States of the cost of cleaning up pollution damage, where a primary statutory duty to do so fell on the defendant.276 But if there are no factors calling for the intervention, as a matter of necessity, of someone on whom the duty does not lie, such intervention may be treated as officious and go unrewarded.277 An American case suggests a useful test to limit recovery to appropriate cases:278 The obligation must be of such a nature that actual and prompt performance thereof is of grave public concern; the person upon whom the obligation rests must have failed or refused with knowledge of the facts to perform the obligation; or it must reasonably appear that it is impossible to perform it; and the person who intervenes must, under the circumstances, be not a mere intermeddler but a proper person to perform the duty.

[853] Tortious duty. If, in Chapman v Hearse,279 the leading Australian case concerning the duty of care to rescuers, Dr Cherry had not been killed, could he have recovered recompense from the tortfeasor for the medical services provided? This is a different question from the one discussed above280 (which involves the doctor’s right to recover from the patient or the patient’s non-negligent parents). Canadian and American law supports a restitutionary claim against the tortfeasor whose fault created an emergency to which the plaintiff made a non-officious response.281 Our law is not averse to encouraging such collateral assistance. Thus the victim of a tort may, under the Griffiths v Kerkemeyer282 principle, recover the value of gratuitous services reasonably provided by friends and family at home (albeit that the victim is under no duty to account to the gratuitous provider). When the victim has incurred a [page 324] liability to pay for medical and other services, there is of course no difficulty in recovering this from the tortfeasor. There are, however, good reasons why direct recovery should be discouraged.283 This will spare the tortfeasor a multiplicity of lawsuits, and act as a spur to the victim bringing on the trial of his or her own claim without concern about double recovery. In the rare instances in which a direct claim for reimbursement has been brought against the tortfeasor, it has usually failed.284 There is, however, American authority allowing recovery from the ship owner by the United States of the cost of cleaning up an oil spill, pursuant to a statutory right to do so.285 There have also been several successful claims by American school authorities to recover the cost of removing asbestos or leadbased paint, in pursuance of a general duty to ensure the safety of pupils.286 [854] Contract. We are unaware of any Australian case law about the right to restitution of a person who intervenes to perform the

defendant’s promised duty to pay a debt.287 American case law is divided about restitutionary claims by strangers who respond to an emergency arising out of failure to perform a contractual duty to provide support to another.288 The Restatement Third, Restitution and Unjust Enrichment favours recovery in a proper case on the basis of the necessitous intervention principle.289 1.

The grouping is adapted from J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297.

2. 3.

As to expense incurred at the defendant’s request, see [155], [842], [2924]–[2925] (money paid). See generally [147], [810].

4. 5.

See further [813]–[815]. See generally Fleming, pp 165–8.

6. 7.

(1984) 155 CLR 549 at 578–9. Wagner v International Railway 133 NE 437 (NYCA, 1921) per Cardozo J.

8. 9.

(1961) 106 CLR 112. (1961) 106 CLR 112 at 120 per curiam.

10. Beckingham v Port Jackson & Manly Steamship Co [1957] SR (NSW) 403. See also Kirk v Gregory (1876) 1 Ex D 55 at 58; Elvin & Powell Ltd v Plummer Roddis Ltd (1933) 50 TLR 158; Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242; [1985] 2 All ER 985. 11. Leigh v Dickenson (1884) 15 QBD 60. 12. Taylor v Laird (1856) 25 LJ Ex 329 at 332. 13. See, eg Nicholson v Chapman (1793) 2 H Bl 254 at 259; 126 ER 536 at 539; Force v Haines 17 NJL 385 at 387 (NJ, 1940); The Goring [1987] QB 687 at 708. 14. See [152] (money as an incontrovertible benefit). 15. See further [636], [841]–[847]. 16. See [807]. 17. See E W Hope, ‘Officiousness’ (1929) 15 Cornell LQ 25 at 36; Jones, p 143. 18. (1886) 34 Ch D 234 at 248 (see [810]). 19. P Birks, ‘Negotiorum Gestio and the Common Law’ [1971] CLP 110 at 112. 20. As to money paid, see [116], [842], [2924]–[2925]. 21. See generally Chapter 1 and also the summary in Stoljar, pp 187–96. In Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577 the High Court effectively rejected Professor Stoljar’s criticisms (Stoljar, pp 192–6) concerning the restitutionary basis of those claims. 22. See, eg F D Rose, ‘Restitution for the Rescuer’ (1989) 9 OJLS 167. 23. See, eg claims as to liens [810], [839] and based on subrogation [847].

24. See further [811]–[813]. Generally as to benefit, see [146]–[158]. 25. Cf Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140. 26. See [149], [936]–[941]. 27. See [148], [935]. 28. (1886) 34 Ch D 234. 29. (1886) 34 Ch D 234 at 248. 30. See, eg Hill v Ziymack (1908) 7 CLR 352 at 364, 369–70; City Bank of Sydney v McLaughlin (1909) 9 CLR 615 at 632; Pettit v Pettit [1970] AC 777 at 818; Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) 38 FCR 501; Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214; Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624 at 633; Foskett v McKeown [2001] 1 AC 102 at 119, 140; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [80]; Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307; 311 ALR 351; [2014] HCA 15 at [47]. See also [153]. 31. China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961 per Lord Diplock. 32. (1981) 180 CLR 370 at 376–7; 36 ALR 545 at 549–50. 33. (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [39], [80]. 34. See [843], [844], [851]. 35. China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 960. 36. [1999] 3 NZLR 735 at 742. Hammond J was delivering the judgment of the New Zealand High Court constituted by Ellis J and himself. 37. See J P Dawson, ‘Negotiorum Gestio: The Altruistic Intermeddler’ (1961) 74 Harv L Rev 817; S J Stoljar, ‘Negotiorum Gestio’ in International Encyclopaedia of Comparative Law, vol X, 1980, Chapter 17. 38. See Goff and Jones, 7th ed, §17-026. See now Goff and Jones, §18-53. 39. (1947) 74 CLR 148 at 175. 40. Secretary, Department of Health & Community Services v JWB & SMB (Marion’s Case) (1992) 175 CLR 218 at 267–8 per Brennan J. 41. See [809]. 42. See [158]. 43. Cf Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 (see [1035]). 44. S J Stoljar, ‘Unjust Enrichment and Unjust Sacrifice’ (1987) 50 MLR 603 and Stoljar, pp 9–10, 185ff, 250. See also G A Muir, ‘Unjust Sacrifice and the Officious Intervener’ in Finn, Essays, pp 297ff. James Edelman and Elise Bant, Unjust Enrichment in Australia, pp 303–7 also reject an unjust enrichment analysis of the necessity cases. 45. Generally as to ‘officiousness’ see E W Hope, ‘Officiousness’ (1929) 15 Cornell LQ 25. 46. Cf legislation dealing with unsolicited goods and services: see [1038]. 47. See [931]–[935]. 48. See [819], [827], [829]. See also Restatement, Third, § 20. 49. See generally [157]–[158]. See also [1032], [1038].

50. (1856) 25 LJ Ex 329 at 332. See [807]. 51. As to this issue, see [146]. 52. [1990] 2 AC at 75. For other general statements see Sachs v Miklos [1948] 2 KB 23 at 35– 6; Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH (The Manila) [1988] 3 All ER 843 at 854–5. 53. Garriock v Walker (1873) 1 R (Court of Session) 100; Great Northern Railway v Swaffield (1874) LR 9 Ex 132; China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961; Greenspan v Slate 97 A 2d 390 (NJ, 1953). See further [817]. 54. See Re Rhodes (1890) 44 Ch D 94 at 107; Macclesfield Corp v Great Central Railway [1911] 2 KB 528 especially at 541, and [848] (the burial cases). Cf also, in the law of tort, Carter v Thomas [1893] 1 QB 673. See generally M McInnes, ‘Restitution and the Rescue of Life’ (1994) 32 Alberta L Rev 37 at 54–27; Restatement, Third, § 22, Comment b. 55. Cf the agency of necessity cases: Springer v Great Western Railway [1921] 1 KB 257; China-Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961. 56. Cf [825]–[829] (medical cases). 57. Cf J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57. 58. Tetley & Co v British Trade Corp (1922) 10 Ll L Rep 678. 59. Sachs v Miklos [1948] 2 KB 23. For a hard case see Dimurro v Charles Caplin & Co (1969) 211 EG 31. 60. Re Rhodes (1890) 44 Ch D 94 and [849]. 61. Cf Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd (1947) 74 CLR 148. 62. See generally, F D Rose, ‘Restitution for the Rescuer’ (1989) 9 OJLS 167 at 194–8; M McInnes, ‘Restitution and the Rescue of Life’ (1994) 32 Alberta L Rev 37 at 59–61. 63. Coleby v Coleby (1866) LR 2 Eq 803. See also Shallcross v Wright (1850) 12 Beav 558; 50 ER 1174 (executor’s payment to a physician for services rendered in the mere expectation of a legacy disallowed). Cf Mollgaard v Accident Rehabilitation and Compensation Insurance Corp [1999] 3 NZLR 735 at 742–3 (mixed motives of affection and expectation of payment were held sufficient on the basis that ‘it has never been the law that the relevant motive must be entirely materialistic’). Cf also Re Clabbon [1904] 2 Ch 465 ([819]). 64. Wms Saund 264, note (1); 85 ER 318. 65. Pontypridd Union v Drew [1927] 1 KB 214. Cf the presumption, according to American law, that the provision of services by close family members is gratuitous: Estate of Cleveland v Gordon 837 SW 2d 68 (Tenn Ap, 1992). 66. McLaughlin v Freehill (1908) 5 CLR 858 at 863. 67. Goff and Jones, §18-82, criticising Re Rhodes (1890) 44 Ch D 94 where the onus is placed on the plaintiff, albeit in a case that did not involve a plaintiff in the business of providing the benefit for reward. 68. G A Muir, ‘Unjust Sacrifice and the Officious Intervener’ in Finn, Essays, p 312. See generally R A Albert, ‘Restitutionary Recovery for Rescuers of Human Life’ (1986) 74 Cal L Rev 85 at 101–5. 69. Cf Deglman v Guaranty Trust Co of Canada [1954] 3 DLR 785. 70. As in Coleby v Coleby (1866) LR 2 Eq 803.

71. Chapter 10. 72. [1904] 2 Ch 465. 73. [1904] 2 Ch 465 at 467. 74. This is an application of the general principle that (even when a claim for restitution is properly brought) primacy is to be given to any legal relationship that exists between the parties (see [215]). 75. See generally Goff and Jones, 7th ed, §17-017; R A Albert, ‘Restitutionary Recovery for Rescuers of Human Life’ (1986) 74 Cal L Rev 85 at 120–4; M McInnes, ‘Restitution and the Rescue of Life’ (1994) 32 Alberta L Rev 37 at 64–9. 76. See generally White, Australian Maritime Law, 2nd ed, Chapter 9; Butler and Duncan, Maritime Law in Australia, Chapter 7; Davies and Dickey, Shipping Law, 3rd ed, Chapter 20. 77. A M Honoré, ‘Law, Morals and Reason’ in Ratcliffe, The Good Samaritan and the Law, p 234. 78. See A M Honoré, ‘Law, Morals and Reason’ in Ratcliffe, The Good Samaritan and the Law, p 233. 79. The Goring [1987] QB 687 at 708; Jones, p 154. As to whether a non-professional should ever be able to recover more than expenses, see also [827]. 80. See generally Bowstead and Reynolds on Agency, 20th ed, Chapter 4. 81. (1946) 47 SR (NSW) 122; (1947) 74 CLR 148. See also Hawksford v Hawksford [2005] NSWSC 463 at [73]. 82. Jebara v Ottoman Bank [1927] 2 KB 254; Sachs v Miklos [1948] 2 KB 23; China-Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 960–1. 83. Gaudet v Brown (Cargo ex Argos) (1873) LR 5 PC 134 at 165; Tetley & Co v British Trade Corp (1922) 10 LI L Rep 678. 84. See, eg Great Northern Railway v Swaffield (1874) LR 9 Ex 132 at 136, 138 and generally J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297 at 303–10. 85. China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 958, 965. 86. For example, Prager v Blatspiel, Stamp and Heacock Ltd [1924] 1 KB 566. Cf Jebara v Ottoman Bank [1927] 2 KB 254 at 271. More recently, some judges have analysed the result in terms of restitution or unjust enrichment. 87. As well as the standard texts, see eg articles by J P Dawson, ‘Negotiorum Gestio: The Altruistic Intermeddler’ (1961) 74 Harv L Rev 1073; J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297; F D Rose, ‘Restitution for the Rescuer’ (1989) 9 OJLS 167; G A Muir, ‘Unjust Sacrifice and the Officious Intervener’ in Finn, Essays, pp 297ff; Jones, Chapter 4. 88. L Aitken, ‘Negotiorum Gestio and the Common Law: A Jurisdictional Approach’ (1988) 11 Syd LR 566. 89. (1947) 74 CLR 148 at 175. 90. [1982] AC 939. The facts are summarised in [153]. 91. China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 958, 965.

92. [1979] 2 All ER 35 at 43–4. 93. (1873) 1 R (Court of Session) 100. 94. [1982] AC 939 at 961. See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [80]. 95. J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57. Cf also City Bank of Sydney v McLaughlin (1909) 9 CLR 615 at 625–6 per Griffith CJ. 96. 553 F 2d 830 (CA, 2nd Cir, 1977), cert denied 434 US 859. See also United States Surgical Corp v Consolidated Edison Co of New York 580 F 2d 1122 (CA, 2nd Cir, 1978); United States v P/B STCO 213 756 F 2d 364 (CA, 5th Cir, 1985) (recovery of United States Government’s cost of cleaning up pollution caused by defendant). See Restatement, Third, § 22 Com g. See also the American cases relating to intervention to abate the hazards of asbestos or lead-based paint: [853]. 97. Re F [1990] 2 AC 1 at 78. 98. Lord Goff and Gareth Jones, The Law of Restitution, 3rd ed, 1986, p 343. See also Re F [1990] 2 AC 1 at 76 per Lord Goff. 99. See now Goff and Jones, §18-78. 100. (1990) 67 DLR (4th) 321. 101. Secretary, Department of Health & Community Services v JWB & SMB (Marion’s Case) (1992) 175 CLR 218 at 234; 106 ALR 385 at 392 per Mason CJ, Dawson, Toohey and Gaudron JJ. See also per McHugh J at 310, 452 and Rogers v Whitaker (1992) 175 CLR 479 at 487; 109 ALR 625 at 631. 102. 105 NE 92 at 93 (CANY, 1914). 103. See Restatement, Third, § 22. 104. Cardozo J in Wagner v International Railway 133 NE 437 (CANY, 1921). 105. See [806] and Fleming, pp 195–8. 106. Marshall v Curry [1933] 3 DLR 260. See generally P D G Skegg, ‘A Justification for Medical Procedures Performed without Consent’ (1974) 90 LQR 512. 107. (1992) 175 CLR 218 at 310; 106 ALR 385 at 452. 108. See Secretary, Department of Health & Community Services v JWB & SMB (Marion’s Case) (1992) 175 CLR 218 at 234, 106 ALR 385 at 392. See, eg Children and Young Persons (Care and Protection) Act 1998 (NSW); Guardianship Act 1987 (NSW); Emergency Medical Operations Act 1973 (NT); Consent to Medical Treatment and Palliative Care Act 1995 (SA), s 13. 109. See generally R A Albert, ‘Restitutionary Recovery for Rescuers of Human Life’ (1986) 74 Cal L Rev 85. 110. See Dix et al, Law for the Medical Profession, 2nd ed, §§1106, 1149–50. But cf Metropolitan Asylum District v Hill (1881) 6 App Cas 193 at 204. See generally R J Gray and G S Sharpe, ‘Doctors, Samaritans and the Accident Victim’ (1973) 11 Osgoode Hall LJ 1; M McInnes, ‘Restitution and the Rescue of Life’ (1994) 32 Alberta L Rev 37. 111. Woods v Lowns (1995) 36 NSWLR 344 (upheld in Lowns v Woods (1996) Aust Torts Rep 81-376). The decision is discussed in Fleming on Torts, p 167. 112. See generally Annot 34 ALR 3d 176 (1970) where this principle and its exceptions are discussed.

113. See, eg Greenspan v Slate 97 A 2d 390 (NJ, 1953). 114. Shallcross v Wright (1850) 12 Beav 558 at 561–2; 50 ER 1174 at 1175 per Lord Landale MR (the ‘necessity and duty co-existing, I think that he is entitled to be reimbursed out of the estate of the testator’). Cf also Baker v T E Hopkins Ltd [1958] 1 WLR 993 (affirmed [1959] 1 WLR 966). 115. See generally [820]. 116. Soldiers Memorial Hospital v Sanford [1934] 2 DLR 334. Cf Metropolitan Asylum District v Hill (1881) 6 App Cas 193 at 204. 117. [1932] 2 DLR 787 (Man CA); Comment (1932) 46 Harv L Rev 528. See also Cotnam v Wisdom 104 SW 164 (1907); Peninsular & Oriental Steam Navigation Co v Overseas Oil Carriers Inc 553 F 2d 830, cert denied 434 US 859 (CA, 2nd Cir, 1977); Moorehead v Canley 599 NE 2d 786 (Ohio App, 1991); Skibinski v Community Living British Columbia [2010] BCSC 1500. 118. [1932] 2 DLR 787 at 789. Cf [826]. 119. See [830]–[833]. 120. Mulloy v Hop Sang [1935] 1 WWR 714; Soldiers Memorial Hospital v Sanford [1934] 2 DLR 334; Malette v Shulman (1990) 67 DLR (4th) 321 (discussed [826]). 121. Secretary, Department of Health & Community Services v JWB & SMB (Marion’s Case) (1992) 175 CLR 218 especially at 234, 265–7, 310–11; 106 ALR 385. See generally P D G Skegg, ‘A Justification for Medical Procedures Performed without Consent’ (1974) 90 LQR 512 at 523–9. 122. Re F [1990] 2 AC 1 at 76 per Lord Goff. Cf Edson v Hammon 127 NYS 359 (NYAD, 1911). 123. See R A Albert, ‘Restitutionary Recovery for Rescuers of Human Life’ (1986) 75 Cal L Rev 85 at 98–107. 124. Re Rhodes (1890) 44 Ch D 94. 125. Glenn v Savage 13 P 442 at 448 (Ore, 1887). See also Nicholson v Chapman (1793) 2 H Bl 254 at 259; 126 ER 536 at 539. 126. The Port Victor (Cargo ex) [1901] P 243 at 249. 127. Sachs v Miklos [1948] 2 KB 23. 128. [1932] 2 DLR 787. See also [819]. 129. Cf Peninsular & Oriental Steam Navigation Co v Overseas Oil Carriers Inc 553 F 2d 830, cert denied 434 US 859 (CA, 2nd Cir, 1977) (see [824]). 130. Griffiths v Kerkemeyer (1977) 139 CLR 161. But cf [853]. 131. (1886) 34 Ch D 234 at 248. See [810]. 132. J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297 at 316. The correctness of this is discussed at [836]. 133. A M Honoré, ‘Law, Morals and Rescue’ in Ratcliffe, The Good Samaritan and the Law, p 232. 134. See esp Re Rhodes (1890) 44 Ch D 94. 135. See [825]–[829].

136. See [1040]. 137. See [1040]. 138. Williams v Wentworth (1842) 5 Beav 325; 49 ER 603; Re Brooks (1903) 21 WN (NSW) 4; McLaughlin v Freehill (1908) 5 CLR 858; Re EG [1914] 1 Ch 927; Mollgaard v Accident Rehabilitation and Compensation Insurance Corp [1999] 3 NZLR 735 at 742. 139. (1890) 44 Ch D 94. 140. Goff and Jones, §18-82. 141. McLaughlin v Freehill (1908) 5 CLR 858 at 863. 142. See [819]. 143. (1968) 69 DLR (2d) 411. 144. See [1040]. 145. See Re Brooks (1903) 21 WN (NSW) 4; In the Estate of Mattson, deceased (1905) 5 SR (NSW) 562; Victoria v Public Trustee [1962] VR 8. 146. (1890) 62 LT 638 at 639. See also Gore v Gibson (1845) 13 M & W 623; 153 ER 260. 147. See Re J [1909] 1 Ch 547 at 577; Pontypridd Union v Drew [1927] 1 KB 214 at 220; Elkington & Co Ltd v Amery [1936] 2 All ER 86 at 88; Re Oberth [1936] 3 WWR 474. For the statutory provisions see [1040]. As to the recovery of money lent to a minor to purchase necessaries, see Annot 65 ALR 1337–41 (1930). Section 7 of the Sale of Goods Act 1923 (NSW) no longer applies to contracts by minors: see Minors (Property and Contracts) Act 1970, First Schedule. However a minor may be bound in a much wider range of circumstances than is the case at common law: s 17. 148. [1908] 2 KB 1. 149. [1908] 2 KB 1 at 8. 150. Re Rhodes (1890) 44 Ch D 94 at 108 per Lopes LJ. See generally [816]–[818]. 151. Stoljar, p 203. 152. (1886) 34 Ch D 234 at 248, quoted [810]. See also [835]. 153. See [810]. 154. (1886) 34 Ch D 234 at 248. See further [810]. In Falcke, the payer of a life insurance premium had acted to prevent the lapsing of the policy. 155. Macclesfield Corp v Great Central Railway [1911] 2 KB 528; Re Banque des Marchands de Moscou [1952] 1 All ER 1269. The reasoning in those cases is criticised by: Woodward, pp 334–5; Birks, Introduction, pp 196–7, 312; Stoljar, pp 211–12; J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297 at 330. 156. See, eg Aitchison v Lohre (1879) 4 App Cas 755 at 760; The Gas Float Whitton No 2 [1895] P 301 at 311; Re Cleadon Trust Ltd [1939] Ch 286 at 322; Sorrell v Paget [1950] 1 KB 252 at 260. 157. See the dicta in Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [49] (Gleeson CJ) and [80] (Gummow, Hayne, Crennan and Kiefel JJ) recognising necessitous intervention in the form of services provided to protect property. 158. See Restatement, Third, § 21. As to the influence of this Restatement, see [104].

159. See [837]–[840]. 160. (1886) 34 Ch D 234. 161. See Binstead v Buck (1776) 2 Wm Bl 1117; 96 ER 660; Nicholson v Chapman (1793) 2 H Bl 254; 126 ER 536; Aitchison v Lohre (1879) 4 App Cas 755 at 760; Hill v Ziymack (1908) 7 CLR 352; Fisher v Automobile Finance Co of Australia Ltd (1928) 41 CLR 167 at 175. 162. Nicholson v Chapman (1793) 2 H Bl 254 at 259; 126 ER 536 at 539. 163. Cf Sorrell v Paget [1950] 1 KB 252. 164. Nicholson v Chapman (1793) 2 H Bl 254 at 259; 126 ER 536 at 539 per Eyre CJ. 165. Cf E W Hope, ‘Officiousness’ (1929) 15 Cornell LQ 25 at 36; Jones, p 143. 166. See, eg Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248. Cf at 241. 167. Taylor v Laird (1856) 25 LJ Ex 329 at 332 per Pollock CB. This homely analogy is always inexact given that the issue is whether the service should be paid for. Its rhetorical appeal loses force as justifications for the plaintiff’s conduct are weighed in the scales. See also [808]. 168. A view we do not hold. See esp [809]. 169. See [813]. 170. See Stoljar, pp 215–19. 171. Sachs v Miklos [1948] 2 KB 23 at 35–6; China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961; J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57. Cf The Goring [1987] QB 687. 172. (1793) 2 H Bl 254; 126 ER 536. 173. (1793) 2 H Bl 254 at 258; 126 ER 536 at 539. 174. (1874) LR 9 Ex 132. See also Binstead v Buck (1776) 2 W Bl 1117; 96 ER 660; Guildford Borough Council v Hein [2005] EWCA Civ 979. 175. (1874) LR 9 Ex 132 at 137 per Pigott B. See also Palmer v Stear (1962) 113 L Jo 420. These ‘feelings’ may be reinforced by criminal sanctions; for example, the Prevention of Cruelty to Animals Act 1979 (NSW), s 14. 176. See also Garriock v Walker (1873) R (Court of Session) 100 and China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 960–1. 177. First Federal Savings and Loan Association v A & M Towing & Road Service 127 Ohio App 3d 46, 711 NE 2d 755 (1998); Surrey Breakdown Ltd v Knight [1999] RTR 84; Suburban Towing and Equipment Pty Ltd v Suttons Motor Finance Pty Ltd (2008) 74 NSWLR 77; [2008] NSWSC 1346. 178. (1874) LR 9 Ex 132 (see [837] for the facts). 179. Jebara v Ottoman Bank [1927] 2 KB 254 at 271 per Scrutton LJ; Re Banque des Marchands de Moscou [1952] 1 All ER 1269 at 1278–9 per Vaisey J; China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961 per Lord Diplock. 180. See Burns Philp & Co Ltd v Gillespie Brothers Pty Ltd (1947) 74 CLR 148 at 175 per Latham CJ. See [823]. 181. (1874) LR 9 Ex 132. See also Guildford B C v Hein [2005] EWCA Civ 797. 182. [1982] AC 939 at 961.

183. Garriock v Walker (1873) 1 R (Court of Session) 100 (see [823]). 184. See the passage from China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961 (see [823]); J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 at 65–70. Cf Springer v Great Western Railway [1921] 1 KB 257; Sachs v Miklos [1948] 2 KB 23. 185. See [839]–[840]. 186. Guy v Churchill (1887) 35 Ch D 489 at 492 (Lindley LJ), cited in Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307 at 318 [16]. See also Moks v Poynice (1987) 8 NSWLR 662 at 664; Shirlaw v Taylor (1992) 102 ALR 551 at 561 per Sheppard, Burchett and Gummow JJ. 187. Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307 at 318 [16]. The principles relating to the ‘fruits of the action’ lien are discussed by Campbell J in Firth v Centrelink (2002) 55 NSWLR 451. 188. In re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171; Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307. See also Dean-Willcocks v Nothingtoohard Pty Ltd (2007) 25 ACLC 109; [2006] NSWCA 311 (receivers); Coad v Wellness Pursuit Pty Ltd (in liq) (2009) 71 ACSR 250; [2009] WASCA 68 (administrators). See also Barnes v Eastenders Cash & Carry [2015] AC 1. 189. See Dean-Willcocks at [103]; Atco Controls Pty Ltd (in liq) v Stewart (2013) 31 ACLC 13065; [2013] VSCA 132 at [86], [162], [218]–[219], [295]; Hamilton v Donovan Oates Hannaford Mortgage Corp Ltd [2007] NSWSC 10. 190. Atco Controls at [218]–[219] (and on appeal) Stewart v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307 at [16]. 191. R v Howson (1966) 55 DLR (2d) 582 at 593 per Laskin JA. 192. Re Pike (1888) 23 LT Ir 9; Allison v Jenkins [1904] 1 IR 341. 193. See Restatement, Third, § 21. 194. Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [49] (Gleeson CJ); [80] (Gummow, Hayne, Crennan and Kiefel JJ). 195. See generally Annot 108 ALR 388 (1937); Restatement, Third, p 312. 196. Oxenham v Clapp (1832) 2 B & Ad 309; 109 ER 1158. 197. [1939] Ch 286 (see [846]). 198. [1948] 2 KB 23 at 35–6. 199. China Pacific SA v Food Corp of India (The Winson) [1982] AC 939 at 961; J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57. See [838]. 200. See, eg Garriock v Walker (1873) 1 R (Court of Session) 100. 201. See Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140. 202. Cf Procter & Gamble Philippine Manufacturing Corp v Peter Cremer Gmbh & Co (The Manila) [1988] 3 All ER 843 at 854–5; County of Carleton v City of Ottawa (1963) 39 DLR (2d) 11. As to free acceptance, see [158]. 203. J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 at 70–1 (citing Goff and Jones, The Law of Restitution, 3rd ed, p 144). See Restatement, Third, § 22. 204. But no worse off either, because D could, if sued by the creditor, adopt P’s initially

unauthorised payment and provide a complete defence to the claim. See Belshaw v Bush (1851) 11 CB 191; 138 ER 444. Cf [636], [844], [846]. 205. For discussion, see Beatson, Chapter 7. 206. Coshott v Sakic (1998) 44 NSWLR 667 at 671; Gray v Gray (2004) 12 BPR 22,755; [2004] NSWCA 408; Alexiadis v Zirpiadis (2013) 302 ALR 148; [2013] SASCFC 64. 207. See [116], [841], [2924]–[2925] (money paid). Cf Heydon v Perpetual Executors Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111; Joaquin v Hall [1976] VR 788; Jenkins v Wynen [1992] 1 Qd R 40; Schmierer v Taouk (2004) 207 ALR 301 as to onus of proof. Where money is paid in order to keep alive property belonging to another it has been stated that a request ‘might be implied from slight circumstances’: Falcke v Scottish Imperial Company (1886) 34 Ch D 234 at 241 per Cotton LJ. 208. Burness (as liquidator of Denward Lane Pty Ltd (in liq)) v Supaproducts Pty Ltd (2010) 74 ACSR 1; [2009] FCA 893 at [45]–[46] (and cases there cited); Henderson’s Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539; [2011] VSCA 167 at [62]. See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [79]. 209. City Bank of Sydney v McLaughlin (1909) 9 CLR 615, 625; Johnston v Arnabold [1990] 2 Qd R 138; Oakleigh Acquisitions Pty Ltd (in liq) v Steinochr [2005] WASCA 247 at [81]; Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWSC 753; Burness (as liquidator of Denward Lane Pty Ltd (in liq)) v Supaproducts Pty Ltd (2010) 74 ACSR 1; [2009] FCA 893 at [45]–[46]. 210. (1836) 1 M & W 511; 150 ER 537, applied in Re Chetwynd’s Estate [1938] Ch 13. 211. (1836) 1 M & W 511 at 513; 150 ER 537 at 537 per Lord Abinger CB. 212. Bills of Exchange Act 1909 (Cth), s 70. 213. Bills of Exchange Act 1909 (Cth), s 73(5). 214. J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297 at 320. See also L Aitken, ‘Negotiorum Gestio and the Common Law: A Jurisdictional Approach’ (1988) 11 Syd LR 566 at 577–80. 215. Hawtayne v Bourne (1841) 7 M & W 575; 151 ER 905 (discussed [845]). 216. As to compulsion see the cases discussed in Chapter 6. As to request see [116], [842], [2925]. As to mistake, see Chapter 4. 217. Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at [80] (emphasis added). 218. (1841) 7 M & W 575; 151 ER 905. 219. Commenting upon this decision, Lord Chorley said: ‘The green shoots of this promising doctrine were glared upon with Medusa-like effect by Parke B, archpriest of the legalistic school, and withered.’ See R S T Chorley, ‘Liberal Trends in Present-Day Commercial Law’ (1939) 3 MLR 272 at 275. See also Re A Debtor [1937] 1 Ch 156. 220. [1939] Ch 286 (applied in Turner v Webb (1941) 42 SR (NSW) 68 and Crantrave Ltd (in liq) v Lloyds Bank Plc [2000] QB 917). See also Re National Motor Mail-Coach Co Ltd [1908] 2 Ch 514; Burness (as liquidator of Denward Lane Pty Ltd (in liq)) v Supaproducts Pty Ltd (2010) 74 ACSR 1; [2009] FCA 893. In Vickery v JJP Custodians Pty Ltd (2002) 11 BPR 20,333; [2002] NSWSC 782 at [140] Austin J favoured revisiting Re Cleadon Trust on a suitable occasion in light of the equitable notions underlying Sir Wilfred Green MR’s dissenting judgment and modern thinking about Sinclair v Brougham [1914] AC 398.

Burrows, p 467 doubts the correctness of Re Cleadon. Even its continuing academic supporters are at pains to explain it by reference to modern thinking about the unjust enrichment concept. 221. (1886) 34 Ch D 234 (see [810]). 222. [1939] Ch 286 (see [844]). 223. See generally [173]–[174]. 224. Cf [416]. 225. (1799) 8 TR 308; 101 ER 1405. 226. (1799) 8 TR 308 at 310; 101 ER 1405 at 1406. 227. Goff and Jones appears no longer to contend for such a proposition either in this context or the context of contribution and recoupment when one compares the 7th and 8th editions. 228. Simpson v Eggington (1855) 10 Ex 845 at 847; 156 ER 683 per Parke B (‘a general rule’); City Bank of Sydney v McLaughlin (1909) 9 CLR 615 at 633; Lucas v Wilkinson (1856) 1 H & N 420; 156 ER 1265; Re Rowe [1904] 2 KB 483; Smith v Cox [1940] 2 KB 558; Guardian Ocean Cargoes Ltd v Banco do Brasil SA [1991] 2 Lloyd’s Rep 68 at 87–8; Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 430; Re Emanuel (No 14) Pty Ltd (in liq); Macks v Blacklaw & Shadforth Pty Ltd (1997) 147 ALR 281; Burness (as liquidator of Denward Lane Pty Ltd (in liq)) v Supaproducts Pty Ltd (2010) 74 ACSR 1; [2009] FCA 893 at [45]–[46]; Crantrave Ltd (in liq) v Lloyd’s Bank Plc [2000] QB 917. See generally Beatson, Chapter 7. It is difficult to see the theoretical basis upon which writers treat as discharged the debt paid under compulsion by P, but not if P acts voluntarily: see, eg Beatson, p 188. 229. See Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 431 citing Hirachand Punamchand v Temple [1911] 2 KB 330 at 339–40, 341 and In re LJ Clarke [1967] Ch 1121 at 1136. 230. See [636]. 231. See Dixon v Barton [2011] NSWSC 1525. See also [458]. 232. Brasher v O’Hehir [2005] NSWSC 1194 at [37]; Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008] NSWSC 753. 233. Cheeseman v Industries Assistance Board (1926) 29 WAR 1; Johnston v Arnabold [1990] 2 Qd R 138. Cf City Bank of Sydney v McLaughlin (1909) 9 CLR 615 at 625. 234. As to money as an incontrovertible benefit, see [152]. 235. See Butler v Rice [1910] 2 Ch 277; Ghana Commercial Bank v Chandiram [1960] AC 732 at 745; Hill v ANZ Banking Group Ltd (1974) 4 ALR 634; Cochrane v Cochrane (1985) 3 NSWLR 403 at 405; Rogers v Resi-Statewide (1991) 32 FCR 344; Vassos v State Bank of South Australia [1993] 2 VR 316 at 330; Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221; Re Dalma No 1 Pty Ltd (in liq) (2013) 279 FLR 80; [2013] NSWSC 1335. See generally as to this species of subrogation, Meagher, Gummow and Lehane, §9075–9-165; Denis S K Ong, Ong on Subrogation, The Federation Press, 2014, Chapter 4. 236. Re Dalma No 1 Pty Ltd (in liq) (2013) 279 FLR 80; [2013] NSWSC 1335 (Brereton J). 237. Cook v Italiano Family Fruit Company Pty Ltd (in liq) (2010) 190 FCR 474; 276 ALR 349 (Finkelstein J); Carter, in the matter of Damilock Pty Ltd (in liq) [2012] FCA 1445 (Mansfield J). See also Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2008]

NSWSC 753. 238. J D McCamus, ‘The Self-Serving Intermeddler and the Law of Restitution’ (1978) 16 Osgoode Hall LJ 515; D Friedmann, ‘Payment of Another’s Debt’ (1983) 99 LQR 534. 239. [1976] QB 402 at 409, 412 per Scarman LJ. The case is discussed at [635]. 240. As in Re Cleadon Trust Ltd [1939] Ch 286. 241. See Restatement, Third, § 22 (2) (a). 242. G A Muir, ‘Unjust Sacrifice and the Officious Intervener’ in Finn, Essays, p 325; Restatement, Restitution, §115. 243. The cases are discussed generally by S G Hume, ‘Dead Bodies’ (1956) 2 Syd LR 109 and L Aitken, ‘Negotiorum Gestio and the Common Law: A Jurisdictional Approach’ (1988) 11 Syd LR 566 at 571–7. 244. Rees v Hughes [1946] KB 517; Croskery v Gee [1957] NZLR 586; Mollgaard v Accident Rehabilitation and Compensation Insurance Corp [1999] 3 NZLR 735 at 742. 245. Jenkins v Tucker (1788) 1 H Bl 90; 126 ER 55; Chapple v Cooper (1844) 13 M & W 25; 153 ER 105; R v Vann (1851) 2 Den 325; 169 ER 521; Routtu v Routtu [1955] 1 DLR 627; Pearce v Diensthuber (1977) 81 DLR (3d) 286; Clarke v London General Omnibus Co Ltd [1906] 2 KB 648 at 649. Cf at 663. 246. R v Stewart (1840) 12 Ad & E 773; 113 ER 1007. 247. Tugwell v Heyman (1812) 3 Camp 298; 170 ER 1389. See [818]. 248. (1788) 1 H Bl 90; 126 ER 55. See also Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225 at [55]. 249. (1788) 1 H Bl 90 at 93; 126 ER 55 at 57. See also Ambrose v Kerrison (1851) 10 CB 776; 138 ER 307; Bradshaw v Beard (1862) 12 CB(NS) 344; 142 ER 1175; Routtu v Routtu [1955] 1 DLR 627. For the American cases see Annot 35 ALR 2d 1399 (1954). 250. (1977) 81 DLR (3d) 286. 251. Rogers v Price (1829) 3 Y & J 28; 148 ER 1080; Bradshaw v Beard (1862) 12 CB(NS) 344; 142 ER 1175. 252. Rogers v Price (1829) 3 Y & J 28; 148 ER 1080; Davey v Rural Municipality of Cornwallis [1931] 2 DLR 80. 253. The father in Jenkins v Tucker failed in his additional claim to be reimbursed for debts incurred by his daughter while her husband was in Jamaica. 254. Rogers v Price (1829) 3 Y & J 28 at 34; 148 ER 1080 at 1082 per Garrow B. See also Shallcross v Wright (1850) 12 Beav 558 at 561–2; 50 ER 1174 at 1175. 255. (1799) 8 TR 308; 101 ER 1405. See Chapter 6. 256. P Birks, ‘Negotiorum Gestio and the Common Law’ [1971] CLP 110 at 125. 257. Cf Bradshaw v Beard (1862) 12 CB(NS) 344 at 349; 142 ER 1175 at 1177; Jenkins v Tucker (1788) 1 H Bl 90 at 93; 126 ER 55 at 93; Re Kneebs’ Estate; Chase v Morningside State Bank 70 NW 2d 539 (Ia, 1955). See [818]. 258. See, eg Rees v Hughes [1946] 1 KB 517 at 528. 259. See, eg Croskery v Gee [1957] NZLR 586. 260. Coleby v Coleby (1866) LR 2 Eq 803. 261. See [819].

262. Biberfield v Berens [1952] 2 QB 770. 263. (1947) 74 CLR 148 at 178. 264. Mondock v Gennrich 21 A 2d 611 (NJDC, 1941). 265. For a review of the cases and the statutory intrusions in Australia on the deserted wife’s ‘agency’ see I J Hardingham, ‘A Married Woman’s Capacity to Pledge Her Husband’s Credit for Necessaries’ (1980) 54 ALJ 661. See also Married Persons’ Property Act 1986 (ACT), s 5; Married Persons’ (Equality of Status) Act 1996 (NSW), s 7; Married Persons’ (Equality of Status) Act 1996 (NT), s 5; Law of Property Act 1936 (SA), s 104. 266. Chantler v Chantler (1906) 6 SR (NSW) 412 at 413; Bazeley v Forder (1868) LR 3 QB 559 at 564. Cf J Eekelaar, ‘Are Parents Morally Obliged to Care for their Children?’ (1991) 11 OJLS 340. 267. Coldingham Parish Council v Smith [1918] 2 KB 90; Saywell v Yiu (1976) 14 SASR 56. 268. Cf Astles v Morgan (1882) 4 ALT 50; Urmston v Newcomen (1836) 4 A & E 899; 111 ER 1022; Greenspan v Slate 97 A 2d 390 (NJ, 1953). 269. Cf Greenspan v Slate 97 A 2d 390 (NJ, 1953); Restatement, Third, §22, Comment g. See [817]. 270. Rotea v Izuel 95 P 2d 927 (Cal, 1939). 271. Simmons v Wilmott (1800) 3 Esp 91 at 92; 170 ER 549 per Sergeant Shepherd. See also Annot 93 ALR 900 (1934); Peninsular & Oriental Steam Navigation Co v Overseas Oil Carrier Inc 553 F 2d 830 (CA, 2nd Cir, 1977), cert denied 434 US 859; Hastings v Village of Semans [1946] 4 DLR 695; County of Carleton v City of Ottawa (1965) 52 DLR (2d) 220. See also Mollgaard v Accident Rehabilitation and Compensation Insurance Corp [1999] 3 NZLR 735 at 742. 272. Cf Noble County v Niemann 78 P 2d 672 (Okla, 1938). 273. Cf Garriock v Walker (1873) 1 R (Court of Session) 100; Great Northern Railway v Swaffield (1874) LR 9 Ex 132; Greenspan v Slate 97 A 2d 390 (NJ, 1953). See [823]. 274. See [147], [157]–[18] and Lamb v Bunce (1815) 4 M & S 275; 105 ER 836. 275. (1876) 2 QBD 145. 276. United States v P/B STCO 213 756 F 2d 364 (CA, 5th Cir, 1985). See Restatement, Third, pp 319–20, 325–6. See also [824], [852]. 277. Macclesfield Corp v Great Central Railway [1911] 2 KB 528. The correctness of this decision has been questioned (see [835]); and it appears inconsistent with more recent US authority: United States v Boyd 520 F 2d 642 (CA, 6th Cir, 1976), cert denied 423 US 1050. 278. Sommers v Putnam County Board of Education 148 NE 682 at 684 (Ohio, 1925). 279. (1961) 106 CLR 112 (see [806]). 280. See [827]. 281. Attorney-General for Ontario v Crompton (1976) 74 DLR (3d) 345 at 348; Wyandotte Transportation Co v United States 389 US 191 (1967). Restatement, Third, pp 319–20, 325– 6. 282. (1977) 139 CLR 161 at 177, 193–4. See also Van Gervan v Fenton (1992) 175 CLR 327. 283. J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of

Restitution’ (1979) 11 Ottawa L Rev 297 at 331–4. 284. Metropolitan Police District Receiver v Croydon Corp [1957] 2 QB 154. 285. United States v Dae Rim Fishery Co Ltd 794 F 2d 1392 (CA, 9th Cir, 1986). 286. See Restatement, Third, § 22 Comment i. See also City of New York v Lead Industries Association Inc 597 NYS 2d 698 (NYAD, 1993). 287. Cf however Gill v Gill (1921) 21 SR (NSW) 400. 288. See J D McCamus, ‘Necessitous Intervention: The Altruistic Intermeddler and the Law of Restitution’ (1979) 11 Ottawa L Rev 297 at 303–10, 334–5. 289. Restatement, Third, § 22, pp 316–17 (equitable lien).

[page 325]

PART V

Claims Arising out of Ineffective Contracts

[page 327]

Chapter Nine

Introduction to Ineffective Contracts 1. 2.

3.

General …. Key Concepts and Types of Claim ….

[901] [907]

(a) General ….

[907]

(b) Quantum Meruit ….

[912]

(c) Total Failure of Consideration ….

[915]

(d) Benefit and Acceptance ….

[931] [936]

Relevance of Reliance ….

1. General1 [901] Objects. In order for an issue of restitution to arise in relation to a benefit conferred in discharge of a contractual obligation, the general rule is that the contract must, for one reason or another, be ‘ineffective’. The reason is simple. While the contract remains effective it governs the parties’ rights in relation to the benefit.2 However, once the contract has been found to be ineffective, an issue of restitution may arise. Accordingly, an ‘important part of the law of restitution is concerned with money paid or benefits conferred in respect of legally ineffective transactions’.3 The object of this chapter is to introduce the ineffective contracts area, by classifying the various types of ‘ineffective contract’, explaining the key concepts and identifying the typical restitutionary claims in this

context. The chapter also provides a vehicle for exploring some of the theoretical questions more debated in the literature than the cases. It is impossible to explain the restitutionary claims without indicating how and why contracts are (or become) ineffective. Therefore each of the following chapters also includes a brief statement of the contractual background. However, the detailed consideration of the principles under which a contract may be said to be ineffective is the province of works on contract not restitution.4 Of course, the analysis in those chapters also includes identification of relevant statutory provisions. [page 328] [902] The concept. The concept of an ‘ineffective contract’ (or ‘ineffective transaction’) does not have a fixed content: a contract may be ineffective for a variety of reasons.5 Moreover, of itself, the concept is of limited value. It also suffers from the difficulties involved in assuming that by attaching labels consequences are also stated. Words such as ‘void’, ‘unenforceable’, ‘discharged’, and so on, although appearing determinative, signify different things in different contexts. When divorced from the legal bases for ineffectiveness — ‘mistake’, ‘statute’, ‘breach’, and so on — attaching labels plays a relatively minor role in determining the success or failure of restitutionary claims. Accordingly, descriptions such as ‘void’ and ‘unenforceable’ are useful only in locating particular factual situations within the more general concept of ineffective contract. In practice, restitution for unjust enrichment tends to play a greater role in the context of inherently ineffective contracts than where the contract subsequently becomes ineffective. An obvious reason is that failure to perform a contract ineffective from its inception generally does not sound in damages, whereas breach is a major reason why a contract may become ineffective.6 The utility of the ineffective contract concept lies mainly in the analytical assistance which it provides in identifying common contexts

for restitutionary claims. In view of the rule7 that restitution cannot be claimed while a contract remains effective, the broad division between contracts which are inherently ineffective and those which subsequently become ineffective has analytical assistance. The former refers to transactions which never become fully effective as contracts. Examples include incomplete or uncertain agreements, and unenforceable contracts.8 A transaction subsequently becomes ineffective on the occurrence of an event recognised by law or the parties’ own agreement as having this effect. Examples are discharge by operation of law, discharge by an election of a promisee to terminate the contract for breach or repudiation and an election to rescind a contract for misrepresentation.9 Although in principle there is a clear conceptual difference between a contract which is inherently ineffective and one which goes wrong after formation, the division is not always clear-cut. Some bases for ineffectiveness cross the boundary. For example, depending on their precise effect in a particular fact situation, matters such as mistake or illegality may render the transaction inherently ineffective or lead to the contract subsequently becoming ineffective.10 The valuation of restitutionary claims made in relation to benefits conferred under ineffective contracts is a ‘conceptually distinct’11 issue, dealt with in a separate chapter. The discussion includes consideration of adjustments [page 329] which may be required on the grant of restitution in the plaintiff’s favour, as well as the relationship between restitution and damages.12 [903] Inherently ineffective contracts. From the brief discussion above,13 it can be deduced that in order for a contract to be described as ‘inherently’ ineffective it must either fail to pass the law’s criteria for contract formation (agreement), or fail to satisfy the criteria applied to show that a contract validly formed is enforceable by the parties.

Therefore, in addition to agreements which are not in point of law contracts, there are some transactions which are affected by some factor preventing enforcement by either or both parties. Three principal categories of contract therefore fall to be analysed14 as inherently ineffective contracts: (1) contracts which fail to materialise; (2) contracts which are ‘void’ for mistake, lack of capacity, uncertainty, and so on; and (3) contracts ‘unenforceable’ as a matter or agreement, or at common law or under statute. The contrast between (1) and (2) is largely one of convenience. The former signifies that the parties broke off their negotiations without reaching agreement.15 The latter describes situations where, notwithstanding that the parties may have taken a contrary view, there is in law no contract. And the third signifies that, although there is a contract, the right to enforce it has been postponed either by agreement or by a rule of law which requires a court to withhold contractual sanctions against one party or both. [904] Contracts which become ineffective. A contract valid in its inception may become ineffective by subsequent discharge or rescission (including the setting aside of a contract).16 There are three main categories:17 (1) contracts discharged for breach or repudiation; (2) contracts discharged without breach, for example, under the doctrine of frustration; and (3) contracts rescinded or set aside for a vitiating factor such as misrepresentation or undue influence. Although parties may agree that a contract is to become void (or be discharged) on the occurrence of a particular event, these contracts do not comprise a discrete category of ineffective contract. The same may be said of contracts which become unenforceable on the nonoccurrence of an event

[page 330] which neither party promised to bring about, as where performance of a contract is ‘subject to finance’.18 The descriptive words in the list form the titles for the chapters discussing contracts which become ineffective. The reasons which justify that approach, rather than treatment under a single heading, include the following. First, the contrast between discharge and rescission is significant. Second, the quasi-contractual legacy means that the fact of breach is an important consideration. Third, whereas contracts discharged for breach are for the most part governed by the general law, a restitutionary claim in relation to a frustrated contract — the most important illustration of the category of a contract discharged without breach — is governed by statute in some jurisdictions. Fourth, whereas as a matter of history the common law of quasi-contract forms the background for discharged contracts, equitable adjustment is the background for contracts rescinded or set aside. [905] Requirement of election. Restitutionary claims for benefits conferred in the discharge of an obligation under a contract which is not inherently ineffective assume that the contract has been discharged or rescinded.19 Since discharge and rescission are examples of election between rights, this is a general assumption of an effective election, discharging the parties or rescinding the contract. In other words, because a claim for restitution in relation to a benefit conferred under a contract which was not inherently ineffective cannot be made while the contract remains ‘on foot’,20 it is usually a pre-condition to a claim that the contract has been discharged, or has ceased to exist.21 Discharge crystallises the rights of the parties. In some cases, including under the doctrine of frustration, a contract may be discharged automatically on the occurrence of an event. However, the general rule is that in order to claim restitution an election to discharge the contract must be proved.22 For example, an election to terminate for breach or repudiation is a final election discharging the parties to

the contract from the duty to perform their respective contractual obligations.23 The contract cannot be reinstated unless both parties agree, or an order for reinstatement by relief against forfeiture is made in favour of a party in breach of contract.24 Absent such agreement or relief, discharge determines the validity of a claim for restitution. If there is a total failure of consideration, that is, a total failure of the agreed return,25 either party may obtain restitution of money paid.26 In cases of discharge for breach or repudiation following part performance, reasonable remuneration [page 331] is available to the promisee.27 However, the promisor will generally be denied the right to restitution by way of reasonable remuneration.28 Whereas discharge may occur by operation of law or at the election of one of the parties, rescission is always a matter of election or court order. Accordingly, where the claim in restitution assumes that the contract has ceased to exist, there is a requirement of rescission ab initio, or a court order setting aside the contract. Since, generally speaking, a contract is not void on the operation of a vitiating factor (such as misrepresentation), rescission (like discharge) is very important to restitutionary claims arising out of ineffective contracts. Thus, as a general rule, a pre-condition to any claim for restitution is an election to rescind the contract, or an order setting aside the contract.29 Election is not relevant if there is no contract, including most instances of void agreements. There is also, by definition, no contract to set up against any restitutionary claim. Nevertheless, election is sometimes relevant to claims in relation to benefits conferred under contracts which are inherently ineffective. For example, except when there is full performance,30 election is also required in cases where the benefit was conferred under an unenforceable contract.31 Although most of the comments made above are uncontroversial,

there have always been two potential sources of confusion. The first is terminology.32 ‘Rescission’ is frequently used to refer to both an election to terminate for breach or repudiation and rescission ab initio. Cases in which restitution is said to be available following ‘rescission’ are therefore somewhat ambiguous. For the modern law, the key lies in the entitlement to claim contract damages.33 Since no such claim can be made if a contract is rescinded (ab initio) in these cases rescission must refer to discharge. Second, in most cases, ‘election’ refers to election between inconsistent rights, not inconsistent remedies.34 Moreover, although it is often the case that an election between rights will serve to narrow the range of remedies available, there is no inherent inconsistency between restitution and contract damages. Putting statute to one side, the one situation in which inconsistency arises is where a contract is rescinded. Even if the contract was breached prior to rescission, contract damages cannot be claimed.35 [906] Defences and ineffective contracts. This Part of the work does not deal, except incidentally, with defences to restitutionary claims. Although [page 332] some defences, particularly change of position,36 estoppel37 and delay,38 may justifiably be ignored because they are of general application, there are two defences which have particular relevance to ineffective contracts, namely, election39 and illegality.40 The importance of election between rights as a defence is that an election against discharge or rescission denies a pre-condition to the plaintiff’s claim for restitution.41 While it is relatively easy to ignore cases in which a contract has been affirmed,42 it is difficult to ignore the impact of illegality. A contract which is void may also be illegal, in which case illegality43 may be a defence to a claim for restitution.44 It is

therefore necessary to take account of the impact of public policy on claims arising in the context of inherently ineffective contracts.45

2. Key Concepts and Types of Claim (a) General [907] Introduction. This part of the chapter describes the usual types of claim made in respect of benefits conferred under ineffective transactions. It also explains the key concepts governing those claims. The restitutionary claims made today in respect of benefits conferred under ineffective contracts were formerly classified as quasicontractual, and brought under the common indebitatus counts. [908] Quasi-contract, unjust enrichment and statute. Claims to recover reasonable remuneration, or to recover as restitution any payment for which the agreed return has not been provided, are the two principal claims in the context of ineffective contracts. In the old terminology, the former is a claim to recover a quantum meruit (for work done) and the latter to recover money had and received to the use of the plaintiff.46 Claims in quasi-contract were of course grounded in the implied contract theory.47 [page 333] Many of the key English cases48 decided on the basis of the implied contract theory were adopted in Australia.49 The rejection of the implied contract theory occurred in the context of an ineffective transaction. In Pavey & Matthews Pty Ltd v Paul,50 Deane J said that the ‘basis of the obligation to make payment for an executed consideration given and received under an unenforceable contract should now be accepted as lying in restitution or unjust enrichment’, rather than a fictional implied promise.51 Following

Pavey, the proper rationalisation of such claims is therefore to reverse or prevent an unjust enrichment.52 For claims made under the current law, the conclusions reached under the law of quasi-contract cannot be ignored. The scope of analysis in the context of inherently ineffective contracts,53 as well as those made in relation to benefits conferred under contracts discharged for breach or repudiation,54 and contracts discharged without breach55 is to a large extent determined by the old case law.56 Clearly, however, the modern perception of the nature of the claim, as one in restitution for an unjust enrichment, calls for a re-evaluation of the law.57 Much of the old learning on the common counts is nevertheless still applied, even in cases where the [page 334] concept of ‘restitution or unjust enrichment’ is stated as the rationale for the plaintiff’s success or failure. Because of this approach, there are still many unanswered questions about unjust enrichment. While it follows that some of the terminology of quasi-contract is still viable, calling up money had and received seems regrettable.58 In Pavey & Matthews Pty Ltd v Paul,59 Deane J said the fact that a contract is not applicable, has been frustrated, avoided or is unenforceable ‘provides the occasion for (and part of the circumstances giving rise to) the imposition by law of the obligation to make restitution’. This is recognition that the ineffectiveness of a contract is an important factor leading to restitution, not that ineffectiveness is of itself sufficient. Nor is the statement a formulation of the requirements of unjust enrichment, as applied to ineffective transactions. It has largely been left to academic lawyers to theorise about the continued viability of the old concepts, and their place in the elements which make up unjust enrichment. Indeed, in recent years there has been a marked reluctance to build on Deane J’s pioneering judgment in Pavey.60

While the operation of statute is extremely important to the Australian law of restitution,61 there is no general statute regulating restitutionary claims arising from the conferral of benefits under ineffective contracts. Moreover, no legislation exists to regulate the making of restitutionary claims in any of the general categories of ineffective transaction62 identified above.63 However, for some jurisdictions the frustrated contracts legislation serves that purpose for the most important category of contracts discharged for reasons other than breach.64 [909] Absence of inconsistent contractual promise. One aspect of the implied contract theory, applied from the end of the eighteenth century,65 and adopted in Australia66 as generally applicable to quasicontractual claims in relation to ineffective contracts, is the proposition that restitution [page 335] is not available while an inconsistent contractual promise exists between the parties. This survives today: it is real and not fictional. The proposition is properly based, not on an inability to imply a contract, but on the fact that until a contract is found to be ineffective, ‘payment’ for any benefit conferred is regulated by the contract.67 At its lowest, this approach means that restitution is not relevant to a benefit conferred in discharge of a contractual obligation.68 Although the approach does not mean that a plaintiff can never occupy a position under which it has alternative claims in contract and restitution, the need to ensure that the law does not countenance conflicting sets of legal obligations must be respected. As Deane J explained in the context of the claim in Pavey & Matthews Pty Ltd v Paul,69 if there is a valid and enforceable agreement governing the claimant’s right to payment, there is ‘neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration’. The principle

is applicable to other restitutionary claims.70 Accordingly, although restitution may be sought in respect of ineffective contracts of all types, unless the contract is inherently ineffective no claim is available71 in respect of a benefit conferred in discharge of an obligation until the contract is rescinded or the parties’ obligations discharged.72 It is not, however, a corollary that conferral of benefit under an ineffective contract is a sufficient basis for a claim for restitution. The defendant must be unjustly enriched.73 But a view that ineffectiveness is sufficient has influenced some decisions. For example, in Tea Tree Gully Builders Co Pty [page 336] Ltd v Martin74 Bollen J held that a builder who was not only unlicensed, but who had also failed to perform the contract, was entitled to recover as on a quantum meruit in respect of work done. It was reasoned that the claim was not caught by legislation prohibiting recovery of a ‘fee or other consideration’ by an unlicensed builder; and that there was an unjust enrichment because the builder had conferred a ‘benefit’ for which there was no contractual entitlement. The case was wrongly decided. First, the contract was still on foot. Second, the rule in Sumpter v Hedges75 applied. Even if it could be said that the contract was discharged by the defendant’s election, the builder would have failed had it been licensed. Third, the builder was relying on its failure to comply with the statutory requirement to establish both that the contract was ineffective and its entitlement to restitution. Because the general requirement of an ineffective contract must be seen from the perspective of an inconsistent contractual promise, restitution may be available if a benefit is conferred independently of the terms of an effective contract. For example, restitution is available if the contract price is paid twice over as a result of a mistake.76 Acceptance of benefit may also occur where a contract is effective, for example, if the defendant requested and accepted a performance which the plaintiff was not required to provide.77

[910] Claims against third parties. The ‘absence of inconsistent contractual promise’ idea has a broader application. Even where third parties are concerned, unjust enrichment is not a basis for adjusting agreed risk allocations. Therefore, the inconsistent contractual promise need not be contained in a contract with the person alleged to be benefited. For example, where A and B enter into a contract the performance of which benefits C, as in the ordinary case where the beneficiary of performance (B) is a corporate entity owned by C, the general rule is that no restitutionary liability can arise as between A and C.78 Similarly, where services are rendered by B at the request of A, under an agreement which requires A to pay for the services, the fact that C stands to benefit from those services (under a contract with A) does not make C liable in restitution to B.79 A common example is sub-contracting. If C contracts with A under terms which permit A to sub-contract, and B is appointed subcontractor, on these facts alone B has no claim in restitution against C if A fails to pay B.80 [page 337] Lumbers v W Cook Builders Pty Ltd (in liq)81 concerned a closely analogous situation. A contracted to do building work for C. Most of the work was in fact done by B, but without the knowledge or consent of C. Payments continued to be made by C to A. After the work was finished, B claimed payment from C of an amount which C had failed to pay to A.82 There was no novation or assignment. Not surprisingly, the High Court held that B could not recover restitution from C. Allowing the claim would have directly contradicted the terms under which A and C had contracted. Gleeson CJ said83 that the contract between A and C could not be ‘put to one side as an inconvenient distraction’. Under that contract, C had requested A to do the work: the facts did not establish any request made by C to B.84 In Lumbers, the High Court called in aid85 a statement by Lord Goff (with whom Lord Lowry agreed) in Pan Ocean Shipping Co Ltd v

Creditcorp Ltd (The Trident Beauty)86 that ‘serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract’.87 In that case, the House of Lords refused a claim based on failure of the agreed return. However, the reasoning presents some difficulties.88 A time charterer paid an instalment of hire to the shipowner’s assignee. Since the hire was not earned under the contract, the charterer enjoyed an accrued contractual right, enforceable against the owner-assignor, to recover the money. In those circumstances, it could not be said that the charterer enjoyed alternative causes of action against the assignor, in contract and in restitution. Lord Goff said89 there was a ‘contractual regime’ which regulated the recovery of hire.90 That was [page 338] also said to be the reason why no claim in restitution could be made against the assignee. However, the payment was made to the assignee, not the assignor. Payment discharged the shipowner, and benefited the assignee. There was no analogy with a sub-contractor’s situation. Moreover, as a matter of principle, if the payment was conditional in the hands of the assignor, following assignment the assignee could not be in a better position unless the contractual regime amounted to an agreement to look only to the assignor for ‘repayment’.91 It would therefore seem simplistic to reason that a claim in restitution against an assignee must fail merely because no such claim can be made against the assignor.92 [911] Defensive claims. The primary focus is reversal of an unjust enrichment. Since there is also a concern to prevent unjust enrichment, a (prospective) right to restitution may be raised as a defence to an action to recover a money sum alleged to be due under a contract. In this way the law avoids circuity of action. In particular, where a plaintiff seeks to recover a contract debt, the concept of total failure of the agreed return may be put forward as a

defence to the plaintiff’s claim.93 So as to prevent unjust enrichment of the plaintiff, a court will not enforce a debt if the defendant would be entitled to recover the sum paid in a restitutionary claim.94

(b) Quantum Meruit [912] Introduction. In Pavey & Matthews Pty Ltd v Paul,95 Deane J demonstrated that the old common law claim for a quantum meruit accommodated two distinct categories of case. One category was as an action in contract, to recover a debt arising under a genuine contract, whether express or implied.96 In the other, the debt became due in circumstances [page 339] where an obligation or promise to pay for an accepted benefit was imposed or imputed by law.97 Although common lawyers have tended to speak in terms of implied contract, the second usage is not based on agreement, and would, moreover, be excluded by a valid and enforceable contract. The claim is derived from common law principles, rather than equity, and its origin in indebitatus assumpsit is now simply historical fact.98 We prefer to refer to the claim as one in restitution, without the Latin description, for reasonable remuneration to prevent or reverse an unjust enrichment.99 [913] Contractual claims. Under the modern law, a claim to recover a reasonable sum may be available in cases where there is an effective contract. There are two types of case.100 First, the contract may contain an express or implied promise to pay a reasonable sum (or price) for performance rendered.101 Rejection of the implied contract theory of quasi-contract clearly does not deny the validity of such contracts: restitutionary liability is relevant only if the transaction was ineffective. Thus, in Pavey & Matthews Pty Ltd v Paul102 itself, the

building contract contained an express promise to pay a reasonable sum calculated by reference to prevailing rates of payment in the building industry. It was because the contract was ineffective under statute that the builder framed its claim in restitution. Nor does the rejection of the implied contract theory impact on the implication of terms in contracts under ordinary contractual principles. However, the process must not be confused with the imposition of an obligation to pay reasonable remuneration as restitution for an unjust enrichment.103 Second, in cases where price was not agreed, or where the transaction into which a term is sought to be implied would otherwise be ineffective, there may be a genuine implied contract to pay a reasonable sum for performance rendered.104 Again, rejection of the implied contract theory of restitution does not deny that contracts may be implied from conduct. However, restitutionary liability may be imposed even though it is not possible to imply a contract. It follows that the implication of a term or contract should [page 340] not be done artificially.105 Nevertheless, until contractual avenues have been exhausted no analysis in terms of unjust enrichment is called for.106 This is important not only in doctrinal terms but also because no claim for damages for breach of contract can be made unless there is a contract to be breached. [914] Restitutionary claims. It is the second category referred to above107 which applies generally to ineffective contracts, and is therefore relevant where there is no applicable agreement, or the contract is otherwise ineffective. For the restitutionary claim for reasonable remuneration to be available, the requirements of unjust enrichment must be satisfied. From that perspective, the services or work done must constitute a benefit, and the circumstances must be such as to show that it was unjust for the defendant to receive (or retain) the benefit without rewarding the plaintiff. Even though not

now based on a fictional implied contract, such a claim is still often referred to as a ‘quantum meruit’. Today, we hear very little of quantum valebat, the quasi-contractual description of a claim to recover the reasonable price of goods supplied to the defendant by the plaintiff at the defendant’s request.108 A major reason is that for most ineffective sale of goods contracts legislation implies an obligation to pay a reasonable price for accepted goods,109 or renders the buyer liable to pay the contract price without prejudice to its claim for damages for breach of warranty.110 In the comparatively rare situations in which the legislation does not apply, it is necessary to consider whether a contractual or restitutionary claim is available. The former must be based on an implied term or (genuine) implied contract.111 The latter is based on the rationale that retention of the goods without payment would be an unjust enrichment.112

(c) Total Failure of Consideration (i) General [915] Introduction. In quasi-contract, the principal basis for successful claims for money paid by way of performance of an ineffective contract was total failure of consideration,113 that is, total failure of the agreed return for the payment. The principle was also used to defend a claim for the [page 341] recovery of a liquidated sum, that is, where the payment would, if made, be recoverable in restitution.114 Under the modern law, these are claims to reverse or prevent an unjust enrichment. In some contexts, the description ‘total failure of consideration’ may denote a contractual claim. Adjustments of hire paid prior to ‘redelivery’ of a time chartered vessel have sometimes been so described.115

[916] Quasi-contract. An important use of the common indebitatus counts in quasi-contract was to recover money had and received by the defendant to the use of the plaintiff on a consideration which totally failed.116 It was originally thought that such a failure could occur only if the contract was void, or rescinded ab initio. Accordingly, it was not applicable to a partially performed contract, or a contract merely discharged by frustration or at the election of the payer or payee.117 However, the twentieth century cases conceded that discharge in futuro on termination of a partially performed contract is sufficient,118 provided that discharge brings about a total failure of the agreed return.119 The belated recognition that a total failure may occur on discharge means that there are fairly recent cases in which the discredited ideas have been employed.120 These must today be regarded as questionable authorities.121 [page 342] The requirement of total failure of consideration, applied in the cases on common counts,122 continued to be applied after the procedural reforms which abolished the forms of action in the nineteenth century.123 It was rigorously applied — still on the basis of quasicontract — in most twentieth century cases.124 Although the unjust enrichment rationale has displaced implied contract, total failure remains the usual requirement. ‘Total failure of the agreed return’ describes situations in which the plaintiff received no part of the defendant’s bargained-for performance. An obvious example is a money sum paid in advance as the price of goods which are never delivered. However, the claim was — and still is — complicated by terminology.125 The ‘failure of consideration’ description was sometimes justified by reference to a contrast between the meaning of ‘consideration’ in the formation of a simple contract and its meaning under the law of quasi-contract. In the former, ‘consideration’ generally refers to a promise of performance, whereas in the context of a claim in quasi-contract it referred to the performance

of a promise.126 However, the utility of this contrast was also doubted.127 [917] Principle. The basic principle derived from the law of quasicontract is that failure of the agreed return for a payment is a ground for restitution.128 This principle has been rationalised as an illustration of unjust enrichment.129 Deane and Dawson JJ explained in Baltic Shipping [page 343] Co v Dillon (The Mikhail Lermontov)130 that ‘unjust enrichment looks to the future performance and not the bare promise as the relevant consideration’. Therefore, if there is a failure of the agreed return for a payment, there is a prima facie obligation to make restitution. Unconscionable conduct by the payee is not an ingredient of the claim. Indeed, it would be inconsistent with the analysis in David Securities Pty Ltd v Commonwealth Bank of Australia131 to conceive of such an ingredient, as an ‘independent’ element, ‘over and above’ failure of the agreed return.132 Notwithstanding this acceptance that an unjust enrichment may be established on the basis of failure of the agreed return, a strict requirement of total failure is still usually applied.133 The courts also continue to use the total failure of consideration terminology.134 Indeed, the claim is still sometimes described as quasi-contractual in nature,135 and the ‘money had and received’ analysis enshrined in the common counts continues to be invoked in the Australian cases.136 Although the subject of statutory qualification,137 the present position draws on the distinction between transactions rescinded ab initio for misrepresentation or mistake, and transactions merely discharged in futuro. [page 344]

In cases of rescission ab initio, a plaintiff may recover a payment made because rescission implies a total failure of consideration, or adjustments that take account of any benefit received by the plaintiff.138 By contrast, discharge is not synonymous with a total failure of consideration, and must be shown to be the consequence of discharge.139 [918] Reasons for the requirement of total failure. Putting cases of fraud to one side, four (interrelated) reasons derived from the law of quasi-contract have been used to justify the requirement of total failure. First, the common law knows no concept of apportionment of contractual payments independently of the intention of the parties. Thus, if a plaintiff who has paid a lump sum to the defendant is benefited by the receipt of some part of the agreed return, it is not open to the court to order restitution of part of the payment. But in some contexts apportionment is required under statute.140 Second, if a lump sum payment was made, and the plaintiff benefited from the receipt of the defendant’s performance, it was not open to a court applying common law principles to award the plaintiff the full amount of the payment, subject to an order in favour of the defendant for the value of the benefit conferred. This illustrates the common law’s limited ability to make orders in adjustment, to achieve restitutio in integrum, that is, restitution and counter-restitution.141 The idea does not govern cases of rescission where counter-restitution is exacted as the price of restitution.142 Third, formerly, the mere fact that the contract was to some extent unperformed, with the possibility of a claim for damages for breach of contract, meant that the contract was still ‘open’.143 In such a situation, no contract could be implied. Initially this may have been an insistence on rescission ab initio as a necessary element of any claim to obtain restitution of a contractual payment. However, the modern cases treat discharge as sufficient.144 Many contracts which would formerly have been regarded as ‘open’ are today regarded as discharged contracts.145 Fourth, common law courts did not conceive that legal title to property could be revested by a unilateral act.146 Accordingly,

enjoyment of title, even for a short time, was a sufficient basis to deny restitution for a payment made prior to the transfer of the property interest.147 This is, again, an insistence [page 345] of rescission ab initio. In other words, restitution was denied because the plaintiff was disentitled to ‘rescind’. Since it is now accepted that discharge is a sufficient setting for restitution, and that property in goods may revest on an election to terminate a contract,148 the mere fact that the plaintiff obtained some benefit is no longer conclusive. [919] Role of the promisor’s promise. Payments made under contracts are made on terms. So much is trite and needs no authority.149 It follows that before any restitutionary claim can be considered the contract must be construed. There may be a contractual right of recovery. If so, recourse to restitution is neither necessary nor permissible.150 The order of performance is significant. So also are labels, as is the classification of payments according to whether they are ‘payments in earnest’, ‘part payments’ or ‘unconditional’ payments. These labels state construction conclusions about the nature of the payment. When the modern law of contract began to emerge, contractual promises were classified as being either dependent or independent.151 The presumption, until well into the eighteenth century, was that promises were independent. A promisor who makes an independent promise does not bargain for the promisee’s performance. The agreed return is the promisee’s promise. Except in cases where there is in fact no contract, no failure of consideration could occur.152 The only action available in respect of a defendant’s failure to perform was an action on the promise.153 However, the law changed at the end of the eighteenth century, when the former presumption was reversed. Therefore, each party’s promise to perform is today presumed to be dependent on prior or contemporaneous occurrence of an event (‘condition precedent’),

usually (substantial) performance by the other party.154 The presumption of dependency of obligation gave the concept of total failure of consideration much greater scope for operation. Today, reference is seldom made to the distinction between dependent and independent promises. In part this is simply due to the presumption of dependency of obligation: the agreed return of each party’s performance is presumed to be performance by the other. It is also due to the modern focus [page 346] of contract law on discharge rather than the order of performance.155 Clearly, however, in order for an issue of restitution to arise, a payment of some sort must have been made prior to performance by the payee falling due. The first step in a restitutionary analysis is therefore to identify the agreed return for any such payment. This is a reference to a ‘benefit bargained for under the contract or purported contract’.156 The second step is to determine whether, and to what extent, there has been a failure of the agreed return. Both are discussed below.157

(ii) The agreed return [920] Identification of the agreed return. It follows from the presumption of dependency of obligation that in most executory contracts the agreed return for a payment is substantial performance by the payee. Usually, this is reflected in the order of performance. Thus, in employment contracts, building contracts and other lump sum contracts for the provision of services, the assumption is that performance must precede payment. And in relation to contracts of sale, performance is presumed to be concurrent, so that the price is payable in return for the goods or land. In all these cases, performance is a condition precedent to payment of the contract sum. If the price is paid in anticipation of performance, the dependent nature of the parties’ obligations leads to the conclusion that if no part of the agreed

return was provided there is a prima facie right to restitution. Accordingly, if a buyer of land or goods pays the price in advance there is a total failure of the agreed return if the seller or vendor does not transfer title, or if title revests on discharge of the contract. Although it might be also said that such advance payments are inherently ‘conditional’, it is important not to confuse construction of the contract with the impact of the payer’s ability to seek restitution if the agreed return is not provided.158 Where a payment is ‘conditional’ as a matter of contract construction, there is no obligation to pay until the condition is fulfilled. By definition, in cases of advance payment, there is no such condition. Therefore, recovery is based on a rule of law: a liability to make restitution is imposed, not implied.159 The imposition is made on a total failure of the agreed return, and the modern rationale is unjust enrichment.160 Since rescission ab initio is no longer required, discharge of a contract is sufficient if it brings about a total failure.161 For example, in Fibrosa Spolka Akcyjna v Fairbairn Lawson [page 347] Combe Barbour Ltd162 Lord Wright said163 that ‘when money is paid under a contract it can only be claimed back as for failure of consideration where the contract is terminated as to the future’. He concluded:164 The right in such a case to claim repayment of money paid in advance must in principle, in my judgment, attach at the moment of dissolution. The payment was originally conditional. The condition of retaining it is eventual performance. Accordingly, when that condition fails, the right to retain the money must simultaneously fail. It is not like a claim for damages for breach of the contract which would generally differ in measure and amount, nor is it a claim under the contract.

The condition of retention to which Lord Wright refers relates to the title of the payee to retain the money.165 In other words, the ‘condition’ relates to retention. There are also contracts the performance of which is conditional on

the occurrence of an event (‘condition precedent’) which neither party has promised to bring about. For example, the obligation to perform a contract may be conditional on approval by a government authority, or the performance of a sale of land contract may depend on fulfilment of a condition precedent expressed in a ‘subject to’ clause. For such contracts, if the condition precedent is not satisfied, the parties will usually be discharged. It is the fact of discharge which may bring about a failure of the agreed return. Therefore, failure of the condition precedent and failure of the agreed return are distinct issues.166 Of course, a payer may merely have bargained for a promise.167 For example, the sale of goods legislation contemplates that a buyer may promise to pay for goods on a day certain irrespective of delivery.168 This is a codification of a sale of land case decided in the seventeenth century.169 In such situations, the scope for a restitutionary relief is limited. [921] Classification of payments over time. Transactions which provide for the payment of money over time, or in proportion to performance, pose analytical problems. These contracts take various forms. However, there are four main categories. The first is an executed contract, as where a debtor promises to make periodic payments of principal and interest in repayment of a loan. It is hardly ever meaningful to speak of failure of the agreed return for any of those payments. Unless the agreement is void, restitutionary issues rarely arise. The second is a contract which provides for periodic payments but does not apportion the payee’s performance according to the payments made. In cases of sale where title is conferred when the final payment is made, the agreed return fails if the contract is discharged or rescinded prior to [page 348] performance by the seller. More difficult are contracts where there is an

element of work. The mere fact that the contract requires payments to be made on specific dates does not establish a distinct (severable) agreed return for each payment. There is, in other words, an issue of contract construction.170 Third, rather than being apportioned over time, payments may be apportioned to performance. Thus, a contract for the sale of goods may provide for instalment deliveries, each with its own price. These are ‘severable’ contracts, that is, contracts in which the agreed return for each payment is performance by the other party of a distinct (severable) part of the contract.171 The question is whether any part of the severable agreed return has been received. There is a contrast with contracts where there is an entitlement to progress payments as work proceeds under a lump sum contract. These are not severable contracts.172 Periodic payments under contracts of hire and lease illustrate a fourth category. The agreed return is the right to enjoy the subject matter (or actual use), for the period covered by the payment. A hirer or lessee of goods or land will therefore almost invariably fail in a claim to recover a payment if the right of use has been enjoyed.173

(iii) Failure of consideration [922] Failure of consideration as a basis for restitution. The recognition that restitution is available on a total failure of the agreed return means that it is an ‘unjust factor’,174 that is, an established basis for restitution under an unjust enrichment analysis.175 It is, moreover, independent of fault, and may therefore be invoked by a party in breach of contract.176 Provision of part of the agreed return is treated in the same way as receipt of the whole. Due to the requirement of a total failure, the concept has produced some rough justice. As was pointed out in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd,177 if the defendant has relied on the contractual payment and incurred expenditure, a total failure of the agreed return implies that the defendant must make restitution without deduction for its reliance loss.

However, some instances of reliance can now be addressed under the change of position defence.178 But the total failure criterion remains the principal basis for establishing a prima facie claim to restitution.179 It applies whether or not the promise to render the agreed return was enforceable by the payer. [page 349] [923] Failure of condition. At the heart of the quasi-contractual concept of total failure of consideration is the idea that contracts contemplate an exchange of performances.180 It is because the expression ‘total failure of consideration’ emphasises a ‘failure in performance’, that our preference is to use the expression total failure of the agreed return.181 It eliminates the word ‘consideration’, and emphasises the need to consider whether any part of the agreed return has been rendered for the payment at issue. In most cases of total failure, the payment will have been made in discharge of an unconditional obligation. For example, in McDonald v Dennys Lascelles Ltd182 Dixon J explained183 that where a contract for the sale of land requires instalment payments, in making the payments the purchaser is ‘relying only on the vendor’s promise to give him a conveyance’. Therefore, as a matter of construction, the purchaser’s payments are unconditional.184 But he also explained185 that the vendor’s ‘title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract’. This ‘condition’ is not an implied term of the contract. Rather, as was noted above,186 it is a statement of effect of the law of restitution. The impact is that the right to retain a payment is conditional on the agreed return for the payment not failing totally. Unless that point is taken, it is misleading to say that the basis for recovery is ‘failure of condition’. However, it is hardly surprising that there is some support for ‘failure of condition’ as a more general basis for restitution which is independent of failure of the agreed return.187 One problem is that this

sounds like a contractual rationalisation188 which begs the question of why the ‘condition’ should be ‘receipt of part of the agreed return’ — rather than ‘receipt of all of the agreed return’. The law generally insists on the former as a basis for restitution. Even more problematic are suggestions in favour of vague concepts such as ‘failure of basis’ or that a ‘state of affairs has failed to sustain itself’.189 Contractual assumptions about such matters have never of themselves provided bases for restitution. Indeed, even the failure of an express condition precedent to performance is insufficient unless there is a contractual right of recovery or a total failure of the agreed return can also be established. The balance of Australian authority therefore treats failure of [page 350] the agreed return as the controlling concept: failure of condition may bring about a total failure.190

(iv) Scope and application [924] Introduction. In analysing the scope and application of the concept of failure of the agreed return, six issues are considered below:191 (1) whether the concept may be excluded by agreement; (2) whether a total failure is required under the concept of unjust enrichment; (3) the relevance of the basis on which the contract is classified as ineffective; (4) whether the concept applies to restitution for a non-monetary benefit; (5) modification of the concept by statute; and (6) whether the concept should be rejected in favour of a contractual analysis.

[925] Payments on terms. Whatever view may be taken presumptively about the agreed return for a payment made under a contract,192 it is open to the parties to reach a different agreement. The contract may exclude recovery on the basis of failure of the agreed return. A familiar technique is to employ a forfeiture clause. Such provisions are very common in relation to deposit payments. They do not necessarily exclude the possibility of restitution, since relief against forfeiture may be granted under statute, or the general law.193 There are two more general situations. One is where payment is made for an executed consideration.194 The other is where the contract expressly or impliedly provides for the return of a payment on the occurrence of a specified event.195 Alternative analyses in contract and restitution may also be open.196 [926] Requirement of total failure. Although the subject of much academic criticism, the quasi-contractual concept of total failure197 continues [page 351] to be applied.198 Therefore, once the agreed return has been identified, the provision of part of the agreed return for the payment is generally sufficient to bar a restitutionary claim.199 Application of the requirement of total failure of agreed return may therefore result in the retention of a sum substantially in excess of the value of any benefit conferred. There is nothing in the cases to suggest that recognition of unjust enrichment produces a different result.200 In Commonwealth of Australia v Amann Aviation Pty Ltd,201 Deane J suggested that in a case of partial failure of consideration, ‘restitution or unjust enrichment’ may ‘found a direct action for the excess of money paid … over the value of any consideration actually received’, if breach by the defendant led to the contract being ineffective, and the ‘circumstances are such that it would be unconscionable conduct on the part of the guilty party to retain the excess’. However, since the

payer is entitled to damages this is hardly a critical situation. Application of Deane J’s approach to other situations would see a major change in the law.202 There has in fact been some relaxation of the requirement. Substantial performance is generally sufficient to enable recovery of the contract price.203 A substantial failure in performance disentitles a plaintiff to recover the contract sum. From a restitutionary perspective, the corollary is that substantial failure of the agreed return is a sufficient basis for restitution. This is how the total failure requirement is applied in practice.204 Therefore, as Mason CJ said in Baltic Shipping Co v Dillon (The Mikhail Lermontov),205 there cannot be a total failure if the incomplete performance results in the payer receiving and retaining ‘any substantial part of the benefit expected under the contract’. [927] Relevance of classification of ineffective contracts. Four points can be made about the relevance of classification. First, in many cases it will be so obvious that a payment must be ‘returned’ that sophisticated analysis is unnecessary. Thus, if the payee tendered no performance, analysis in terms of why the contract is ineffective will often be otiose. Second, the concept of total failure of the agreed return has been applied to all types of ineffective contract. This includes cases in which the contract [page 352] is void or fails to materialise. Accordingly, an ‘agreed return’ need not be the performance of a contractually binding promise.206 Third, total failure of the agreed return is not usually available as a basis for restitution if the contract is ineffective because it is illegal.207 But in that context restitution may be available even though there is no failure of the agreed return.208 Fourth, where a contract is rescinded for invalidating cause, although

a total failure of the agreed return is sufficient, it is not required. Instead, the requirement of restitutio in integrum is applied.209 [928] Failure of consideration and quantum meruit. Arguments in favour of applying failure of the agreed return where the restitutionary claim is based on conferral of a non-monetary benefit appear to have two related objectives. The first is to provide uniformity by application of a single basis for restitution.210 If the defendant provided no part of the agreed return for the other party’s performance, the argument is that the right to restitution should not depend on the nature of the agreed return. The second objective is to reject,211 or at least lessen the importance of,212 free acceptance as the basis for restitution for a non-monetary benefit. Free acceptance relies on a defendant’s conduct in accepting a (non-monetary) benefit when there was a reasonable opportunity to reject it.213 Failure of the agreed return emphasises the plaintiff’s position. Applying failure of the agreed return to non-monetary benefits would avoid the need to rely on the defendant’s conduct.214 It is notoriously difficult for a plaintiff in breach of contract to obtain restitution for a non-monetary benefit,215 and the assumption is that employing total failure of the agreed return would reduce the significance of the fact of breach. We regard acceptance of benefit as the principal criterion in relation to non-monetary benefits under Australian law. Apart from being supported [page 353] by authority,216 acceptance is in our view the relevant criterion. Because receipt of money is always beneficial, enrichment of the defendant is not in issue where failure of the agreed return is the basis for restitution.217 But in cases where restitution in respect of a nonmonetary benefit is sought, enrichment may be problematic. There is an obvious ellipsis in the transfer of failure of the agreed return to non-

monetary benefits: it assumes an objective concept of benefit which Australian law has not embraced.218 By contrast, the movement towards a generalised theory of unjust enrichment under English law has included some support for ‘failure of consideration’ as a justification for awarding reasonable remuneration.219 A prima facie claim for restitution (on the basis of total failure of the agreed return) is established if the total contract price was paid in advance and the defendant rendered no performance. But unless the contract is void or unenforceable, full performance of a non-monetary obligation can only lead to recovery of the contract sum. In cases where there is a part payment, the prima facie claim for restitution is again established if no performance was rendered. But partial non-monetary performance is not analogous. Consider then the position of a plaintiff who agrees to build a house on the defendant’s land. If the house is, say, one-third complete when the plaintiff abandons the contract there is no contractual entitlement. However, if the contract has been discharged it is open to a court to award restitution, provided that benefit and injustice are established. Treating ‘failure of the agreed return’ as equivalent to ‘no contractual entitlement’, it might be said that there is a failure of the agreed return. Enrichment might be judged by reference to the contractual request, but whether partial compliance with the request enriched the defendant remains an issue.220 The law of quasi-contract was clear on this point: an additional factor — acceptance of benefit — was required. Mere receipt was not regarded as ‘acceptance’, and the contractual allocation of risk excluded any restitutionary claim.221 There is no reason why recognition of unjust enrichment as the rationale for restitution in cases of failure of the agreed return should make any difference. And in the application of unjust enrichment to reasonable remuneration claims, even if partial satisfaction of a contractual request should now be regarded as beneficial, the element of injustice remains. Merely reciting part performance is not sufficient to establish injustice — by acceptance of a benefit or otherwise. The difference lies in the nature of money as a benefit.222 Unless the benefit is capable of being returned, there is no

analogy with the receipt of a part payment. It is not meaningful to say that the agreed return for one-third of a house is performance of the [page 354] promise to pay for the completed structure, in the same way that the agreed return for payment of part of the price of land is transfer of title. [929] Statutory modification. In particular contexts the scope for insistence on the requirement of total failure of the agreed return has been narrowed by statute. There are illustrations in relation to each category of ineffective contract.223 For example, the concept has been abandoned under the frustrated contracts legislation.224 [930] Contractual analysis. Proof of total failure of the agreed return establishes a prima facie right to restitution. One problem with analysis in terms of ‘failure of condition’225 is that it is apt to suggest that recovery is really contractual. In Stocznia Gdanska SA v Latvian Shipping Co,226 no less an authority than Lord Goff said that in contracts for the sale of goods or land, the ‘buyer’s remedy is contractual, the seller’s title to retain the money being conditional upon his completing the contract’. Indeed, he thought that McDonald v Dennys Lascelles Ltd227 was decided on that basis. With respect, this analysis is clearly incorrect. There are four points. First, a promise to make a part payment creates an obligation to pay a contract debt. Unless there is a condition precedent to payment, that debt is incurred when the contract is entered into, notwithstanding that the obligation to pay may be future.228 It is simply incorrect to suggest that because the contract is one of sale there is an implied term requiring repayment of a sum of money, derived simply from the nature of the contract.229 Second, in McDonald Dixon J characterised230 the ‘legal right to the return of the purchase money’ as an ‘implication made at law’. Clearly, he was not referring to an implied term. We see no reason to depart from this.231 Construction of the contract is the basis for identifying the

agreed return, and also the circumstances in which it fails. But the source of the right to restitution is external. The modern understanding is that the ‘implication made at law’ arises because the requirements of unjust enrichment are satisfied. Unjust enrichment is not an issue if there is a contractual right to repayment, and McDonald proceeds on the basis that there is no such [page 355] right.232 The fact that Dixon J’s analysis may posit a proprietary base233 has not been seen as inconsistent with the unjust enrichment rationale.234 But it is clearly inconsistent with a contractual analysis.235 Third, if A makes a payment to B which is received conditionally, it will also be conditional in the hands of an assignee. Treating every part payment towards the price of an asset as conditional on the payer’s receipt of title to the asset would cause considerable difficulty for receivables financing. The established commercial understanding contradicts a conditional payment approach.236 Fourth, similarly, if payment by A to B towards the price of an asset creates a conditional contractual obligation to repay, it would also create a contingent liability for an equal amount. However, that is clearly not the established understanding of B’s legal position. There is abundant authority237 to the effect that a seller of land or goods does not incur a contingent debt on receipt of a part payment.

(d) Benefit and Acceptance [931] Introduction. A court which orders pecuniary restitution must determine a money sum. There is no doubt that anything of economic value may count as a ‘benefit’ under an unjust enrichment analysis. Nevertheless, whether there are limits to the factual benefits capable of being the subject of a claim for restitution has been debated. This is discussed below in an investigation of the criteria used to

establish that the benefit at issue is one for which restitution may be available. Equally, however, the traditional view is that ‘benefit’ does not refer simply to any increase in the defendant’s wealth which can be attributed to steps taken by a party to an ineffective contract.238 This leads to a consideration of the connection required between the alleged benefit and the defendant’s conduct. [932] Incontrovertible benefits. An ‘incontrovertible’ benefit is one which no reasonable person could deny.239 Money is such a benefit. The concept also includes a (non-monetary) receipt realised in money. There is undoubted support for this concept in the modern cases. It may explain [page 356] Cadorange Pty Ltd v Tanga Holdings Pty Ltd.240 A company made improvements to land in anticipation of an inter-company transaction amounting to a contract. Young J held that restitution was available. This took the form of an equitable lien or charge over the proceeds obtained by the company’s liquidator on the sale of the land. The concept may sometimes extend to a benefit which is merely realisable in money.241 Incontrovertible benefit also includes the saving of a necessary expenditure,242 an idea which may explain the difficult decision in Craven-Ellis v Canons Ltd.243 In that case, services were rendered by the plaintiff as the defendants’ managing director in circumstances where the contract was void, and the request that the services be rendered therefore vitiated, by the failure of the defendants’ directors to acquire their qualification shares in time. Greer LJ said244 that the defendants were saved a necessary expenditure: if the plaintiff had not performed the services, the defendants ‘would have had to get some other agent’ to carry them out. Nevertheless, there are many situations in which even a reasonable

person might deny that a benefit has been received. Thus, a nonmonetary receipt is not regarded as an incontrovertible benefit simply because there has been an increase in the defendant’s wealth, or the defendant has been saved an expense which might have been incurred. Similarly, a defendant is not incontrovertibly benefited merely because the plaintiff has, by performing services for the defendant, lost the opportunity to perform the same services for someone else.245 [933] Requested benefits. The common indebitatus counts relating to non-monetary benefits conferred under ineffective contracts required proof [page 357] of a prior request by the defendant.246 They therefore suggested a general rule that restitution is not available in respect of unrequested benefits.247 The key case in quasi-contract was Cutter v Powell,248 where the court refused to award reasonable remuneration for work done by a seaman until his death prior to the completion of the voyage.249 The case was seen as illustrating a general principle. Expressed in modern terms, reasonable remuneration was not available for the partial discharge of a non-monetary obligation. The position of a plaintiff in breach of contract was treated as obvious.250 Restitution was not available unless a contract could be implied. In effect, a plaintiff who had partially fulfilled a contractual request was in the same position as a plaintiff who had performed unrequested services. There were two main qualifications. A plaintiff could recover on a quantum meruit where the transaction became ineffective due to the defendant’s breach.251 In addition, a contract would be implied in favour of the plaintiff if the defendant freely accepted the non-monetary benefit.252 Following the demise of the implied contract analysis, the elements of unjust enrichment are the principal focus for any claim for reasonable remuneration by way of restitution. The analysis is relevant

only if no contractual claim is available. A plaintiff who has discharged a non-monetary obligation for which there is an (express or implied) agreed return, and thereby satisfied the request expressed in the contract, is entitled to sue in contract for the agreed return.253 The enrichment of the defendant is attributable to its obligation to accept performance which is in accordance with the contract. Except where the contract is void or unenforceable, restitutionary principles do not come into play.254 However, if no remedy in contract (other than damages) is available, restitution for unjust enrichment may become relevant. Thus, as under the law of quasi-contract, a plaintiff who partially performed a contract prior to its discharge (by the plaintiff) for breach by the defendant is entitled to claim restitution.255 But in other situations, even allowing for the fact that a request need not be express,256 and that an unrequested benefit may be [page 358] accepted,257 the general rule remains that the defendant must have requested and accepted the benefit in respect of which the plaintiff seeks restitution.258 Nevertheless, the movement — at least under English law — towards a generalised theory of restitution259 has included reliance on a more objective concept of benefit.260 Of course, the emphasis on prior request does not impact on all claims in respect of non-monetary benefits. For example, the jurisdiction to make awards under the concept of restitutio in integrum is independent of request. Accordingly, if a contract is rescinded for misrepresentation, restitution may be awarded for improvements to property prior to rescission as an adjustment necessary to achieve what is practically just between the parties.261 [934] Accepted benefits. Under the law of quasi-contract, free acceptance of work done or work and materials supplied led to liability to pay a reasonable sum (quantum meruit). Acceptance was considered

relevant to an understanding that services were not rendered gratuitously,262 and to whether a contract should be implied.263 In the leading Australian case, Steele v Tardiani,264 Dixon J referred265 to ‘taking the benefit’ of work as a circumstance ‘removing’ the ‘right to remuneration from the exact conditions of the special contract’. However, except in the sale of goods context, free acceptance was rarely established. Moreover, when the sale of goods legislation was enacted, ‘acceptance’ of goods meant that the buyer was liable to pay the contract price. Therefore, many claims which would otherwise have been quasi-contractual became claims to recover contract debts.266 In most circumstances, but particularly in claims for work done on the defendant’s land, no contract would be implied unless there was informed and free choice between retaining and rejecting the benefit conferred. As Collins LJ said in Sumpter v Hedges,267 it is ‘only where the circumstances are such as to give that option that there is any evidence on which to ground [page 359] the inference of a new contract’. In Metcalfe v Britannia Ironworks Co,268 Lord Coleridge CJ explained that there must be ‘acceptance amounting to a voluntary acceptance’ in order to make a consignee liable under an implied contract for goods carried to the wrong port. By contrast, in cases where the defendant breached the contract, proof of free acceptance was not required.269 Rejection of the implied contract theory does not negate the concept of ‘acceptance’ in the modern law.270 Since restitution is conceived as a remedy which is independent of contract, some factor additional to a defendant’s receipt of value under the contract must be established. Unlike money, services are not necessarily beneficial, even in an objective sense. Therefore, putting cases of incontrovertible benefit to one side, ‘acceptance of benefit’ plays a major role even under an unjust enrichment analysis.271 Even so, its role is a matter of controversy. One view is that free acceptance establishes both benefit

and injustice.272 Free acceptance is an appropriate rationale for success by a plaintiff in relation to an unrequested benefit.273 However, in other contexts, the role of acceptance is different. Where liability to pay reasonable remuneration is based on full performance of an inherently ineffective contract, the concept is ‘constructive acceptance’.274 In that context, free acceptance is not required to establish either benefit or injustice. For situations in which a request is fulfilled in part, the position is more complex. If the contract was discharged for the defendant’s breach or repudiation, free acceptance need not be established. In so far as acceptance has a role, the requirement is deemed to be satisfied.275 It also seems clear that in these cases ‘benefit’ is established objectively. By contrast, if the contract was discharged for the plaintiff’s breach or repudiation, acceptance must be established independently of the contract. The same is true if neither party was in breach. Arguably, in these cases acceptance has the same dual role occupied where services are unrequested.276 However, a more logical approach would be to say that partial satisfaction of a request is a benefit, so that acceptance goes only to injustice in retention without payment. The logic is that since receipt of part performance is a benefit when the issue is [page 360] whether an agreed return has totally failed, it would be perverse for the law to apply the contrary view in relation to services.277 The importance of the point is that other bases for restitution, such as mistake or unconscionable conduct, may operate in cases where acceptance cannot be established. However, once acceptance is proved, the plaintiff is not required to establish unconscionable conduct or some other additional element going to the justice of the case.278 [935] Services with no end product. It is sometimes suggested that, in its application to services, unjust enrichment should be

restricted to services which have an end product.279 We do not subscribe to the view that unjust enrichment is inapplicable to ineffective contracts for these ‘pure’ services.280 Contract is made available by society to all industries, trades and professions. It operates for the benefit of everyone. For those who supply raw materials, participate in the manufacturing process, build skyscrapers or modest houses and those who deal in choses in action or merely express opinions, contract operates as a facilitating and sanctioning institution. Human capital is regarded equally with the other factors of production as part of the wealth of an economy. No matter what their nature, a transaction for the provision of services may be ineffective, and it would be surprising if only services having an end product were the province of unjust enrichment. For example, the fact that people are prepared to pay for the services of lawyers suggests that members of the profession confer benefits, including by expressing opinions. The same may be said of economists, accountants, and so on. The Australian cases establish a general principle that if services have a market value as services, their acceptance is capable of founding a claim in restitution for unjust enrichment.281

3. Relevance of Reliance [936] Introduction. ‘Reliance’ is, of itself, a vague concept relevant to all bases for civil liability. Most acts done by way of performance involve reliance on the contract as a legally enforceable agreement. That includes accepting performance which is in accordance with the contract. [page 361] Reliance never operates as an independent legal criterion, and it is seldom determinative.282 Thus, the mere proof of reliance on a promise does not make the promise a contract. Under orthodox analysis, in

order to constitute consideration the reliance must have been bargained-for, rather than merely anticipated. Reliance is crucial for the purposes of concepts such as estoppel and misrepresentation. In contexts such as those, it extends beyond bargained-for reliance to induced and anticipated reliance. Even so, reliance is only one of a number of components which must be established in order to obtain a remedy. Again, the statutory prohibitions283 which are a significant feature of Australian law require loss or damage in addition to reliance on the conduct prohibited.284 Where a contract is ineffective, reliance will often be misplaced, as where steps are taken in anticipation of an agreement which never materialises, or in the belief that an agreement is binding as a contract. But there is no necessary connection between reliance and the conferral of benefit. Accordingly, concepts such as estoppel which require reliance to be established, do not also require the plaintiff’s reliance to have enriched the defendant. However, if that is the position as a matter of fact, a response similar to that available under restitution for an unjust enrichment may result.285 [937] Issues. The mere fact that reliance is an element of proof in relation to some bases for civil liability does not imply that reliance is a kind of benefit for the purposes of unjust enrichment. However, several issues are raised. One is whether reliance on a request is ever the basis for a prima facie claim for reasonable remuneration. A second issue is whether reliance by a defendant on the receipt of money under an ineffective contract is a defence to a claim for restitution based on total failure of the agreed return. [938] Reliance and benefit. A restitutionary response based on unjust enrichment is possible only if the plaintiff conferred a benefit. Unjust enrichment does not address reliance on an ineffective contract as a distinct form of benefit. Obviously, an increase in a defendant’s wealth may be the consequence of a plaintiff’s reliance, and reliance of some sort is a feature of most restitutionary claims. Indeed, the emphasis of the

common counts on request286 implies that connecting the benefit received by the defendant with reliance by the plaintiff on the defendant’s request has always been seen as important. Thus, if a defendant has requested work under an ineffective transaction, a benefit may accrue directly from the plaintiff’s reliance. Benefit may also include the saving of an expense,287 which may occur because the plaintiff relied on an ineffective transaction. But in neither case is it sufficient for a plaintiff to [page 362] recite reliance on conduct or a transaction: the plaintiff must also show that the defendant benefited from that reliance.288 The general requirement for restitutionary liability to pay reasonable remuneration is that the defendant accepted the benefit conferred. Even though a defendant’s request for performance may be vitiated, reliance by the plaintiff on the ineffective contract serves to explain why the defendant has been benefited. To the extent that reliance goes to the justice of the plaintiff’s claim, there is an obvious contrast between reliance on a request and attempts to claim restitution in respect of unrequested benefits. The latter usually fail. Moreover, even though reliance may be present, it may or may not signify the enrichment of the defendant. Often, reliance will directly enrich a third party, and be characterised as a loss to the plaintiff rather than a benefit to the defendant. More generally, restitution is not available where reliance merely impoverishes the plaintiff. Indeed, to treat reliance as a distinct form of benefit would make restitution a general remedy to redress reliance loss.289 Since in most cases where money is paid under a contract the payer will believe that it was obliged to pay, ‘reliance’ tends to be somewhat ubiquitous. In other cases, it is an expectation of reward that motivates the payer. If the agreed return for a payment has totally failed the claim will succeed. But this is because the defendant has not rendered the agreed return, rather than because the plaintiff’s reliance was

legitimate. From the perspective of the payee, it would clearly be wrong to suggest that reliance on the receipt is per se a benefit to the payer, which must always defeat a claim for restitution based on total failure of the agreed return. If the law were otherwise the defence of change of position would have little work to do.290 Reliance may be relevant to cases where, although there is no direct right to claim restitution, a restitutionary response is required to achieve restitutio in integrum.291 Thus, if a plaintiff enters into a contract for the sale of land in consequence of the defendant’s misrepresentation, and improves the property prior to rescission, restitution may be an adjustment made to give effect to rescission. But even in this context, reliance is circumstantial, and if it does not enrich the defendant must be redressed, if at all, in a claim for compensation.292 There are American cases holding that if the defendant receives no benefit, because there is merely reliance expenditure by the plaintiff, no claim in unjust enrichment is possible.293 On the other hand, in Earhart v William [page 363] Low Co294 the Supreme Court of California overruled an earlier decision295 which required restitution to be based on a ‘direct benefit’, stating that a defendant ‘who receives the satisfaction of obtaining … compliance with the defendant’s request to perform services incurs an obligation to pay for labor and materials expended in reliance on that request’.296 Although broadly expressed, the statement was made in the context of a case where work was done on the defendant’s land. Moreover, and consistently with the Australian approach to services with no end product, it appears that the ‘satisfaction’ of a request justifies a claim for restitution only if reliance was beneficial to the defendant.297 [939]

Forms of reliance. Although not necessarily helpful, it is

possible to classify reliance. The most important form is ‘bargained-for reliance’, that is, purchased reliance. Discharge of an obligation is reliance which was bargained-for by the defendant. One form is performance which has a designated agreed return, and is therefore referable to a distinct reciprocal promise. Another form is ‘reliance in performance’, that is, discharge of an obligation for which there is no designated agreed return. A broader form is ‘anticipated reliance’. Thus, where a work and materials contract is entered into, it can be anticipated that money will be spent in reliance, for example, in purchasing materials. Such reliance does not count as performance of the contract. These forms of reliance can be contrasted with ‘unanticipated reliance’. If A tells B that it is contemplating a contract, expenditure by B in the belief that a contract will materialise is generally, from A’s perspective, unanticipated.298 Clearly, it is also unrequested. [940] Reliance and claims for reasonable remuneration. Since reliance is not per se a benefit, consideration of the various forms of reliance is not particularly informative. Proof of enrichment usually requires proof of acceptance, so that it is the defendant’s conduct, rather than that of the plaintiff, which is at issue. This is clearly the case where reliance is unanticipated. Factual benefit to the defendant is generally insufficient.299 In a claim for reasonable remuneration there must be request or an element of risk sharing. The line of cases of which Planché v Colburn300 is the root appears to contradict the general approach that reliance does not generate a claim [page 364] for reasonable remuneration. These cases suggest that even though there is otherwise no benefit, a plaintiff is entitled to recover a reasonable sum if the contract is discharged for the defendant’s breach or repudiation after detrimental reliance. The cases are controversial. Notwithstanding that there is no conduct by the defendant which can

be described as ‘acceptance’, they suggest a restitutionary response in circumstances where no part of the agreed return for a promised payment has been provided by the plaintiff. Nor does the plaintiff have to give any credit for whatever benefit accrued through its reliance. In addition, restitution may be awarded even though the plaintiff could have proceeded by way of damages.301 There are, on any view, formidable objections to this line of cases. In order to justify these cases, it is necessary to say that the defendant is deemed to have been benefited.302 However, given that the plaintiff enjoys a right to claim damages, it is difficult to see why this view should be taken.303 Recognition of a right to ‘restitution’ seems entirely gratuitous. Enrichment ought always to be a matter of proof.304 Enrichment of a third party, or mere detriment to the plaintiff, cannot logically be said to benefit the defendant. To take the contrary view risks converting restitution into a general remedy for reliance loss.305 [941] Reliance and total failure of consideration. The proper approach to establishing a prima facie claim based on failure of the agreed return is clear. What matters is whether part of the agreed return for the payment sought to be recovered was provided. A prima facie right to restitution arises if no part of the agreed return was received. Reliance after payment goes to the defence of change of position.306 Policy points in the same direction. The policy basis for not treating detrimental reliance by a defendant as defeating the claim is the general requirement that the failure be total. Even today, the claim is by definition a narrow one. Failure of the agreed return would nearly vanish as a basis for restitution if a payee’s reliance counted as a complete defence.307 Nevertheless, as noted below, it has been suggested that reliance expenditure (by the payee) can defeat a claim for restitution based on failure of the agreed return.308 Because the law does not take an entirely objective approach to ‘benefit’ there is some asymmetry between restitution for money paid under a

[page 365] contract and restitution by way of the award of reasonable remuneration. However, the latter is to some extent a test for any ability to raise reliance as a defence to the former. The general rule is that expenditure in reliance does not generate a claim for reasonable remuneration.309 Preparation for performance is an obvious case.310 For example, if A and B enter into a contract for the supply of machinery, B’s expenditure in acquiring materials does not fall to be remunerated under a claim for reasonable remuneration if the contract is ineffective. By parity of reasoning, the mere fact that the defendant may have relied on the contract (or the payment), for example, in incurring expenditure, does not justify a decision that the failure of the agreed return is merely partial. Moreover, unless the contract is varied, what counts as the agreed return cannot change over time, that is, by reference to what a payee does.311 There is no evidence under the law of quasi-contract of attempts to apply the Planché v Colburn312 line of cases for claims based on total failure of consideration. There is nothing in the concept of unjust enrichment to suggest that the position is any different today. Unless reliance expenditure is the provision of an agreed return for a payment, it cannot be put forward as a defence to a claim based on total failure of the agreed return. That was the analysis in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.313 In that case, although expenses may have been incurred in the manufacture of machinery to be delivered to the buyers, there was a total failure of the agreed return: no part of the machinery was delivered. Viscount Simon LC said314 that although the manufacturer ‘may have incurred expenses in connexion with the partial carrying out of the contract’, a total failure of the agreed return nevertheless occurred when the contract was discharged by frustration prior to the manufacturer rendering part of the agreed return.315 However, certain observations in Baltic Shipping Co v Dillon (The Mikhail Lermontov)316 call the analysis in question. In the context of a

claim to recover a payment made under an entire contract, Mason CJ considered317 it ‘material’ to ascertain whether the payee is ‘required by the contract’ to perform work and incur expense before completing performance. This approach, although perhaps implying that expenditure pursuant to an obligation may itself prevent total failure of the agreed return, is consistent with the view that in construing the contract it is simply relevant to consider whether the defendant agreed to incur expenditure. However, it [page 366] is also necessary to establish that the contract identifies performance of the obligation as an element of the agreed return for the payment. McHugh J went further. He said318 that ‘if the payee has … incurred expense prior to the completion of the contract’, restitution is not available. McHugh J seems to have been of the view that expenditure in reliance on receipt of a payment may convert what would otherwise be a conditional obligation into an unconditional one. When applied to a contract under which a payee must incur expenses prior to performance, this approach effectively restricts the failure of the agreed return concept to cases where there is neither performance nor reliance. This has the potential to lead to absurd results, even if expenditure discharges an obligation. For example, assume that P pays V $100,000 as part payment for land in respect of which V must lodge (and obtain approval for) a plan of subdivision. V might spend, say, $10,000 in discharging this obligation. If P thinks better of the transaction, and repudiates liability, it may suit V to treat the contract as discharged rather than seek specific performance. V is entitled to retain the deposit, and cannot be required to account for any benefit obtained from its expenditure. However, on an analysis which treats V’s reliance as a defence to P’s claim for restitution, V can also keep the whole of the part payment. Clearly, this is not the law.319 One explanation for suggestions in favour of treating a payee’s reliance as a complete defence to a claim based on failure of the agreed

return is a conception that a payment made should be regarded as a fund from which the payee can defray expenses. But in a case like Baltic Shipping it would be quite impossible to attribute steps by the carrier to the contracts with individual passengers. Consideration of whether reliance is part of the agreed return is therefore more likely to be relevant where expenditure is referable to a single contract. Assume that is the position, but the contract is discharged. Because there is no requirement of restitutio in integrum, denying a payer’s claim would leave the payee in the happy position of being able to retain the payment and the fruits of its reliance.320 Unless that is the parties’ bargain, denying restitution on the basis that the money represented a ‘fund’ rewrites the contract. The results contemplated by Mason CJ and McHugh J can be achieved by agreement. Stocznia Gdanska SA v Latvian Shipping Co321 was a case where total failure of the agreed return was raised as a defence to an action to enforce an overdue payment under a shipbuilding contract. Lord Goff rightly said322 that whether there is a total failure does not depend on whether something tangible was received. The question is ‘whether the promisor has [page 367] performed any part of the contractual duties in respect of which the payment is due’. He distinguished Fibrosa as a simple contract of sale and purchase. In relation to the shipbuilding contract at issue, the financial commitments which the shipbuilders were bound to make supported the view that the agreed return for the buyer’s advance payments included preparatory expenditure. However, as a matter of general principle, it is impossible to treat anticipated reliance on a payment as a complete defence to a claim based on failure of the agreed return. The contract at issue in Stocznia was an elaborate scheme. However, the shipbuilders chose to make a common law claim. Had the payments sought been no more than contributions towards the price of the

vessels, the characterisation of the contract as one for the sale of future goods323 would in our view have been applicable. Failure of the agreed return would have been a defence, and any financial commitments which the shipbuilders might have made would have been irrelevant. In fact, the payments in question fell due on the occurrence of a designated event, namely, keel laying. Accordingly, the agreed return was identified by the contract. It was because the designated event had occurred that the shipbuilders were entitled to succeed. Any general reliance expenditure incurred was irrelevant. 1.

See J Beatson, ‘The Temptation of Elegance: Concurrence of Restitutionary and Contractual Claims’ in The Search for Principle, p 143; S A Smith, ‘Concurrent Liability in Contract and Unjust Enrichment’ (1999) 115 LQR 245.

2. 3.

See also [215] and further [909]. Sharma v Simposh Ltd [2013] Ch 23 at 29; [2011] EWCA Civ 1383 at [21] per Toulson LJ (with whom Laws and Black LJJ agreed).

4.

See Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, pp 253, 273. Cf J Beatson, ‘What Can Restitution do for You?’ (1989) 2 JCL 65.

5. 6. 7.

Cf [1043]. See generally on the relationship between damages and restitution [1403]–[1414]. See [215], [901] and further [909].

8. 9.

See further [903]. See further [904].

10. Similarly, where a ‘subject to’ clause introduces a condition precedent, the condition may go either to existence of the contract or its enforceability. See [1002], [1018], [1219]. 11. Benedetti v Sawiris [2014] AC 938 at 986; [2013] UKSC 50 at [114] per Lord Reed JSC. 12. See Chapter 14. 13. See [902]. See further [1002]. 14. See generally Chapter 10. For valuation issues see Chapter 14. 15. There are also examples of agreements which do not count as contracts because of the parties’ intention to that effect. See [1002]. For the treatment of contracts affected by illegality see [906], [1003], [1022]. 16. See generally Chapters 11–13. For valuation issues see Chapter 14. 17. A legally effective contract which is discharged by full performance (or by agreement) does not exemplify an ineffective contract. Therefore, restitutionary issues rarely arise. See further [1205], [1221]. 18. See [1219]. 19. See [909], [1103]. For discharge and rescission in the context of an unenforceable contract see [1003], [1015], [1019], [1032].

20. See [909]. 21. For discussion of election as a defence see [2208]. Cf [2507]–[2510] (defence of consideration). 22. See [1103]. 23. See [1103], [1111]. 24. Such an order may deny the right to treat a contract as discharged for breach, or effective exercise of the right. See [1139], [1141], [2206]. 25. See [923] (emphasis on ‘failure in performance’). 26. See further [915]–[930]. 27. See further [933], [940]. On the terminology, see [912]. 28. See [933]. 29. See [1302]. 30. See [1030]. See also [1154], [1205], [1221]. 31. See [1003], [1015], [1019], [1032]. 32. See Carter’s Breach of Contract, §3-40. 33. Cf Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 462 (referring to Lilley v Elwin (1848) 11 QB 742 at 755; 116 ER 652 at 657). 34. See generally on election Chapter 23. 35. See, eg Alati v Kruger (1955) 94 CLR 216, which also illustrates that rescission does not prevent damages being awarded in tort for fraud. 36. See generally Chapter 24. 37. See the explanation in [2213]. 38. See generally Chapter 27. 39. See generally Chapter 23, which also deals with the requirement of restitutio in integrum and other restrictions on election between rights. Some aspects of bona fide purchaser (see generally Chapter 25) and delay (see generally Chapter 27) are also relevant. 40. See generally Chapter 26. 41. See also [905]. 42. But see [1117], [1121]. 43. For a general discussion on the impact of illegality on contracts see [1013]–[1014]. 44. We deal with incapacity to contract in the context of ineffective contracts rather than in the context of defences. See Chapter 10. 45. For the role of illegality in establishing a prima facie case for restitution see [1003], [1022] and generally Chapter 26. 46. See [113], [117], [118]. 47. See generally [112]–[132]. See further [2921]–[2926] (pleading the common counts). 48. Cutter v Powell (1795) 6 TR 320; 101 ER 573 (see [933]); Planché v Colburn (1831) 8 Bing 14; 131 ER 305 (see [1168]); Appleby v Myers (1867) LR 2 CP 651 (see [1229]); Whincup v Hughes (1871) LR 6 CP 78 (see [1221]); Sumpter v Hedges [1898] 1 QB 673 (see [1155]). See also Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] AC 190 at 202.

See, eg Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194 at 201 (adopting 49. Appleby v Myers (1867) LR 2 CP 651); Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 234, 236 (adopting Cutter v Powell (1795) 6 TR 320; 101 ER 573); Steele v Tardiani (1946) 72 CLR 386 (adopting Sumpter v Hedges [1898] 1 QB 673). See also [126]–[127], [130]. 50. (1987) 162 CLR 221 at 255; 69 ALR 577. See also [131] and further [917]. 51. For earlier cases adopting restitution or unjust enrichment as the appropriate explanation in the context of ineffective contracts see: Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 61 (frustrated contract); James v Thomas H Kent & Co Ltd [1951] 1 KB 551 at 556 (unenforceable contract of employment); Stockloser v Johnson [1954] 1 QB 476 at 492 (seller of goods ought not to be unjustly enriched at the buyer’s expense); Kiriri Cotton Co Ltd v Dewani [1960] AC 192 (illegal premium paid to obtain lease recoverable as an unjust enrichment); Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 459–60 (benefit conferred under unenforceable or void contract). 52. See Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12; Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350. For cases applying Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577 to other types of ineffective transaction see, eg Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 445–6 (money paid under illegal contract); Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 (nonmonetary benefit conferred under void contract); Foran v Wight (1989) 168 CLR 385 at 438; 88 ALR 413 (money paid under contract subsequently discharged for breach); Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 and Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 (quantum meruit against party in breach). Cf Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 (illegality). See further [917]. 53. See generally on quasi-contract and inherently ineffective contracts [1003], [1004], [1020], [1024], [1025], [1030], [1040], [1042], [1045]. 54. See generally on quasi-contract and contracts discharged for breach or repudiation [1105], [1114], [1116], [1134], [1136], [1151], [1158], [1161], [1174]. 55. See generally on quasi-contract and contracts discharged without breach [1202], [1217], [1219], [1222], [1227], [1228], [1229], [1230]. 56. But it played a less significant role in relation to benefits conferred under contracts rescinded or set aside. See generally [1303], [1305], [1319], [1330]. 57. See [105], [130], [218]. 58. See [145]. 59. (1987) 162 CLR 221 at 256; 69 ALR 577. Mason and Wilson JJ agreed with Deane J’s conclusions. See also Shapiro v Solomon 42 NJ Super 377; 126 A 2d 654 at 658 (1956). 60. See [139]. 61. See the general analysis in [222]–[232]. 62. Contrast Contractual Remedies Act 1979 (NZ), s 9 (see generally Dawson and McLauchlan, The Contractual Remedies Act 1979, 1981, pp 140ff; Brian Coote, ‘Remedy and Relief under the Contractual Remedies Act 1979’ (1993) 6 JCL 141) and other legislation discussed by the Law Commission of New Zealand, Contract Statutes Review,

Report No 25, 1993. 63. See [902]–[904]. 64. See [1236]–[1268]. 65. See generally Weston v Downes (1778) 1 Doug 23; 99 ER 19; Towers v Barrett (1786) 1 TR 133; 99 ER 1014; Ehrensperger v Anderson (1848) 3 Ex 148 at 158–9; 154 ER 793 at 797; Ranger v Great Western Railway Co (1854) 5 HLC 72 at 101, 118; 10 ER 824 at 836, 843; Sumpter v Hedges [1898] 1 QB 673; Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 140–1. 66. See generally Markham v Bernales (1906) 8 WALR 208 at 210; Summers v The Commonwealth (1918) 25 CLR 144 at 152–3 (affirmed (1919) 26 CLR 180); Horton v Jones (1934) 34 SR (NSW) 359 at 367 (affirmed on other grounds (1935) 53 CLR 475); Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 236; Steele v Tardiani (1946) 72 CLR 386 at 402; Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 450–1, 462; Smith v Hartshorn (1960) 60 SR (NSW) 391 at 392–3; Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 457, 458; Flett v Deniliquin Publishing Co Ltd [1964–5] NSWR 383 at 385. 67. The proposition holds true even if the contract was induced by fraud or mistake. See also [215], [905] (general requirement of election). 68. For broader applications see [910]. 69. (1987) 162 CLR 221 at 256; 69 ALR 577. See also Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40 at 59; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 275n; Ansett Transport Industries (Operations) Pty Ltd v Alenia Aeritalia & Selenia SpA (1991) 105 FLR 169 at 174; Issitch v Worrell (2000) 172 ALR 586 at 592; [2000] FCA 477; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 577–8; 185 ALR 335; [2001] HCA 68 at [166]; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 671; 247 ALR 412; [2008] HCA 27 at [111]; Alexiadis v Zirpiadis (2013) 302 ALR 148 at 152; [2013] SASCFC 64 at [19]. And see Beale, p 210. 70. See, eg Foran v Wight (1989) 168 CLR 385 at 413, 432; 88 ALR 413; Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 356, 385; 111 ALR 289; Shephard v ANZ Banking Corp Ltd (1996) 41 NSWLR 431 at 435; National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd (1997) 217 ALR 365 at 371; Portman Building Society v Hamlyn Taylor Neck (a firm) [1998] 4 All ER 202 at 208; Fuller v Happy Shopper Markets Ltd [2001] 1 WLR 1681 at 1689. 71. But see suggestions in cases that an employer may be liable in restitution to pay a reasonable remuneration (for work accepted) if an employee intentionally breaches the contract by ‘working to rule’. See Miles v Wakefield Metropolitan District Council [1987] AC 539 at 553, 561. See also Wiluszynski v Tower Hamlets London Borough Council [1989] ICR 493. Cf Sim v Rotherham Metropolitan Borough Council [1987] Ch 216 (equitable set-off). See Carter’s Breach of Contract, §6-90. Contrast Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 450, 452, 462. See also Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 275n. 72. See [215], [901], [1214], [1305]. The view that rescission ab initio is an essential requirement has been discredited. See [918], [1106].

73. See [908]. Alternatively, there must be a statutory basis for the claim. 74. (1992) 59 SASR 344. Cf Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 262. 75. [1898] 1 QB 673 (see [1155]). 76. See generally Chapter 4. Cf Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775; [2004] EWCA Civ 47 (acceptance of mistaken transfer of registration right in relation to number plate of motor vehicle). See also Chapter 5 (compulsion) and further [1302]. 77. But genuine implied contract may also be a viable analysis. See [913], [1045], [1171], [1232]. 78. See MacDonald Dickens & Macklin (a firm) v Costello [2012] QB 244 at 251; [2011] EWCA Civ 930 at [23] (see James Goodwin, (2012) 128 LQR 503; P S Davies, [2012] CLJ 37). 79. See Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 261. See also Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 160 (secondary collateral benefit insufficient). Cf Blue Haven Enterprises Ltd v Tully [2006] UKPC 17 at [19]. 80. See Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97; 111 ALR 649. See also J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57; Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) 38 FCR 501; Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122; Peter Watts, ‘Does a Sub-contractor Have Restitutionary Rights Against the Employer?’ [1995] LMCLQ 398. Contrast United States v Algernon Blair Inc 479 F 2d 638 (CA, 4th Cir, 1973) and Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 (sub-contractor’s claim against contractor). Cf Smith v Hartshorn (1960) 60 SR (NSW) 391; Marriott Industries Pty Ltd v Mercantile Credits Ltd (1990) 55 SASR 228. 81. (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27. See Amy Goymour, [2008] CLJ 469; Mitch Riley, ‘The Conceptual Relationship Between Contract Law and Unjust Enrichment and the Decision in Lumbers v Cook’ (2011) 28 JCL 267. 82. A and B were members of the same corporate group. But relations between them were not altogether harmonious and there was evidence that C and A considered the contract as discharged. 83. (2008) 232 CLR 635 at 654; 247 ALR 412; [2008] HCA 27 at [45]. 84. See (2008) 232 CLR 635 at 674; 247 ALR 412; [2008] HCA 27 at [126]. 85. See (2008) 232 CLR 635 at 655, 663; 247 ALR 412; [2008] HCA 27 at [47], [79]. See also Winslade Partners Pty Ltd v Steri-Flow Filtration Systems (Aust) Pty Ltd (2012) 113 SASR 69 at 77; [2012] SASCFC 65 at [34]. 86. [1994] 1 WLR 161 at 166. 87. See also MacDonald Dickens & Macklin (a firm) v Costello [2012] QB 244 at 254; [2011] EWCA Civ 930 at [30] per Etherton LJ, with whom Pill and Patten LJJ agreed (‘sound legal policy’). 88. See G J Tolhurst, ‘Assignment, Equities The Trident Beauty and Restitution’ [1999] CLJ 546. Cf Daniel Friedmann, (1994) 110 LQR 521; Kit Barker, [1994] LMCLQ 305. 89. [1994] 1 WLR 161 at 164. See also MacDonald Dickens & Macklin (a firm) v Costello [2012] QB 244 at 251–2; [2011] EWCA Civ 930 at [26]; Wuhan Guoyu Logistics Group Co

Ltd v Emporiki Bank of Greece SA (No 2) [2014] 1 Lloyd’s Rep 273 at 278–9; [2013] EWCA Civ 1679 at [26]–[27]. Cf Hua Chiao Commercial Bank Ltd v Chiaphua Industries Ltd [1987] AC 99 (contractual claim). 90. Contrary results may be achieved by estoppel (see, eg Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 (estoppel against bank which promised that builder would be paid under contract with third party)) or under the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) in cases emphasising that privity of contract is not relevant (see, eg Holloway v Witham (1990) 21 NSWLR 70; Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 506; 114 ALR 355 at 390). 91. See G J Tolhurst, ‘Assignment, Equities The Trident Beauty and Restitution’ [1999] CLJ 546 at 555, 564–5. See also J W Carter and G J Tolhurst, ‘Conditional Payments and Failure of Consideration: Contract or Restitution?’ (2001) 9 APLR 1 at 17–19. 92. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 480–1. Cf Sprague v Booth [1909] AC 576 (forfeiture of assignor’s payment); McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 468, 471, 479 (vendor’s assignee in no better position than vendor in claim against guarantor). 93. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 (see [1121]); Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 especially at 53. See also Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 936, quoting French Marine v Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz [1921] 2 AC 494 at 511 per Lord Dunedin (to the same effect is the brocard of the civil law that ‘frustra petis quod mox es restiturus’); Farstad Supply AS v Enviroco Ltd [2010] Bus LR 1087 at 1096, 1107; [2010] UKSC 18 at [32], [59]. And see Carter’s Breach of Contract, §13-39. See further [1225]. 94. For a different example of the same general principle see Reading v Attorney-General [1951] AC 507 (see [1714]), referred to on this point in Attorney-General for Hong Kong v Reid [1994] 1 AC 324 at 337. 95. (1987) 162 CLR 221; 69 ALR 577. See also Benedetti v Sawiris [2014] AC 938 at 996; [2013] UKSC 50 at [147]. 96. See further [913]. 97. See further [914]. 98. Cf Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 233; 69 ALR 577; Monks v Poynice Pty Ltd (1987) 8 NSWLR 662 at 664. 99. See [145]. 100. See also British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1981) [1984] 1 All ER 504 at 509. See further [1045]. Cf [1409], [1410], [1804], [1818] (assessment of damages for breach on reasonable remuneration basis). 101. See Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 319. Where an executory contract provides for the payment of a reasonable price, the contract is enforceable unless a sale of land. In other contexts, an obligation to pay a reasonable price may be implied if the parties were not still negotiating. See generally Carter on Contract, §§04-130-04-160. See further [1037] (reasonable price for goods accepted), [1038] (goods accepted under void contract), [1045] (implied term and implied contract).

102. (1987) 162 CLR 221; 69 ALR 577. 103. Cf Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 190, 192; 312 ALR 356; [2014] HCA 32 at [30], [34] (conception of terms implied in law as ‘imposed’ obligations). 104. By similar reasoning, a contract may be implied in relation to benefits conferred under an informal variation. See further [1045], [1171], [1174]. 105. See E Allan Farnsworth, ‘Precontractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations’ (1987) 87 Col L Rev 217 at 286–7. But cf P S Atiyah, ‘Form and Substance in Legal Reasoning: The Case of Contract’ in MacCormack and Birks, The Legal Mind: Essays for Tony Honoré, 1986, p 36. 106. See S N Ball, ‘Work Carried Out in Pursuance of Letters of Intent — Contract or Restitution?’ (1983) 99 LQR 572; Ewan McKendrick, ‘The Battle of the Forms and the Law of Restitution’ (1988) 8 OJLS 197 at 207; P S Davies, ‘Anticipated Contracts: Room For Agreement’ [2010] CLJ 467. 107. See [912]. 108. See [114], [115], [119]. 109. See [1037]–[1039]. Cf [1040] (‘necessary’ goods). 110. See [1174]. 111. See [1045]. 112. See further [1037]. Where there is an element of work, the claim may be made for reasonable remuneration. Cf British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1981) [1984] 1 All ER 504 (see [1034]). 113. See generally [117]. 114. See [911]. 115. See Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 at 400; [2005] EWHC 735 (Comm) (if hire paid in advance under charterparty is recoverable to the extent overpaid because vessel was off hire, the basis is failure of consideration). See also Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164–5, 169–70. For broader issues see [923], [930]. 116. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 835 per Robert Goff J, affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352 (one ‘form of the old action for money had and received was the action to recover money paid for a consideration which wholly failed’). See also [113], [114], [115], [117], [916]. 117. See, eg Hunt v Silk (1804) 5 East 449; 102 ER 1142; Street v Blay (1831) 2 B & Ad 456; 109 ER 1212; Gompertz v Denton (1832) 1 C & M 207; 149 ER 376; Mondel v Steel (1841) 8 M & W 858 at 871; 151 ER 1288 at 1293; Fitt v Cassanet (1842) 4 Man & G 898 at 903; 134 ER 369 at 371; Blackburn v Smith (1848) 2 Ex 783 at 792; 154 ER 707 at 711; Clarke v Dickson (1858) EB & E 148; 120 ER 463; Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587; Chandler v Webster [1904] 1 KB 493 (overruled Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32). See further [1105], [1116], [1217]. 118. See generally McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477; Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 47; Stockloser v Johnson [1954] 1 QB 476 at 483, 489–90; Hyundai Heavy Industries Co Ltd v Papadopoulos [1980]

1 WLR 1129 at 1134, 1136, 1141, 1147, 1148; Foran v Wight (1989) 168 CLR 385; 88 ALR 413; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383, 389, 393; 109 ALR 57; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344; 111 ALR 289. See also Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 (context of forfeiture of deposit under land contract); Johnson v Agnew [1980] AC 367 (rescission ab initio not a remedy for breach of contract). 119. For illustrations see [1121], [1220]. See also J W Carter, ‘Discharged Contracts: Claims for Restitution’ (1997) 11 JCL 130. 120. See Marsh v Mackay [1948] St R Qd 113 (claim based on total failure of consideration on discharge of contract failed where restitutio in integrum impossible); Thorpe v Fasey [1949] 1 Ch 649 at 662–6 (part performance sufficient to prevent discharge for breach); Landers v Schmidt [1983] 1 Qd R 188 at 198 (reliance on Hunt v Silk (1804) 5 East 449; 102 ER 1142). Cf Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524 at 539–44. 121. See further [1019], [1116], [1217]. 122. See, eg Street v Blay (1831) 2 B & Ad 456; 109 ER 1212; Palmer v Temple (1839) 9 Ad & E 508 at 520, 521; 112 ER 1304 at 1309; Fitt v Cassanet (1842) 4 Man & G 898; 134 ER 369. For a recent statement see Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 355; 111 ALR 289. 123. See, eg Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587; Whincup v Hughes (1871) LR 6 CP 78; McEntire v Crossley Bros Ltd [1895] AC 457 at 464. See James Edelman, ‘The New Doctrine of Partial Failure of Consideration’ (1996) 15 Aust Bar Rev 229. 124. See, eg Griffith v Brymer (1903) 19 TLR 434; Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 412; George v Roach (1942) 67 CLR 253; Svanosio v McNamara (1956) 96 CLR 186 at 207; Elson v Prices Tailors Ltd [1963] 1 All ER 231 at 234. 125. See [145]. See also [1101]. 126. See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 48 (adopted Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 350–1, 389; 111 ALR 289). See also Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 147; Goss v Chilcott [1996] AC 788; Sharma v Simposh Ltd [2013] Ch 23 at 29; [2011] EWCA Civ 1383 at [23]; Barnes v Eastenders Cash & Carry Plc [2015] AC 1 at 42; [2014] UKSC 26 at [104]. 127. See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 53 per Lord Atkin (not necessary ‘to use the word “consideration” in two senses’). 128. We refer to failure of the agreed return in preference to total failure of consideration. See [145]. 129. See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 61 per Lord Wright (‘unjust enrichment or unjust benefit’); Foran v Wight (1989) 168 CLR 385 at 438; 88 ALR 413 per Deane J (appropriate ‘nomenclature’ in a modern context is ‘“restitution” for, or of, “unjust enrichment”’); Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 117; 104 ALR 1 per Deane J (unjust enrichment ‘gives rise to a direct right of action’); Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 375; 111 ALR 289 per Deane and Dawson JJ (‘modern substantive categorisation is as an action in unjust enrichment’). Cf Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] 1 QB 27 at 45; [2009] EWCA Civ 75 at [40] per Moore-

Bick LJ, with whom Ward and Smith LJJ agreed (‘right to recover in restitution’); Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 517; 286 ALR 12; [2012] HCA 7 at [31] per French CJ, Crennan and Kiefel JJ (‘retention … prima facie unjust’). See also [170], [208], [2904]. 130. (1993) 176 CLR 344 at 376; 111 ALR 289. 131. (1992) 175 CLR 353 at 379; 109 ALR 57 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at 616; 307 ALR 512 at 552; [2014] HCA 14 at [135]. 132. But see Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at 74; 257 ALR 658; [2009] NSWCA 186 at [128] (prima facie claim based on mistake where loan contract was void substantially defeated because the circumstances did not make retention unjust). But cf Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 556–7; 185 ALR 335; [2001] HCA 68 at [103]–[104]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 517; 286 ALR 12; [2012] HCA 7 at [32]. Cf Management 3 Group Pty Ltd (in liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2) (2011) 281 ALR 482 at 517; [2011] FCA 663 at [244]; Alexiadis v Zirpiadis (2013) 302 ALR 148 at 156; [2013] SASCFC 64 at [35]. For discussion see Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: the High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 Aust Bar Rev 284. See also [139]. 133. Statute now replaces or qualifies the common law in some cases (see, eg [1236]–[1268] (frustrated contracts legislation)) and in other cases principles derived from equity apply (see [1301]). 134. See, eg Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923, 925, 935; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 355, 385, 389; 111 ALR 289; Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164, 170; Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] 1 QB 27 at 45; [2009] EWCA Civ 75 at [40]. 135. See Foran v Wight (1989) 168 CLR 385, in reference to a claim for a deposit payment, at 413 per Mason CJ (claim ‘an appeal to the law of quasi-contract’), 432 per Brennan J (recovery ‘in quasi-contract as money paid for a consideration that had totally failed’); 88 ALR 413. See also Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 148–9. 136. See Foran v Wight (1989) 168 CLR 385 at 455; 88 ALR 413 per Dawson J (‘claim for money had and received based upon an imputed promise to repay’); Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 355; 111 ALR 289 per Mason CJ, with whom Brennan and Toohey JJ agreed (‘action to recover money paid on a total failure of consideration is on a common money count for money had and received’). See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 524, 530, 539; 185 ALR 335; [2001] HCA 68 at [14], [30], [62]. 137. See [2333] (restriction on discharge by rejection of goods in some jurisdictions). 138. There is a requirement of substantial restitution. See [1305], [1330], [1331], [1401], [1437], [2329]. 139. On the relationship between discharge and substantial restitution see [1433], [1434], [1438], [1439], [2329]. 140. See [1147], [1235]. Cf [1237], [1245]–[1252] (frustrated contracts legislation in New

South Wales). 141. In Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 545; 286 ALR 12; [2012] HCA 7 at [114], Gummow and Bell JJ linked ‘counter-restitution’ with expressions ‘disfavoured’ in Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 661, 662–3; 247 ALR 412; [2008] HCA 27 at [75], [78]. 142. See generally [1305], [1331], [1431]–[1439], [2324]–[2335]. 143. See, eg Weston v Downes (1778) 1 Doug 23 at 25; 99 ER 19 at 20; Gompertz v Denton (1832) 1 C & M 207 at 209; 149 ER 376 at 377. See also Smith’s Leading Cases, vol 2, p 9. 144. See, eg Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 450 per Latham CJ (‘special contract is no longer open’). 145. See further [1156]. 146. See, eg Street v Blay (1831) 2 B & Ad 456; 109 ER 1212. 147. See, eg Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587. 148. See [1118], [1438]. Cf [1437] (cases of rescission). In several jurisdictions the passing of property in specific goods, by barring rejection prevents a claim for restitution. See [2323]. See also [1174]. 149. See further [925]. 150. See [909], [910]. See further [925]. 151. See generally J L Montrose, ‘Conditions, Warranties and Other Contractual Terms’ (1937) 15 Can BR 309; S J Stoljar, ‘Dependent and Independent Promises’ (1957) 2 Syd LR 217; Stoljar, A History of Contract at Common Law, 1975, Chapter 12; J W Carter and C Hodgekiss, ‘Conditions and Warranties: Forebears and Descendants’ (1977) 8 Syd LR 31; Carter’s Breach of Contract, §§1-08-1-24. 152. Cf Rose v Poulton (1831) 2 B & Ad 822 at 828–9; 109 ER 1348 at 1351. 153. The presumption could be rebutted. See, eg Peeters v Opie (1671) 2 Wms Saund 346; 85 ER 1141 (building contract). 154. The key cases were Kingston v Preston (1773) 2 Doug 689; 99 ER 437; Campbell v Jones (1796) 6 TR 570; 101 ER 708; Morton v Lamb (1797) 7 TR 125 at 129; 101 ER 890. For an influential statement of the relevant (and formalistic) rules see the 6th edition of Serjeant Williams’ notes to Pordage v Cole (1669) 1 Wms Saund 319; 85 ER 449, edited by Edward Vaughan Williams and published in 1845, referred to in Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 350, 384; 111 ALR 289. See also Smith’s Leading Cases, vol 2, p 1 (notes to Cutter v Powell (1795) 6 TR 320; 101 ER 573). 155. See [1105]. 156. Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923 per Kerr LJ, with whom Nicholls LJ agreed (adopted David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382, 388; 109 ALR 57). See also Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 351; 111 ALR 289; Heckenberg v Delaforce [2000] NSWCA 137 at [58]. 157. See [920]–[923]. 158. Cf Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 351; 111

ALR 289 per Mason CJ, with whom Brennan and Toohey JJ agreed (‘right to retain the payment is conditional upon the performance of his or her obligations under the contract’). 159. See further [923], [930]. 160. See further [1016], [1018], [1113]. 161. See generally Carter’s Breach of Contract, §13-50. 162. [1943] AC 32. 163. [1943] AC 32 at 64. 164. [1943] AC 32 at 65. 165. See further [923], [930]. 166. See [1219]. 167. Cf [916] (different senses of consideration). 168. See [1128]. See also [1133]. 169. See Pordage v Cole (1669) 1 Wms Saund 319; 85 ER 449. See also Kingston v Preston (1773) 2 Doug 689 at 691; 99 ER 437 at 438. 170. See, eg [1119]. 171. See [1113], [1151], [1153], [1154], [1159]. 172. See [1153]. 173. See, eg [1132]. 174. See generally [170]–[171]. 175. See [138], [908]. 176. See further [1125], [1224]. 177. [1943] AC 32 at 49–50, 54–5, 71–2. Cf Restatement (Second) Contracts, §371 Com (b) and see further [1223]. 178. See generally Chapter 24. 179. See [926]. 180. Cf Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 555; 185 ALR 335; [2001] HCA 68 at [101]. 181. See [145]. 182. (1933) 48 CLR 457. 183. (1933) 48 CLR 457 at 477. Rich and McTiernan JJ agreed. 184. See J W Carter and G J Tolhurst, ‘Recovery of Contract Debts Following Termination for Breach’ (2009) 25 JCL 191 at 205. See further [930]. 185. (1933) 48 CLR 457 at 477. 186. See [920]. 187. See Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 386; 111 ALR 289 per Gaudron J (‘the right to have moneys refunded comes about because the condition is unsatisfied, regardless of whether there is a total failure of consideration’). Contrast Peter Jaffey, ‘Restitutionary Remedies in the Contractual Context’ (2013) 76 MLR 429 at 440ff.

188. See further [930]. Cf Martin v Pont [1993] 3 NZLR 25 (recovery where defendant’s employee appropriated a payment made for a purpose which failed). 189. But see Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 538, 557; 185 ALR 335; [2001] HCA 68 at [60], [104]. Cf Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 517; 286 ALR 12; [2012] HCA 7 at [31]. 190. See, eg Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 525, 527, 589; [2001] HCA 68 at [16], [21], [199]. Cf Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 389; 111 ALR 289 per McHugh J (‘total failure of consideration by reason of the non-fulfilment of the condition’); Barnes v Eastenders Cash & Carry Plc [2015] AC 1 at 42; [2014] UKSC 26 at [105] per Lord Toulson, with whom the other members of the court agreed (‘failure of basis’ is ‘more apt’). See further [1221]. 191. See [925]–[930]. 192. See [919], [920], [921]. 193. See [1136]–[1145]. 194. See [921]. 195. Cf R v Brown (1912) 14 CLR 17 at 25, 31. See further [930], [1016], [1126], [1216], [1219]. 196. See Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc [2015] 1 WLR 2961 at 2971; [2015] UKSC 38 at [23], [24] (implied contractual right, or restitutionary right arising as a matter of law, to recover overpayment made under statutory adjudication scheme). 197. See [916]. 198. See Foran v Wight (1989) 168 CLR 385 at 432; 88 ALR 413; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 350, 375, 389; 111 ALR 289. For illustrations see [1124], [1221]. 199. For the policy justification see Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 579; 185 ALR 335; [2001] HCA 68 at [173]. 200. See [142]. But see [916], and contrast the position under statute. See, eg [1147]. Cf [1305], [1331], [1431]–[1439] (restitutio in integrum). 201. (1991) 174 CLR 64 at 117; 104 ALR 1. 202. Cf Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 552–3; 286 ALR 12; [2012] HCA 7 at [137]. 203. See [1152]. 204. See, eg Fehlberg v Stanton [1960] ALR 299 at 304–5 per Dixon CJ, with whom the other members of the High Court agreed (‘substantially a complete failure’). 205. (1993) 176 CLR 344 at 350; 111 ALR 289. Brennan and Toohey JJ agreed. See also Frederick Wilmot-Smith, ‘Reconsidering “Total” Failure’ [2013] CLJ 414. 206. See, eg Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923. Cf Pearce v Brain [1929] 2 KB 310 at 314 (contrast between void and voidable); Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 336 (if the contract is void the consideration is recoverable in quasicontract). See also [171] and further [1015]. 207. See [2606]. See also [925]. 208. See generally Chapter 26.

209. See [1305], [1330], [1331], [1401], [1437], [1438], [1439], [2329] (requirement of substantial restitution). 210. See David Campbell, ‘Better than Fuller: A Two Interests Model of Remedies for Breach of Contract’ (2015) 78 MLR 296 at 304 (restitution theorists who advocate the idea are ‘seeking to put failure of consideration at the heart of their enterprise’). 211. See A S Burrows, ‘Free Acceptance in the Law of Restitution’ (1988) 104 LQR 576; Michael Garner, ‘The Role of Subjective Benefit in the Law of Restitution’ (1990) 10 OJLS 42. Cf Alistair Wyvill, ‘Enrichment, Restitution and the Collapsed Negotiations Cases’ (1993) 11 Aust Bar Rev 93. Contrast Mitchell McInnes, ‘Bases for Restitution: A Call for Clarity with Unjust Factors’ (1996) 10 JCL 73 at 75–6. 212. See Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 105; Birks, Future, pp 53–8. 213. Cf [1025], [1031], [1032] (constructive acceptance). 214. Cf [1231]. 215. See [1164]. 216. See [1025], [1157], [1231]. See also [157]–[158]. See further [1160] (approach would require leading cases to be overruled). 217. See Benedetti v Sawiris [2014] AC 938 at 982; [2013] UKSC 50 at [99]. 218. See also [1025] (assumes partial failure of the agreed return is a distinct basis for restitution). 219. See Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at 1774; [2008] UKHL 55 at [43]; Barnes v Eastenders Cash & Carry Plc [2015] AC 1 at 42, 44; [2014] UKSC 26 at [108], [116]. See further [1035]. 220. See further [934]. 221. See further [1162], [1227], [1228]. 222. See also [1025], [1160] (requirement of total failure). 223. See, eg [1047], [1147], [1333]–[1335]. 224. See generally [1236]–[1268]. 225. See also [923]. 226. [1998] 1 WLR 574 at 589. Lords Hoffmann, Hope and Hutton agreed. See further [1016], [1018]. 227. (1933) 48 CLR 457 at 475–9. See also [920]. 228. See Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) 19 VR 512 at 527; [2008] VSC 50 at [67]. In the sale of land context, Dixon J debated alternative views in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 465; Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566. 229. See G J Tolhurst, ‘Assignment, Equities The Trident Beauty and Restitution’ [1999] CLJ 546 at 552. Cf Fehlberg v Stanton [1960] ALR 299 at 305 (whether a payment is ‘provisional’ a question of construction). 230. (1933) 48 CLR 457 at 478. Rich and McTiernan JJ agreed. See also Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 65 (see [920]). 231. See J W Carter, ‘Shipbuilding Contracts: Not Quite the Final Chapter’ (1998) 13 JCL

156 at 162–4. 232. Even the questionable analysis of Stable J in Dies v British and International Mining and Finance Corp Ltd [1939] 1 KB 724 at 743 (see [1127]), to which Lord Goff also referred, is expressed in terms of a right of recovery which the ‘law confers’. 233. Cf Stoljar, pp 5ff. 234. See J W Carter and G J Tolhurst, ‘Conditional Payments and Failure of Consideration: Contract or Restitution?’ (2001) 9 APLR 1 at 9. 235. It is therefore odd that Lord Goff should have spoken in terms of the seller’s ‘title to retain’. See [923]. 236. See also J W Carter and G J Tolhurst, ‘Conditional Payments and Failure of Consideration: Contract or Restitution?’ (2001) 9 APLR 1 at 15. 237. See, eg Shephard v ANZ Banking Corp Ltd (1996) 41 NSWLR 431 at 435; Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) 19 VR 512 at 531; [2008] VSC 50 at [81]. 238. See [142], [143], [146]. Cf [135], [142], [166], [207] (‘injustice’ does not mean abstract unfairness). 239. See generally [151]–[153]. Contrast Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 638; 247 ALR 412; [2008] HCA 27 per Gummow J (arguendo) (‘just a slogan’); but cf (2008) 232 CLR 635 at 661 n71. 240. (1990) 20 NSWLR 26. 241. See Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775; [2004] EWCA Civ 47. See also Van den Berg v Giles [1979] 2 NZLR 111 (acceptance or incontrovertible benefit in improvements to defendant’s property); Marston Construction Co Ltd v Kigass Ltd (1989) 46 BLR 109 at 126 (see [1036]). Cf Anderson v Schultz (1975) 62 DLR (3d) 762 (provision of rent free accommodation); Rowe v Vale of White Horse District Council [2003] 1 Lloyd’s Rep 418 at 421; [2003] EWHC 388 (Admin) at [12] (common ground). But cf Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752; [2008] UKHL 55 (unlocking potential value of property was not extent of enrichment). 242. See Benedetti v Sawiris [2014] AC 938 at 960; [2013] UKSC 50 at [25]. But see John P Dawson, ‘Restitution Without Enrichment’ (1981) 61 Boston ULR 563 at 612 (the ‘shifty phrase, “saving of expenditure” … should be shunned like a contagious disease’). 243. [1936] 2 KB 403. See further [1027] (acceptance). 244. [1936] 2 KB 403 at 412. Contrast Tito v Waddell (No 2) [1977] Ch 106 (failure by defendants to incur expenses in accordance with contract term did not amount to benefit); Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co (The Manila) [1988] 3 All ER 843 at 855 (buyers’ funding of extra freight on shipowners’ insolvency was not incontrovertible benefit to sellers), see James Cooper, [1989] LMCLQ 397; Ewan McKendrick, [1989] LMCLQ 401; Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 (no more than an incidental benefit proved), see Mitchell McInnes, (1993) 109 LQR 521. 245. See further [1027], [1036], [1156], [1160], [1170], [1231], [1418], [1430], [1437], [1438], [1439]. 246. See [115], [118], [119]. Cf T J Sullivan, ‘The Concept of Benefit in the Law of QuasiContract’ (1975) 64 Geo LJ 1.

247. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 665; 247 ALR 412; [2008] HCA 27 at [86]. See also [147], [157]. 248. (1795) 6 TR 320; 101 ER 573. See further [1229], [1231]. 249. Although the common rate of wages was £4 per month, the agreement was to pay 30 guineas for 10 days. There was a very clear contractual risk allocation. See (1795) 6 TR 320 at 324; 101 ER 573 at 576 per Lord Kenyon CJ (‘it was a kind of insurance’). See S M Waddams, ‘Restitution for the Part Performer’ in Reiter and Swan, Studies in Contract Law, 1980, p 164. 250. The leading example in quasi-contract is Sumpter v Hedges [1898] 1 QB 673 (see [1155]). For another frustration case see Appleby v Myers (1867) LR 2 CP 651 (see [1229]). 251. See [1166]. 252. See [1157]–[1159]. 253. See also [1153] (contractual claim in respect of partial performance of severable contract). 254. For illustrations see [1027], [1030]. See further on the relationship between restitution and contract performance [1154], [1205]. 255. See [1166]. 256. See ABB Power Generation Ltd v Chapple (2001) 25 WAR 158 at 167; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 666; 247 ALR 412; [2008] HCA 27 at [89]; Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at 748; [2009] NSWCA 424 at [138]; Programmed Total Marine Services Pty Ltd v Ship ‘Hako Endeavour’ (2014) 315 ALR 66 at 97; [2014] FCAFC 134 at [171]. 257. See, eg Hendersons Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539 at 552; [2011] VSCA 167 at [59]. Contrast Quarante Pty Ltd v Owners Strata Plan No 67212 [2008] NSWCA 258 at [119]. 258. See [934]. 259. See [928]. 260. See Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at 1773; [2008] UKHL 55 at [40]; Benedetti v Sawiris [2014] AC 938 at 960; [2013] UKSC 50 at [26]. Cf Barnes v Eastenders Cash & Carry Plc [2015] AC 1; [2014] UKSC 26. 261. See generally [1305], [1331], [1431]–[1439]. For the defence of inability to make restitutio in integrum see generally [2324]–[2335]. 262. See Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 320. 263. See Sumpter v Hedges [1898] 1 QB 673 (see [1155]). See P H Winfield, ‘Quasi-contract for Work Done’ (1947) 63 LQR 35. 264. (1946) 72 CLR 386 (see [1165]). 265. (1946) 72 CLR 386 at 402. McTiernan J agreed. See also Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235. 266. See further [1174]. 267. [1898] 1 QB 673 at 676. See also at 674. In Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280, the idea was expressed in terms that merely taking possession is not acceptance, where a building is to be erected, repairs done or alterations are made to a building on a person’s land.

(1877) 2 QBD 423 at 427. See also Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 268. Ch D 339 at 364–5; Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 409. 269. See [940]. See further [1158], [1161], [1166], [1167]. Note also [1168] (deemed benefit). 270. See generally Gareth Jones, ‘Restitutionary Claims for Services Rendered’ (1977) 93 LQR 273; G J Tolhurst and J W Carter, ‘Acceptance of Benefit as a Basis for Restitution’ (2002) 18 JCL 52. See also [157]–[158]. 271. See, eg Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577 (see [1024]); Damberg v Damberg (2001) 52 NSWLR 492 at 528–30; Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775 at 2788–9; [2004] EWCA Civ 47 at [32]–[33]; Hendersons Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd (2011) 32 VR 539 at 552; [2011] VSCA 167 at [59]; Benedetti v Sawiris [2014] AC 938; [2013] UKSC 50 (see [1033]). See the general analysis in [157]–[158]. 272. See Rowe v Vale of White Horse District Council [2003] 1 Lloyd’s Rep 418 at 422; [2003] EWHC 388 (Admin) at [13]. See further [1025], [1156]. 273. Cf Progressive Pod Properties Pty Ltd v A & M Green Investments Pty Ltd [2012] NSWCA 225 at [36]. 274. See [1025], [1031], [1032]. 275. See [1158], [1167]. Indeed, even ‘benefit’ may be deemed. See [1168]. 276. Cf Steele v Tardiani (1946) 72 CLR 386 (see [1165]). See also [928]. See further [935], [938], [940], [1156], [1227]. 277. Under the law of quasi-contract, the position may have been influenced by an assumption of rescission ab initio. See [905], [916], [918]. In other words, although a person who received part of the agreed return could not rescind the contract, a part performer could. See further [1105], [1168]. 278. But cf Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775 at 2788; [2004] EWCA Civ 47 at [32]; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 662; 247 ALR 412; [2008] HCA 27 at [77], [125]. 279. See [148]. 280. See [148]. See also Chapter 8 (necessitous intervention). 281. See Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525; Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221. Cf Vasco Investment Managers Ltd v Morgan Stanley Australia Ltd [2014] VSC 455 at [344]. For earlier cases, based on quasi-contract but to the same effect, see Segur v Franklin (1934) 34 SR (NSW) 67; Stevenson v Hook (1956) 73 WN (NSW) 307. Compare the more questionable line of authority discussed [940], [1168]. 282. See [149]. 283. See [1047], [1315]. 284. See [229], [230], [1047], [1334]. Cf [1838]. 285. See, eg Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord) [1988] 2 Lloyd’s Rep 343 (entitlement to commission for services rendered based on estoppel by convention). See further [1046]. See also [1047], [1334] (discretionary orders under statute). 286. See generally on the common counts [114]–[119].

287. See [932]. 288. See also [155]–[156]. On the role of request where no express contract was contemplated see [814]–[816], [842], [2915]. On the common count for money paid see [116]. 289. But see Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 where, from this perspective, an unreasonably wide view was taken of the scope of restitution. 290. See further [941] and generally Chapter 24. 291. See [1305], [1330], [1331], [1401], [2329]. 292. See [1304]. 293. See, eg Noyes v Pugin 27 P 548 (Wash, 1891); Boone v Coe 154 SW 900 (Ky, 1913). 294. 158 Cal Rptr 887; 600 P 2d 1344 (1979). See also John P Dawson, ‘Restitution Without Enrichment’ (1981) 61 Boston ULR 563, arguing, more generally, that restitutionary remedies under American law do not depend on proof of enrichment. Contrast E Allan Farnsworth, ‘Precontractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations’ (1987) 87 Col L Rev 217. Cf [1025], [1031], [1032] (constructive acceptance). 295. Rotea v Izuel 95 P 2d 927 (1939). 296. 600 P 2d 1344 at 1348. 297. Thus, Com (a) to §370 of the Restatement (Second) Contracts (which refers to ‘benefit’ by way of part performance or ‘reliance’) states that expenditures in preparation for performance which do not enrich a defendant cannot give rise to a claim in restitution. See also Gareth Jones, ‘A Topography of the Law of Restitution’ in Finn, Essays, p 5. 298. Cf Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582. 299. See [814]. 300. (1831) 8 Bing 14; 131 ER 305 (see [1168]). 301. For the influence of rescission ab initio as a basis for restitution see [905], [916], [1103], [1105], [1106], [1116], [1168], [1214]. 302. See further [1167], [1168]. 303. However, a conventional damages award seems a better rationale than restitution. See further [1168], [1408], [1409], [1430], [1810], [1818]. 304. On this basis, the general criterion of acceptance of benefit is displaced by proof of breach. Although this, in effect, treats the claim as fault based, it is still necessary to show enrichment of the defendant at the plaintiff’s expense. See further [1408], [1409], [1514], [1519]. 305. See Restatement (Second) Contracts, §370 Com (a). See also [1409]–[1411] (relationship between damages and claim for reasonable remuneration). 306. See generally Chapter 24. Nothing said in the text is intended to qualify that defence. See also [938]. 307. The frustrated contracts legislation (see generally [1236]–[1268]) dispenses with the requirement of failure of consideration, and substitutes mechanisms which permit reliance expenditure to be recovered or set-off. However, this is sometimes part of a regime for apportioning loss. 308. See also [1134]. Cf [928].

309. See [1168]. 310. It may sometimes be open to debate whether the payer has bargained for reliance. See [1134]. 311. Cf Watney v Mass (1954) 54 SR (NSW) 203 (see [1120]). 312. (1831) 8 Bing 14; 131 ER 305 (see [1168]). See [940]. See further [1168], [1406], [1408], [1409]. 313. [1943] AC 32 (see [1220]). 314. [1943] AC 32 at 49; see also at 54–5, 71–2; BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 798 per Robert Goff J, affirmed [1981] 1 WLR 232; [1983] 2 AC 352 (‘no allowance [can] be made for expenses incurred by the payee’). 315. Indeed, it was the insensitivity of the total failure of consideration concept to reliance expenditure which led to the enactment of the Law Reform (Frustrated Contracts) Act 1943 (UK). See Ewan McKendrick, ‘Frustration, Restitution, and Loss Apportionment’ in Burrows, Essays, pp 152–3. 316. (1993) 176 CLR 344; 111 ALR 289. 317. (1993) 176 CLR 344 at 352–3; 111 ALR 289. Brennan and Toohey JJ agreed. 318. (1993) 176 CLR 344 at 391; 111 ALR 289. He also said that the anticipation of reliance may be sufficient. Cf Beatson, pp 60, 71, 75–6, suggesting that although anticipation is not sufficient, the ‘fact’ of reliance should be. See also Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 526; 185 ALR 335; [2001] HCA 68 at [17] (suggestion that failure to incur an expense may cause part of a severable agreed return to fail). 319. Cf Terra Nova Pty Ltd v Nalanda Pty Ltd [1977] Qd R 296. But see [1438] (position where purchaser has been let into possession). 320. Contrast [1247] (position under Frustrated Contracts Act 1978 (NSW), s 13(2)). 321. [1998] 1 WLR 574. See also Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129. See further on the cases [1133], [1134]. 322. [1998] 1 WLR 574 at 588. Lords Hoffmann, Hope and Hutton agreed. 323. Cf Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] 1 QB 27 at 35; [2009] EWCA Civ 75 at [12].

[page 369]

Chapter Ten

Inherently Ineffective Contracts 1.

2.

3.

4.

General ….

[1001]

(a) Introduction ….

[1001]

(b) The Contractual Background …. Recovery of Money Paid ….

[1005] [1015]

(a) Total Failure of Consideration ….

[1015]

(b) Countervailing Factors …. Restitution for Non-monetary Benefits ….

[1020] [1023]

(a) Quantum Meruit ….

[1023]

(b) Accepted Goods ….

[1037] [1042]

Other Claims ….

1. General (a) Introduction [1001] Objects. This chapter has as its object the analysis of restitutionary claims arising out of inherently ineffective contracts, that is, ‘agreements’ which are not fully enforceable as contracts.1 It is very much about the old and the new. The new is represented by Pavey & Matthews Pty Ltd v Paul,2 where the principle of unjust enrichment was first recognised as the unifying concept for restitution. It is also represented by cases on transactions beginning with documents such as letters of intent which are a common

feature of the modern contracting process. The old is represented by the cases the reasoning in which has been superseded by Pavey & Matthews Pty Ltd v Paul. [1002] Concept. A contract is inherently ineffective if it never materialises, is void, unenforceable, or illegal by reason of public policy or statute.3 Words such as ‘void’, ‘unenforceable’ and ‘illegal’ are, however, notoriously difficult. They are used in various senses. Without attempting to produce definitions which cover all situations, for it is not necessary to mark off precisely the boundaries of each, our usage of these terms may be explained as follows.4 [page 370] A ‘void’ contract is one which, whatever the intention of the parties, does not take effect as such due to a failure to satisfy an essential element of contract formation. The concept therefore includes agreements which fail for want of consideration and those which are void for uncertainty or incompleteness. For present purposes it may also be taken to include anticipated transactions which never materialise as contracts due to the breakdown of negotiations,5 as well as transactions where words such as ‘subject to’ introduce a clause which the parties intend to qualify formation of the contract, rather than its performance. A contract may exist but be ‘unenforceable’ under a rule of public policy or a statutory requirement non-compliance with which requires a court to withhold normal contractual remedies.6 The most common example in the restitution cases is a contract affected by a requirement derived from (or analogous to) s 4 of the Statute of Frauds 1677 (Imp).7 Although contracts induced by fraud might also be included, these are more appropriately analysed as contracts which may become ineffective due to a subsequent event, namely, exercise of the right to rescind.8 ‘Illegal’ contracts are those prohibited by statute, or contracts which

infringe a rule of public policy under which the contract is not merely unenforceable.9 The contrast between ‘void’ and ‘unenforceable’ is not always easy to draw in practice; and the classification of contracts (or promises) as being void or merely unenforceable, but not ‘illegal’, is often problematic.10 Failure to comply with a statutory requirement does not usually mean that the resulting contract is void or affected by illegality. The precise effect always depends on construction of the statute. Even though the statute may say that the contract is ‘void’, that does not always imply that non-compliance prevents contract formation.11 Similarly, whether analysed in terms of ‘heads’ of public policy or the underlying basis for particular rules, public policy does not always prevent formation of a contract. Thus, public policy may render the contract ineffective merely in the sense of being unenforceable or voidable. And the rule may only impact on particular provisions. [page 371] Restitutionary claims may arise in all categories. What matters for present purposes is simply that contracts which fall into any of these categories exemplify inherently ineffective contracts. [1003] Restitutionary claims. The diverse nature of contracts regarded as inherently ineffective does present analytical problems. However, if the requirements of unjust enrichment are satisfied there is a proper basis for restitution.12 Such claims are notoriously difficult, particularly where the contract is illegal. The basic division between monetary and non-monetary benefits applies,13 and the two principal concerns are failure of the agreed return and reasonable remuneration. Since there is no effective contract to be put forward as an obstacle to the claim, absence of consideration, the presence of uncertainty or incompleteness, lack of contractual agreement, mistake or the failure of a condition precedent to formation all provide circumstantial contexts for restitutionary claims.14 If unenforceability derives from statute, the

statutory limitation on enforcement may not impact on remedies which arise independently of the contract. Restitution has been a common source for relief. But since in this context a contract exists, the general rule is that restitution cannot be claimed until the unenforceable contract is fully performed,15 discharged or rescinded.16 Two maxims of the common law restrict the enforcement of illegal contracts:17 no cause of action arises out of illegality;18 and if the parties are equally at fault the condition of the defendant is better.19 Illegality presents particular challenges: encroachment of these maxims on restitutionary claims;20 and application of the implied contract theory of quasi-contract.21 Although the refusal to enforce contracts on the ground of public policy (including as expressed by statute) illustrates the subordination of private right to public interest,22 this does not necessarily include claims in restitution which, being based on unjust enrichment, are independent of contract. Grounds for saying that the parties are not equally at fault are themselves characteristically factors such as duress, which are bases for establishing an unjust enrichment. However, analysis in terms of unjust enrichment is somewhat patchy.23 It is nevertheless clear that the implied contract theory of quasi-contract no longer governs such claims.24 [page 372] [1004] Other claims. Further difficulties in applying an unjust enrichment analysis arise where statute modifies common law rules. For example, the rules applicable to benefits conferred under minors’ ineffective contracts defy analysis in terms of any unifying concept.25 Statutory modifications have generally been made without regard to general principles of restitution, or on the basis of an assumed quasicontractual regime. Remedies made available under the Australian Consumer Law,26 for contravention of statutory prohibitions on particular kinds of conduct, focus on loss or damage, not the conferral of benefit. Brief reference must be made to these and certain other claims,27

founded on contract (express or implied), promissory estoppel or tort. Given the ineffective contract perspective, the common feature is that the parties to the claim at least contemplated a contractual relationship.28

(b) The Contractual Background (i) Void contracts [1005] Contracts void for lack of agreement. Agreement to contract is often found in correspondence between an offer to contract and acceptance of that offer. However, offer (to contract) and acceptance are merely tools of analysis, and the real question in every case is whether the circumstances indicate an agreement which the law recognises as a contract. An intention to contract is essential.29 Although this will easily be inferred, an agreement cannot be a contract in the face of the parties’ agreement that it should not give rise to legal rights and obligations.30 However, there is no presumption that a family or domestic arrangement is intended to be legally enforceable. Some restitutionary claims have arisen from such arrangements.31 In order for a promise to take effect as a simple contract it must be supported by consideration. ‘Consideration’ determines whether the promise should be recognised as creating a contractual duty.32 Apart from cases in which there is simply no promise, a propounded consideration may fail33 for a variety of reasons. Without attempting to cover all situations, mention should be made of the sufficiency rule as it has often been a reason for claims in restitution. Although the rule has in recent years been narrowed, a promise does not count as sufficient consideration if it is to do no more than perform a pre-existing public or contractual duty.34 Again, a promise the performance of which is at the sole discretion of a party is an illusory [page 373]

consideration.35 Consideration may also be described as illusory in other cases, such as where the promise is illegal.36 The courts give primacy to the need to uphold agreements wherever possible, particularly executed commercial agreements. They employ various devices to attain this goal.37 However, there are sometimes cases in which no contract is formed, due to the agreement being uncertain or incomplete. Two related principles are thus involved. First, an agreement may be uncertain in its language or application.38 Second, the transaction may be incomplete because, although the language used is clear enough, an essential part of the contract is still to be agreed upon. Only if the parties fall out while there is an executory element does a problem arise. If the parties fully perform the transaction, the uncertainty or incompleteness is in effect cured. Restitutionary issues do not arise. [1006] Non-occurrence of condition. The concept of a ‘void’ contract includes an agreement which does not mature into a contract due to the failure to satisfy a condition precedent to contract formation. In these cases, relatively uncommon in the modern law outside agreements made ‘subject to contract’, until the particular contingency is fulfilled there is no contract. Either party may therefore withdraw from the transaction. Whether there is such a condition precedent is in all cases a question of intention.39 Similarly, the parties may have agreed that their agreement is not to be binding as a contract unless particular circumstances exist or a certain state of affairs continues. If the circumstance does not exist, or the state of affairs ends, effect is given to this agreement as creating a condition precedent to contract formation. This is sometimes wrongly regarded as the operation of a doctrine of mistake. In fact, the question is again merely one of intention, to be resolved by construction of any written agreement.40 [1007] Mistake generally. The main problem with the concept of mistake is the supposed general rule that operative mistake renders the parties’ agreement void. It is, however, extremely doubtful whether

Australian law recognises an independent doctrine (or doctrines) under which a contract may be regarded as void for mistake.41 Once the common law took the view that fraud by one [page 374] party inducing the other to contract does not render a contract void, little room was left for such a doctrine. Moreover, the law of contract is concerned with the exchange of promises, and a contract may result even though the promise of one party was never capable of being performed in specie.42 An offer to buy one subject matter cannot be accepted by a party who only has a different subject matter to sell, but an offer which a reasonable person in the position of the offeree would assume to relate to the available subject matter may be accepted. Only if the objective theory is displaced can it be said that the contract is void. Moreover, in such cases it is the lack of agreement that is the basis for the conclusion that there is no contract, not a doctrine of mistake. If evidence may be given of subjective belief, reciprocity is lacking and there is no contract.43 [1008] Common and mutual mistake. Where a mistake is shared by both parties it is usually termed a ‘common’ mistake. Cases of ‘mutual’ mistake are those in which the parties make different mistakes.44 Although most such mistakes have no legal significance, the Australian cases proceed on the basis that there is an area of application for a doctrine of common mistake. Under English law, the area of application appears to be broader. Accordingly, unlike the position under Australian law, there are illustrations of contracts which have been held void on the basis of operative mistake.45 Nevertheless, the test for voidness46 is so rarely satisfied that common mistake is of marginal significance. A more likely scenario is an express or implied term making formation of the transaction conditional on the

correctness of a common assumption.47 Indeed, the theme of the Australian cases is that the possibility of relief for breach of contract, fraud, or unconscionable conduct is more real than a conclusion of voidness.48 Therefore, the general approach, assuming a relevant common mistake to have been established, is to treat the contract as effective, but liable to be rescinded or set aside on proof of misrepresentation49 or unconscionable conduct.50 Nevertheless, if the position is that there is no contract, claims based on unjust enrichment may arise where payments made are sought to be recovered,51 and also (but rarely in practice) in cases where non-monetary benefits were conferred.52 [page 375] In cases of operative mutual mistake the parties are at crosspurposes. Because of the inherent (and insoluble) ambiguity, neither party’s construction can be held to be ‘correct’, and there is no contract.53 However, once one party’s construction is held correct, the unmistaken party is entitled to insist on performance unless there was knowledge of the mistake or unconscionable conduct. The contract is then voidable or liable to be set aside, but it is not void.54 [1009] Unilateral mistake. A ‘unilateral mistake’ is a mistake made by one party but not the other. To have legal significance, the mistake must generally be known to (or knowingly induced by) the other. Much play has been made with the famous decision in Smith v Hughes,55 which some have seen as based on an outmoded — subjective — view of contract law. If there is a fundamental mistake as to the terms of a contract, no contract can result from apparent offer and acceptance. As Blackburn J said56 in Smith v Hughes ‘if one of the parties intends to make a contract on one set of terms, and the other intends to make a contract on another set of terms, … there is no contract, unless the circumstances are such as to preclude one of the parties from denying

that he agreed to the terms of the other’. Smith v Hughes involved an oral contract. There is less scope for the conclusion where a document is adopted as a written contract. Moreover, even if evidence of actual intention is before the court, as it was in Taylor v Johnson,57 the decision whether mistake as to terms displaces an apparent agreement depends on the nature of the mistake and the circumstances in which the contract was agreed. In a case of mistaken identity, the contract may be held to be void.58 However, the mere circumstance that one party is mistaken, by reason of the other’s fraud or otherwise, is not of itself a reason for concluding that the contract is void.59 It might reasonably be said that today the prospect of a contract being held void for unilateral mistake under Australian law is remote. This implies that restitutionary claims made on that basis are of marginal interest. Mistake is more likely to be a basis for rescission, or an order setting aside the contract (as in Taylor v Johnson), with consequential claims by way of adjustment to achieve restitutio in integrum.60 [page 376] [1010] Other void contracts. There are various other examples of void transactions, including contracts made without authority, certain cases in which contracts are affected by public policy or statute, and incapacity.61 A contract may be void under statute. However, because these are very specific situations they generally offer little by way of general interest for restitution. For example, legislation provides that all contracts or agreements by way of gaming or wagering are null and void.62 The legality of such contracts is not affected, and performance may be lawful. Another illustration, based on an erroneous view of the effect of mistake in contract,63 is that an agreement to sell specific goods is void where, unknown to the seller, the goods perished before the contract was made.64

Analysis of agreements by those who lack capacity to contract presents many difficulties, not the least of which is in classifying the agreements as void or voidable.65 The doctrine of ultra vires, applicable where an entity’s legal capacity is limited by statute, the objects stated in its registered memorandum, or applicable as a limitation on the contractual capacity of government bodies, is today a fairly narrow one.66 This is particularly so in relation to corporations registered under the Corporations Act 2001 (Cth).67 However, an ultra vires contractual assent is a nullity, and any purported agreement therefore ‘void’.68

(ii) Unenforceable contracts [1011] Contracts unenforceable under statute. The main examples of unenforceable ineffective contracts are contracts unenforceable under statute. The extent of unenforceability varies, and depends on construction of the statute. A familiar example is where writing is required for enforceability. The requirement may be that the contract itself be in writing, or that there be written evidence of the contract.69 That most often considered in the restitutionary context is unenforceability arising from the operation [page 377] of the legislation (derived from s 4 of the Statute of Frauds 1677 (Imp)) requiring written evidence for certain promises.70 Since such legislation is focused on the evidentiary function of writing, non-compliance with the requirements generally renders the agreement unenforceable, rather than void. That is the position for contracts affected by provisions derived from s 4 of the Statute of Frauds 1677 (Imp).71 The effect is procedural, preventing any action which would ‘charge’ the defendant on the contract, but not denying its existence.

[1012] Contracts unenforceable at common law. The category of unenforceable contracts includes contracts the performance of which has been postponed by the agreement of the parties, and some cases of lack of contractual capacity.72 However, where unenforceability derives from the failure of a condition precedent to performance, the contract is valid, and the condition may be waived. Accordingly, these contracts are better analysed as contracts which may subsequently become ineffective, usually by discharge without breach.73 Where a mentally incompetent person purports to enter into an agreement, the resultant contract is unenforceable, and subject to a right of avoidance.74 It is therefore capable of being ratified at the election of the incompetent on attaining lucidity. Such a person is, however, liable to pay for necessaries supplied.75 So also are minors.76 However, the law relating to the capacity of minors does not suggest any single approach or classification.77 Although in the majority of cases minors are not bound by their contracts, their general ability to avoid or ratify (and enforce any resulting rights against an adult party) within a reasonable time of attaining majority,78 suggests unenforceability rather than voidness.79 But a contract necessarily prejudicial to a minor is apparently void, and not subject to ratification.80 In addition, ratification has been restricted by legislation.81 [page 378]

(iii) Illegal contracts [1013] Introduction. Illegal contracts are examples of ineffective contracts. Since we treat the issue of illegality mainly in the context of defences to restitutionary claims,82 the discussion in this chapter is intended, mainly, to illustrate how illegality is an additional factor in restitutionary analysis. From the perspective of a general contractual analysis, four points are important. First, a contract may be inherently illegal (by reason of a prohibition

on entry into the contract), or become illegal during the course of performance. Where the illegality arises because one party has chosen to use the agreement to achieve an illegal purpose, it is inherently ineffective, at least from that party’s perspective. By contrast, cases of supervening illegality arise from a change in the law, or a change in circumstances. Since principles analogous to frustration are applied, these cases fall into the category of contracts discharged without breach.83 Second, a contract entered into with the common object of committing an illegal act is void, and usually also illegal. The application of this principle depends on proof of intent to break the law.84 Third, if an agreement is illegal it creates no contractual rights, and neither party is able to enforce it. But the fact that the contract is illegal does not usually prevent acts done under the contract being effective, including to transfer property rights.85 Fourth, a contract may be illegal as prohibited by statute, or be affected by a rule of public policy. In relation to the latter, whether the contract is unenforceable, void or void and illegal, depends on the circumstances. This is the only point warranting further discussion. [1014] Statutory illegality and public policy. A court cannot enforce a contract which is expressly or impliedly prohibited by statute.86 Whether the contract is prohibited is an issue of statutory construction. A contract is both void and illegal where a statute prohibits the making of a contract, and makes entering into the contract an offence. However, express prohibition is a narrow category.87 Although every Act raises its own interpretation issues, the likely availability of a restitutionary claim may be relevant to the decision whether the contract was impliedly prohibited.88 [page 379] Some contracts which are contrary to public policy are illegal and

void. In other cases a contract may be void or merely unenforceable, without actually being illegal.89

2. Recovery of Money Paid (a) Total Failure of Consideration (i) General [1015] Introduction. Consideration is absent where an agreement which is intended to operate as a contract is void for failure to satisfy an essential requirement of contract formation.90 But total failure of consideration, the concept underlying the treatment of contractual payments at common law, does not require the contract to be void.91 Thus, failure of consideration does not signify voidness ab initio.92 Accordingly, although in some cases where a total failure of consideration is established the contract may also be void, not all such cases involve void contracts. Where a contract is void, for whatever reason, there is by definition no contractual agreed return. However, the concept of total failure of the agreed return has been applied to void contracts.93 Therefore, the ‘“bargain” referred to in describing failure of consideration need not be contractual in nature’.94 It is consistent with the Australian cases that in some situations a requirement of restitutio in integrum may be applied.95 In cases where money is paid under a void contract, it might seem simpler to say that since consideration does not exist any payment made is recoverable unless there was an intention to make a gift of the payment. Although that approach may sometimes be appropriate,96 analysis in terms of absence of consideration has not traditionally been regarded as a sufficient basis for restitution.97 Given that the law is premised on the view that no prima facie right to restitution is established merely by proof that A’s wealth

[page 380] has been increased at B’s expense, it is easy to see why. There is, however, scope for analysis by reference to mistake.98 Whether the payer bargained for the payee’s promise to perform or the payee’s performance, a failure of the agreed return does not occur merely because the contract is unenforceable.99 Although the contract is inherently ineffective, failure of the agreed return assumes valid discharge or rescission.100 In all cases of voidness or unenforceability arising from statute or public policy, including where the contract is illegal, there are countervailing considerations which qualify both contractual intention and restitutionary principles. Accordingly, total failure of the agreed return is not always available as a basis for restitution.101 [1016] Intention, mistake and failure of condition. So far as the agreement permits, the agreed return for a payment is determined by construction. The parties’ intention is also important in determining whether the principle of failure of the agreed return has been excluded.102 Moreover, in some cases intention, rather than restitutionary analysis, has been emphasised as the basis for recovery. Restitutionary analysis may alternatively be based on failure of condition or mistake. Unless there is a public policy element, one way of analysing a claim to recover money paid under a void contract is to treat the payment as purely provisional. On this approach, since the right to retain the payment depends on satisfaction of a condition (contingency), once the contingency fails, the basis for recovery is the intention of the parties.103 This approach is clearly correct where the parties have expressed their intention. Applied to other situations, the approach treats total failure of the agreed return as an unnecessarily complicated basis for recovery. Although in these situations it is difficult to see how there can be any general rule that any money paid under a contract which turns out to be void must be returned, such a term may

sometimes be implied.104 But to treat all payments made under void contracts as recoverable independently of failure of the agreed return, and without any requirement of restitutio in integrum, hardly seems conducive to just results. Moreover, if the scope of the implied term is limited to cases where nothing was given in return for the payment, the analysis seems little different from the fictional implied contract which characterised recovery in quasi-contract. Therefore, we do not adopt a general contractual justification. No cause of action arises from the mere fact that a contract is void, but the failure of the agreement may result in a total failure of the agreed return. Accordingly, the obligation to make restitution is imposed by law. Under an unjust enrichment analysis, the basis for restitution is failure of the agreed return. [page 381] Traditionally, mistake has not been treated as the appropriate rationale for restitution in the context of inherently ineffective contracts.105 Even in cases where it would be reasonable to conclude that payments were made on the assumption that the contract was valid (when in fact it was void), total failure of the agreed return has been the basis for recovery. However, subject to policy considerations, mistake as to validity is a basis for restitution for a payment made in performance of a contractual provision void under statute.106 Logically, if a mistake as to the validity of a void contract can be proved there is no reason why recovery should not be based on the mistake.107 If the payer has a cause of action in restitution based on mistake, whether of fact or law, analysis of whether an agreed return has failed108 is unnecessary. But this cannot cover all cases. Apart from the fact that mistake must be proved, a payment made in anticipation of agreement is not made under a void contract, and any ‘mistake’ is really misprediction. If the contract is unenforceable under statute or by reason of public policy, analysis relying on the parties’ intention is not available because, by definition, the contract cannot be enforced. Even from a

restitutionary perspective, recovery on the basis of failure of the agreed return would contradict the statute while the contract remains partly executory. And since the contract is supported by consideration, recitation of mistake is not sufficient to justify recovery.109 Accordingly, failure of consideration must be established as the consequence of discharge or rescission.

(ii) Void and unenforceable contracts [1017] Void contracts. Where an agreement is void for mistake, the High Court recognised in Svanosio v McNamara110 that money paid is recoverable on the basis of total failure of the agreed return. It was said that if a contract for the sale of land is void because it was in fact owned by the purchaser, the price is recoverable.111 But that was not the position in Svanosio. Although the vendor did not own a substantial part of the land purchased, the sale was completed and neither the contract nor the conveyance was void. Because contracts are rarely void for mistake, there are [page 382] few illustrations in the reported cases.112 The same approach has generally been taken to cases where a contract is void for lack of authority and some cases of incapacity. Restitution may be based on total failure of the agreed return,113 and where there is no illegality the principle of restitutio in integrum is applied.114 In Rover International Ltd v Cannon Film Sales Ltd,115 film distributors (Cannon) reached an agreement with Rover under which, in return for substantial advance payments from Rover, Cannon would make available for distribution master prints of certain films. Since the profits were to be shared, this was analogous to a joint venture. Rover’s advance payments were in the nature of contributions towards Cannon’s profits. Cannon wanted out of the arrangement, and purported to terminate for breach on Rover’s part. It transpired that

Rover had not been incorporated at the time of the contract, which was therefore void.116 Kerr LJ (with whom Nicholls LJ agreed) considered that Rover was entitled to recover the payments made on the basis of total failure of the agreed return. The agreed return was identified as the opportunity to earn a share of the gross receipts from exhibiting the films. The non-incorporation of Rover meant that the agreed return was not received. Although benefits were obtained on delivery of some of the films contemplated, this was regarded as incidental, and not an element of the agreed return which therefore failed totally. In relation to minors’ contracts, where a minor renounces a contract void unless adopted, or binding if not renounced, the minor may recover any payment made prior to renunciation if there has been a total failure of the agreed return.117 The position in respect of minors’ contracts rendered void [page 383] under statute118 is opaque. As always, there is considerable conflict of authority. Some cases suggest that the voidness of the contract justifies relief.119 Others state that the description of the contracts as ‘void’ (or ‘absolutely’ void) does not itself imply a total failure of the agreed return.120 In our view, total failure of the agreed return, established by reference to a failure to render performance, ought to be a sufficient basis for recovery.121 Because it no longer matters whether the mistake is one of fact or law, if mistake as to validity is established, this may be a viable basis for restitution in relation to void contracts.122 Money paid is then recoverable whether or not there has been a failure of the agreed return.123 Indeed, restitution may be awarded even though the ‘contract’ may have been fully performed.124 English law has made a distinct move in this direction, at least for money paid under agreements void for being ultra vires. Another suggestion, somewhat less compelling, is that ‘absence’ of consideration may be a basis for restitution.125

[1018] Unfulfilled condition precedent. The failure of a condition precedent going to the formation of a contract may activate an agreement that payments made must be returned. If no intention is expressed, the cases suggest various possibilities, including: an implied right, established by construction or implication;126 total failure of the agreed return; and failure of condition. In fact, in the majority of cases (for example, where the claim is to recover a deposit) the position is treated as too clear to justify discussion of the doctrinal basis.127 A total failure of the agreed return, caused by failure of the condition is sufficient. George v Roach128 appears to be an illustration. [page 384] An agreement for sale of a business comprising a newspaper agency provided for payment at a price calculated by reference to the valuation of a named valuer. A majority of the High Court held that the valuation provision stated a condition precedent to formation of any contract between the parties. When the valuer refused to value the agency, the purchaser was entitled to recover part payments of the price which had been paid in advance. There was a total failure of the agreed return for these payments. In Masters v Cameron129 prospective purchasers of a farming property paid a deposit due under an agreement which was ‘subject to the preparation of a formal contract of sale’. The High Court held that the clause postponed existence of the contract, and concluded that since no formal contract was signed the deposit was recoverable by the purchasers. The deposit had in fact been paid to the agent employed by the vendor to sell the property, and the court considered that the payment was only to have the character of a deposit on execution of a contract of sale. As this did not occur, the deposit never became the property of the prospective vendor.130 A deposit paid on terms that it is

not to be recoverable (by the payer) unless the contract goes off by reason of the payee’s default, is not recoverable unless fault is established. In the absence of an express agreement to the contrary, an implication of forfeiture arises where the payment is made on entry into the contract, to show the genuineness of the payer. Alternatively, the payment has the character of a deposit once the contract is entered into.131 In Masters v Cameron construction of the agreement showed that the ‘deposit’ had that purpose. Since no contract was entered into, it was recoverable on the basis of the parties’ intention.132 [1019] Contracts unenforceable under statute. In respect of contracts unenforceable under statute, no failure of the agreed return can be established while the contract remains partly executory. Therefore, the general rule is that until the contract has been rescinded or discharged, no claim for restitution can be made in respect of a payment under the contract. The typical example is a payment made under an oral contract required by the Statute of Frauds 1677 (Imp) or derivative legislation to be in writing or evidenced in writing. While the contract remains ‘on foot’, the ‘payee may rely upon such contract to protect its position against a plaintiff seeking to establish some countervailing claim’,133 including one for restitution. [page 385] However, it is a sufficient basis for restitution that the contract has been rescinded for misrepresentation, or for some other vitiating factor. Discharge by termination for breach or repudiation is also sufficient if it brings about a total failure of the agreed return. The general principles stated in McDonald v Denny s Lascelles Ltd134 apply to a part payment made under an unenforceable sale of land transaction. Accordingly, even a party in breach may rely on total failure of the agreed return.135 Against a party in breach, discharge ought always to be a sufficient basis for recovery.136 An apparently contrary decision is Marsh v Mackay.137 Payments were made under an oral agreement for the

purchase of land on which the vendor agreed to build. The vendor repudiated the contract and the purchaser sued for restitution of payments made under the contract in anticipation of conveyance.138 These were held to be irrecoverable because of the purchaser’s intermediate possession. Nevertheless, the contract was one of sale not lease (a fair rent was assessed at one-quarter of the weekly payments made). The fact that the agreement treated the weekly instalments as rental payments seems an insufficient justification for the court’s decision. Although Marsh v Mackay seems a doubtful authority, it illustrates the ability of a payee to set up the terms of the unenforceable contract. Accordingly, so far as deposits are concerned, unless the claim is brought against a payee in breach, restitution is not available. The contractual right of forfeiture prevents reliance on failure of the agreed return.139

(b) Countervailing Factors [1020] General. In some of the situations considered above140 there may be countervailing considerations, preventing reliance on failure of the agreed return as the basis for restitution.141 But, as a general rule, the statutory policy does not include claims for restitution. For example, although there is a policy element in legislation derived from s 4 of the Statute of Frauds 1677 (Imp), the difficulty which confronts a plaintiff seeking to recover a [page 386] payment made under an oral contract is not the policy of the statute.142 It is now clear that the policy does not extend to restitutionary claims. Rather, the difficulty lies in establishing total failure of the agreed return. However, in other contexts policy considerations override total

failure of the agreed return.143 This is illustrated in the contrast between the ability of a minor who has transferred goods under an ineffective contract to recover the goods if a total failure of the agreed return occurs on renunciation of the contract, and the rule that an adult who has paid for goods which the minor-seller later refuses to deliver is not entitled to restitution.144 Clearly, however, unjust enrichment is now the appropriate criterion, and the policy of the law — designed to protect minors — should be accounted for by way of a defence to a prima facie claim.145 We should not now feel the same difficulty as was felt by courts in days gone by to make minors liable in restitution for money misappropriated. However, the cases, rooted in the implied contract analysis of quasi-contract,146 often refused relief on the basis that it would be tantamount to making the minor liable in contract.147 Occasionally, public policy considerations will assist the plaintiff in establishing total failure of the agreed return. The countervailing factor then operates against the defendant. This was the position in Guinness Plc v Saunders.148 Ward, a director of Guinness, received £5.2 million for advice on the takeover of Distillers. The services were performed under a contract which was void for want of authority. The services were beneficial, at least from the perspective of the shareholders of Guinness. However, any benefit which Ward conferred could not be relied upon. Ward had placed himself in a position of conflict. It would have been contrary to policy to allow him to retain the money. Accordingly, the money was recoverable [page 387] by Guinness on the basis of total failure of the agreed return, or because Ward was a constructive trustee.149 [1021] Impact of statutory policy. Assuming that the ineffective contract is unenforceable or void, but not also illegal, the principle of failure of the agreed return will generally be applicable to establish a prima facie case. As noted above,150 the policy element in legislation

derived from s 4 of the Statute of Frauds 1677 (Imp) does not extend to restitutionary claims. For other statutes there may be a public policy element, or the claim might defeat the object of the statute. Another possibility is for the statute to incorporate a defence for the payee where there would otherwise be an unjust enrichment.151 The policy basis of the legislation may be to protect the public, a class of people, or the revenue.152 The relevant policy does not hinge on the contract being illegal.153 For example, in Deposit & Investment Co Ltd v Kaye154 the Full Court of the Supreme Court of New South Wales held that restitution was not available under the common counts for payments made pursuant to a contract void (or unenforceable) under moneylending legislation. Walsh J noted the principle of unjust enrichment, but said it was not against conscience for the defendants to retain the money which the plaintiff sought to recover.155 Although operating from a different policy perspective, the cases on gaming and wagering contracts illustrate the same point. These statutes render the contracts void but not illegal,156 and since performance of a void contract is lawful and effective, a loser who pays cannot subsequently claim restitution of the amount of a bet.157 Even a mistaken payment may be irrecoverable, if recovery would contradict the legislative policy. [page 388] For example, in Morgan v Ashcroft158 a bookmaker entered one credit twice in the defendant’s account and so overpaid him. The payment was thus mistaken and would, other things being equal, have led to restitution in favour of the plaintiff. The English Court of Appeal declined relief because to grant it would have involved recognising gaming transactions as producing legal consequences, the very thing which the statute prevented. Of course, the plaintiff knew as well as the defendant that gambling contracts were unenforceable. Although the court was not being asked to enforce a contract, the plaintiff’s attempt to show that the defendant’s receipt (or retention) of the mistaken

payment was unjust necessarily involved examining the state of account between the parties, that is, a judicial exercise that would presuppose the enforceability of the betting transactions. Of course, an implied contract approach to the policy issue is no longer appropriate. The claim in restitution cannot be rejected simply on the basis that an implied contract would, like the express contract, be void.159 However, cases such as Sinclair v Brougham,160 decided under the influence of that approach, treat the policy against contractual claims as conclusive. A building society carried on the business of banking. This was ultra vires, and the depositors’ contracts were void. The validity of the depositors’ claim in restitution depended on whether the policy behind the ultra vires rule extended beyond contractual claims to those in restitution. Although it would be fallacious to treat legal classification of the claim as sufficient, the better view is that the policy did not extend beyond contract, so that the claim in restitution should have succeeded.161 The House of Lords came to a different conclusion, but this may be explained by the fact that it asked the wrong question.162 [1022] Impact of illegality. Clearly, the policy element is strongest in cases where statute or a rule of the common law (public policy) renders a contract both void and illegal. Illegality is a circumstance which, by virtue of its effect on the contract and the position of the parties, makes failure of the agreed return inapplicable. The maxim which expresses the public policy concern is in pari delicto potior est conditio defendentis.163 It emphasises that, unless the parties were not equally at fault, the plaintiff has no remedy.164 [page 389] Accordingly, failure of the agreed return is not in these cases a sufficient basis for restitution. The view that restitution is not available because an implied contract would be subject to the same rule as the express contract165 must be put to one side. However, countervailing

considerations, which operate as the criteria for exceptions to the in pari delicto rule, are almost without exception expressed by reference to established bases for restitution under an unjust enrichment analysis. Contemporary dislike for the in pari delicto exceptions has led to suggestions in favour of a more general approach.166 Thus, in Hurst v Vestcorp Ltd167 McHugh JA suggested that restitution for unjust enrichment is available provided there is no legislative intent to deny the claim, and the defendant would otherwise obtain an ‘unmerited benefit’. However, this begs the question somewhat.168

3. Restitution for Non-monetary Benefits (a) Quantum Meruit (i) General [1023] Introduction. Claims for restitution as on a quantum meruit, that is, claims for reasonable remuneration in respect of a nonmonetary benefit conferred under a transaction ineffective from its inception, are generally straightforward in terms of principle. The right of a plaintiff to restitution depends on the concepts of request and acceptance.169 However, the application of these concepts is difficult, and they are themselves somewhat controversial.170 This is also an area in which academic discussion has made a significant contribution, although there is much disagreement. It is useful, although not always crucial, to classify the factual situation. There is a clear distinction between ‘no contract’ situations and situations where the contract is merely unenforceable. Not so clear is the distinction between void contracts and contracts which fail to materialise. On the one hand, the parties to a transaction may believe that their agreement is a valid contract, even though a rule of statute or the common law requires the agreement to be treated as void. On the other hand, the parties may know a contract is yet to be agreed.

Between these two extremes are various situations in which opinions may differ as to the proper categorisation. [page 390] [1024] Pavey & Matthews. Since the High Court’s decision in Pavey & Matthews Pty Ltd v Paul171 to recognise (and apply) unjust enrichment was given in the context of an inherently ineffective contract, it is appropriate to begin the discussion with an analysis of that case. A builder sued to recover a sum of $26,945 alleged to be due for work done under an oral building contract with Ms Paul. She agreed to pay a reasonable price, calculated by reference to prevailing rates in the industry. The sum sought was the value of the work, assessed by deducting $36,000 paid by way of progress payments from the agreed market value, namely $62,945. The claim could not be framed in contract due to non-compliance with s 45 of the Builders Licensing Act 1971 (NSW) which was then in force. This required any contract under which the holder of a licence undertook to carry out building work to be in writing. Section 45 said that an unwritten contract was ‘not enforceable against the other party to the contract’. The builder held a licence, the work was ‘building work’ under the Act, and s 45 therefore took effect. Clarke J said the statute did not defeat the builder’s claim, and ordered the remaining issues to be tried before an arbitrator. That decision was reversed by the New South Wales Court of Appeal.172 For that court, the claim, framed as an indebitatus count, was an action to enforce the contract. It was also said to be inconsistent with the legislative policy of the Act for the claim to succeed. An appeal was then taken to the High Court, which held (Brennan J dissenting) that the Court of Appeal was wrong. The builder therefore succeeded. The contract at issue was ineffective as being unenforceable by virtue of the statute. Both in its requirements and its effect, the statute was analogous to s 4 of the Statute of Frauds 1677 (Imp). It was therefore appropriate to consider use of the common count in quantum meruit in

that specific context. The High Court analysed the history of the common counts to explain the nature of claims for reasonable remuneration under the modern law.173 Deane J considered that the cases showed that claims for reasonable remuneration in that context were not regarded as actions on the contract. The fact that some of the cases174 treated such claims as permissible simply because they were seen as actions in debt did not imply that the proper basis was contractual rather than restitutionary.175 For Deane J, there was no need to resort to the fictional promise of indebitatus assumpsit to explain why the Statute of Frauds did not apply to an action to recover reasonable remuneration. However, he emphasised proof of acceptance (actual or [page 391] constructive) of the benefit of a plaintiff’s work as an essential ingredient of the claim. On the facts, in his view Paul had accepted the benefit of the builder’s work. Since its claim did not involve enforcing an agreement unenforceable under s 45 of the Act, the builder was entitled to restitution, subject to an analysis of the policy of the Act itself. The claim succeeded because Deane J could discern no legislative intent to deprive the builder of its ordinary common law right.176 Very briefly, the reasoning of the other members of the court was as follows. In their joint judgment, Mason and Wilson JJ agreed with Deane J’s conclusions and reasoned along substantially similar lines. They thought the words of s 45, although apt to embrace indirect as well as direct enforcement of the contract, did not touch the right to recover reasonable remuneration. That claim did not depend on the existence of any implied contract. However, it was not enough for the builder to prove execution of the building contract and non-payment. In order for such a claim to succeed, acceptance of benefit must be proved.177 In their view, the obligation enforced following acceptance differs in character from the contractual obligation to pay which was unenforceable by virtue of non-compliance with s 45. Therefore, like

Deane J, they regarded178 the builder’s claim as a ‘claim to restitution or one based on unjust enrichment’, arising from Ms Paul’s ‘acceptance of the benefits accruing … from the [builder’s] performance of the unenforceable oral contract’. Brennan J, although dissenting in respect of the effect of policy considerations inherent in s 45, expressed similar views. By contrast, Dawson J agreed with the majority on the legislative policy issue. However, he considered that the common indebitatus counts offered a remedy where there was an express agreement which could not be enforced, provided that the agreement was completely executed or performed, so that the promise to pay (a non-contractual promise) could be implied. Because these common counts rested on a promise implied in fact, rather than a fictitious promise, they were distinguishable from those cases in which indebitatus assumpsit was used as a remedy in quasi-contract based on a promise implied in law. It therefore followed that the action was not an action on an implied contract, or at least not on an implied contract covering the same ground as the express contract.179 [1025] Acceptance of benefit. Acceptance of benefit is the principal justification for reasonable remuneration in respect of inherently ineffective contracts. The Australian cases are legion.180 But there are also many [page 392] English cases.181 Restitution will be denied if there is no acceptance, or if the reason for the contract being ineffective also prevents reliance on acceptance. That is how the matter was approached in Pavey & Matthews Pty Ltd v Paul.182 ‘Free’ acceptance was recently confirmed as a basis for restitution under English law in the inherently ineffective context in Benedetti v Sawiris.183 In one very important respect, Pavey is not a satisfactory decision.184 The case refers to two forms of acceptance: ‘actual’ and

‘constructive’.185 Neither was defined. However, the former is clearly a reference to ‘free’ acceptance; while the latter appears to refer to a category of implied, inferred or deemed acceptance. The contract, although unenforceable, was still a request to the builder to execute the work. But the work in question was done on Paul’s land, and it is notoriously difficult to establish free acceptance if work is done pursuant to a contractual request and the recipient becomes the owner of the improvements to the land as the work proceeds.186 It appears that, when the work was being done, Paul did not know that the contract was unenforceable. Accordingly, there was no unconscionable conduct at the time of receipt. She did not stand by with knowledge that the builder was doing work for which she would not be contractually obliged to pay. It also seems difficult to say that acceptance was a legitimate inference from her conduct following performance of the contract.187 Once the work was complete, Paul could not return it, and her reliance on the statute could not be unconscionable conduct per se. However, Paul did receive the very benefit for which she bargained. This led Deane J to his concept of ‘constructive’ acceptance. Therefore, where a contract is fully performed (and the defendant’s request satisfied), there is a constructive acceptance of the benefit of the work, apparently on the basis that the defendant cannot deny that the work was beneficial. Accordingly, the concept does not require unconscionable conduct in receipt. A prima facie claim was made out without proof of free acceptance. Consideration of statutory policy was therefore relevant, but only as a possible defence to the builder’s prima facie claim.188 Had the policy been stronger Paul would have [page 393] been entitled to say, ‘I have been enriched, but I have a defence’. However, if this is the correct analysis of constructive acceptance, there seems in practice little difference between the approach of the High Court and the theory it disapproved,189 namely, that full performance

gives rise to a debt which is enforceable, independently of the Statute of Frauds, by a claim in quasi-contract.190 Nevertheless, the dislike for bases for restitution such as acceptance which emphasise the defendant’s conduct has led commentators to look for other explanations of Pavey. Professor Birks191 suggested failure of the agreed return as the appropriate basis. This gives effect to the concern to find a basis for restitution which looks to the position of the builder rather than that of Paul. Because the contract in Pavey was executed, had the contract been enforceable the builder could have recovered the agreed return (the price of the work), in contract. The statute, which prevented the builder’s claim in contract, did not apply to a claim in restitution based on failure of the agreed return. Therefore, Paul could not simply recite the terms of the statute to deny the builder’s claim. However, failure of the agreed return is a workable analogy if the payment has been earned but not paid at all. The criterion is total (or at least substantial) failure. Had the builder in Pavey not received progress payments for the work done (or if the contract had been severable), its position would have been analogous to a person who pays the contract price in advance but receives no performance. Failure of the agreed return might then have provided an analogy. But Pavey was not such a case. Progress payments were made. Failure of the agreed return related to the balance of the promised performance. Because the contract was not severable, the unpaid work had did not have its own agreed return. Failure was partial, rather than total or substantial. It is, moreover, not difficult to construct examples where a plaintiff would be shut out by a modest receipt. Accordingly, adoption of failure of the agreed return, in place of acceptance of benefit, requires recognition of partial failure of the agreed return as a distinct basis for restitution.192 By contrast, as the High Court’s decision shows, the acceptance criterion is not affected by the receipt of part payment.193 The reasoning in Pavey will apply to full performance of the severable part of a contract.194 Therefore, assuming that the contract is discharged, the plaintiff can invoke constructive acceptance.195 But in

the absence of free acceptance, any other claim based on partial performance will fail. [page 394]

(ii) Void contracts [1026] Introduction. Where a transaction is void, for whatever reason, but the defendant’s request (as expressed in the void agreement) has been complied with, the plaintiff is entitled to reasonable remuneration if performance has been accepted.196 In some cases, the parties may have believed the transaction to be a contract. If that belief is established as a mistake, there is scope for treating mistake as the basis for restitution. Although the cases provide some support for this,197 mistake has traditionally been seen as more relevant to claims to recover money paid than claims for reasonable remuneration.198 Moreover, analysis in terms of mistake tends to assume an objective concept of benefit, which is difficult to reconcile with the cases. [1027] Contracts void at common law. The chief examples of void contracts are agreements void for uncertainty (or incompleteness), absence of consideration or lack of capacity or authority. In these cases, the parties may have relied on the transaction as a binding contract, ‘voidness’ being discovered after beneficial performance has taken place. Therefore, the benefit the subject of the claim for reasonable remuneration was at the time it was conferred expected to be remunerated by performance. It is unnecessary to clear the hurdle often encountered where a contract fails to materialise, namely, that the work was done in anticipation of agreement to a promise to pay.199 In Hansen v Mayfair Trading Co Pty Ltd,200 D’Arcy J allowed a claim for reasonable remuneration where there was no contract, on the basis that the defendant had impliedly accepted the services of the plaintiff, a consultant accountant. The implication was drawn from the use of the

work done in certain litigation in which the defendant was engaged.201 A more recent illustration is Rover International Ltd v Cannon Film Sales Ltd.202 Services were rendered after entry into an agreement which was void as a pre-incorporation contract. The services took the form of processing and distributing films. Ultimately, it was conceded that something was due. However, the court agreed that a claim for reasonable remuneration was available. There is no discussion of the legal requirements. Kerr LJ (with whom Nicholls LJ agreed) said it was not necessary to consider whether an express or implied request was required to found the claim, this point having been abandoned. He made reference to mistake, that is, the parties’ belief that a contract existed.203 Describing the task of the court as being to carry out a ‘process [page 395] of equitable restitution’,204 most of the discussion is centred on whether the void contract set a ceiling on recovery.205 Many of the cases have involved uncertain (or incomplete) or noncontractual promises to remunerate personal services in a domestic context. A typical example is Stinchcombe v Thomas,206 where the plaintiff sued an executor for restitution. At the testator’s request she had served as a housekeeper, following the testator’s promise to ‘well reward’ her and to leave her a substantial sum in his will. The agreement, although void for uncertainty, was fully performed. She received property to a value of £1000 under the will, but did not consider she had been ‘well rewarded’. Treating the testator as having accepted the benefit of the work, Monahan J held in favour of the plaintiff. Like D’Arcy J in Hansen v Mayfair, Monahan J applied Craven-Ellis v Canons Ltd.207 Both regarded the case as illustrating acceptance of benefit. Craven-Ellis is, however, a difficult case. The plaintiff claimed reasonable remuneration for work done for the defendant as a valuer and estate agent. In 1931 an agreement was executed under the seal of

the company, setting out the terms under which the plaintiff would act as its managing director. The seal was affixed by resolution. However, the contract was void because none of the directors had obtained the necessary share qualification. They were incapable of acting for the company. Nevertheless, the English Court of Appeal held that restitution was available. Greer LJ said208 that a promise to pay could be implied. It arose ‘from the performance of the services and the implied acceptance of the same by the company’. He emphasised209 that the promise was not a factual inference, but rather an inference ‘which a rule of law imposes on the parties where work has been done or goods have been delivered under what purports to be a binding contract, but is not so in fact’. The difficulty with this analysis lies in explaining how the request and acceptance bound the company when no-one with authority acted on its behalf. Policy considerations aside, one basis for Craven-Ellis is incontrovertible benefit.210 The other basis, which courts have adopted [page 396] expressly or by default, is that there may be an acceptance of benefit irrespective of whether there is authority or capacity to contract.211 Acceptance of benefit is the general criterion, applicable to void contracts of all types. It was emphasised by Byrne J in Brenner v First Artists’ Management Pty Ltd.212 In the late 1980s various people worked together in a project the basic object of which was to profit from the ‘comeback’ of Daryl Braithwaite, a famous Australian singer of the 1970s. Relevantly, the arrangements comprised a management agreement and a record agreement. These agreements were held to be too uncertain (or incomplete) to count as contracts, with the result that the work done under them could not be remunerated on a contractual basis. For the most part, the services took the form of advising Braithwaite and promoting his comeback. Although the success of the comeback could be traced, at least in part, to the work which the plaintiffs had done, it was not possible to identify the increase in

Braithwaite’s wealth that was directly attributable to their work. In any event, the parties fell out and the consensual arrangements were terminated before the success of the project. Confronted by a restitutionary claim in respect of what is sometimes termed ‘pure services’,213 Byrne J held in favour of the plaintiffs.214 There are three main links in the chain of reasoning. First, the decision in Pavey & Matthews Pty Ltd v Paul,215 although reached in the context of an unenforceable contract, is applicable to claims for reasonable remuneration in respect of services rendered under a void transaction. It followed that unjust enrichment was the applicable concept. Second, in deciding whether Braithwaite had benefited, it was not conclusive that the plaintiffs could not directly attribute increases in Braithwaite’s wealth to their efforts. Byrne J said216 economic benefit is not required. In his view,217 the services rendered were beneficial and could be remunerated under restitutionary principles. [page 397] Third, applying Pavey, the relevant question was whether the benefit of the services at issue had been requested and accepted by Braithwaite. Given that the services were rendered in accordance with consensual arrangements which the parties intended to be effective as contracts, there was no difficulty in finding a request. Equally, so Byrne J thought, since Braithwaite made no attempt to reject the benefit of the services until the arrangements were terminated, he had either actually or constructively accepted the benefit of the services. Byrne J described218 this as the ‘gist’ of the claim, and said219 that where a benefit is requested and accepted no other basis is relevant. He described220 the relevant test as being: [W]hether the recipient of the services, as a reasonable person, should have realised that a person in the position of the provider of the services would expect to be paid for them and did not take a reasonable opportunity to reject those services.

He concluded that the test was satisfied. The services were provided under contracts which turned out to be void, pursuant to a request

made in a normal commercial relationship with a person in the business of providing those services for reward. Minors and persons suffering from mental disability are, of course, liable to pay a reasonable sum for necessary services221 or goods.222 [1028] Impact of statutory and public policy. Voidness under statute raises specific questions of policy.223 It must therefore be considered whether the statute which renders the contract void also bars the restitutionary claim at issue. Extending Pavey & Matthews Pty Ltd v Paul224 a little, it is logical to say that the mere fact that the contract is void is not a bar to a claim in restitution for reasonable remuneration.225 However, the statute may expressly prohibit such claims, or it may be inferred that this was the legislative intention.226 For example, in Sevastopoulos v Spanos227 a failure to [page 398] comply with legislation requiring any claim for the ‘cost’ of work done to be in writing was held to prevent a claim for reasonable remuneration.228 There are many similar cases.229 Public policy may also be relevant to claims arising out of benefits conferred under contracts void under the general law. In Guinness Plc v Saunders,230 a director’s claim to reasonable remuneration for services rendered under a void contract was rejected. In the view of Lord Templeman (with whom Lords Keith, Kilbrandon and Griffith agreed), no contract could be implied because this was contrary to the terms of the articles of the company. He distinguished Craven-Ellis v Canons Ltd231 on the basis that there the plaintiff was not a director, and because in Guinness the imposition of an obligation to make restitution would have been contrary to the rule of policy which prohibits a director from profiting from breach of a fiduciary duty. In the view of Lord Goff, with whom Lord Griffith agreed, the claim failed simply because to award restitution would have been contrary to the policy applicable to fiduciaries.232

Where a transaction is both void and illegal, claims for reasonable remuneration are almost invariably refused, on the basis that neither the contractual concept of discharge nor the restitutionary concept of acceptance can be applied.233 This approach has no doubt been influenced by the implied contract theory. The approach has been strictest where the benefit has been conferred under a contract illegal as prohibited under statute. The implied contract of quasi-contract has in that context been treated as an implausible subterfuge.234 However, the reasoning in Pavey & Matthews Pty Ltd v Paul235 [page 399] may perhaps be used to support the view that in cases of statutory illegality there is merely a stronger policy element to be considered, as a defence to a claim otherwise made out on a prima facie basis. However, such an approach relies principally on the conception that liability in restitution is an independent liability. That is very difficult to reconcile with the strictures of the ex turpi maxim.236

(iii) Unenforceable contracts [1029] Introduction. The main examples of cases on unenforceable contracts237 involve contracts affected by s 4 of the Statute of Frauds 1677 (Imp), or derivative legislation. In Pavey & Matthews Pty Ltd v Paul,238 Deane J explained239 the relevant quasi-contract principles for contracts affected by these provisions in four propositions derived from Jordan CJ’s judgment in Horton v Jones.240 The first denies that performance of the contract is sufficient to render the statute inapplicable. The second proposition is that the statute did not apply to a quantum meruit claim based on acceptance of the benefit of performance of the contract. The criterion was expressed by Jordan CJ in terms of behaviour in relation to a benefit such that, in the absence

of a contract, the plaintiff could succeed on a common money count.241 Third, although the unenforceable contract may be referred to as evidence of the remuneration recoverable under the claim,242 the express contract prevents the implication of a contract. Fourth, the defendant is liable on a quantum meruit claim (for reasonable remuneration as on an indebitatus count): the obligation to pay is ‘imposed by law, and does not depend on an inference of an implied promise’.243 In Pavey, the claim was rationalised as a species of restitution for unjust enrichment. It is independent of the unenforceable contract244 and not affected by the policy of the statute. [1030] Fully performed unenforceable contracts. Prior to Pavey & Matthews Pty Ltd v Paul245 it was clear law that a claim for reasonable [page 400] remuneration would be awarded for full performance by the plaintiff of a contract unenforceable by reason of s 4 of the Statute of Frauds 1677 (Imp).246 The usual case was an oral employment contract for a period in excess of one year.247 In Matthes v Carter248 the Full Court of the Supreme Court of New South Wales said that a quantum meruit claim is an action for a debt based upon the executed contract and not on an implied contract. Because the contract has been discharged by performance, the proper ground for relief was said to be restitution. This approach was adopted by the High Court in Turner v Bladin,249 in obiter dicta relying on Denning LJ’s original views in James v Thomas H Kent & Co Ltd.250 The High Court said that a quasi-contractual claim arising from performance of the contract is not within the purview of the statute,251 as the statute concerns actions in assumpsit rather than debt.252

However, in Pavey & Matthews Pty Ltd v Paul this approach was expressly rejected. The propositions formulated253 by Deane J led him to agree with Denning LJ’s revised judgment in James v Thomas H Kent & Co Ltd,254 in preference to the original views relied on in Turner v Bladin. Since the policy of the statute also extends to (contractual) claims to enforce debts arising from performance,255 the statute is not restricted (as a matter of statutory interpretation) to claims brought on executory contracts. Adopting Denning LJ’s revised judgment, the obligation enforced in a restitutionary claim does not derive from the unenforceable agreement. The basis of the obligation to make payment for an executed consideration given and received under an unenforceable contract is restitution for unjust enrichment. Because liability is imposed as a response to the benefit requested and accepted, [page 401] the statute does not apply.256 Nor does its underlying policy. As the decision in Pavey illustrates, the same reasoning is applicable to statutes analogous to the Statute of Frauds, subject to proper consideration of any additional policy concerns underlying the particular statute.257 Therefore, as the effect of non-compliance increases from the mere imposition of a procedural bar on a claim in contract to wider sanctions, so the scope of the statutory policy broadens. Failure to comply with the statute may then be a good defence to the claim in restitution.258 A person suffering from a lack of contractual capacity, by minority, mental disability (including the impact of drugs), is liable to pay a reasonable sum for ‘necessary’ services supplied.259 These are services which are suitable to the condition in life of the incompetent person.260 In City Bank of Sydney v McLaughlin,261 Griffith CJ recognised the possibility of a restitutionary claim against a mentally incompetent person, based on acceptance of a benefit after recovery from disability. Whether under the general law the liability to pay for necessary services is always restitutionary, or in some cases contractual, remains unclear.

There is some support for the view that agreements for necessaries form an exception to the capacity rule. To the extent that a minor may be bound by executory contracts of employment and analogous contracts, contractual liability is suggested.262 However, for services provided to a person not competent to contract, the obligation is to pay a reasonable sum. [1031] Substantially performed unenforceable contracts. A distinct question is whether a restitutionary claim is available if the plaintiff’s performance of an unenforceable contract is merely substantial. For effective contracts relating to work or other services, including building contracts, substantial performance is normally sufficient to entitle the plaintiff to recover the contract price.263 The rationale generally given for allowing recovery of the agreed price as a contract debt is the defendant’s right to [page 402] claim compensation for defects in the work. If this rationale is inapplicable — because there was no breach by the plaintiff — the doctrine of substantial performance does not apply.264 So far as claims for reasonable remuneration are concerned, in a case like Pavey & Matthews Pty Ltd v Paul,265 recovery of reasonable remuneration would be appropriate, notwithstanding any breach of contract by the builder, provided the contract has been substantially performed. Since the Act recognised the ability of the customer to enforce the oral contract against the builder, compensation could be claimed for any deficiencies in the work.266 However, there is no reason to assume valuation of the builder’s claim for reasonable remuneration would be equal to the contract price. Accordingly, the ability to claim damages is more relevant to consequential losses. Nevertheless, the position is more problematic if the duty of statutory compliance applies to both parties, so that the contract is not enforceable by the defendant. This the normal position for contracts

affected by provisions derived from s 4 of the Statute of Frauds 1677 (Imp). One view is that there is an insuperable obstacle to a restitutionary claim if the contract is not fully performed.267 The plaintiff’s claim is governed by the rules on partially performed unenforceable contracts.268 However, the contrary view can be supported. Given that under contractual principles the promisor is in effect discharged by substantial performance, the restitutionary principles applicable on full performance should also operate even though the contract is unenforceable.269 The inability of the defendant to claim compensation is immaterial. The key point under this approach is that what is valued is the performance rendered.270 Unlike the position in a contractual claim — where the plaintiff recovers the contract price — the claim in restitution is for the reasonable value of the plaintiff’s (substantial) performance. [1032] Partially performed unenforceable contracts. An unenforceable contract is a species of ineffective contract. However, partial performance (not amounting to substantial performance) of a contract affected by a provision derived from (or analogous to) s 4 of the Statute of Frauds 1677 (Imp) will not usually lead to a successful claim for reasonable remuneration. There are two reasons. First, an undischarged unenforceable contract bars a restitutionary claim by a plaintiff in breach.271 Second, treating partial [page 403] performance of an entire contract as an unrequested benefit, unless the contract has been discharged for the defendant’s breach, enrichment must be established independently of the contract, by acceptance.272 The claim may succeed if the contract is severable, as in Riley v Melrose Advertisers,273 where an advertiser recovered for work done and accepted in respect of the severable part of an unenforceable oral contract. Following Pavey & Matthews Pty Ltd v Paul,274 in that context the applicable form of acceptance is constructive acceptance.

The principal situations in which claims based on partial performance have succeeded are against a defendant in ‘breach’. If the contract has been ‘removed’ by discharge for breach, reasonable remuneration is available. Clearly, if the defendant prevented the plaintiff from completing performance, the ineffective contract may be validly discharged by the plaintiff. Reasonable remuneration may also be claimed where, although there is no actual prevention of performance, a right of discharge is available under the doctrine of repudiation. Neither the contract nor the statute is an obstacle to the claim based on unjust enrichment.275 In Matthes v Carter276 the Full Court of the Supreme Court of New South Wales held that if an unenforceable contract is validly terminated by the plaintiff for repudiation by the defendant, a claim for reasonable remuneration is available in respect of work done at the defendant’s request. Because the contract was merely partially performed, valid termination was essential.277 Similarly, in Brooks Robinson Pty v Rothfield278 it was held that, if the contract in question was unenforceable by reason of the Statute of Frauds, the plaintiff was entitled to reasonable remuneration because the plaintiff accepted the defendant’s repudiation (after building work was partially completed) as a basis for ‘rescission’ of the contract. More recently, in Gino D’Alessandro Constructions Pty Ltd v Powis279 restitution was awarded following partial performance where a builder accepted the defendant’s repudiation of a contract unenforceable under a statute with a policy object similar to that of the Statute of Frauds. The object of the legislation was the introduction of a degree of contractual precision, a means to determine whether loss was suffered, so as to attract the benefit of insurance under the legislation. The policy of the legislation did not extend to the claim for restitution. [page 404] Although it is arguable that in these cases the basis for the claim is acceptance of benefit, little attention is paid to the concept. The

principal rationale may be the same as in the context of effective contracts which become ineffective due to discharge by the plaintiff for breach or repudiation by the defendant,280 namely, the defendant’s breach or repudiation. By contrast, if a claim is made by a plaintiff whose breach or repudiation of the unenforceable contract led to discharge, the claim must be based on free acceptance.281 The requirement is satisfied if the defendant accepted performance independently of the contract. Therefore, the defendant must have enjoyed the option to reject the performance alleged to be beneficial.

(iv) Contracts which fail to materialise [1033] Introduction. Cases where negotiations break down before a binding contract materialises are, from one perspective, simply examples of void contracts. However, there is often an important factual distinction. If a ‘contract’ is void as a matter of law, conferral of benefit reflects an underlying assumption of legal obligation. But in the present context it is usually understood by the parties that they are merely negotiating towards a contract. It is perhaps correct to say that when applying the implied contract rationale,282 courts were less willing to regard work done in anticipation of a contract as liable to be remunerated in a restitutionary claim than are courts today, applying the unjust enrichment rationale.283 In part, this is a response to a not uncommon feature of modern contracting, namely, that the contracting process often lags behind performance. Documents such as heads of agreement and letters of intent are often executed as preliminary agreements. Work is done while lawyers debate matters such as liability clauses, but the contract is never signed. There are two important introductory points. First, although the contemplated contract has failed to materialise, it must be asked whether, in fact, another contract was agreed.284 A contract may be implied from conduct, a preliminary agreement may take effect as a self-contained contract or it may be possible to establish a contract limited to the work done. In all these cases, the work in question falls to be remunerated under a contract.285

[page 405] The second point is the incidence of risk.286 Where a person seeks to gain a contract to do work, the inference may easily be drawn where work is done without the benefit of contract that the plaintiff is taking the risk that no contract will materialise. A mere expectation of remuneration under a contract yet to be agreed is not in itself a basis for restitution, even if an assumption that a contract will be agreed is reasonably made. As has been explained,287 the principle of unjust enrichment is not a response to reliance per se. Therefore, the general rule is that work done in preparing a tender, or in preparation of performance under an anticipated contract, cannot be made the subject of a claim for reasonable remuneration. The former is an overhead expense to be recouped from payments under the contract.288 Expenditure in anticipation of being awarded a contract is simply a gamble. In order to invoke unjust enrichment, the plaintiff must establish both enrichment and injustice. Neither is established by the assertion of a reasonable expectation of reward. ‘Risk’ is an elusive concept, but there is sometimes scope for a conclusion that the other party is implicated in the risk that no contract will materialise. If the contracting process is complex, and work is done in performance of the contemplated contract, it may be quite unrealistic to say that the risk of the negotiations coming to nothing falls only on the plaintiff.289 It may be plausible to say that although the plaintiff has taken the risk that no contract will be agreed, the defendant has borne the risk that if the contract does not materialise it will be obliged to pay a reasonable sum for work actually done. Although proof of an unjust enrichment assumes that there was no express agreement on risk, the normal inference — that payment must flow from the contract — may be displaced. For example, in Benedetti v Sawiris290 under one aspect of complex arrangements involving various entities, the claimant provided valuable services in anticipation of entry into a contract which never materialised. Reasonable remuneration was claimed, and awarded by the Supreme Court of the United Kingdom, on the basis that the benefit of the claimant’s services had been freely

accepted by the defendants. Indeed, since it was not disputed that valuable services had been provided, most of the discussion is focused on how the benefit conferred should be valued.291 [page 406] [1034] Claims based on executed work. A relatively straightforward situation is where the work with which the anticipated contract would deal is executed. At least from the plaintiff’s perspective, the ineffective nature of the contract will not usually matter. The plaintiff is entitled to payment. In fact, the plaintiff may well prefer to claim in restitution rather than contract, in order to avoid a claim by the defendant for breach of contract. This was the position in British Steel Corp v Cleveland Bridge and Engineering Co Ltd.292 Work was done under a letter of intent which had no contractual effect. Specifications were agreed, and the builders completed the manufacture and delivery of 137 cast-steel nodes which were installed in accordance with the anticipated contract. It was clear that the work was not done gratuitously, and Robert Goff J held that a claim for reasonable remuneration, which was ultimately conceded, was available. He emphasised satisfaction of the request to do the work.293 Similarly, in Peter Lind & Co Ltd v Mersey Docks and Harbour Board294 services were held to have been rendered in anticipation of entry into a construction contract. A claim for reasonable remuneration was available when the work was completed without any formal contract being signed. Decisions such as British Steel might be criticised for their failure to explain the basis on which the recipient of the work is held to have been benefited for the purposes of unjust enrichment. Although Robert Goff J did not in fact invoke that concept, it would have been an unjust enrichment for the work to have gone unremunerated. It seems excessively technical to say that although the work was requested and executed it was not accepted.295 Even though a recipient’s conduct could be said to be referable to the expectation that a contract will be

agreed, and therefore not amount to an ‘acceptance’ of the work, such a conclusion would ignore commercial realities. It would also be inconsistent with the goal of preventing unjust enrichment.296 [1035] Partial performance. Where work is done in preparing a quotation, or information is provided in abortive contract negotiations, the general rule is that reasonable remuneration cannot be claimed.297 The more difficult case is partial completion of the work with which the anticipated contract would deal. That includes situations in which preliminary work has been commenced or completed. Analysis of why [page 407] the contract failed to materialise is important. Of course, the discussion assumes that the claim does not relate to goods or materials which the defendant refuses to return when it is quite able to do so. A much discussed case is Sabemo Pty Ltd v North Sydney Municipal Council.298 In 1969, the council advertised that it planned to build a civic centre. Its objective was to enter into a joint venture — by awarding a building lease — for the development of land which it owned. Sabemo was the successful tenderer in a process the object of which was to bring about a negotiating relationship. It prepared various schemes at considerable expense, one of which was satisfactory to all interested parties. Development approval was also given. Ultimately, however, the council decided to proceed with a more modest development. As the decision had nothing to do with the conduct of Sabemo, or the quality of its work, it was (not surprisingly) aggrieved at the council’s refusal to pay for the work it had done. Sheppard J held that Sabemo was entitled to what he termed299 ‘compensation or restitution’. In the then state of the law, he felt unable to characterise the claim as based on unjust enrichment, and applied a principle of entitlement based on the combination of three factors. First, a joint assumption that a contract will be entered into. Second, work beneficial for the project contemplated, which in other circumstances the plaintiff

would not have been expected to do gratuitously. Third, a unilateral decision not to proceed to contract for reasons which, however valid, pertain only to the defendant’s position. This principle is manifestly risk-orientated: the plaintiff was entitled to be remunerated because it had not agreed to the risk which materialised.300 It is therefore fault based. Although when the parties came together it could be said that Sabemo was taking the risk that no building lease would be awarded, the circumstances changed and a situation arose in which the plaintiff reasonably understood that its labours would be rewarded. Although little thought was given to the possibility that a quite different development strategy would be adopted, the council had not given up its freedom not to contract. One case on which Sheppard J relied was William Lacey (Hounslow) Ltd v Davis.301 It was contemplated that a building contract would be awarded to the plaintiffs. Work in the form of the preparation of estimates was done in anticipation of the contract. However, no contract was agreed. Barry J found for the plaintiff. Although he reasoned that there is no difference between doing work under a void contract and doing work [page 408] on the basis that payment will be made out of the proceeds of an anticipated contract, in terms of risk there is a clear difference between a misplaced assumption and a misprediction.302 From a technical perspective, it might be asked why there was a right to ‘compensation’ in Sabemo. If there was a breach of duty, it arose either under estoppel or some principle of good faith.303 Sabemo’s complaint was that it had relied on the council’s conduct, incurred expenses and rendered valuable services. Compensation on the basis of promissory estoppel was not available at the time. Although an argument for liability on that basis might be stronger today, the terms of the contemplated contract were not agreed. However, there was

detrimental reliance by Sabemo on statements made by the council; and Sheppard J made a finding of unconscionable conduct. Sheppard J’s (alternative) solution in terms of restitution is also difficult.304 He did not adopt an unjust enrichment basis. Sheppard J may have taken the view that a claim in restitution is a claim for compensation, or held that restitution may be claimed even though the principle of unjust enrichment does not apply, perhaps on the basis that unjust enrichment applies only in cases of tangible benefit. We do not see either approach as viable today: each has been overtaken by subsequent developments.305 In Brenner v First Artists’ Management Pty Ltd,306 Byrne J, in following Sabemo in the void contract context, did not adopt a compensation rationale. He adopted restitution, and also rejected the idea that unjust enrichment is inapplicable where services have no end product. He applied the concept of acceptance, and said that the question of benefit is determined from the ‘perspective of the recipient’.307 Under the principle of unjust enrichment, a distinction must be drawn between detriment incurred at the defendant’s request in the hope of remuneration, and the benefit to the defendant of services which are requested and accepted as such. Unjust enrichment will not apply where reliance by the service provider is the only ‘benefit’.308 In Sabemo the work [page 409] which was done did enrich the council.309 The case graphically illustrates information as a benefit obtained from professional services. The council benefited from determining the building scheme which would meet its needs, even though that benefit was not realised (or realisable) in the way envisaged.310 In addition, the council determined what was not feasible, which was also beneficial. But for the convoluted way in which it obtained the services which Sabemo provided, the council would have had to pay a price. In its dealings with Sabemo a point was reached where the council was requesting work for which a

reasonable person in the position of the council would have appreciated that payment would have to be made, whether or not the development proceeded as planned. It accepted the benefit of that work even though it did not utilise it in the way envisaged. More recently, in Cobbe v Yeoman’s Row Management Ltd311 a developer pulled out of negotiations for a joint venture arrangement when the owner of the land which was to be used for the joint venture demanded a higher price for the land. Since the exertions of the developer led to the grant of planning permission, they were beneficial to the owner. The House of Lords had no difficulty in holding that the developer was entitled to reasonable remuneration for the work done. It appears to have regarded as sufficient that the work in question was requested and objectively beneficial. Although the developer took a calculated risk in doing the work without the benefit of a concluded contract, the fact that the failure of any contract to materialise could be attributed to the land owner’s conduct was also relied on. Indeed, Lord Scott said312 the developer’s claim for restitution could be analysed in terms of two ‘co-extensive’ claims. The first was to recover money paid (with interest) and the value of the services on the basis of total failure of the agreed return. The second was a quantum meruit claim, that is, reasonable remuneration for the work done.313 [1036] Realised or realisable benefit. Where any work done is of a preliminary character, the factual situation is generally one of reliance rather than request and acceptance. But if the concept of acceptance cannot be applied to establish an enrichment, the concept of incontrovertible benefit may apply. William Lacey (Hounslow) Ltd v Davis314 may be explained on this basis. The defendant realised a benefit from the plaintiff’s work when he used the plaintiff’s estimates in evidence to the War Damage Commission. [page 410] In Marston Construction Co Ltd v Kigass Ltd,315 realisable benefit was

treated as within the scope of incontrovertible benefit. Building and civil engineering contractors were awarded reasonable remuneration for work done in preparing designs and working drawings in anticipation of entry into a contract which never materialised. It was found that the services were requested, and held that the defendants obtained a realisable benefit.

(b) Accepted Goods [1037] Most claims contractual. The concept of acceptance of benefit is an obvious basis on which to determine liability to pay for goods which are delivered in circumstances where there is no binding contract. However, most claims to payment for accepted goods seem to be either contractual or statutory in character.316 This arises principally from provisions of the sale of goods legislation which oblige a buyer to pay a ‘reasonable price’ for goods accepted under an inherently ineffective contract. Even so, the nature of liability in respect of necessary goods accepted by persons lacking full contractual capacity is still debated.317 Whatever the rationale, there is no need to apply general principles of unjust enrichment. Of course, it can also be said that the legislation is a statutory codification emphasising the importance of ‘acceptance’. The sale of goods legislation does not apply to all such contracts, or to all claims which may arise out of inherently ineffective sale of goods contracts. Acceptance under the general law therefore has some relevance. [1038] Void contracts. The sale of goods legislation states318 that the price in a contract of sale may be fixed by the contract, left to be fixed in a manner agreed by the parties, or determined by the course of dealing between the parties. It is also stated that where the price is not determined in any of these ways, the buyer must pay a reasonable price.319 There is no reference to implied contract, or even an implied term. So far as accepted goods are concerned, the concept is acceptance in performance.320

In recognising that a contract of sale may be implied from the conduct of the parties, the sale of goods legislation allows for an obligation based on a genuine implied contract.321 Although the general contractual requirements such as consideration, certainty and intention to create legal relations, remain applicable, the impact is to marginalise restitutionary claims. Even if [page 411] goods are accepted under a category of void contract to which the legislation does not refer, the obligation is to pay a reasonable price. But this is a restitutionary obligation,322 based on unjust enrichment. Although account must be taken of the fact that goods may be consumed, or become fixtures, the ‘seller’ will generally succeed if the ‘buyer’ chooses to accept the goods. British Steel Corp v Cleveland Bridge and Engineering Co Ltd323 may be cited as an example. Although the contract failed to materialise, the steel nodes with which the contract would have dealt were supplied and installed. It was irrelevant whether the contract was for the supply of goods, or a work and materials contract, since a restitutionary claim for reasonable remuneration was available on the basis that the nodes had been requested and accepted with knowledge that the seller was to be paid. A request for the delivery of goods may be vitiated by mistake. In the much debated Boulton v Jones,324 the defendants were owed money by one Brocklehurst, with whom they had regularly dealt. Subsequently, Brocklehurst sold his business to the plaintiff. Not knowing of this, the defendants sent a written order for goods addressed to Brocklehurst at his place of business. The plaintiff struck out Brocklehurst’s name, substituted his own, and filled the order. Notwithstanding the defendants’ apparent acceptance of the goods, the plaintiff’s action for the price failed on the basis that there was no contract.325 This was sought to be justified by reference to the prejudice to the defendants resulting from the fact that they were entitled to a set-off against Brocklehurst of which they would be deprived in the plaintiff’s action.

There cannot be much scope today for denying a restitutionary claim where goods have been accepted. Arguably, sensitive valuation of the claim could accommodate a case like Boulton v Jones under the principle of unjust enrichment.326 Even unrequested goods may be accepted, with consequent liability in contract or restitution. But there are policy reasons associated with the delivery of unsolicited goods to consumers. The sale of goods legislation is therefore qualified by legislation dealing with unsolicited goods (and services). Under the legislation, making a demand for payment is an offence.327 If a right to payment arises, that will be the impact of the legislation, rather than common law principles of restitution. In Victoria, certain contracts by minors are expressly declared void by statute.328 However, delivery of goods to the minor with the intention to pass [page 412] property will be effective to do so.329 It is possible that restitutionary claims are available, and in practice there does not appear to be any great distinction between these cases and those made in respect of minors’ transactions void or unenforceable under the general law. [1039] Unenforceable contracts. The usual basis for statutory unenforceability, namely, failure to comply with a statutory requirement of writing, was originally applicable to sale of goods contracts. However, provisions derived from s 17 of the Statute of Frauds 1677 (Imp), requiring any contract for the sale of any goods with a value of $20 or more, are in force only in Tasmania and Western Australia.330 But the relevance of the requirement to restitutionary claims was always marginal. In the absence of writing, alternative ways of complying with the legislation are available. It is sufficient that the buyer gives something in earnest to bind the contract, or in part payment, or that the buyer

accepts and actually receives part of the goods sold.331 Moreover, for this purpose there is an acceptance of goods when the buyer does any act in relation to the goods which recognises a pre-existing contract of sale: acceptance in performance of the contract is unnecessary.332 The effect of acceptance is to make the contract enforceable,333 and the buyer is liable on the contract. This all leaves little room for restitutionary claims. The sale of goods legislation deals with the main example of common law unenforceability (or voidness), namely, lack of capacity to contract. A reasonable sum must be paid for necessary goods.334 No such entitlement arises if non-necessary goods are supplied. Thus, a minor is not obliged to pay the agreed price, or a reasonable sum, even though the goods have in fact been received, accepted and used by the minor. It may be debated whether the distinction between necessary and nonnecessary goods is based on policy considerations consistent with society’s current perceptions, including the concept of unjust enrichment.335 [1040] Claims for necessaries supplied. It has never been doubted that incapacity to contract is not a defence to a claim based on the receipt of necessary goods by a mentally incompetent person or a minor. Prior to the enactment of the sale of goods legislation, the courts developed principles for classifying goods as ‘necessaries’. The concept was not limited to the bare essentials of life, but depended on a particular individual’s [page 413] circumstances. So, in the context of a minor or mentally incompetent person, the concept was applied to articles fit to maintain the person in his or her state, station, and degree in life.336 Although therefore extending to articles of utility, it did not apply to luxury items,337 nor to items with which the incompetent was already amply supplied.338

However, it was never determined whether the liability to pay for necessaries was an exception to the rules on incapacity, or the imposition of a quasi-contractual liability. It appears339 that the balance of authority was in favour of the latter. In some contexts, this seems to have been viewed as a proprietary liability, to be realised from (and limited by) the incompetent’s own property.340 The sale of goods legislation codified this aspect of the law by providing that a ‘reasonable price’ must be paid for necessaries sold and delivered to a person who, by reason of minority, mental incapacity or drunkenness, is incompetent to contract. The legislation341 defines ‘necessaries’ as goods suitable to the condition in life of the incompetent person, and to that person’s actual requirements at the time of the sale and delivery.342 As a matter of substance, if the agreed price is a reasonable price, the contract is enforceable against the minor, but only if the goods are accepted. Whether this operates by way of exception, or imposes a statutory or restitutionary liability, seems more or less irrelevant. Nevertheless, debate as to the nature of an obligation to pay for necessary goods has continued. Some cases suggest a contract basis,343 others a quasi-contractual basis.344 For example, in Nash v Inman345 fancy waistcoats supplied to an undergraduate were held not to be necessaries where the undergraduate was already adequately supplied with clothes provided by the father. Cozens-Hardy MR said346 that if the goods had been necessaries the minor could ‘be made liable on assumpsit’. But Fletcher Moulton LJ [page 414] considered347 that where a minor is liable to pay for necessaries supplied, the sum is recoverable as ‘on a quantum meruit’. [1041] Claims affected by illegality. The sale of goods legislation does not affect the law on illegality, this being one of the areas preserved under the ‘rules of the common law’ exception to

codification.348 Generally, no claim in restitution may be made where the contract is illegal, even if goods have been accepted.349

4. Other Claims [1042] Introduction. The object of this section of the chapter is to indicate in a general way other claims which may arise in situations which also raise an issue of restitution. For inherently ineffective contracts, the interaction between restitution, contract, promissory estoppel, tort and statute is complex.350 To begin with, we should indicate why this is so. First, in the brief analysis of risk351 a tension was exposed between the privilege of withdrawing from negotiations which have not matured into a contract and an understanding that, no matter what the outcome of negotiations, the plaintiff will not go entirely unrewarded. The law responds to this tension, but does so in various and complex ways. Restitution and contract do not occupy the entire field. The area of pre-contractual liability is now so complex that it almost defies analysis.352 The Australian Consumer Law,353 as well as the doctrines of estoppel, may provide bases for an award in favour of the plaintiff whether or not restitution could be claimed. Second, developments in the law of contract indicate that agreements which, in the past, would have been treated as void, for example, on the basis of uncertainty or absence of consideration, are often effective. In other contexts, a contract may be implied from conduct.354 There is an increasing willingness to enforce preliminary agreements as contracts. For example, even though a contract to negotiate a contract is not itself a binding agreement,355 an express agreement to negotiate in good faith may in some circumstances be enforceable.356 [page 415] Third, where the contract is merely unenforceable, doctrines derived

from equity may intervene, through part performance and estoppel. The relief is not restitutionary, and receipt of benefit is no more than a circumstantial consideration.357 However, the effect may be to prevent what would otherwise be an unjust enrichment. Fourth, even in cases where a contract is illegal, a collateral contract may be enforced, or liability may arise in tort or under statute. It is not a necessary assumption that a restitutionary claim would fail. But that is often the position. These developments and bases for relief were in part encouraged by the implied contract theory of quasi-contract. The recognition of restitution for unjust enrichment came too late to provide a more generalised solution to the problems addressed. But recourse to fictional devices should be deplored where restitution itself offers a reasonable (principled) solution.358 Equally, care must be taken to ensure that restitution is not deployed inappropriately.359 [1043] Tort. If a contract is inherently ineffective, there is always potential for a claim based on simple common law negligence or fraud, and the assertion of tortious claims to protect property rights cannot be ignored.360 A claim in tort may arise whether or not a contract is agreed. A minor may be held liable in tort. For example, a minor who has converted hired goods, or failed to return the goods on demand on expiry of the bailment, may be held liable.361 But this does not extend to fraud in relation to a contract which the minor is entitled to avoid.362 Again, fraud by a minor may make certain relief available to the other party under principles derived from equity.363 Thus, if a minor seeks relief requiring the assistance of the court, the minor may be required to restore benefits obtained. This liability has a restitutionary flavour, but may be limited to property still in the minor’s possession.364 However, the categorisation of some claims arising from minors’ frauds as ‘equitable’ now seems open to doubt,365 and the recognition of unjust enrichment may ultimately result in a more coherent analysis of liability for fraud.366 All this is,

[page 416] of course, a long way from a personal claim to restitution simply on the basis of a payer’s mistake as to the age of the minor.367 [1044] Preliminary agreements. One purpose of a preliminary agreement may be to enable work to commence prior to completion of the negotiations for the main contract. If so, the preliminary agreement may itself be enforceable as a contract.368 The fact that a contemplated contract is inherently ineffective does not exclude the possibility of a collateral contract. Where the contract and its breach are proved, contract damages are recoverable. For example, in Turriff Construction Ltd v Regalia Knitting Mills Ltd369 it was held that where preparatory work was done for a building contract which did not materialise, a collateral contract had been agreed in relation to that work. A collateral contract may be agreed in circumstances where the main contract was ineffective for failure to comply with formal requirements derived from the Statute of Frauds 1677 (Imp).370 And even in the context of illegality there are cases in which collateral contracts have been enforced. Thus, in Strongman (1945) Ltd v Sincock371 a failure to obtain a licence rendered building work illegal to the extent that it was unlicensed. Damages for breach of a collateral contract were awarded because the defendant breached a promise to obtain a licence for the excess work. Since the defendant was an architect, on whom it was reasonable for the plaintiffs to rely,372 the best rationalisation is that the defendant undertook the duty to ensure compliance with the statute. On that basis, the facts may have justified a restitutionary claim. [1045] Implied contracts and implied terms. Liability in respect of benefits requested and accepted by a defendant may be based on an implied contract, provided there was an intention to contract.373 If a contract is implied, the plaintiff is entitled to claim damages for its breach. Compensation may or may not be assessed by reference to a benefit obtained by the defendant from the plaintiff’s performance.374

There are three other types of case. First, agreement to the terms of a document put forward as an offer (or counter-offer) may be inferred from conduct. A fairly recent example is Empirnall Holdings Pty Ltd [page 417] v Machon Paull Partners Pty Ltd,375 where a contract was found in the implied assent to a printed offer (never expressly accepted as such) by the acceptance of work following the receipt of the offer. Second, there are cases in which although the parties purported to enter into an express contract, the contract is incomplete or uncertain. Thus, the payment terms may never have been agreed. If there is found to be an intention to contract, an obligation to pay a reasonable price for performance may be implied.376 Third, if the parties’ agreed machinery for fixing the price of goods or services fails, the contract may nevertheless be enforced if there is an implied term to pay a reasonable price. A well-known illustration is Foley v Classique Coaches Ltd,377 where an agreement to purchase all the petrol required by the buyer at a price to be agreed by parties from time to time was held to be valid, as including an implied term that petrol would be supplied at a reasonable price. Although of a ‘fundamentally different character’,378 it is not always easy to distinguish these situations from restitutionary liability.379 Indeed, one objection to the implied contract basis for quasi-contract was that it blurred the distinction between implied agreement and imposed liability.380 Thus, in Way v Latilla381 the parties contemplated a contract under which the plaintiff would be given a share or interest in mining concessions in the Gold Coast Colony as remuneration for his work in acquiring them for the defendant. However, that agreement was incomplete, due to the parties’ failure to agree on the amount of the share or interest. Since it was clear that the work done was to be remunerated, the House of Lords considered that an implied contract to pay for the work arose from the conduct of the parties. Lord Atkin

said382 that because an implied contract of employment existed, the defendant was entitled to a reasonable remuneration. The assessment of the claim was on a basis quite different from that contemplated by the [page 418] proposed agreement.383 It may be that the whole contract was implied,384 but the decision is consistent with a restitutionary basis. Thus, Lord Wright (who agreed with Lord Atkin) thought that the work was done and accepted on the basis that some remuneration was to be paid; but criticised the trial judge for making for the parties a contract which they did not make themselves. He went on to say385 that there was ‘an implied promise … to pay on a quantum meruit’. Not surprisingly, the case has often been treated as based in quasicontract.386 [1046] Estoppel and part performance. The effect of relief based on the doctrines of estoppel and part performance will often be to prevent the unjust enrichment of a defendant under an inherently ineffective contract. If a plaintiff conferred benefits on the defendant, an order for specific performance will prevent unjust enrichment.387 That may be the position following part performance of a contract ineffective for failure to comply with a writing requirement derived from s 4 of the Statute of Frauds 1677 (Imp).388 Nor is the statute a defence if an estoppel is established.389 Of course, something more than reliance on the unenforceable390 promise is necessary to raise an estoppel. However, Waltons Stores (Interstate) Ltd v Maher391 illustrates that a promise or representation may defeat the statute. There was either a promise to comply with the statute or an entitlement to assume that a contract complying with the statute had come into existence. More generally, estoppel has been a common source for relief in the context of inherently ineffective contracts.392 Indeed, one form of estoppel, traditionally referred to as ‘proprietary’

estoppel, is often restitutionary in effect.393 The contexts vary considerably.394 Typically, however, the issue arises in circumstances where no contract [page 419] is contemplated. A common scenario is an express or implied promise to transfer an interest in identified property,395 often by will. Usually, therefore, the context is domestic rather than commercial. Ultimately, the form of relief is discretionary, and the Australian cases have shown little interest in using prevention of unjust enrichment as a criterion.396 It follows that circumstantial context can be significant.397 Claims based on proprietary estoppel are more likely to succeed in a domestic than a commercial context. In relation to the latter, if the parties anticipated entry into a contract, proprietary estoppel has less relevance.398 Accordingly, analysis in terms of unjust enrichment may be preferred where an anticipated contract for the disposition of an interest in property fails to materialise. In Cobbe v Yeoman’s Row Management Ltd,399 an owner of land (A) agreed ‘in principle’ to sell the land to B (or B’s nominee) for a certain price as a key component of a joint venture arrangement. Although there was no draft contract, the understanding was that B would seek desired planning permission, and if obtained, purchase and develop the land for residential occupation. It was contemplated that B would make certain payments to A once receipts exceeded twice the price of the land. Following B’s successful application for planning permission, A demanded a higher price for the land. B then brought proceedings, making various claims. The House of Lords considered that B had no entitlement under the doctrine of proprietary estoppel,400 but was entitled to restitution. A was unjustly enriched by B’s part performance of the arrangement which the parties contemplated. Accordingly, B was entitled to reasonable remuneration. It has nevertheless been suggested401 that estoppel may be a ‘more sweeping’ solution to the problems of contracts which fail to

materialise. Barry J’s reliance in William Lacey (Hounslow) Ltd v Davis402 on the ‘mutual belief and understanding that the building was being reconstructed and that the plaintiff company was obtaining the contract’, perhaps suggests an approach more akin to estoppel than restitution. Again, the decision in Sabemo Pty Ltd v North Sydney Municipal Council403 arguably amounted to the grant of relief for unconscionable departure from an implied promise not to withdraw from contract negotiations without notice, or without good reason.404 [page 420] The impact of relief by way of estoppel is often to prevent an issue of unjust enrichment arising.405 Since prevention of ‘unjust enrichment’ is an objective to which all bases of civil liability must aspire,406 it would be surprising if the norm did not have some impact on relief in the estoppel context. In Waltons Stores (Interstate) Ltd v Maher,407 Deane J suggested that ‘[n]otions of good conscience and fair dealing, enforced by the rationale of legal doctrines precluding unjust enrichment’, inform conclusions about estoppel. This statement relies more on prevention of unjust enrichment as a general legal norm than the dedicated concept investigated in this chapter. However, neither has figured in the High Court’s subsequent estoppel decisions. [1047] Claim under statute. Various statutes impinge on claims which might otherwise be brought for restitution in respect of benefits conferred under inherently ineffective contracts. The two main areas408 are the statutes ‘reforming’ the rules on capacity to contract, and the prohibitions on certain classes of conduct in trade or commerce by the Australian Consumer Law.409 In some jurisdictions there is statutory jurisdiction to make orders in the nature of restitutionary responses against or in favour of minors. Thus, s 7 of the Minors Contracts (Miscellaneous Provisions) Act 1979 (SA) provides that where property passed to another party to the contract prior to avoidance of a contract on the grounds of minority, a

court may order restitution of the property, on such terms and conditions as the court considers just, whether or not the minor received a benefit.410 Section 37(1) of the Minors (Property and Contracts) Act 1970 (NSW) states that the court may make orders confirming the minor’s contract, in whole or in part, or make orders for adjustment of rights. Under s 37(4), except in so far as the court confirms the contract, the court may make orders to ensure that the minor and the other party make just compensation to the extent that the minor was benefited, and restore the parties to their positions before the contract was made.411 Again, in proceedings against the promoters of a proposed company which purports to enter into a contract prior to incorporation, the court may do anything that it considers appropriate in the circumstances. That includes ordering the company to transfer to a party to the contract property the company received because of the contract.412 The Australian Consumer Law is of more general importance. Statutory rights are available against a defendant who engaged in one or more of the classes of prohibited conduct. Typically that will be the prohibition in s 18 on conduct in trade or commerce which is misleading or deceptive (or likely [page 421] to mislead or deceive).413 If a contravention is established, a plaintiff has a statutory right to recover damages equal to the amount of loss or damage caused by the conduct.414 This does not depend on proof of an inherently ineffective contract, or the conferral of a benefit. However, there will be cases in which the latter may legitimately be the subject of a claim for damages. There is also a jurisdiction to make discretionary orders, on the application by a person who has suffered or is likely to suffer loss or damage by prohibited conduct.415 These orders are made in order to compensate, or to prevent or reduce loss or damage.416 Without limiting the discretion thus conferred, particular types of order are

listed. Those most relevant to restitutionary relief include:417 an order directing a refund of money, or the return of property; and certain orders in relation to instruments creating or transferring interests in land. If caused by prohibited conduct, conferral of benefit under an inherently ineffective contract may therefore form the subject matter of a claim for a discretionary order. The existence of the jurisdiction does not affect a plaintiff who is entitled to an order for restitution as of right on the basis of unjust enrichment. 1.

On the place of inherently ineffective contracts within the scheme of ineffective contracts see [902], [903].

2. 3.

(1987) 162 CLR 221; 69 ALR 577. See [902], [903].

4. 5.

See also [903]. For the contracts included see [1005]–[1014]. See further [1023].

6. 7.

For contracts within the description see [1011]–[1012]. For provisions derived from s 17 of the Statute of Frauds 1677 (Imp) see [1039].

8.

See generally Chapter 13. The same approach is taken to contracts unenforceable by reason of an unfulfilled condition precedent to contract performance. See generally Chapter 12. For contracts within the description see [1013]–[1014].

9.

10. See discussions in the context of alleged illegality in Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 433 at 458; Buckley v Tutty (1971) 125 CLR 353 at 379–80; A v Hayden (1984) 156 CLR 532 at 557; 56 ALR 82. See also Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443 at 455 per Latham CJ (expression ‘void contract’ a ‘contradiction in terms’). Cf May fair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 448–9 (meaning of ‘unenforceable’). 11. See, eg Amatruda v Roberts [1938] VLR 154 (where a contract for the sale of land was rendered ‘void’, the statute meant ‘voidable’); Valoutin Pty Ltd v Furst (1998) 154 ALR 119 at 148–9 (‘void’ meant ‘voidable’ in provision in bankruptcy legislation dealing with preferences). See also Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 226; 69 ALR 577 per Mason and Wilson JJ (‘as a matter of ordinary legal usage the words “enforceable” and “unenforceable” may refer either to the judicial and curial remedies available for the enforcement of a contract or to all the remedies available for the enforcement of a contract, including such remedies as the contract itself may provide’). 12. See [131], [135], [141], [908]. 13. See [908]. 14. Cf Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 458. 15. See [1030]. See also [1031] (substantial performance), [1032] (partial performance). 16. See [909] and further [1019], [1032]. In cases where unenforceability results from statute, the rule may be qualified by the terms of the statute itself.

17. See generally on the effects of illegality, Carter on Contract, Chapter 28. 18. Ex turpi causa non oritur actio. 19. In pari delicto potior est conditio defendentis. 20. See further [1013]–[1014], [1022], [1028], [1041], [1042]. 21. See Chapter 1 and further [2604]. 22. It is appropriate for the court to take judicial notice of what standards of behaviour are acceptable: A v Hayden (1984) 156 CLR 532 at 571; 56 ALR 82. 23. Cf Nelson v Nelson (1995) 184 CLR 538; 132 ALR 133 per McHugh J; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7 per French CJ, Crennan and Kiefel JJ. See further [1022], [1028], [1042], [1043] and generally Chapter 26. 24. See further [1022]. Cf [1028]. 25. Except perhaps under the Minors (Property and Contracts) Act 1970 (NSW). 26. Competition and Consumer Act 2010 (Cth), Sch 2. See [1047]. 27. See [1043]–[1047]. 28. Therefore, we do not deal in detail with claims based on proprietary estoppel. See further [1046]. 29. Carter, Construction, §2-20. 30. See generally Carter on Contract, Chapter 8. 31. See [1027]. 32. Unless the promise is made by way of deed. 33. See [916] (different senses of ‘consideration’). 34. See generally Carter on Contract, §06-350. 35. Thus, promissory expressions reserving an option not to perform do not create a contract. See Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 517; Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 356. 36. See further [1013]–[1014]. 37. The most common device is an implied term. However, a term cannot be implied for the purpose of making a legally incomplete agreement a contract. See Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 (adopting Aotearoa International Ltd v Scancarriers A/S [1985] 1 NZLR 513 at 556). See Brian Coote, ‘Contract Formation and the Implication of Terms’ (1993) 6 JCL 51. See also [1045] (genuine implied contract). 38. A contract is not void for uncertainty merely because it has more than one possible meaning, or can produce in its application more than one possible result. See Carter, Construction, §§14-22–14-24. 39. See Carter on Contract, §05-040. See further on conditions precedent to performance [1207], [1209]. 40. See McRae v Commonwealth Disposals Commission (1951) 84 CLR 377. 41. Although cases in which a contract has been held void simply on the ground of mistake are virtually unknown to Australian law, the possibility has been recognised. See McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 409; Svanosio v McNamara (1956) 96 CLR 186 at 197, 206; Porter v Latec Finance (Qld) Pty Ltd (1964) 111 CLR

177 at 187. A wider view is taken under English law. See Carter, Construction, §§9-34–942. 42. As in McRae v Commonwealth Disposals Commission (1951) 84 CLR 377. 43. If the circumstances permit an offeror to rely on subjective intention to say that an offer was made only to A, there is no contract on ‘acceptance’ by B. Cf Shogun Finance Ltd v Hudson [2004] 1 AC 919; [2003] UKHL 62; see D W McLauchlan, ‘Mistake of Identity and Contract Formation’ (2005) 21 JCL 1. 44. The word ‘mutual’ is sometimes applied to cases in which the parties made the same mistake. 45. See, eg Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255. 46. See Bell v Lever Bros Ltd [1932] AC 161 at 227 (whether the actual state of the facts destroys the identity of the subject matter as it was in the assumed state of facts). 47. See Bell v Lever Bros Ltd [1932] AC 161; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377. 48. See Taylor v Johnson (1983) 151 CLR 422; 45 ALR 265. 49. See Carter on Contract, §22-210. 50. See Carter on Contract, §22-260. 51. See, eg [1015], [1017] (failure of agreed return). 52. See further [1015], [1026]–[1028]. See also [1431]–[1439] (restitutio in integrum). 53. There is some support for such a view in Sharp v Thomson (1915) 20 CLR 137 at 142; R W Cameron & Co v L Slutzkin Pty Ltd (1923) 32 CLR 81 at 90, 93; Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 79–80, based on one interpretation of Raffles v Wichelhaus (1864) 2 H & C 906; 159 ER 375. See also Carter, Construction, §§9-39, 1831. 54. See [1009]. 55. (1871) LR 6 QB 597. 56. (1871) LR 6 QB 597 at 607. 57. (1983) 151 CLR 422. 58. See, eg Cundy v Lindsay (1878) 3 App Cas 459; Ingram v Little [1961] 1 QB 31; Shogun Finance Ltd v Hudson [2004] 1 AC 919; [2003] UKHL 62. A contract is void for mistake if the defence of non est factum is available. See Carter on Contract, §§22-500–22-570. 59. See, eg Phillips v Brooks Ltd [1919] 2 KB 243; Lewis v Averay [1972] 1 QB 198. These cases represent the preferred view under Australian law. 60. See [1324], [1329], [1332], [1437], [2329] (restitutio on rescission). 61. See also [1013]–[1014] (illegality and public policy). 62. See Contract Law in Australia, §25-16. 63. See McRae v Commonwealth Disposals Commission (1951) 84 CLR 377, where the High Court held that the rule does not apply to a sale of goods which never existed. See also Svanosio v McNamara (1956) 96 CLR 186 at 209; Robert Goff, ‘The Search for Principle’ (1983) 69 Proc of British Academy 169 at 173. 64. See ACT: Sale of Goods Act 1954, s 11; NT: Sale of Goods Act 1972, s 10; NSW: Sale of

Goods Act 1923, s 11; Qld: Sale of Goods Act 1896, s 9; SA: Sale of Goods Act 1895, s 6; Tas: Sale of Goods Act 1896, s 11; Vic: Goods Act 1958, s 11; WA: Sale of Goods Act 1895, s 6. 65. Cf Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 at 417. 66. Cf Williams v The Commonwealth (2012) 248 CLR 156; 288 ALR 410; [2012] HCA 23. 67. See Corporations Act 2001 (Cth), s 124. Similarly, although contracts made in anticipation of company incorporation are void at common law, a company may ratify its preincorporation contracts within a reasonable time after incorporation: Corporations Act 2001 (Cth), s 131(1). See also [1047]. 68. See, eg Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council [1999] QB 215. For restitutionary claims involving the Crown see Chapters 20 and 21. 69. See [1012]. Where agreement is reached ‘subject to contract’, the effect is generally to make the execution of the contract document a condition precedent to formation. However, execution may condition performance. See [1006]. For ‘subject to’ clauses more commonly construed as having the latter effect see [1219]. 70. For the promises affected see Carter on Contract, §§09-050–09-110. The imposition of a requirement of writing need not be exclusive. See [1039] (sale of goods). 71. Contrast Law of Property (Miscellaneous Provisions) Act 1989 (UK), s 2 (contract void). 72. See also [1014] (agreement contrary to public policy). 73. See generally Chapter 12. 74. See Gibbons v Wright (1954) 91 CLR 423 at 441–3, 447, 449. Cf McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243; City Bank of Sydney v McLaughlin (1909) 9 CLR 615. Contracts with persons certified as being mentally ill are not at issue. 75. See [1030], [1040]. 76. See [1030], [1040]. 77. See generally Carter on Contract, §16-040. In New South Wales, minors’ contracts are regulated by the Minors (Property and Contracts) Act 1970 (NSW). See further [1047]. 78. See, eg Sellin v Scott (1901) 1 SR (NSW) Eq 64; Re Mundy (1963) 19 ABC 165; [1963] ALR 264. 79. In the context of an attempt by an adult to enforce a contract with a minor, it is immaterial whether the contract is void or voidable. 80. See De Garis v Dalgety & Co Ltd [1915] SALR 102 at 124–5, 137, 156–7. See, eg Whundo Copper Syndicate v Ferrari [1962] WAR 24 (trading contract). See also Supreme Court Act 1986 (Vic), s 49. 81. See Carter on Contract, §16-160. 82. See generally Chapter 26. But see [1020]–[1022] (countervailing factors), [1042], [1044] (other claims). 83. See Joseph Constantine SS Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154 at 163 and generally Chapter 12. 84. See generally Carter on Contract, §27-020. 85. See [2605]. 86. See generally Carter on Contract, Chapter 27.

87. See, eg Dalgety and New Zealand Loan Ltd v C Imeson Pty Ltd [1964] NSWR 638; Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; 21 ALR 585. 88. For example, in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410; 21 ALR 585 the contract was not impliedly prohibited when the plaintiffs carried on the business of banking without statutory authority by lending money, since a conclusion to that effect might have prevented the recovery of money deposited with the plaintiffs. See also Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 18. 89. And in some situations, such as where a contract is in restraint of trade, public policy may merely deny the enforceability of particular provisions. 90. See [1005]. 91. For the general principle see [916]. See further [1032] (unenforceable contract a bar to restitution). 92. See Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164, 170. 93. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382, 388; 109 ALR 57, adopting Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923 (contract or purported contract). See also Bell v Lever Bros Ltd [1932] AC 161 at 222. Cf Marsh & McLennan Pty Ltd v Stanyers Transport Pty Ltd [1994] 2 VR 232 at 246. See also [919]. 94. Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 555; 185 ALR 335; [2001] HCA 68 at [102] per Gummow J. 95. See Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428. See also Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 681. See further [1435]. 96. See [1017]. 97. But see Ben Kremer, ‘Recovering Money Under Void Contracts: “Absence of Consideration” and Failure of Consideration’ (2001) 17 JCL 37. 98. See [1016], where intention and failure of condition are also discussed. 99. The position is even clearer where the contract is enforceable by the payer. See Re Whiteley Insurance Consultants (A Firm) [2009] Bus LR 418 at 433; [2008] EWHC 1782 (Ch) at [44]. 100. See [215], [909], [1003] and further [1032]. 101. See [1020]–[1022]. 102. See [925] and further [1019]. Cf [1136]–[1145] (relief against forfeiture). 103. For illustrations see [1018]. 104. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 384; 109 ALR 57. 105. If the conclusion is that the contract was not void, as in cases such as Bell v Lever Bros Ltd [1932] AC 161 (see [1320]), failure of the agreed return must be established in discharge or rescission. 106. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57 (money paid under void ‘gross up’ provision); Marshall v Marshall [1999] 1 Qd R 173 at 180 (payment to unlicensed builder recoverable on basis of mistake where

obligation to pay was void). 107. This was an alternative ground for Kerr LJ’s judgment in Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912, and the basis on which Dillon LJ decided the case. See also Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at 69; 257 ALR 658; [2009] NSWCA 186 at [119] (non est factum — prima facie claim for money lent). Cf National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd (1997) 217 ALR 365 at 366. See further [1017]. See generally on mistake Chapter 4. 108. See [1015]. 109. But cf Grand Lodge AOUW of Minnesota v Towne 161 NW 403 (Minn, 1917); Edler v Auerbach [1950] 1 KB 359 at 375. The defence of consideration will apply (see generally Chapter 25). 110. (1956) 96 CLR 186 at 198–9, 207. See also Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 683; Bell v Lever Bros Ltd [1932] AC 161 at 222; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 406. 111. For a decision to this effect see Chirnside v Keating (1889) 15 VLR 697 (leasehold). 112. See, eg Strickland v Turner (1852) 7 Ex 208; 155 ER 919 (purchaser of annuity entitled to recover price paid when annuitant had died before the sale); Griffith v Brymer (1903) 19 TLR 434 (successful claim to recover money paid under contract, void for common mistake, to view Coronation procession); London Holeproof Hosiery Co Ltd v Padmore (1928) 44 TLR 499 (deposit recovered where contract was void for mistake). See also Svanosio v McNamara (1956) 96 CLR 186 at 209 (recovery of price paid if contract is void or unenforceable because subject matter does not exist); David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 389–90; 109 ALR 57 (recovery of price paid for goods which perished before contract). Cf Stuesser v Ebee 19 Wis 591; 120 NW 2d 679 (1963) (recovery of deposit where Statute of Frauds provision rendered contract void). 113. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; Guinness Mahon & Co Ltd v Kensington and Chelsea Royal London Borough Council [1999] QB 215; Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549 at 574; [2010] EWCA Civ 579 at [62]. Contrast Midland Junction Municipality v Kent (1931) 34 WALR 99. 114. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 681–3, 710. Cf Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428. Contrast Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (recs and mgrs apptd) (in liq) (No 3) (2006) 229 ALR 615; [2006] SASC 615, where the point is not considered. 115. [1989] 1 WLR 912. For discussion see J Beatson, (1989) 105 LQR 179; N H Andrews, [1990] CLJ 15; Peter Birks, ‘Restitution after Ineffective Contracts: Issues for the 1990s’ (1990) 2 JCL 227; Jones, pp 95ff. For other issues raised in the case see [1027], [1122], [1131]. 116. See [1010]. 117. See, eg Steinberg v Scala (Leeds) Ltd [1923] 2 Ch 452 (price of shares not recoverable on minor’s repudiation of contract because failure of consideration was merely partial). See generally Corpe v Overton (1833) 10 Bing 252; 131 ER 901; English v Gibbs (1888) 9 LR (NSW) L 455; Pearce v Brain [1929] 2 KB 310 at 314; Curruth v Ern Moro & Amoco Enterprises Pty Ltd (1966) 60 QJP 106.

118. See [1012]. 119. See Valentini v Canali (1889) 24 QBD 166; Coras v Webb [1942] St R Qd 66 at 73. Cf Pearce v Brain [1929] 2 KB 310 at 314–15. 120. See Cowern v Nield [1912] 2 KB 419; Woolf v Associated Finance Pty Ltd [1956] VLR 51. See also Carter on Contract, §16-220. 121. See further [1020] (countervailing factors). 122. See Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 387, 415. See also Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (recs and mgrs apptd) (in liq) (No 3) (2006) 229 ALR 615 at 631; [2006] SASC 615. See [1016] and generally on mistake Chapter 4. 123. Cf Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 67; 126 ALR 1 (absence of legal entitlement to receive or retain). 124. See Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 387, 415–16. Cf Cook’s Constructions Pty Ltd v SFS 007298633 Pty Ltd (formerly t/as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661; [2009] QCA 75. 125. Cf Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549 at 574; [2010] EWCA Civ 579 at [62]. The rationale given, that the distinction between failure and absence (of consideration) is a matter of terminology, is unconvincing. 126. See, eg Guardian Ocean Cargoes Ltd v Banco do Brasil SA (Nos 1 and 3) [1994] 2 Lloyd’s Rep 152 (advance payment). Cf Henderson v Young (1913) 15 WAR 5. 127. See, eg Aberfoyle Plantations v Cheng [1960] AC 115; Astra Trust Ltd v Adams [1969] 1 Lloyd’s Rep 81; Brew v Whitlock (No 2) [1967] VR 803. 128. (1942) 67 CLR 253. Cf [1209], [1235] (sale of goods at price to be fixed by the valuation of third party). For an illustration in the context of a contract void by statute see Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443 at 458 (recovery of money paid under void contract to take shares). 129. (1954) 91 CLR 353. 130. See also Chillingworth v Esche [1924] 1 Ch 97; Gribbon v Lutton [2002] QB 902. Contrast Sharma v Simposh Ltd [2013] Ch 23; [2011] EWCA Civ 1383 (title passed and there was no failure of consideration). 131. See Chillingworth v Esche [1924] 1 Ch 97 at 114–15. See also Federal Commissioner of Taxation v Guy (1996) 137 ALR 193 at 201, not followed on another point Brooks v Federal Commissioner of Taxation (2000) 173 ALR 235 (necessary to consider all the circumstances). 132. See Sharma v Simposh Ltd [2013] Ch 23 at 33–4; [2011] EWCA Civ 1383 at [44]–[45]. 133. Head v Kelk (1961) 63 SR (NSW) 340 at 348 per Herron J (with whom McClemens and Brereton JJ agreed). See also Thomas v Brown (1876) 1 QBD 714 (adopted Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257; 69 ALR 577); Lejo Holdings Pty Ltd v Deutsche Bank (Asia) AG [1988] 2 Qd R 30 at 43; Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 at 357–8. Contrast Perpetual Executors and Trustees Association of Australia Ltd v Russell (1931) 45 CLR 146 (oral contract no defence to order for possession). Cf Take Harvest Ltd v Liu [1993] AC 552 at 568–9. 134. (1933) 48 CLR 457 (see [1121]). 135. See, eg Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59. See also Lejo Holdings Pty

Ltd v Deutsche Bank (Asia) AG [1988] 2 Qd R 30 at 43. Cf Thomson v McInnes (1911) 12 CLR 562 (purchaser entitled to return of deposit where claim for specific performance failed). Contrast Frey v Stangl 125 NW 868 (Ia, 1910). There is no evidence of application of restitutio in integrum. But cf Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428. 136. See, eg Crombie v Crombie [1903] SALR 147 (see [2723]); Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 459. 137. [1948] St R Qd 113. 138. No action based on part performance was available as the claim was brought in the Magistrates Court. 139. See Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59 at 70; Take Harvest Ltd v Liu [1993] AC 552 at 568. Cf Schwartz v Syver 264 Wis 526; 59 NW 2d 489 at 491, 492 (1953). Contrast Stuesser v Ebee 19 Wis 591; 120 NW 2d 679 (1963) (because the Statute of Frauds provision rendered the contract void, the purchaser was entitled to restitution subject to a deduction for the vendor’s expenses). Under §375 of the Restatement (Second) Contracts, restitution is available if the plaintiff would, but for the Statute of Frauds, be so entitled. 140. See [1015]–[1019]. 141. The same is, of course, true in relation to claims for reasonable remuneration. See further [1028]. 142. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 541–2; 286 ALR 12; [2012] HCA 7 at [105]. 143. See Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549 at 582; [2010] EWCA Civ 579 at [87] (restitutionary defence). 144. See Cowern v Nield [1912] 2 KB 419; Pearce v Brain [1929] 2 KB 310 at 314. Similarly, minors are not liable to repay loans for necessaries, although the creditor may be subrogated to the rights of the seller against the minor. See Martin v Gale (1876) 4 Ch D 428; Lewis v Alleyne (1888) 4 TLR 560; Gardiner v Wainfur (1919) 89 LJ Ch 98; Mercantile Credit Ltd v Spinks [1968] QWN 32. See also Nottingham Permanent Benefit Building Soc v Thurstan [1903] AC 6 (right of subrogation where money is used to discharge liabilities in respect of a contract not avoided by the minor). See also Chapter 8 (‘Necessitous Intervention’). 145. Cf Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at 72; 257 ALR 658; [2009] NSWCA 186 at [131] (policy rationale for non est factum used to displace lender’s prima facie claim based on mistake even though lender played no role in the conduct on the basis of which non est factum plea was established). 146. See R Leslie Ltd v Sheill [1914] 3 KB 607 at 613 where Lord Sumner, although treating minority as a defence, invoked the implied contract rationale of Sinclair v Brougham [1914] AC 398 (see [126], [1021]). 147. See generally R W Clarke, ‘Contracts for Sale of Non-necessary Goods; Vendor’s Remedies Against an Infant Purchaser’ (1981) 7 Univ Tas LR 85 at 93. Cf P S Atiyah, ‘The Liability of Infants in Fraud and Restitution’ (1959) 22 MLR 273. See also Re Seager; Seeley v Briggs (1889) 60 LT 665; Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 463; Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at 72; 257 ALR 658; [2009] NSWCA 186 at [131]. But cf Peters v

Tuck (1915) 11 Tas LR 30. 148. [1990] 2 AC 663. See also Corio Guarantee Corp v McCallum [1956] VLR 755 (serious misconduct by managing director meant that he had to repay remuneration for managerial and accountancy services). 149. For a suggestion that mistake was the proper basis see Peter Birks, [1990] LMCLQ 330 at 332. 150. See [1020]. 151. The statute which renders the contract void may expressly confer a right to restitution. But see Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (recs and mgrs apptd) (in liq) (No 3) (2006) 229 ALR 615 at 627; [2006] SASC 615 (fact that the statute said that money paid under the void contract ‘may be recovered by action in any court of competent jurisdiction’ did not confer right of recovery and no common law basis was established). 152. Relief may in some cases be granted on terms. See Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 450ff; Mediservices International Pty Ltd v Stocks & Realty (Security Finance) Pty Ltd [1982] 1 NSWLR 516 at 524 and further [2639]. 153. See, eg Forde v Birmingham City Council [2009] 1 WLR 2732 at 2778; [2009] EWHC 12 (QB) at [206]. See also [1028] (reasonable remuneration). For illegality see [1022]. 154. (1962) 63 SR (NSW) 453. See also Dimond v Lovell [2002] 1 AC 384 at 397 (consumer credit legislation); Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816; [2003] UKHL 40 (consumer credit legislation). 155. See also Forde v Birmingham City Council [2009] 1 WLR 2732 at 2778; [2009] EWHC 12 (QB) at [206] (claim by solicitor for reasonable remuneration contrary to policy where contract was unenforceable). 156. See, eg Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. 157. See Bridger v Savage (1885) 15 QBD 363 at 367. Cf Cohen v Kittell (1889) 22 QBD 680 (agent who failed to bet on commission not liable in damages). Contrast Read v Anderson (1882) 10 QBD 100, affirmed (1884) 13 QBD 779 and applied Middleton v Cavenett [1923] SASR 255 (once a commission agent places bets as instructed, thereby incurring personal responsibility, the agent’s principal is liable to reimburse the agent when the lost bet is paid). 158. [1938] 1 KB 49. 159. See [126], [132]. Cf [1047]. 160. [1914] AC 398 (see [126]). Cf Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 461. 161. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 710 (total failure of consideration). Cf Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549 at 585; [2010] EWCA Civ 579 at [96] (no general public policy rule applies where money is borrowed under a contract which is ultra vires the borrower). 162. The House of Lords departed from the decision in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. On the extent of the departure see Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549; [2010] EWCA Civ 579. See also [131]. 163. See generally Chapter 26.

164. The maxim of the common law ex turpi causa non oritur actio applies only to causes of action which depend for their enforcement on an illegal contract. See [2604]. An independent claim may be available. See further [1043] (tort) and generally [2617]–[2624]. 165. The cases employing quasi-contract analysis frequently treated the inability to imply a contract as sufficient to deny a claim in restitution. See, eg Hirsch v The Zinc Corp Ltd (1917) 24 CLR 34 at 57 (no contract can be implied where the express contract would be unlawful). See also [1003], [1021] and further [1043], [2607]. 166. Cf Nelson v Nelson (1995) 184 CLR 538 at 562–9, 617; 132 ALR 133; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 231; 143 ALR 569. 167. (1988) 12 NSWLR 394 at 445–6 (see [2608]). Kirby P agreed. 168. Although the context was a loan agreement which was not severable from an illegal contract, in Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 521; 286 ALR 12; [2012] HCA 7 at [41], French CJ, Crennan and Kiefel JJ did not consider that McHugh J’s suggestion in Vestcorp was directed to benefits conferred under illegal contracts. 169. See generally [154]–[158], [933]–[934]. 170. See [928], [931], [934]. 171. (1987) 162 CLR 221; 69 ALR 577. See Gareth Jones, ‘Restitution: Unjust Enrichment as a Unifying Element in Australia?’ (1988) 1 JCL 8; J W Carter, ‘Ineffective Transactions’ in Finn, Essays, p 206. See also J Beatson, (1988) 104 LQR 12. Contrast Steve Hedley, ‘Implied Contract and Restitution’ [2004] CLJ 435. 172. See Paul v Pavey & Matthews Pty Ltd (1985) 3 NSWLR 114. See also Schwarstein v Watson (1985) 3 NSWLR 134. 173. See [131], [1024]. Historical analysis was also necessary to show how the court in Turner v Bladin (1951) 82 CLR 463 had been misled by Denning LJ’s approach in James v Thomas H Kent & Co Ltd [1951] 1 KB 551 (as reported [1950] 2 All ER 1099). See [1030]. 174. See [1030]. 175. See David Ibbetson, ‘Implied Contracts and Restitution: History in the High Court of Australia’ (1988) 8 OJLS 312 at 323–6. See also [131] and further [1030]. Cf Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at 740; [2009] NSWCA 424 at [87]. 176. Reliance was placed on the interpretation of similar legislation in Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40. 177. See (1987) 162 CLR 221 at 228–9; 69 ALR 577. 178. (1987) 162 CLR 221 at 227; 69 ALR 577. 179. Therefore, disagreeing with the other members of the court, he considered Turner v Bladin (1951) 82 CLR 463, and Denning LJ’s original views in James v Thomas H Kent & Co Ltd [1951] 1 KB 551 (as reported [1950] 2 All ER 1099 at 1103–4), to be correct. See [1030]. 180. See, eg Riley v Melrose Advertisers (1915) 17 WAR 127 at 131; Horton v Jones (1934) 34 SR (NSW) 359 at 367–8 (affirmed on other grounds (1935) 53 CLR 475); Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 320; Johnsons Tyne Foundry Pty Ltd v Maffra Corp (1948) 77 CLR 544 at 562 (adopting Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 411);

Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246; Denton v Ryde Municipal Council (1953) 19 LGR (NSW) 152 at 157; Hansen v Mayfair Trading Co Pty Ltd [1962] WAR 148 at 152; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 227–9, 255–6, 257, 263, 264; 69 ALR 577; Angelopoulos v Sabatino (1995) 65 SASR 1; Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 257, 259, 262; Damberg v Damberg (2001) 52 NSWLR 492 at 528–30. Cf City Bank of Sydney v McLaughlin (1909) 9 CLR 615 at 625– 6; M R Hornibrook Pty Ltd v Eric Newham (Wallerawang) Pty Ltd (1971) 45 ALJR 523 at 524. See generally [157], [934]. 181. See, eg Scott v Pattison [1923] 2 KB 723 at 727; Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 411; Bridgewater v Griffiths [2000] 1 WLR 524 at 532; Rowe v Vale of White Horse District Council [2003] 1 Lloyd’s Rep 418 at 421–2; [2003] EWHC 388 (Admin); Benedetti v Sawiris [2014] AC 938; [2013] UKSC 50. See also Van den Berg v Giles [1979] 2 NZLR 111 at 121. 182. (1987) 162 CLR 221; 69 ALR 577 (see [1024]). 183. [2014] AC 938 at 960, 988; [2013] UKSC 50 at [25], [119]. 184. See also [108], [130], [145], [209] (‘compensation’). 185. See (1987) 162 CLR 221 at 227, 255–6, 257, 263, 264; 69 ALR 577. 186. See further [1046]. 187. Cf [125], [175]. 188. Cf Gareth Jones, ‘Restitution: Unjust Enrichment as a Unifying Element in Australia?’ (1988) 1 JCL 8 at 14, emphasising that analysis of whether a defendant has been enriched is distinct from analysis of detriment to the defendant caused by the plaintiff’s failure to comply with the statute. 189. See [1030]. 190. In Weatherhead v Cooney 180 P 760 (Id, 1919) full performance of a void contract was regarded as insufficient, but the decision was influenced by the treatment of full performance of an unenforceable contract as the basis for a claim in contract. See now Restatement (Second) Contracts, §§141, 145. 191. See Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, pp 109ff; Birks, Future, pp 54–6, 96–7. Cf Sue Arrowsmith, ‘Ineffective Transactions and Unjust Enrichment: A Framework for Analysis’ (1989) 9 Legal Studies 121 at 125. For a more general discussion see [928]. 192. See [928]. 193. See, eg Ward v Griffiths Bros Ltd (1928) 28 SR (NSW) 425 (reasonable remuneration of employee exceeded sums paid as wages). 194. See also [1031] (substantial performance). 195. See [1032]. 196. See Damberg v Damberg (2001) 52 NSWLR 492 at 528–30 (free acceptance). An alternative basis may arise if the defendant’s conduct prevented the contract being effective. Cf Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 (see [1035]). 197. See [1027]. See generally on mistake Chapter 4; as to mistake in the provision of services see [455]–[458]. See also [1040], [1046] (proprietary claim).

198. See also [1435] (restitutio in integrum). Cf [2328]. 199. See [1033], [1035]. 200. [1962] WAR 148. 201. See also [157]–[158]. 202. [1989] 1 WLR 912. See also Cotronic (UK) Ltd v Dezonie [1991] BCLC 721. 203. See also Murphy v Mitchell 149 NE 603 (Mass, 1925); Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 411–12 (adopted Johnsons Tyne Foundry Pty Ltd v Maffra Corp (1948) 77 CLR 544 at 562); Upton-On-Severn Rural District Council v Powell [1942] 1 All ER 220. Contrast Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) 38 FCR 501 at 521–4 (no relevant mistake). Query whether Chirnside v Keating (1889) 15 VLR 697, where benefits were conferred under a contract which was apparently void for mistake, should have been decided on the basis of incontrovertible benefit. 204. [1989] 1 WLR 912 at 922. 205. See [1424]. 206. [1957] VR 509. See also Horton v Jones (No 2) (1939) 39 SR (NSW) 305 (services rendered in consideration of uncertain promise to receive testator’s ‘fortune’ under his will); Reynolds v McGregor [1973] QL 1. Cf Van den Berg v Giles [1979] 2 NZLR 111 (restitutionary claim for improvements to property pursuant to void or unenforceable contract). 207. [1936] 2 KB 403. See A T Denning, ‘Quantum Meruit: The Case of Craven-Ellis v Canons Ltd’ (1939) 55 LQR 54. See also Flett v Deniliquin Publishing Co Ltd [1964–5] NSWR 383. Cf Harvey v Hinchinbrook Divisional Board [1903] St R Qd 174. 208. [1936] 2 KB 403 at 409. Contrast Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd [2010] NSWCA 351. 209. [1936] 2 KB 403 at 410. See also at 411–12 (adopted Johnsons Tyne Foundry Pty Ltd v Maffra Corp (1948) 77 CLR 544 at 562). Cf Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 at 898 (Craven-Ellis illustrates the basis for an imposed obligation to pay notwithstanding that the parties to a transaction, actual or proposed, did not intend that such an obligation should arise). 210. See [932]. See generally on the concept [151]–[153]. 211. See Johnsons Tyne Foundry Pty Ltd v Maffra Corp (1948) 77 CLR 544 at 562 (corporation was liable on common money count for acceptance of executed consideration under contract void for lack of capacity). See also Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 321; Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235, 246; Newton v Brownett (1940) 41 SR (NSW) 1 at 6 (affirmed without reference to the point sub nom Brownett v Newton (1941) 64 CLR 439); Hansen v Mayfair Trading Co Pty Ltd [1962] WAR 148 at 152; Keeley v State of Victoria [1964] VR 344 at 368–9; Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 at 536. Cf Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 464 (implied contract analysis). See also Haugesund Kommune v Depfa ACS Bank (Wikborg Rein & Co Part 20 defendant) [2012] QB 549 at 566; [2010] EWCA Civ 579 at [32] (contrasting ‘power’ and ‘capacity’). 212. [1993] 2 VR 221. See also Angelopoulos v Sabatino (1995) 65 SASR 1 (see Michael Bryan, [1996] LMCLQ 337); Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) 5 VR

577. Cf Shapiro v Solomon 42 NJ Super 377; 126 A 2d 654 (1956). 213. See [148], [935]. 214. Contrast Bridgewater v Griffiths [2000] 1 WLR 524 at 532; Rowe v Vale of While Horse District Council [2003] 1 Lloyd’s Rep 418; [2003] EWHC 388 (Admin) (council unable to establish that recipient should have known that sewerage services were to be the subject of a separate charge), see Margaret Halliwell, [2003] CLJ 561. 215. (1987) 162 CLR 221; 69 ALR 577. 216. See [1993] 2 VR 221 at 257–8. He cited Planché v Colburn (1831) 8 Bing 14; 131 ER 305 (see [1168]). 217. Applying Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 (see [1035]). 218. [1993] 2 VR 221 at 257. 219. [1993] 2 VR 221 at 259. See also Alma Hill Constructions Pty Ltd v Onal (2007) 16 VR 190 at 208; [2007] VSC 86 at [58]. 220. [1993] 2 VR 221 at 260. See also ABB Power Generation v Chapple (2001) 25 WAR 158 at 164; Vasco Investment Managers Ltd v Morgan Stanley Australia Ltd [2014] VSC 455 at [347]. 221. See [1030]. 222. See [1039], [1040]. 223. See also [1031], [1038]. 224. (1987) 162 CLR 221; 69 ALR 577 (see [1024]). 225. See also cases permitting unlicensed builders to recover: Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 at 585–6; O’Connor v Leaw Pty Ltd (formerly known as Mal-Corp Pty Ltd) (1997) 42 NSWLR 285; Nunkuwarrin Yunti v A L Seeley Constructions Pty Ltd (1998) 72 SASR 21; Great City Pty Ltd v Kemayan Management Services (Australia) Pty Ltd (1999) 21 WAR 44. Contrast Cook’s Constructions Pty Ltd v SFS 007298633 Pty Ltd (formerly t/as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661 at 666, 671; [2009] QCA 75 at [19], [38] (claim did not fall within express permission). 226. Cf Equuscorp Pty Ltd v Wilmoth Field Warne (A Firm) (2007) 18 VR 250 at 286; [2007] VSCA 280 at [139]–[140] (no entitlement to reasonable remuneration where statute which made provision for quantum meruit claim was contravened). 227. [1991] 2 VR 194. See also Denton v Ryde Municipal Council (1953) 19 LGR (NSW) 152 (quantum meruit claim not available where local government legislation prohibited contract); Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 445; Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12; Mostia Constructions Pty Ltd v Cox [1994] 2 Qd R 55 at 61. Cf Keeley v State of Victoria [1964] VR 344 (quantum meruit claim would have been inconsistent with statute regulating public service employee). 228. Contrast Upjay Pty Ltd v MJK Pty Ltd (t/as Klobas Property Group) (2001) 79 SASR 32 (quantum meruit available where contract unenforceable by provision in Land Agents Act 1994 (SA) providing that agent was not entitled to ‘commission or other consideration for services’ if agreement was oral); Wentworth v Rogers (2006) 66 NSWLR 474 at 488–9, 508; [2006] NSWCA 145 (services provided under costs agreement rendered void by statute).

229. See Multo Pty Ltd v Craddock (1988) Unreported, SC(NSW) (Bryson J), 11 March (noncompliance with Auctioneers and Agents Act 1941 (NSW), requiring real estate agent’s contract to be in writing, excluded a claim for reasonable remuneration); F J Richards Pty Ltd v Mills Pty Ltd (1990) Unreported, SC(Qld) (Kelly SPJ), 14 September (Auctioneers and Agents Act 1971 (Qld), s 70); Investmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd (2002) 56 NSWLR 27 (Property, Stock and Business Agents Act 1941 (NSW)). Although expressed in broader terms, Weatherhead v Cooney 180 P 760 (Id, 1919) is in accord. See also Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196; [1998] QCA 417 (where contract was illegal under builders licensing legislation, quantum meruit was not available). 230. [1990] 2 AC 663. 231. [1936] 2 KB 403 (see [1027]). 232. See Jones, pp 65–7 (difficulty of reconciling the result with O’Sullivan v Management Agency and Music Ltd [1985] QB 428 (see [1437])). 233. See generally Taylor v Taylor (1890) 11 LR (NSW) L 323; Redmond v Wynne (1892) 13 LR (NSW) L 39; Bostel Bros Ltd v Hurlock [1949] 1 KB 74; Re Trepca Mines Ltd (No 2) [1962] Ch 511. 234. For a dictum supporting a distinction between illegality under statute and at common law, see Newton v Brownett (1940) 41 SR (NSW) 1 at 6 (affirmed without reference to the point sub nom Brownett v Newton (1941) 64 CLR 439). See further [2606]. 235. (1987) 162 CLR 221 at 229, 262–3; 69 ALR 577. 236. See generally Chapter 26. 237. As to the jurisdiction of arbitrators see O’Connor v Leaw Pty Ltd (formerly known as MalCorp Pty Ltd) (1997) 42 NSWLR 285 at 296–305 (claim for quantum meruit in respect of benefits conferred was in relation to ‘any matter concerning the agreement’ and arbitrator had jurisdiction); Elkateb v Lawindi (1997) 42 NSWLR 396 at 402–3 (words in arbitration clause referring to ‘any dispute or difference … in connection with’ contract between proprietor and builder were wide enough to embrace quantum meruit claim). 238. (1987) 162 CLR 221; 69 ALR 577. 239. (1987) 162 CLR 221 at 250–1; 69 ALR 577. Mason and Wilson JJ took the same approach. Contrast that of Dawson J. 240. (1934) 34 SR (NSW) 359 at 367–8 (affirmed on other grounds (1935) 53 CLR 475). See also Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 320; Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246. 241. For criticism see [917]. Cf [131]. 242. See [1422], [1425]. 243. Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 320 per Jordan CJ. 244. See [1024]. 245. (1987) 162 CLR 221; 69 ALR 577. 246. See, eg Souch v Strawbridge (1846) 2 CB 808; 135 ER 1161; Horton v Jones (1934) 34 SR (NSW) 359 at 367 (affirmed on other grounds (1935) 53 CLR 475); Turner v Bladin (1951) 82 CLR 463. Cf Mavor v Pyne (1825) 3 Bing 285; 130 ER 522. 247. See, eg Scarisbrick v Parkinson (1869) 20 LT 175 (see [1422], [1425]); Scott v Pattison

[1923] 2 KB 723; Ward v Griffiths Bros Ltd (1928) 28 SR (NSW) 425; Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235, 246; James v Thomas H Kent & Co Ltd [1951] 1 KB 551. 248. (1955) 55 SR (NSW) 357 at 363. See also James v Thomas H Kent & Co Ltd [1951] 1 KB 551 at 554, 556. 249. (1951) 82 CLR 463. See also Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 457–8. Cf M R Hornibrook Pty Ltd v Eric Newham (Wallerawang) Pty Ltd (1971) 45 ALJR 523 at 524, where the High Court left open the question whether the relevant ‘legal theory’ was ‘implied contract’ or ‘quasi-contract’. 250. [1951] 1 KB 551 at 556 (as reported in [1950] 2 All ER 1099 at 1103–4). See the detailed review in Schwarstein v Watson (1985) 3 NSWLR 134 at 148–51. See also Fablo Pty Ltd v Bloore [1983] 1 Qd R 107 at 111–12. Cf Smith v Hartshorn (1959) 60 SR (NSW) 391 at 393, 394. 251. See, eg Souch v Strawbridge (1846) 2 CB 808; 135 ER 1161. See also A T Denning, ‘Quantum Meruit and the Statute of Frauds’ (1925) 41 LQR 79 at 85; Stoljar, pp 232–5. 252. In fact, avoidance of the statute by means of a claim in debt may not have been seen as a bad thing. Cf Simpson, p 610; Stoljar, p 194. 253. (1987) 162 CLR 221 at 250–1; 69 ALR 577 (see [1029]). 254. [1951] 1 KB 551 at 556. 255. Deane J also said that the fictional assumpsit could not alter the reality that an action on an indebitatus count could be brought on the agreement, even though the pleader chose to enforce the fictional promise to pay rather than the debt. See also Deglman v Guaranty Trust Co of Canada [1954] 3 DLR 785. 256. Contrast Restatement (Second) Contracts, §375, Com (b) which states that the restriction on restitutionary claims following full performance (see §373) applies to contracts regulated by the Statute of Frauds because a contractual claim is available. 257. See also Fablo Pty Ltd v Bloore [1983] 1 Qd R 107; J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1984] 2 Qd R 413 at 425; Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40 (approved Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577); Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571. Cf Mostia Constructions Pty Ltd v Cox [1994] 2 Qd R 55, where White J, although holding that a prohibition on the recovery of ‘any fee, charge, damages or other reward’ by an unlicensed builder was sufficient to exclude a claim for reasonable remuneration, nevertheless held (without explaining the cause of action) the builder entitled to recover the cost of labour and materials requested and accepted under a fully performed contract. 258. See [1028]. 259. For necessary goods see [1037], [1039], [1040]. 260. See, eg McLaughlin v Freehill (1908) 5 CLR 858 (solicitor’s services); Roberts v Gray [1913] 1 KB 520 (contract analogous to apprenticeship). See generally Carter on Contract, §§16-110, 16-140. 261. (1909) 9 CLR 615 at 625–6. Cf Birks, p 436. 262. See Roberts v Gray [1913] 1 KB 520; Doyle v White City Stadium Ltd [1935] 1 KB 110. Cf Sellin v Scott (1901) 1 SR (NSW) Eq 64. See also McLaughlin v Freehill (1908) 5 CLR 858 at 862, 863, where Griffith CJ (with whom Barton J agreed) appears to have left the point

open. See further [1037], [1039], [1040] (necessary goods). 263. See [1152]. 264. See Carter’s Breach of Contract, §6-93. 265. (1987) 162 CLR 221; 69 ALR 577 (see [1024]). 266. Even in cases where no claim in contract is available, a claim may be made in tort if the statute imposes a duty on the plaintiff. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 264; 69 ALR 577 (breach of statutory duty). 267. Unless, perhaps, an incontrovertible benefit is established. See generally [151]–[153], [932], [1027], [1036]. 268. See [1032]. 269. See Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40 at 58. See also Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235, 246; James v Thomas H Kent & Co Ltd [1951] 1 KB 551 at 556; Fablo Pty Ltd v Bloore [1983] 1 Qd R 107 at 112. Cf Scott v Pattison [1923] 2 KB 723. 270. See generally on valuation Chapter 14. 271. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257; 69 ALR 577 per Deane J (‘[i]f the unenforceable contract has not been rescinded by the plaintiff or otherwise terminated, the defendant will be free to rely on it as a defence … in a case where he is ready and willing to perform his obligations under it’). See also Smith v Hartshorn (1959) 60 SR (NSW) 391 at 393. For the general principle see [215], [909]. 272. See, eg Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221; Triple ‘C’ Holdings Pty Ltd v Hogan [1983] 1 NSWLR 252. But cf Tea Tree Gully Builders Co Pty Ltd v Martin (1992) 59 SASR 344 (see [909]). For the general rule see [933], [934], [938]. Cf Restatement (Second) Contracts, §375 (restitution available if the plaintiff would, but for the Statute of Frauds, be so entitled). 273. (1915) 17 WAR 127. 274. (1987) 162 CLR 221; 69 ALR 577 (see [1024]). 275. See Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 458; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257; 69 ALR 577. 276. (1955) 55 SR (NSW) 357. See also Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 459. 277. The case was sent for re-trial on this basis. 278. [1951] VLR 405 at 409. See further on the case [1167], [1428], [1429]. 279. [1987] 2 Qd R 40 (approved Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577). 280. See generally [1166]–[1168]. 281. See also Horton v Jones (1934) 34 SR (NSW) 359 at 367–8 (affirmed on other grounds (1935) 53 CLR 475). 282. See, eg Sinclair v Rankin (No 2) (1908) 10 WAR 126 (work done in anticipation of entry into partnership). 283. See generally Gareth Jones, ‘Restitutionary Claims for Services Rendered’ (1977) 93 LQR 273; E Allan Farnsworth, ‘Precontractual Liability and Preliminary Agreements: Fair

Dealing and Failed Negotiations’ (1987) 87 Col L Rev 217; J W Carter, ‘Ineffective Transactions’ in Finn, Essays, p 206; Alistair Wyvill, ‘Enrichment, Restitution and the Collapsed Negotiations Cases’ (1993) 11 Aust Bar Rev 93; Sharon Christensen, ‘Recovery for Work Performed in Anticipation of Contract: Is Reliance an Element of Benefit?’ (1993) 11 Aust Bar Rev 144; Kit Barker, ‘Coping with Failure — Reappraising PreContractual Remuneration’ (2003) 19 JCL 105. 284. See [1045]. 285. See [1044], [1045]. 286. Cf Andrew Kull, ‘Restitution and the Noncontractual Transfer’ (1997) 11 JCL 93 (and see Keith Mason, ‘Commentary on “Restitution and the Noncontractual Transfer”’ (1997) 11 JCL 111). 287. See generally [149], [936]–[941]. 288. For an illustration see Magical Waters Fountains Ltd v City of Sarnia (1992) 91 DLR (4th) 760 (work did not go beyond ‘tender or proposal’ stage). But see William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932 (see [1035]). Cf [1044]. 289. Cf Hooker Corp Ltd v Darling Harbour Authority (1987) Unreported, SC(NSW) (Rogers J), 30 October, reversed (1988) Unreported, SC(NSW) (CA), 20 September, on the basis that there was a valid contract (where consortium and government body failed to reach agreement, expenditure in anticipation of contract was not recoverable because consortium had taken the risk of the expenditure not being remunerated); Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 621–2 (quantum meruit not raised where letter of intent was not contractual and the plaintiff incurred expenses and conferred benefits in anticipation of lease being signed). See also Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310. 290. [2014] AC 938; [2013] UKSC 50. See Peter Jaffey, (2014) 77 MLR 983. 291. See Chapter 14. 292. [1984] 1 All ER 504. See also TTMI SARL v Statoil ASA (The Sibohelle) [2011] 2 Lloyd’s Rep 220 at 230; [2011] EWHC 1150 (Comm) at [53]. 293. [1984] 1 All ER 504 at 511 (the law ‘imposes an obligation on the party who made the request to pay a reasonable sum for such work as has been done pursuant to that request’). Presumably the defendants, who were themselves sub-contractors, received payment for the work. 294. [1972] 2 Lloyd’s Rep 234. However, the case may well illustrate a genuine implied contract. See [1045]. See also Australian Securities and Investments Commission v Edwards (2005) 220 ALR 148 at 170–1; [2005] NSWSC 831 (affirmed sub nom Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723; [2009] NSWCA 424). 295. Since execution of the work is satisfaction of the request which the parties intended to state contractually, there is an analogy with the concept of ‘constructive’ acceptance applied in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577. See [1024], [1025]. 296. Cf Way v Latilla [1937] 3 All ER 759 per Lord Wright; Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 259, 260. 297. See Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at

749; [2009] NSWCA 424 at [141]. See also [1033]. 298. [1977] 2 NSWLR 880 (see J D Davies, (1981) 1 OJLS 300). 299. [1977] 2 NSWLR 880 at 903. 300. Although Rattee J in Regalian Properties Plc v London Docklands Development Corp [1995] 1 WLR 212 at 231 (see Paul Key, (1995) 111 LQR 576; Justin Mannolini, (1996) 59 MLR 111) was satisfied that the negotiations were always ‘subject to contract’, and that there was no risk sharing, he was inclined to consider Sabemo a doubtful authority. The application of Sabemo in Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 seems doubtful because there was a contractual risk allocation. See Carr v McDonald’s Australia Ltd (1994) 63 FCR 358 (Sabemo depends on the absence of an enforceable promise of reward). Cf Smith v Hartshorn (1959) 60 SR (NSW) 391 at 395 (unenforceable contract). 301. [1957] 1 WLR 932. See also Dickson Elliot Lonergan Ltd v Plumbing World Ltd [1988] 2 NZLR 608; Magical Waters Fountains Ltd v City of Sarnia (1992) 91 DLR (4th) 760 at 763–5. Cf OTM Ltd v Hydranautics [1981] 2 Lloyd’s Rep 211 at 214. 302. See Strang Patrick Stevedoring Pty Ltd v Owners of the MV ‘Sletter’ (1992) 38 FCR 501 at 524. Cf Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 32, 40. See also [410]. 303. See further [1042]. 304. Cf Stephenson Nominees Pty Ltd v Official Receiver on behalf of Official Trustee in Bankruptcy; Ex parte Roberts (1987) 76 ALR 485 at 503; 16 FCR 536 (case based in quasi-contract). 305. See [135], [145] (rejection of compensation rationale for restitution); [148], [935] (rejection of argument that professional services are beneficial only where there is some marketable end-product). 306. [1993] 2 VR 221 (see [1027]). 307. [1993] 2 VR 221 at 258. Query, however, the suggestion (at 259) that where services are rendered in anticipation of a contract, the plaintiff is in no worse position than a plaintiff who has rendered services under a contract which is unenforceable, void or uncertain. 308. But see Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428, where the defendant was held liable to pay a sum which the plaintiff paid to contractors for work done on the plaintiff’s land (at the defendant’s request) in anticipation of entry into a lease. Although Denning LJ said ([1954] 1 QB 428 at 436) the claim was for ‘restitution’ it is difficult to see how this was so. In substance the plaintiff sought and recovered a reliance loss. Cf Leading Edge Events Australia Pty Ltd v Kanawa [2007] NSWSC 228 at [234]–[271]; Birks, Future, pp 101–2. 309. See also Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 143 (the council was enriched). 310. Cf Carr v McDonald’s Australia Ltd (1994) 63 FCR 358, where Sabemo was treated as a restitution case, without mention of unjust enrichment. Contrast Cooper v City of Derby 75 A 140 (Conn, 1910), where an architect’s plans were never accepted and restitution was refused. 311. [2008] 1 WLR 1752; [2008] UKHL 55. See Amy Goymour, [2009] CLJ 37. See further [1046]. See also Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at 749; [2009] NSWCA 424 at [141].

312. [2008] 1 WLR 1752 at 1774; [2008] UKHL 55 at [43]–[44]. Lords Hoffmann, Brown and Mance agreed. 313. However, relief was granted on terms. See [2008] 1 WLR 1752 at 1774–5; [2008] UKHL 55 at [45]. 314. [1957] 1 WLR 932. Contrast Regalian Properties Plc v London Docklands Development Corp [1995] 1 WLR 212 at 224. But see Michael Garner, ‘The Role of Subjective Benefit in the Law of Restitution’ (1990) 10 OJLS 42 at 57. 315. (1989) 46 BLR 109. But see Regalian Properties Plc v London Docklands Development Corp [1995] 1 WLR 212 especially at 228–9. Contrast Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752; [2008] UKHL 55. 316. See further [1038]. 317. See [1039], [1040]. 318. See ACT: Sale of Goods Act 1954, s 13; NSW: Sale of Goods Act 1923, s 13; NT: Sale of Goods Act 1972, s 13; Qld: Sale of Goods Act 1896, s 11; SA: Sale of Goods Act 1895, s 8; Tas: Sale of Goods Act 1896, s 13; Vic: Goods Act 1958, s 13; WA: Sale of Goods Act 1895, s 8. 319. The provisions assume that the parties were not still negotiating the price, or that the goods have been accepted. See May & Butcher Ltd v R (1929) [1934] 2 KB 17n. Cf Hall v Busst (1960) 104 CLR 206 at 222, 232ff, 243ff. 320. See Wenning v Robinson (1964) 64 SR (NSW) 157 at 161–3, 167. 321. The claim under a contract inferred from conduct is contractual. See [1045], where implied terms are also discussed. 322. See Newton v Brownett (1940) 41 SR (NSW) 1 at 6 (affirmed without reference to the point sub nom Brownett v Newton (1941) 64 CLR 439). 323. (1981) [1984] 1 All ER 504 (see [1034]). See also Barrow Lane and Ballard Ltd v Phillip Phillips & Co Ltd [1929] 1 KB 574 (where sale of goods contract was void under statute, liability for goods accepted was not contractual). 324. (1857) 2 H & N 564; 157 ER 232. 325. See also Shogun Finance Ltd v Hudson [2004] 1 AC 919 at 957–8; [2003] UKHL 62 at [94]–[96]. 326. The analogy is with incontrovertible benefit. See generally [152]–[153], [932], [1027], [1036]. But see Shogun Finance Ltd v Hudson [2004] 1 AC 919 at 958; [2003] UKHL 62 at [96] (change of position). 327. See Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2), Pt 3-1, Div 2. See also Chapter 8 (‘Necessitous Intervention’). 328. See [1012]. 329. See Stocks v Wilson [1913] 2 KB 235 at 246–7; Re Henderson (1916) 12 Tas LR 40 at 41; Hall v Wells [1962] Tas SR 122 at 123–8. See Carter on Contract, §16-220. 330. See Tas: Sale of Goods Act 1896, s 9; WA: Sale of Goods Act 1895, s 4. A sale of goods contract may also be caught by a modern derivative of the aspect of s 4 of the Statute of Frauds 1677 (Imp) relating to contracts not to be performed within the space of one year from its making. However, that aspect of s 4 now operates only in Tasmania. See Mercantile Law Act 1935 (Tas), s 6.

331. See Tas: Sale of Goods Act 1896, s 9(1); WA: Sale of Goods Act 1895, s 4(1). 332. See Tas: Sale of Goods Act 1896, s 9(3); WA: Sale of Goods Act 1895, s 4(3). 333. Cf Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 (buyer accepted goods and incorporated them into manufactured product). 334. See [1040]. 335. The Minors (Property and Contracts) Act 1970 (NSW) rejects the distinction. See also Chapter 8 (‘Necessitous Intervention’). Cf Sue Arrowsmith, ‘Ineffective Transactions and Unjust Enrichment: A Framework for Analysis’ (1989) 9 Legal Studies 121 at 134. 336. See Peters v Fleming (1840) 6 M & W 42 at 46–7; 151 ER 314 at 315–16; Re Rhodes (1890) 44 Ch D 94 at 105; Re Brooks (1903) 21 WN (NSW) 4. 337. See, eg Ryder v Wombwell (1868) LR 4 Ex 32 (antique silver goblet purchased as gift and shirt buttons composed of diamonds and rubies); Stocks v Wilson [1913] 2 KB 235 (curios and snuff boxes not necessaries). See also Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at 71; 257 ALR 658; [2009] NSWCA 186 at [129] (loan contract for benefit of third party). A person purchasing necessaries at the incompetent’s request could recover the reasonable cost. 338. The knowledge of the seller is not relevant: Foster v Redgrave (1867) LR 4 Ex 35n; Barnes & Co v Toye (1884) 13 QBD 410; Johnstone v Marks (1887) 19 QBD 509. 339. See Carter on Contract, §§16-350, 16-440. 340. See Re Rhodes (1890) 44 Ch D 94 at 105; Re Brooks (1903) 21 WN (NSW) 4 at 5. See also Re Beavan [1912] 1 Ch 196 at 201 (recoupment from estate of mentally incompetent for necessary expenditure). 341. See ACT: Sale of Goods Act 1954, s 7(3); NSW: Sale of Goods Act 1923, s 7; NT: Sale of Goods Act 1972, s 7(3); Qld: Sale of Goods Act 1896, s 5(3); SA: Sale of Goods Act 1895, s 2; Tas: Sale of Goods Act 1896, s 7(2); Vic: Goods Act 1958, s 7; WA: Sale of Goods Act 1895, s 2. The Sale of Goods Act 1923 (NSW) does not apply to minors’ contracts. See Minors (Property and Contracts) Act 1970 (NSW), which does not rely on the concept of necessaries. 342. See generally Carter on Contract, §§16-080, 16-090. See also [819]. 343. See Nash v Inman [1908] 2 KB 1 at 7, 12; Cowern v Nield [1912] 2 KB 419 at 422; Stocks v Wilson [1913] 2 KB 235 at 243. See also Roberts v Gray [1913] 1 KB 520 at 527 (necessary services). Cf Hamilton v Lethbridge (1912) 14 CLR 236 at 261. 344. See Nash v Inman [1908] 2 KB 1 at 8–9; Re J [1909] 1 Ch 574 at 577; Pontypridd Union v Drew [1927] 1 KB 214 at 220; Elkington & Co Ltd v Amery [1936] 2 All ER 86 at 88. 345. [1908] 2 KB 1. 346. [1908] 2 KB 1 at 7. 347. [1908] 2 KB 1 at 9. 348. See [1336]. 349. Illegality is therefore a defence to a claim in restitution. See generally Chapter 26. 350. Compare Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 621 per Rogers A-JA (reference to the ‘somewhat ill-defined distinction between estoppel and restitution’, where the plaintiff conferred benefits in anticipation of contract, and relief by way of promissory estoppel was sought but refused).

351. See [1033]. 352. See Carter on Contract, Chapter 2; Fung, Chapters 2 and 3. 353. Competition and Consumer Act 2010 (Cth), Sch 2. 354. See [1045]. 355. Suggestions in favour of tortious liability for breach of a common law duty of good faith were rejected in CGU Workers Compensation (NSW) Ltd v Garcia (2007) 69 NSWLR 680; [2007] NSWCA 193. 356. See, eg Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 (see Gregory Tolhurst, (1994) 7 JCL 79); United Group Rail Services Ltd v Rail Corporation of New South Wales (2009) 74 NSWLR 618; [2009] NSWCA 177. Cf Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd Trading as ‘Uncle Bens of Australia’ (1992) 27 NSWLR 326 at 343. See generally J W Carter and M P Furmston, ‘Good Faith and Fairness in the Negotiation of Contracts’ (1994) 8 JCL 1, (1995) 8 JCL 93. 357. See [936]. 358. See [1033]. 359. See [913]. Cf Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 174–5; 80 ALR 574. 360. See further [2620]–[2623] (whether claim in tort independent of illegal contract). 361. See Ballett v Mingay [1943] 1 KB 281. 362. See R Leslie Ltd v Sheill [1914] 3 KB 607 at 611. 363. See Carter on Contract, §§16-210, 16-230. 364. See Overton v Banister (1844) 3 Hare 503 at 506; 67 ER 479 at 481; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716. 365. The cases apparently require an express representation by the minor that he or she was of full age. See Carter on Contract, §16-210. 366. Tracing would then cease to be an essential requirement. Compare cases which apparently assert a liability to account for the proceeds of sale, without inquiry into whether these were retained: Campbell v Ridgely (1887) 13 VLR 701; Stocks v Wilson [1913] 2 KB 235 at 247. But see R Leslie Ltd v Sheill [1914] 3 KB 607 at 618–19; Shalson v Russo [2005] Ch 281 at 319; [2003] EWHC 1637 (Ch) at [113]. See R W Clarke, ‘Contracts for Sale of Non-necessary Goods; Vendor’s Remedies Against an Infant Purchaser’ (1981) 7 Univ Tas LR 85. See also Chapter 4. 367. See Thavorn v Bank of Credit & Commerce International SA [1985] 1 Lloyd’s Rep 259 at 264. 368. The contract may be unilateral or bilateral. See British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1981) [1984] 1 All ER 504 at 509–10; RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] 1 WLR 753; [2010] UKSC 14. 369. [1972] EG (Dig) 257. 370. See Carter on Contract, §09-090. 371. [1955] 2 QB 525. Cf Quin v Mutual Acceptance Co Ltd (1967) 69 SR (NSW) 216 at 221; [1968] 1 NSWR 122 at 126 (dictum that offence under hire-purchase legislation would not prevent claim for breach of collateral contract).

372. The court considered that the plaintiffs would have failed had they been guilty of ‘culpable negligence’ in not ensuring that a sufficient licence had been obtained. 373. See Ward v Eltherington [1982] Qd R 561 (building contract inferred). But cf Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 178. Contrast Programmed Total Marine Services Pty Ltd v Ship ‘Hako Endeavour’ (2014) 315 ALR 66 at 95; [2014] FCAFC 134 at [163]. 374. See, eg Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] 1 WLR 1195 (implied contract that local authority would consider timely tenders). 375. (1988) 14 NSWLR 523. The classic example is Brogden v Metropolitan Railway Co (1877) 2 App Cas 666. See also Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at 737; [2009] NSWCA 424 at [73] per Macfarlan JA, with whom Spigelman CJ and Campbell JA agreed (‘implicit acceptance’). 376. See, eg Meem Haskins Coal Corp v Pratt 199 Ky 767, 187 SW 2d 435 (1945); British Bank for Foreign Trade Ltd v Novinex [1949] 1 KB 623; Peters v C W McFarling Floor Surfacing Ltd [1959] SASR 261; Doulton Potteries Pty Ltd v Bronotte [1971] 1 NSWLR 591 at 600. 377. [1934] 2 KB 1. See also British Bank for Foreign Trade Ltd v Novinex [1949] 1 KB 623 (implied obligation to pay reasonable commission to agent on follow up contracts with party introduced to defendant). Cf Wenning v Robinson (1964) 64 SR (NSW) 157 (sale of business contract providing for sale of stock ‘at valuation’ was a contract to pay fair value). 378. Benedetti v Sawiris [2014] AC 938 at 979; [2013] UKSC 50 at [85] per Lord Reed JSC. 379. Cf TTMI SARL v Statoil ASA (The Sibohelle) [2011] 2 Lloyd’s Rep 220 at 229–30; [2011] EWHC 1150 (Comm) at [44]–[48]. 380. But the two may co-exist. See Birks, p 46. Cf Liebe v Molloy (1906) 4 CLR 347 at 353–5; Programmed Total Marine Services Pty Ltd v Ship ‘Hako Endeavour’ (2014) 315 ALR 66 at 73; [2014] FCAFC 134 at [34]. 381. [1937] 3 All ER 759. Cf Peter Lind & Co Ltd v Mersey Docks and Harbour Board [1972] 2 Lloyd’s Rep 234 (see [1034]); Olga Investments Pty Ltd v Citipower [1998] 3 VR 485 at 498 (acceptance of electricity supplied pursuant to request). 382. [1937] 3 All ER 759 at 763. The other members of the House of Lords agreed. 383. See [1419]. 384. Cf Benedetti v Sawiris [2014] AC 938 at 996; [2013] UKSC 50 at [148] per Lord Reed JSC (‘implied contractual term’). 385. See [1937] 3 All ER 759 at 765. 386. See, eg Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 261. Cf Benedetti v Sawiris [2014] AC 938 at 1004; [2013] UKSC 50 at [182]. 387. For a suggested analogy with unjust enrichment see Ash Street Properties Pty Ltd v Pollnow (1987) 9 NSWLR 80 at 101. Cf [244], [1141], [1169]. 388. See generally Meagher, Gummow and Lehane, §§20-180–20-225. 389. On the position where the contract is void for lack of writing and proprietary estoppel is raised, see Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at 1769; [2008] UKHL 55 at [29]; Thorner v Major [2009] 1 WLR 776 at 804; [2009] UKHL 18 at [99]. Cf Yaxley v Gotts [2000] Ch 162 at 174. 390. See Actionstrength Ltd v International Glass Engineering IN.GL.EN Spa [2003] 2 AC 541;

[2003] UKHL 17. 391. (1988) 164 CLR 387; 76 ALR 513. 392. See Fung, Chapter 4. 393. Cf R J Sutton, ‘What Should be Done for Mistaken Improvers?’ in Finn, Essays, p 241. See also Van den Berg v Giles [1979] 2 NZLR 111 at 123; Marriott Industries Pty Ltd v Mercantile Credits Ltd (1990) 55 SASR 228 at 238, and the discussion in [458]. 394. See, eg Dillwyn v Llewellyn (1862) 4 De G F & J 517; 45 ER 1285 (incomplete gift); Ramsden v Dyson (1866) LR 1 HL 129 (assurance of undisturbed possession); Plimmer v Mayor of Wellington (1884) 9 App Cas 699 (requested improvements to property); Inwards v Baker [1965] 2 QB 507 (assurance believed to be binding); Crabb v Arun District Council [1976] Ch 179 (commercial negotiation). See also Birks, pp 290–1, deploring the element of uncertainty in relief. 395. See Thorner v Major [2009] 1 WLR 776 at 795; [2009] UKHL 18 at [61]. 396. See Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473; Sidhu v Van Dyke (2014) 251 CLR 505; 308 ALR 232; [2014] HCA 19. 397. See Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at 1782; [2008] UKHL 55 at [68]. 398. See, eg Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 (sale of land subject to contract); Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (promissory estoppel where terms agreed). 399. [2008] 1 WLR 1752; [2008] UKHL 55. See also on the case [1035]. 400. See also Thorner v Major [2009] 1 WLR 776 at 803; [2009] UKHL 18 at [92], [93]. 401. See Sir Anthony Mason and S J Gageler, ‘The Contract’ in Finn, ed, Essays on Contract, 1988, p 15. 402. [1957] 1 WLR 932 at 939 (see [1035]). Cf Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 where, in substance, the plaintiff sought and recovered a reliance loss, but analogy with estoppel is difficult since the negotiations failed without either party being ‘at fault’. 403. [1977] 2 NSWLR 880 (see [1035]). 404. See Gareth Jones, ‘Claims Arising Out of Anticipated Contracts Which Do Not Materialize’ (1980) 18 U W Ontario LR 447. See also J W Carter, ‘Contract, Restitution and Promissory Estoppel’ (1989) 12 UNSWLJ 30, the argument in which must be read in the light of the analysis in [1035]. 405. Cf Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 (effect of liability under promissory estoppel was to prevent unjust enrichment of a bank which had given an assurance that a builder would be paid). 406. See [107], [108], [135], [221]. 407. (1988) 164 CLR 387 at 453. 408. Mention might also be made of an action under statute to avoid the impact of illegality. See, eg Ison v Australian Wheat Board (1967) 68 SR (NSW) 102. 409. Competition and Consumer Act 2010 (Cth), Sch 2. 410. Compare Supreme Court Act 1986 (Vic), s 51 (see Carter on Contract, §16-160).

411. See Harland, §§1022–1025. 412. See Corporations Act 2001 (Cth), s 131(3). See also [1010]. 413. See also [1315]. 414. A claim may also be made against a person who was involved in contravention of the prohibition. 415. See Australian Consumer Law, ss 237, 242, 243. See also [1315]. Orders may also be made against a person who was involved in contravention of the prohibition. 416. See Australian Consumer Law, s 237. 417. See Australian Consumer Law, s 243.

[page 423]

Chapter Eleven

Contracts Discharged for Breach or Repudiation 1. 2.

3.

Introduction …. The Contractual Background ….

[1101] [1104]

(a) General ….

[1104]

(b) Rights of Discharge ….

[1107]

(c) Consequences of Discharge …. Recovery of Money Paid ….

[1110] [1112]

(a) General ….

[1112]

(b) Recovery Based on Failure of Consideration …. [1116] (c) Recovery Based on Relief Against Forfeiture …. [1136] (d) Recovery Based on Statute …. 4.

Restitution for Non-monetary Benefits ….

[1146] [1150]

(a) The Contractual Background ….

[1150]

(b) Quantum Meruit ….

[1154]

(c) Analogous and Other Claims ….

[1169]

(d) Statute and Reform ….

[1172]

1. Introduction [1101] Objects. The principal object of this chapter is to consider the availability of claims in restitution where a contract becomes ineffective by reason of discharge of the parties for breach or repudiation. Discharge is not automatic.1 Rather, it is the consequence of an election by a promisee to terminate the contract for breach or repudiation by the promisor.2 In the law of quasi-contract,3 a claim to recover a sum of money as money had and received was based on total failure of consideration. The claim to recover a quantum meruit (reasonable sum) for a non-monetary benefit was regarded as one for work done (or work and materials supplied). Although this terminology is still used today, we prefer the terminology of ‘failure of agreed return’ and ‘reasonable remuneration’.4 Whatever terminology is used, the perspective is now restitution for an unjust enrichment. Under the law of quasi-contract, the party whose breach or repudiation led to discharge5 would usually fail in a quantum meruit claim for work done. But [page 424] a claim by the ‘innocent’ party would always succeed. The law thus favoured claims by the party who elected to discharge the contract. Since the same is true today, the law continues to operate to the disadvantage of a party whose breach or repudiation led to discharge.6 Similarly, the requirement of a total failure of the agreed return still governs most non-statutory claims for restitution of money paid under the contract.7 However, in practice, substantial failure is sufficient.8 [1102] Discharge not automatic. Although in the present context discharge is essential to a restitutionary claim,9 discharge for breach or repudiation is not automatic. The promisee simply enjoys a right of election. This right may be expressly conferred by the contract or arise

by operation of law. The contract becomes ineffective on the promisee’s election to terminate the contract.10 In some (very exceptional) cases where the parties are discharged under an express term, discharge may be automatic. In these cases, the transaction becomes ineffective without any election.11 [1103] Discharge as a basis for restitution. Generally, no question of restitution arises in respect of a benefit conferred in discharge of a contractual obligation while the contract remains effective.12 In such cases, the contract is said to be ‘open’.13 However, discharge of the parties may raise an issue of restitution: there is no longer any requirement of rescission ab initio.14 Authoritative recognition that a total failure of the agreed return may occur on discharge is recent.15 Discharge is not in itself sufficient: the requirements of unjust enrichment must be satisfied.16 As always in the ineffective contract context, the problematic elements are benefit and injustice.17 [page 425]

2. The Contractual Background (a) General [1104] Introduction. The concern is to identify a species of ineffective contract, namely, one that has been discharged by termination for breach or repudiation prior to discharge by performance. Although the general law on discharge for breach or repudiation is complex, the principal issues are whether the right has arisen and the consequences of exercise of the right. Two preliminary points affect the scope of the contractual background, by serving to limit the scope for restitutionary claims. First, restitutionary claims are rarely made in cases of true anticipatory

breach, where a repudiation precedes performance by either party. Second, where a contract is fully performed by one party, and the obligation of the other is merely to pay a contract debt, only rarely can the contract be discharged for breach or repudiation.18 [1105] Origins. Discharge for breach or repudiation is a relatively recent concept. It developed from about the middle of the nineteenth century. Cases that might today be said to concern the consequences of discharge for breach or repudiation were previously analysed from the perspective of the ability of one party to enforce the contract against the other.19 A typical scenario was a claim by the plaintiff to recover a sum of money alleged to be due under the contract, and demurrer for failure to allege fulfilment of a condition precedent to the defendant’s liability. If the court decided that the defendant was correct, the plaintiff lost. There was no trial on the merits. Since the occasion for performance by the defendant could never arise,20 talk of discharge was otiose. Instead, the law was analysed in terms of dependent and independent promises.21 Following procedural reforms, claims for damages and restitution were more regularly assessed on their merits. Rescission ab initio was regarded as a right arising at common law from some forms of breach and repudiation.22 For example, in Hochster v De la Tour23 Crompton J observed in argument that if one party announces an intention not to fulfil the contract, the other ‘may take him at his word and rescind the contract. That word “rescind” implies that both parties have agreed that the contract shall be at an end as if it had never been’. Although in that case the plaintiff sought damages for what later became known as ‘anticipatory breach’, it is hardly surprising that claims in quasicontract should be treated differently. Thus, a plaintiff [page 426] might be entitled to claim in contract (for damages) or in quasicontract (for restitution). The former was regarded as an action on the

express contract, and the latter an action on a contract which might be implied only if the express contract was rescinded. Because restitutionary claims were associated with rescission ab initio, restitutio in integrum was insisted on. Claims were regularly denied on the basis of receipt of part performance, or because the contract remained ‘open’.24 This was inherently logical under a law which denied the unilateral revesting of title to property following breach. Two concessions were made as the modern principles of discharge developed in the twentieth century. First, discharge is different from rescission: restitutio in integrum is not a requirement of the former. Second, title to personal property may revest in the transferor on a valid discharge of the contract. These concessions were extremely important.25 The scope for restitutionary claims based on unjust enrichment was nevertheless already largely determined by concepts which were quite inapposite in the context of discharge for breach. [1106] No right of rescission for breach. Since rescission ab initio was for a long time thought to be a right which might accrue from breach or repudiation, it is unsurprising that rescission as a requirement for restitutionary claims infiltrated some twentieth century decisions.26 There are also examples of statutory provisions based on an outmoded approach to discharge.27 Nevertheless, unless a promisee enjoys the benefit of an express right, a contract cannot be rescinded for breach or repudiation.28 By contrast, under the law in many United States jurisdictions, a ‘total breach’ of contract (or a repudiation of obligation) confers alternative rights of rescission and termination.29 Australian cases which suggest a similar choice must, however, now be regarded as unsound.30

(b) Rights of Discharge [1107]

Introduction.

Contracts

discharged

for

breach

or

repudiation comprise two main categories: (1) contracts discharged for breach of a term; and (2) contracts discharged for a repudiation of obligation (including anticipatory breach). [page 427] Specific rights of discharge conferred by law operate within these broad categories. But the concept of discharge for breach of a term is not limited to rights conferred by law. It also includes discharge under a provision by which the right is expressly conferred.31 [1108] Contracts discharged for breach of term. The general rule is that proof of breach of contract does not entitle the promisee to terminate the contract. Exceptions depend on the nature of the term or the nature of the established breach. Proof that a particular term has been breached is sufficient in three situations. The first is that the term is the subject of an express right of termination.32 Second (but rarely), the term may be one for which there is a statutory right to terminate.33 The third is that the term has the character of a condition, rather than an intermediate term or a mere warranty. The concept of ‘condition’ includes an essential time stipulation. Whether a term is a condition, an intermediate term or a warranty depends on the construction of the contract.34 Where breach of a term does not give rise to an immediate right to terminate, a right to terminate may nevertheless arise in five situations: (1) if the promisee exercises an express right to terminate, usually following failure by the promisor to comply with a notice requiring the promisor to remedy its breach, or show cause why the contract should not be terminated;35 (2) if the term is an intermediate term, if the breach is sufficiently serious;36

(3) if the breach amounts to a repudiation of the contract;37 (4) for breach of a time stipulation, if the promisor fails to comply with a notice calling for performance within a specified period of time which is reasonable in the circumstances;38 and (5) the breach falls within a statutory regime providing for (or defining) a right of discharge.39 For example, there is a right of ‘avoidance’ [page 428] for ‘fundamental breach’40 under the United Nations Convention on Contracts for the International Sale of Goods 1980.41 [1109] Discharge for repudiation. ‘Repudiation’ refers to an express or implied refusal to perform a contract.42 This includes professed inability to perform, and inability arising from a disabling act. There is also a right of discharge when the promisor is in fact wholly and finally disabled from performing the contract.43 If there are no words or conduct amounting to repudiation, and otherwise no inability to perform, a promisee may rely on the analogous case of the prospective breach of a contractual term. This concept applies where there is evidence that a promisor will breach a term in a way which, if it actually occurred, would justify termination at common law.44

(c) Consequences of Discharge [1110] Introduction. The consequences of discharge for breach or repudiation depend on the intention of the parties. However, unless they have provided to the contrary, the common law consequences apply.45 These may be summarised in three propositions: (1) the parties are discharged from the duty to perform (and to be ready and willing to perform) their respective contractual

obligations; (2) unconditionally accrued rights and obligations are not affected; and (3) terms intended to regulate rights following discharge remain enforceable. There are significant differences between these consequences and those which occur on rescission for a vitiating factor such as misrepresentation. That is because, following rescission, it is as if the contract never existed. This reflects a contrast in the nature of the factors which lead to the contract becoming ineffective. A right of discharge becomes available because of events which occur after contract formation. These justify an election to terminate but not the complete unravelling of the contract which rescission would involve. By contrast, a right of rescission is available in respect of matters affecting contractual assent. These justify an election to treat the contract as if it never existed, but only if the parties can be restored, substantially, to their pre-contractual positions.46 Although the use of the word ‘avoidance’ in the United Nations Convention on Contracts for the International Sale of Goods 198047 is suggestive of rescission [page 429] of the contract, the effect is the same as discharge. The Convention provides48 that avoidance of the contract ‘releases both parties from their obligations’. However, this is ‘subject to any damages which may be due’. Restitutionary claims are also available.49 [1111] Scope of discharge. The primary effect of discharge is that neither party is obliged (or entitled) to perform the contract. However, this is qualified by their entitlement to enforce accrued rights and obligations (including liabilities), and also terms intended to regulate the parties’ position following discharge.50 The main examples of the

latter are exclusion clauses and dispute resolution provisions such as arbitration, choice of forum and choice of law clauses. It is because discharge is not retrospective51 that it does not affect rights and obligations which have accrued due unconditionally. The principal example is the right to claim damages, which accrues unconditionally on breach by the promisor.52 In addition, terms requiring the payment of money may sometimes be enforced, notwithstanding discharge. Whereas the above consequences depend on the intention of the parties, restitutionary obligations do not.53 The issue of intention in relation to such claims is whether they are excluded by the terms of the contract. Express or implied provisions, such as a forfeiture term, may therefore qualify the ability to claim restitution.54 However, a claim to recover a payment due at the time of discharge may be defended on the basis of the payer’s restitutionary entitlement, so as to prevent circuity of action.55 And whatever type of claim is at issue, it must always be borne in mind that the parties are discharged from their performance duties.

3. Recovery of Money Paid (a) General [1112] Introduction. There are four bases on which a plaintiff may recover money paid prior to the discharge of a contract for breach or repudiation: (1) pursuant to an express (or implied) term of the contract; (2) as restitution; (3) as damages for breach of contract; and (4) under statute. [page 430]

Of course, the principal concern is with (2). Claims to recover damages can largely be ignored. However, the interaction between (1) and (2) is important, and some statutory bases for restitution exist.56 [1113] Relevance of contractual intention. The intention of the parties is always relevant to claims to recover money paid. Situations in which money must be repaid may be defined by contract terms. Alternatively, a provision may deny recovery. Effect will be given to a term, express or implied, providing for repayment,57 or denying recovery. The latter is recognised as a forfeiture provision.58 However, except in relation to deposit payments, no right of forfeiture is implied by law. The scope of any express provision is therefore important.59 The intention of the parties is also the basis for attaching labels. One division is between entire and severable contracts.60 Superficially, this is merely a contrast between contracts in which one party agrees to pay a contract price as a single ‘lump sum’, and contracts in which there are a series of ‘instalment payments’. The latter create severable (or divisible) contracts under which each payment has a designated agreed return, so that in substance there are as many contracts as there are instalments. However, even a lump sum price under an entire contract may be payable as the work proceeds, or have stated components. The contract remains ‘entire’ so that each payment is a contribution towards the lump sum.61 The modern presumption is that contractual obligations under an executory bilateral contract are dependent in nature.62 Accordingly, the terms of the contract must always be considered against a default rule that an obligation to pay money is conditional on performance by the other party. The dependency may relate to prior performance, as where an employer promises to pay wages at the end of one month’s service, or concurrent performance, as under a cash sale of land or goods. Of course, in any situation where money is payable in advance of the other party’s performance, the obligation to pay is unconditional, or conditional on the occurrence of some event which has occurred. However, even where the payer has performed an unconditional promise to pay, dependency of obligation will generally mean that the

title of the payee to retain the payment is dependent on the readiness and willingness of the payee to perform.63 [page 431] [1114] Restitutionary analysis. Prior to the recognition of unjust enrichment, one use of the common count for money had and received by the defendant to the use of the plaintiff, on a consideration that totally failed, was to obtain restitution of payments made under discharged contracts.64 Total failure of the agreed return remains the principal basis for restitution under an unjust enrichment analysis. It therefore forms the main topic for discussion.65 However, recovery on this basis may be displaced by the contract.66 Accordingly, if a contract provides that a payment made is to be forfeited on breach or discharge, total failure of the agreed return does not apply. In such cases, the plaintiff must look to statute or relief against forfeiture. The latter was the creature of equity, and has not thus far been authoritatively adopted in an unjust enrichment analysis. However, the factors which justify relief against forfeiture, that is, the penal nature of the provision and the presence of unconscionable conduct, state a basis for restitution which should be seen as based on unjust enrichment.67 [1115] Claims for overdue payments. Payments are made under contracts according to the terms of the contract, in discharge of the payer’s performance obligations. It follows that the terms of the contract determine (at least on a prima facie basis) the payee’s right to recover any payment outstanding at the time of discharge. The law does not permit recovery of a sum of which the payer would be entitled to immediate repayment in a claim for restitution.68 Therefore, in some cases the payee’s right to enforce payment may depend on whether, if the money had been paid, the payee would succeed in a claim for restitution of the payment.69

(b) Recovery Based on Failure of Consideration (i) General [1116] Quasi-contract and unjust enrichment. Decisions such as Hunt v Silk70 and Street v Blay71 illustrate the basic — restrictive — approach of the law of quasi-contract to total failure of consideration. In the former, there was an agreement to grant a lease of land. Possession was taken and a sum of £10 paid under the agreement. No formal lease was executed. The plaintiff purported to ‘rescind’ the agreement and sued to recover the payment. It was held that the occupation of the premises was a sufficient basis for denying recovery of the money. The intermediate enjoyment, in [page 432] anticipation of the grant, meant that the parties could not be restored to their pre-contractual positions. In Street v Blay, it was explained72 that on a sale of specific goods a purchaser who has obtained title is not entitled to reject the goods on account of breach and recover money paid on a consideration which has totally failed unless there is an express provision to that effect in the contract.73 The intermediate enjoyment of ownership was sufficient to prevent rescission, and, therefore, total failure of consideration. It necessarily followed that the seller was entitled to retain the price of the goods, but liable in damages for breach of warranty. Attempts have been made to justify such decisions on specific bases.74 However, they illustrated a general approach. That approach now falls to be considered against the background of a law which does not require rescission ab initio as a pre-condition to restitution. A different restitutionary analysis is required, not just because of the recognition of unjust enrichment, but also because the treatment of

discharge as a context for claims in restitution has greatly increased the potential for success. So far, neither has led to a general relaxation of the requirement of total failure of the agreed return.75 [1117] Overview. There are six basic rules applicable to failure of the agreed return. First, the relevant time for determining whether a failure of the agreed return has occurred is the time of discharge. Second, in practice, ‘total’ failure of the agreed return refers to a substantial failure. It is irrelevant whether the payer’s breach or repudiation led to discharge.76 Third, the failure of the agreed return may be actual (and establish a prima facie case for restitution), or prospective (and prevent the recovery by the payee). Fourth, at common law there is no right to restitution where the failure is merely partial, that is, less than substantial.77 Fifth, failure of the agreed return will not apply if there is a term of the contract, express or implied, to the contrary.78 Sixth, if the contract is affirmed following breach or repudiation, restitution is not available because the parties are not discharged.79 [page 433] [1118] Total failure of consideration as the effect of discharge. While a contract remains to some extent executory, there can be no talk of total failure of the agreed return: at least one party is subject to an unperformed (undischarged) primary obligation. However, once the parties are discharged, the question of total failure may be raised. If discharge causes a total failure of the agreed return for a payment, the payment is recoverable. It is therefore important that discharge may cause a revesting of title. Thus, in R V Ward Ltd v Bignall80 Diplock LJ referred to the ‘well-established’ rule that ‘where a contract for the sale of goods is [discharged] after the property in the goods has passed to the buyer the [discharge] divests the buyer of his property in the goods’.

Even in a sale of land transaction, where discharge is unlikely to occur after conveyance, discharge will release the vendor from its obligation to convey title, and generally prevent the purchaser’s reliance on its equitable interest as a basis for specific performance. Since a vendor cannot have the land and its value as well,81 the vendor cannot at one and the same time claim to be discharged from the obligation to convey title and seek to recover (or retain) the price of the land. In McDonald v Dennys Lascelles Ltd,82 Dixon J explained83 that when a contract for the sale of land requires payment of the price by instalments, the vendor is ‘entitled to enforce payment before the time has arrived for conveying the land; yet his title to retain the money has been considered not to be absolute but conditional upon the subsequent completion of the contract’.

(ii) Total failure [1119] Introduction. Under the modern law of contract, contractual obligations are presumed to be dependent in character.84 Therefore, the agreed return for payment of (or towards) the price is presumed to be the payee’s performance, rather than that payer’s promise to perform. Accordingly, unless the contract provides otherwise, if there has been no performance by the payee, a prima facie claim for restitution is established on discharge.85 Notwithstanding occasional suggestions to the contrary,86 the basis for recovery is not contractual. [page 434] Where some performance by the defendant has occurred, the first question is whether what was received was an element of the agreed return for the money paid.87 If it was not, the plaintiff again enjoys a prima facie right to restitution.88 If it was, a second question arises, namely, whether the receipt is sufficient to render the failure partial. In that situation, the plaintiff’s claim will fail, at least under orthodox

principles.89 However, in practice, proof that a substantial failure occurred is sufficient.90 Further issues arise if there is a provision for forfeiture of payments made.91 [1120] No performance. If the contract has not been performed at all, other than by the payment of money in respect of which restitution is claimed, the payment is prima facie recoverable.92 Because the parties are discharged, the payee is unjustly enriched by the payment. In Watney v Mass93 the plaintiff paid a sum of £1500 to the defendant under an agreement by which the defendant promised to procure the formation of a company. Shares in the company were then to be allotted to the plaintiff. When the formation of the company was delayed, the plaintiff gave permission for the money to be spent refurbishing a vessel owned by the defendant. Ultimately, the defendant repudiated the contract and the issue for the Full Court of the Supreme Court of New South Wales was whether the payment made was recoverable on the basis of total failure of the agreed return. A majority of the court held that it was recoverable.94 The essence of the decision was that the agreed return for the payment, namely, formation of the company and allotment of shares, failed entirely and was not affected by the subsequent arrangement as to the use of part of the money. The position might have been different had the plaintiff obtained some benefit, or if the contract had been varied. Similarly, in any case in which a buyer of goods validly terminates the contract by rejecting a tender of delivery, the buyer is entitled to restitution of the price if pre-paid.95 If a benefit was conferred in performance, but discharge causes return of the benefit to the defendant, the failure of the agreed return is total, and the plaintiff will succeed. Thus, if a contract for the sale of goods is discharged by the return of defective goods, the intermediate enjoyment does not prevent the failure of the agreed return from being total.96 [page 435]

The same analysis is applicable if the defendant retained a totally worthless performance.97 [1121] Receipt not part of agreed return. The ‘agreed return’ for a payment is the ‘benefit bargained for under the contract’.98 Thus, it is not sufficient for a defendant to point to the receipt of a benefit of some sort. There is a total failure if the benefit was not an element of the agreed return for the payment. The classic illustration is Rowland v Divall.99 The defendant purchased a motor car and sold it to the plaintiff who sold it to another. Unknown to either the defendant or the plaintiff, the car was stolen. The police took possession of the vehicle. Having refunded the subpurchaser’s money, the plaintiff sought restitution from the defendant. Bray J held that use of the vehicle meant there was only a partial failure of the agreed return. The English Court of Appeal rejected the argument that the vehicle had been ‘accepted’. Neither the resale nor use of the vehicle prevented the failure of the agreed return being total. In essence, there was a total failure because the defendant had no right to sell. Therefore, the concept of acceptance100 was beside the point. Since the defendant might have obtained title prior to the plaintiff’s decision to claim the price,101 the best explanation for the case is that failure of the agreed return was the consequence of valid discharge. Atkin LJ perhaps went further than was necessary, suggesting102 that if the seller has no right to sell there is no contract of sale. Notwithstanding his apparently uncompromising stance,103 there may be a contract for the sale of goods even though the seller has no right to sell. Indeed, the contract may create a performance obligation even if the goods have never in fact existed.104 [page 436] The position is just the same where instalment payments are made under a contract for the sale of goods or land and the purchaser is let into possession. In McDonald v Dennys Lascelles Ltd,105 McDonald (and

others) agreed to guarantee performance by Ryde Ltd and another (the purchasers) which had agreed to purchase land from the vendors. (The latter were in fact purchasers from the registered proprietors.) The purchasers agreed to pay a total price of £23,462 by a £6000 ‘deposit’, three yearly instalments of £1000 and the balance on 24 January 1931. The deposit was paid, as were the first two instalments, but neither the final instalment nor the balance was paid. Subsequently, the benefit of the contract was assigned to Dennys Lascelles Ltd. In June 1931 the contract between the vendors and the registered proprietors was terminated. Consequently, the purchasers informed the vendors that they proposed to treat the contract as repudiated. Whether or not there was a repudiation, it was clear that the contract could not proceed to completion, and that the purchasers would not receive title. The High Court held that the purchasers were discharged, and that the guarantors were not liable to make the payment which was overdue under the contract. In addition, the court said that restitution would have been available for payments made under the contract. There was a total failure of the agreed return, namely, title to the land. It did not matter whether the purchaser was in breach. Under Dixon J’s analysis,106 the purchasers’ unconditional obligation did not become conditional.107 Rather, the just title of the payee to retain the payment was conditional.108 Dixon J agreed with the statement of Lord Denman CJ (for the court) in Palmer v Temple,109 that once the contract is discharged, the ‘vendor holds the money advanced to the use of the purchaser’. It was taken for granted by the High Court that a purchaser’s enjoyment of possession under a sale of land contract subsequently discharged for breach or repudiation does not prevent a total failure of the agreed return.110 Enjoyment of possession is not an element of the agreed for payment of the price. It is, however, a matter to be dealt with as an adjustment on discharge.111 [1122] Collateral benefits. The burden of the above analysis is that the receipt of benefit is not per se a bar to restitution. The form and nature of the benefit must be analysed. Generally, the payee’s promise to perform a contract is not a relevant benefit. For example, in May son

v Clouet112 purchasers obtained restitution of instalment payments even though they received the benefit of the vendor’s promise to convey title to land. Rowland [page 437] v Divall113 and Rover International Ltd v Cannon Film Sales Ltd114 illustrate that the receipt of an incidental or collateral benefit is not sufficient. In the former, the buyer obtained possession of the goods, and also payment under the subsequent contract. In the latter, Monitor received the benefit of Cannon’s promise of an exclusive licence. In none of these cases was the benefit a relevant one. The same explanation can be made in relation to a purchaser’s enjoyment of possession under a sale of land contract subsequently discharged for breach or repudiation.115 Indeed, if the law were otherwise, a forfeiture provision would be otiose in any instalment contract authorising the purchaser to enter into possession. However, the point was said to be an open one in Doubikin Holdings Pty Ltd v Grail Pty Ltd,116 and there are authorities apparently to the contrary.117 [1123] Breach of ‘entire’ contract. Under the entire contract doctrine,118 there is no right to enforce a payment obligation unless the contract has been substantially performed. It was argued for the plaintiff in Baltic Shipping Co v Dillon (The Mikhail Lermontov)119 that this principle also governs recovery of an advance payment. A passenger on a cruise ship sued to recover compensation and restitution when the voyage was cut short. She had paid the whole fare in advance, but enjoyed only eight of the promised 14 days when the vessel sank as a result of negligent navigation. It was argued that since the contract was ‘entire’, and only partly performed, the defendant could not retain the fare. The High Court agreed that the contract was entire, and was prepared to assume that the fare would not have been recoverable as a debt due from the plaintiff had it been payable at the conclusion of the

cruise. However, the fate of the claim for restitution did not turn on whether the contract was a partly performed entire contract. Two bases for the claim were discussed.120 One view, the more straightforward, is that there was a partial, rather than substantial, failure of the agreed return. A material part of the agreed return for the payment had been provided. The second view is that as the payment was not conditional on full performance of the contract, there was no (contractual) basis for recovery. Since Mason CJ (with whom Brennan and Toohey JJ agreed) and Deane and Dawson JJ all supported the first view, the decision does not contradict orthodox analysis. Moreover, Deane and Dawson JJ rationalised the total failure of consideration concept in terms of unjust enrichment.121 [page 438] However, some of the general discussion of the impact of a payee’s reliance may contradict orthodox analysis.122 [1124] Partial failure of consideration. If the contract is an exchange of dependent promises, Baltic Shipping Co v Dillon (The Mikhail Lermontov)123 illustrates that a restitutionary claim based on total failure of the agreed return cannot be made if the payer obtained material benefits which were part of an agreed return for performance. Mason CJ expressed124 the principle in terms that the ‘receipt and retention by the plaintiff of any part of the bargained-for benefit will prevent recovery, unless the contract otherwise provides or the circumstances give rise to a fresh contract’. Whether the payer can establish substantial loss or damage is not relevant. Thus, in The Mikhail Lermontov the plaintiff received part of the agreed return, and the physical injury, trauma and disappointment associated with the sinking of the vessel did not permit her to say that there was a total failure.125 In a lump sum contract it is sufficient that the payer received a material benefit. The claim for restitution will fail whether or not the

benefit is substantial. For example, in Shaw v Ball126 a contract for the sale of a business included its goodwill, plant, stock-in-trade and a lease of the premises. The purchaser paid a substantial portion of the purchase price pursuant to the contract, and took possession. Treating the contract as having been discharged by the vendor for breach by the purchaser, the Full Court of the Supreme Court of New South Wales held that the purchaser could not obtain restitution of the payments made because he had enjoyed the goodwill, and profited from sale of the stock of the business. Except where there is a statutory basis for recovery, or the principle of relief against forfeiture applies,127 the only clear case in which a partial failure of the agreed return is a basis for restitution is where the contract is severable. In these cases, the question is whether the agreed return for the severable payment was provided. Restitution is available for any payment made in anticipation of a performance which has totally failed.128 If the payee earned the payment sought to be recovered there is no failure of the agreed return. Thus, a seller of goods is entitled to keep (or recover) the price of goods accepted prior to discharge, and an owner of goods leased or hired to the [page 439] payer may retain any payment made for use of the goods.129 Such situations are so clear that they are not the subject of detailed discussion in the cases.130

(iii) Relevance of fault and intention [1125] Recovery independent of fault. If the contract has been discharged, it is no objection to a claim for restitution of money paid under the contract that the plaintiff-payer breached the contract. The payee is obliged to make restitution for an unjust enrichment unless the failure of the agreed return is merely partial or there is a contrary provision in the contract. Thus, in McDonald v Dennys Lascelles Ltd131

it was said that a purchaser is entitled to restitution of a payment made towards the price of the land under a contract of sale even though discharge occurs by reason of the purchaser’s default. Dixon J cited132 Mayson v Clouet133 for the proposition that it is ‘now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract’. In Mayson v Clouet a contract for the sale of land in Singapore provided for the price ($250,000) to be paid by way a deposit of $25,000, two further $25,000 payments three months and six months later, and the balance after the vendor obtained a certificate showing completion of buildings on the land. After the three payments had been made, the purchaser breached the contract and the vendor exercised its right to terminate. The contract having been discharged, the Privy Council ordered restitution of the two instalments of the price (but not the deposit). Except in relation to the deposit, there was a total failure of the agreed return. The general principle recognised in these cases is that the action can be brought ‘at law’. In Dennys Lascelles, Dixon J acknowledged that, in the absence of a provision for forfeiture, the plaintiff-payer is entitled to rely on total failure and claim the payment as money due in law. Because discharge of the obligation to convey causes a total failure of the agreed return, it is ‘needless to resort to equity and submit to equity as a condition of obtaining relief’.134 [page 440] The same analysis is applicable to any other contract in which the agreed return for the payment has failed entirely, including a sale of goods. However, in Dies v British and International Mining and Finance Corp Ltd135 Stable J suggested that where the contract is discharged for the plaintiff’s breach, it is ‘not the consideration that [fails] but the party to the contract’. There are far too many cases (including Dennys Lascelles) in which the question of who breached the contract has been treated as irrelevant to accept this suggestion. In fact, although Stable J

purported to apply a broader concept,136 the case exemplifies restitution in favour of a party in breach on a total failure of the agreed return. The purchaser agreed to pay a total price of £270,000 for a quantity of rifles and ammunition. An advance payment of £100,000 was made. No goods were delivered prior to discharge by the seller for the buyer’s repudiation. Under orthodox analysis, the purchaser was entitled to restitution because the agreed return for the payment totally failed. In Baltic Shipping Co v Dillon (The Mikhail Lermontov)137 the decision was approved by the High Court on the basis that the payment in Dies was a mere part payment. Mason CJ, although agreeing that there can be no total failure where the plaintiff’s unwillingness to perform is the cause of non-performance, pointed out138 that this is qualified by the effect of discharge. McHugh J expressed the point succinctly when he said139 that if a total failure occurs on discharge, the fact of breach does not matter. [1126] Scope of terms governing retention. Express or implied terms may regulate the retention of a money sum paid prior to discharge for breach or repudiation. If a contract provides for retention by the defendant if the plaintiff breached the contract, it might be said that there is an implied contractual right of recovery if the contract was discharged following breach by the defendant.140 There are cases in which implied intention has arguably been the approach to deposit payments, since the right of the plaintiff-payer to recover the payment against a defendant in breach has been treated as too obvious for analysis.141 Although, as a matter of contract, the consideration for a deposit payment is the payee’s entry into the contract,142 a deposit also bears the character of a part payment. This aspect of the payment can be asserted against a party in breach. Accordingly, analysis in terms of total failure of the agreed return [page 441]

seems more appropriate. That is consistent with the cases. For example, in Lucas v Smith143 a buyer of goods was entitled to restitution of a deposit payment on discharge for breach of the implied condition that the seller had the right to sell the goods. As in Rowland v Divall,144 use of the goods by the buyer did not prevent total failure of the agreed return. The same approach was taken in Foran v Wight.145 Following discharge by the purchaser for breach by the vendor of a contract for the sale of land, the purchaser sought to recover the 10 per cent deposit. Under a contractual analysis it could have been said that, in providing for forfeiture on discharge for the purchaser’s default, the contract impliedly conferred a right of recovery on the purchaser. However, this was not the analysis employed. Instead, the purchaser was held to be entitled to restitution for total failure of the agreed return. By contrast, for the party in breach the express (or implied) agreement for forfeiture excludes total failure of the agreed return concept as a basis for restitution. Reliance must be placed on relief against forfeiture, or statute.146 [1127] Suggestions that partial failure sufficient. In Dies v British and International Mining and Finance Corp Ltd,147 Stable J framed148 a general principle in terms that if the ‘language used in the contract is neutral, the general rule is that the law confers’ a right to recover money paid. The suggestion is that a partial failure of the agreed return is sufficient. Since in Stable J’s view the contract at issue was neutral, the purchaser was entitled to restitution of the payment made. Stable J’s suggestion was doubted in Hyundai Heavy Industries Co Ltd v Papadopoulos.149 More recently, as noted above,150 in Baltic Shipping Co v Dillon (The Mikhail Lermontov)151 Mason CJ thought the best explanation for the case was that the payment recovered was a mere part payment. This was also the effect of McHugh J’s judgment.152 Looked at in this way, Dies is consistent with the law on total failure of the agreed return, although it is quite clear that Stable J did not regard total failure as necessary. Putting statute to one side, and also situations in which counter-

restitution can be exacted as the price of restitution,153 the closest which Australian [page 442] courts have come to the adoption of partial failure of the agreed return as a sufficient basis for restitution in the discharge for breach context is a dictum by Deane J in Commonwealth of Australia v Amann Aviation Pty Ltd.154 This was expressed from the perspective of a claim against a payee in breach. However, in that situation, damages for breach of contract are available to the payer.155

(iv) Payments due but not paid [1128] Issue. In this section we turn to whether unjust enrichment may be raised as a defence to a claim to enforce payment of a sum which fell due prior to discharge for breach or repudiation. In most cases, the issue is whether an entitlement to an order for restitution to reverse an unjust enrichment would be available following payment. If so, that right may be deployed as a defence to the claim to enforce payment, so as to prevent circuity of action.156 From the perspective of general principles regulating the consequences of discharge,157 the claim is for payment of a contract debt. The issue is whether the right to payment accrued unconditionally. Generally, payment must at least have fallen due prior to the action being brought.158 However, this is not an invariable rule. A money sum may in fact have been earned at the time of discharge even though payment was postponed.159 Accordingly, the general criterion is whether the payment was earned prior to discharge. If that criterion is satisfied, the defence will fail.160 The background to claims to enforce payment includes the distinction between dependent and independent promises.161 If the defendant bargained for the plaintiff’s promise to perform, as where the price of land or goods is payable on a day certain irrespective of

performance by the vendor or seller,162 breach by the latter is irrelevant to its right to enforce payment. Each party’s obligation is independent and unconditional.163 Indeed, because each party has bargained for the other’s promise to perform, at common law breach [page 443] by the vendor (or seller) is not a basis for discharge.164 Such contracts are uncommon today.165 However, any contract may include an unconditional payment obligation, the consideration for which is simply the other party’s promise to perform. Moreover, modern contracts frequently include express termination rights, which may be activated by breach of an independent (unconditional) promise to pay.166 [1129] Effect of discharge. There is an important — but largely unacknowledged — conflict in general statements in the cases as to the effect of discharge for breach. In Photo Production Ltd v Securicor Transport Ltd,167 and many other cases, Lord Diplock said that an election effective to discharge the parties puts ‘an end to all primary obligations of both parties remaining unperformed’. Statements to the same effect can be found in many other cases, both in Australia168 and England.169 However, there are also cases which unequivocally restrict discharge to obligations which had not fallen due for performance at the time of discharge. Thus, in Hyundai Heavy Industries Co Ltd v Papadopoulos170 Lord Edmund-Davies quoted171 with approval a statement by Sir Guenter Treitel,172 that the party in breach is not released from ‘primary obligations already due’ at the time of discharge. That is clearly narrower than Lord Diplock’s statement. The conflict might appear more a matter of form than substance. After all, no matter how the rule is expressed, the issue is whether an accrued right was enjoyed at the time of discharge. The mere fact that the time for performance has expired is not synonymous with the enjoyment of an accrued right. However, under the broader rule, the onus is clearly on the payee to establish the accrued right. From the

perspective of the use of failure of the agreed return as a defence, the impact of the narrower version of the discharge rule is that a prima facie position must be displaced by proof of a total failure. [page 444] Proof of a total failure is certainly sufficient for the payer. However, the better view is that discharge extends to all unperformed obligations. It is insufficient for a payee simply to recite the fact that, perhaps fortuitously, discharge took place after a payment fell due. Therefore, the onus ought always to be on the payee to establish an unconditional contractual right to receive payment. The defence of total failure is then inapplicable. Indeed, the narrower rule suggests that a vendor of land who discharges the contract after the date for completion has passed is prima facie entitled to recover the price of the land. That is clearly not the law, since discharge destroys the vendor’s right to receive the payment. Thus, in Palmer v Temple173 it was said174 that the ‘very idea of payment for land falls to the ground when the bargain is at an end’. The approval of this statement by Dixon J in McDonald v Dennys Lascelles Ltd175 is in our view consistent only with the payee bearing the onus of proof. The fact that a payment fell due prior to discharge does not establish that it was also earned. It would simply beg the question to say that the normal rule under a contract for the sale of land is that payment and conveyance are concurrent obligations. The question is always whether the right to payment unconditionally accrued due. [1130] Intention. As a matter of logic, the best evidence that an overdue sum remains payable after discharge for breach or repudiation is a term of the contract permitting its forfeiture. The better reasoned cases on deposit payments express the view that because the payer cannot be in a better position, by reason of not having paid the deposit than if the deposit had been paid, the deposit remains payable after discharge.176 Unfortunately, however, there are many contrary

decisions, not based on a countervailing theory of restitution, or peculiar features of the contracts themselves. Some cases adopt the erroneous view that restitutio in integrum is an invariable requirement following discharge.177 There are also cases in which, for payments other than deposits, no confidence has been placed in a clause permitting a payee to retain a payment made. Thus, in Hyundai Heavy Industries Co Ltd v Papadopoulos178 a clause allowing builders to retain instalments payments179 made under a [page 445] shipbuilding contract prior to cancellation was not regarded as shedding any light on the builders’ ability to sue for instalments which had become due but not been paid. More generally, it is always a question of construction whether the agreed return for a payment was full or partial performance or, indeed, whether the payment was of an out and out nature. The parties’ contract determines the agreed return for the payer’s payment, and whether the payment has been earned. Because of the presumption of dependency of obligation, the prima facie position is that there is no right to payment. That is why the general rule is that the payee cannot claim an overdue payment as a contract debt unless it was earned prior to discharge.180 One aspect of intention is therefore that the parties may agree that a payment is deemed to have been earned on the occurrence of a given event,181 or provide that a payment is due on a day certain irrespective of whether any performance has been rendered by the payee. [1131] Prospective total failure of consideration. ‘Prospective failure of the agreed return’, may be raised as a defence to a claim to recover an overdue payment.182 Where the contract price is payable in return for performance by the payee, but the contract is prematurely discharged, prima facie the

defence of failure of the agreed return succeeds. Clearly, this applies to a single lump sum payment, but it also applies to payments apportioned over time. The position in respect of sale of land contracts was authoritatively stated by the High Court in McDonald v Dennys Lascelles Ltd.183 Dixon J contrasted the position of a vendor before and after discharge. He cited184 Reynolds v Fury185 as a case where the Full Court of the Supreme Court of Victoria held that instalments of purchase money ‘payable at fixed times before conveyance, become immediately recoverable as debts or liquidated demands, notwithstanding that the sale has not yet been completed by conveyance’. The decision of the High Court in Dennys Lascelles was that, after discharge, the vendor cannot recover an unpaid instalment. Since the vendor was discharged from performance of the obligation to convey title, the agreed return for the payment failed totally. As Dixon J said,186 ‘an unpaid overdue instalment ceases to be payable … when the contract is discharged’. The right of the vendors had not accrued due unconditionally because of the purchasers’ entitlement to restitution.187 The position is the [page 446] same where a deposit falls due for payment by a purchaser prior to discharge for the vendor’s breach. The defence of total failure of the agreed return is again available.188 The approach is also applicable to contracts for the sale of a business, contracts for the sale or manufacture of goods, and to construction contracts.189 Dixon J’s reasoning in Dennys Lascelles190 was applied in Rover International Ltd v Cannon Film Sales Ltd.191 A company named Proper agreed to pay a substantial sum of money by three instalments as a licence fee for exhibiting films. The first two instalments were paid, but the third was not. The contract was then discharged by the payee (Cannon) who sought to recover the outstanding sum. The English Court of Appeal did not regard prior arrival of the time for payment as creating any prima facie right to payment. At the time of discharge,

Cannon had yet to become liable under the terms of the contract to deliver any of the films, and none had in fact been delivered. Under the contract, the agreed return for the money was delivery of the films with a right to use them. It was therefore held that the absence of receipt of any of the films was sufficient to show such a total failure. Moreover, on discharge of the contract Cannon was freed from the obligation to perform a term which precluded it from transferring these rights to anyone other than Proper. [1132] Severable payments. Where a contract is severable, the recovery of a contract debt by the payee depends on proof of performance of the relevant (severable) part of the contract. Performance generates an accrued right to payment. The defence of total failure of the agreed return is not available. For example, where a lease of land is terminated after rent has fallen due for payment, the lessor enjoys an accrued right to recover any overdue payment not relating to a future term.192 The same is true if the contract provides for payment for the use of goods, even if the contract is by way of hirepurchase. For example, in Brooks v Beirnstein193 the plaintiff hired furniture from the defendant under a hire-purchase contract later discharged when the hirer got into arrears. The claim for arrears of rent succeeded on the basis that ‘the hirer has enjoyed the use of the furniture which was the consideration for the rent’.194 The position is even clearer for severable contracts for the sale of goods. If the seller delivers goods which the buyer accepts, there is a contractual [page 447] right to payment.195 Discharge does not include the obligation to pay because the seller enjoys an unconditional accrued right. Similar reasoning governs pro rata payments earned by the payee, as in Markham v Bernales,196 where payment under contract for the carriage of machinery was for an amount per ton. Once the carrier had carried

goods, it was entitled to payment for every ton carried. In all these cases, it is irrelevant that the payee’s subsequent breach or repudiation led to discharge.197 [1133] Independent and unconditional promises to perform. The position is more complex if the promise to pay is independent (unconditional). Under the sale of goods legislation, a seller is entitled to the price even though ownership has not been transferred if the buyer promised to pay for the goods on a day certain irrespective of delivery.198 Although this illustrates a general principle that the payer may have bargained for a mere promise to perform, the concept assumes that the contract has not been discharged for breach. Even though a contract creates a series of independent promises to pay, the payee may enjoy a right to terminate, under a termination clause or on the basis of an express agreement that time of payment is of the essence. The mere fact that a contract creates an unconditional obligation to pay does not mean that the payment remains due following discharge. For example, in McDonald v Dennys Lascelles Ltd199 the promise to make instalment payments prior to completion was in the nature of an independent promise. In agreeing to make those payments, the purchasers had bargained for the vendors’ promise to perform. However, discharge of the contract included the vendors’ obligation to perform. Even if the purchasers had been unable to prove a failure of the agreed return, the vendors would have enjoyed no right to enforce payment. But prospective total failure of the agreed return was sufficient.200 In every case it is a question of construction whether the payment obligation was independent and unconditional, or dependent and therefore conditional. If payments are apportioned to performance, no problem arises. If the agreed return for the payment has been provided, as in the severable contract cases,201 the defence of total failure of the agreed return is not available. However, the fact that a lump sum is payable as performance proceeds does not itself make the contract severable.202 Accordingly, the right of a builder to recover a progress

payment generally depends on the operation of a contractual mechanism, such as an architect’s certificate. In such cases, [page 448] the contractual mechanism creates a condition precedent.203 But payments which fall due simply by the effluxion of time are quite different. Outside the sale of land context, the leading case is the difficult204 decision in Hyundai Heavy Industries Co Ltd v Papadopoulos.205 Shipbuilders contracted to ‘build, launch, equip and complete’ a cargo ship for buyers who agreed to pay the price by instalments expressed as percentages of the total price. The price included ‘all costs and expenses for designing and supplying all necessary drawings for the vessel’. The first instalment (for 2.5 per cent of the price) was paid on time. The second (for the same percentage) was not. A valid notice of termination (‘rescission’) was given in respect of that payment. The shipbuilders were successful in recovering the payment from the buyers’ guarantors,206 on the basis that the guarantors were liable even if the buyers were not. However, a majority of the court also considered that the buyers would have been liable had they been sued.207 This conclusion was not supported by prior shipbuilding cases,208 where the contracts were characterised as lump sum contracts for the sale of goods. As a matter of construction, the contract in Hyundai was thought to be different. Four points were made. Each has its own difficulties. First, had the contract been a simple sale of goods the builders may have been unable to enforce payment;209 but as that was not the contract agreed, the buyers could not establish a prospective total failure of the agreed return. However, where this analysis falls down is in the explanation of why the nature of the contract was crucial. It is also at this point that the erroneous view of the prima facie effect of discharge created the wrong perspective. Viscount Dilhorne said210 that it would have been ‘curious’ for discharge to deprive the shipbuilders of

their accrued right. As already indicated, we do not think that this is in any respect curious. The general rule is that unless the payment was earned by performance prior to discharge, it ceases to be payable after discharge.211 Second, the appropriate analogy was thought to lie with contracts for the hire of goods. It was said212 that, because the shipbuilding contract was analogous, the buyers in Hyundai had received part of the agreed return. The hire cases certainly illustrate the recovery of payments earned by [page 449] performance: payments fall due for the use of goods.213 Cases of that nature were a long way from the facts at issue. A building contract providing for progress payments was a more appropriate analogy.214 In those cases it is the payer who retains the benefit of part performance. But in Hyundai the payee retained the benefit. Nor was any mechanism for payment satisfied. The promise by the builders was an indivisible composite promise to ‘build, launch, equip and complete’. It was therefore impossible to identify any distinct agreed return for the instalment payments. The fact that price included ‘all costs and expenses’ was irrelevant because that statement merely indicated that the builders could not claim more than the contract sum.215 Third, the overdue payment was said to be the subject of an accrued right. This aspect of the analysis was also assisted by the narrower version of the discharge rule. Lord Edmund-Davies relied216 on the passage in McDonald v Dennys Lascelles Ltd217 in which Dixon J emphasised the effect of ‘partial execution’ of the contract. Since the agreed return was performance by the builders of their promise to ‘build, launch, equip and complete’ the vessel, this was misplaced. Partial execution required something more than promising to do the work. No performance was proved in Hyundai.218 In Rover International Ltd v Cannon Film Sales Ltd,219 where Hyundai was distinguished, Kerr LJ noted220 that Lord Edmund-Davies had quoted only part of the

passage, and said that it was ‘helpful to quote a fuller extract’. The contract in Hyundai did not apportion the percentage payments to work done: the payments were payments towards the price of the vessel. There was a failure of the agreed return if the builders’ title to retain payment depended on performance. The mere fact that a builder or manufacturer can be assumed to have incurred expenses does not prevent a total failure of the agreed return.221 Fourth, Viscount Dilhorne thought that the buyers’ promise to pay did not depend on any performance by the builders. This construction the contract treats the agreed return as the builders’ promise to perform.222 This was certainly correct if the obligation to pay was of an independent character. Performance was irrelevant if the agreed return was in fact the builders’ promise to ‘build, launch, equip and complete’ the vessel.223 If that is the proper rationalisation, proof of breach by the builders would not have been a defence to the claim while the contract was on foot.224 It was also [page 450] inappropriate to test the builders’ right to payment by asking whether the buyers could obtain restitution following discharge. Viscount Dilhorne said the builders’ right to retain money paid was irrelevant. Therefore, once the builders were discharged from performance the buyers were discharged from their obligation to pay because they ceased to be entitled to enforce the builders’ promise. Hyundai was approved by the House of Lords in Stocznia Gdanska SA v Latvian Shipping Co.225 Although the facts were unusual, since a condition precedent to payment had been fulfilled, Hyundai was clearly distinguishable.226 In Stocznia, the plaintiff shipbuilding company contracted to build six refrigerated vessels under six contracts. After the first instalment payment was made, the buyer repudiated the contracts. The plaintiff accepted the repudiation and claimed the second instalment, representing 20 per cent of the price for each vessel on the basis that it had completed keel laying for all the vessels. In the Court

of Appeal,227 Hyundai was distinguished because, unlike the contract in that case, there was no provision expressly preserving the shipbuilders’ common law rights. However, the House of Lords held otherwise, stating228 that no inference could be drawn from the absence of an express preservation of rights. Lord Goff (with whom Lords Hoffmann, Hope and Hutton agreed) considered it important to emphasise identification of the agreed return for the payments. As in Hyundai, the plaintiff’s promise was to ‘design, build, complete and deliver’ the vessel. There were also contractual mechanisms. To the extent these had been complied with, no (prospective) failure of consideration could occur. Therefore, any instalments earned prior to termination were recoverable by the plaintiff. On the facts, that was true for only two vessels. The stratagem of the plaintiff, which involved renumbering the completed keels, did not enable it to say that it was entitled to payment in respect of the other vessels as well. It is difficult to reconcile Hyundai (and its approval in Stocznia) with Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.229 That case involved the manufacture and supply of certain machinery. There was a failure of consideration when the contract was discharged. In Stocznia Lord Goff distinguished230 the case by saying that the contract was there treated as a ‘simple contract of sale’, and that the ‘only consideration [was] the transfer of title’. In fact, however, the contract in Fibrosa said that the price included provision of the services of a skilled monteur to superintend erection. Where a buyer purchases goods from a manufacturer it would be impossible to say that different results may occur according to whether the contract states the seller will ‘deliver’ goods, or ‘manufacture and deliver’ them. In that respect, the contract in Hyundai was materially different from the contract in Stocznia. The latter included an agreed mechanism stating how the relevant part of the price was earned. [page 451]

[1134] Impact of reliance. A question which arises is whether a prima facie claim for restitution of a payment — based on total failure of the agreed return — is defeated by proof of reliance expenditure by the payee.231 Such a defence would operate independently of change of position.232 The cases decided while quasi-contractual analysis ruled did not treat reliance on the receipt of money of itself sufficient. The most that can be said is that, in cases such as Shaw v Ball,233 steps taken in reliance on the contract following payment may include enjoyment of the agreed return for a payment. If the agreed return for a payment is simply a promise to perform, steps taken by the payee might also be viewed as expenditure in reliance. That idea seems to underlie some observations in Hyundai Heavy Industries Co Ltd v Papadopoulos,234 where the buyers’ payments may have been used to defray the shipbuilders’ expenses. Lord Fraser said235 that the builders were obliged to carry out work and to incur expense, and also that it was appropriate to assume that the shipbuilders had done so. He also said236 that it was ‘enough that the builder was bound to incur considerable expense in carrying out his part of the contract long before the actual sale could take place’. However, if the buyers’ agreement was to pay on a day certain independently of delivery of the vessel, how the builders spent the money was in fact irrelevant. No question of reliance arises in such cases. Although reliance is also irrelevant where the promise to pay is dependent on performance, the result is different. For example, in McDougall v Aeromarine of Emsworth Ltd237 a shipbuilder’s reliance — in the form of partial completion of the vessel — did not prevent the buyer asserting a total failure of the agreed return following discharge of the contract by the buyer. And when distinguishing Hyundai in Rover International Ltd v Cannon Film Sales Ltd,238 the English Court of Appeal said reliance by Cannon was irrelevant to failure of the agreed return. That included the steps taken to enable delivery of the films, such as buying back rights from third parties, and refraining from granting licences in the films to third parties. Reliance on an ‘entire’ contract, for example, in purchasing materials

for performance, has never been regarded as a general qualification to recovery based on total failure of the agreed return. Burt CJ distinguished Hyundai on this basis in Terrex Resources NL v Magnet Petroleum Pty Ltd,239 and expressly rejected the view that reliance which is necessary for performance of a contract may count as a defence to total failure of the agreed return. He said that reliance on an oil exploration contract did not prevent total failure where the contract was analogous to one of sale and purchase. He was concerned to emphasise that whether the failure is total depends on the terms of the [page 452] bargain. In his view, the money paid was paid in anticipation of the receipt of permits, rather than for a mere promise to explore the permits.240 [1135] Claims against guarantors. In modern contracts, probably the form of ‘security’ most frequently used is a guarantee or indemnity. Thus, in many cases where an overdue payment is sought to be recovered following discharge of a contract for breach or repudiation, the claim is brought against a guarantor, rather than the principal debtor.241 It is therefore useful to note briefly the impact of the analysis made above for guarantors.242 The relevance of the concept of total failure of the agreed return depends in the first instance on the terms of the guarantee. If a guarantee is in traditional terms, so that the guarantor’s responsibility is co-extensive with that of the principal debtor, the creditor stands in no better position against the guarantor than against the principal debtor. Thus, in McDonald v Dennys Lascelles Ltd243 a guarantee was given to secure payment by the purchaser under a sale of land contract. On the assumption that the vendor was discharged following repudiation by the purchaser, it was said that a prospective total failure of the agreed return was a good defence for the guarantor.

Its liability was co-extensive with that of the principal debtor. This illustrates the general rule.244 The liability of an indemnifier may, however, be more extensive than that of a guarantor.245 And in Hyundai Heavy Industries Co Ltd v Papadopoulos246 the House of Lords did not consider it necessary to characterise what was described as a ‘guarantee’ as an indemnity in order to depart from the co-extensiveness principle. The unanimous decision was that even if the buyers (as principal debtors) were not liable to pay an outstanding instalment of the price when the contract was discharged for the buyers’ breach, the ‘guarantors’ were liable. Apparently, their liability was to pay a contract debt, rather than damages. It is not immediately obvious why this was so. The contract was not drafted in terms of a ‘whether liable or not’ indemnity. Nor was it drafted as a primary obligation to pay if the buyers [page 453] did not.247 In fact, the guarantee related to ‘all sums due or to become due’ under the contract. As applied to a case of default by the buyers, it was in the form of a promise to make payment ‘on behalf of’ the buyers. In effect, the guarantee was construed as an independent promise to pay any sum which fell due for payment by the buyers.248 This led to the rather strange result that the guarantors enjoyed no right of indemnity against the buyers.249 In other contracts, the security may take the form of a letter of credit, bank guarantee, performance bond or similar instrument. Because liability under these instruments may be independent of the position of the payer under the underlying contract, a total failure of the agreed return under that contract must usually be irrelevant to a claim to enforce the instrument.250

(c) Recovery Based on Relief Against Forfeiture251

(i) General [1136] Introduction. No issue of relief against forfeiture is raised by the mere fact that prior to discharge money was paid by the payer which the payee is not obliged to repay. That the sum is greater than the value of any benefit conferred is irrelevant. In order for an issue of forfeiture to arise, retention must be pursuant to an express or implied provision for forfeiture.252 Similarly, the loss of the right to receive performance which is a necessary consequence of discharge is not a forfeiture.253 Although the Australian decisions in which relief against forfeiture has been granted have seldom invoked unjust enrichment, the concept plays an important role where there is an entitlement to forfeit money paid.254 The contrast between, on the one hand, restitution for unjust enrichment (based on the principle of total failure of the agreed return), and, on the other hand, relief against forfeiture, is a contrast between principles derived from the common law and those derived from equity. Thus, in McDonald v Dennys Lascelles Ltd255 Dixon J described256 the right of a purchaser of [page 454] land relying on a total failure of the agreed return as a ‘legal right to the return of the purchase money already paid which makes it needless to resort to equity and submit to equity as a condition of obtaining relief’. He also acknowledged257 that restitution may be awarded in cases where there is an express (or implied) agreement excluding the principle of total failure of the agreed return.258 Such relief may be granted whether or not there would, even apart from the provision, be a total failure of the agreed return.259 But relief is granted on terms.260 [1137] Agreed damages and forfeiture clauses. The law refuses to lend its aid to enforce directly a promise to pay a money sum which is a penalty.261 The difference between agreed damages clauses which

are penalties and forfeiture clauses is well established. For example, in Legione v Hateley262 Mason and Deane JJ contrasted a punishment for non-observance of a contractual stipulation (penalty), and the loss or determination of an estate or interest in property or a proprietary right in consequence of a failure to perform (forfeiture). Of course, the word ‘penalty’ can be used in different senses. Thus, although a deposit may be characterised as a penalty, a contrary conclusion does not imply that it is a genuine pre-estimate of loss. In other words, a deposit may be neither a penalty nor a pre-estimate of damages.263 It follows that the ability to characterise a deposit as a penalty does not mean that the rules applicable to executory promises are directly applicable to agreements to forfeit money (or property). Unless the contract has been discharged, the conventional description of a penalty, as a sum stipulated ‘as in terrorem’,264 cannot rationally be applied to a sum which is an element of the contract price. It is the fear of retention (forfeiture) of the money that is coercive, not the promise to pay. It has therefore always265 been more difficult to obtain relief against forfeiture than to have an agreed damages clause characterised as a penalty. Thus, in Yardley v Saunders266 Kennedy J said that the considerations relevant [page 455] to exercise of jurisdiction to grant relief against the forfeiture of a deposit are not necessarily the same as those considered in connection with the distinction between liquidated damages and penalty clauses. Historically, this must be correct. Indeed, the English Law Commission’s provisional recommendation in 1975,267 that deposits be governed by the principles which apply to executory promises, assumes this to be the case. However, there is some support for the view that relief against forfeiture may be based simply on the penal nature of a provision. In

Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd,268 the Privy Council suggested that the rules permitting forfeiture of reasonable deposits are an exception to a general rule. It expressed269 the rule as being that a term which: … requires one party in the event of his breach of the contract to pay or forfeit a sum of money to the other party is unlawful as being a penalty, unless such provision can be justified as being a payment of liquidated damages being a genuine pre-estimate of the loss which the innocent party will incur by reason of the breach.

It is difficult to reconcile this approach with Australian cases, such as Yardley v Saunders, which deny that deposits are governed solely by the distinction between liquidated damages and penalties. It is also inconsistent with authority acknowledging that a deposit may be neither a penalty nor a pre-estimate of loss.270 Moreover, the Privy Council’s statement appears to reverse the onus of proof, since the orthodox view is that even a deposit which exceeds 10 per cent of the contract price is presumed to be valid.271 If the Privy Council’s approach is adopted, a payee who receives such a deposit must prove that the amount is a genuine pre-estimate of loss, and many cases might well have been decided differently on this basis alone. The Australian cases also suggest that if relief against the forfeiture is granted, it extends only so far as the deposit is penal.272 In other words, the payer is entitled to retain what would have been a reasonable sum. By contrast, in Workers Trust the Privy Council said that since the vendor did not at any time stipulate for a reasonable sum, there was no right to insist on the forfeiture of an amount which would have been reasonable.273 [1138] Agreements for forfeiture. An agreement for forfeiture may be express or implied. However, no implication is made for payments that are [page 456] simply contributions towards the contract price. In Mayson v Clouet,274

a clause in the contract permitted the vendor to forfeit the deposit following breach by the purchaser; but there was no express provision for forfeiture of part payments. Treating the issue as one of construction, it was held that the forfeiture provision was limited to the deposit. The case illustrates that forfeiture provisions are construed strictly.275 In relation to a deposit payment, a right of forfeiture in the case of default by the payer under the contract will be implied if there is no express provision. This implication reflects a deposit’s function as a security for the payee.276 Whether a payment made on entry into a contract, but not described as a deposit, is to be so regarded is a question of contract construction.277 If the payment is merely a part payment, there is no implied right of forfeiture and the payment is therefore recoverable as of right on proof of a total failure of the agreed return. Similarly, because substance is more important than form, the mere description of a payment as a deposit does not justify the implication of a right of forfeiture. Once an agreement for forfeiture has been established, whether the occasion for forfeiture has arisen is also an issue of construction. Default by the payer in the performance of the contract is sufficient if the payee is entitled to discharge the contract.278 However, it may not matter whether discharge is for breach or repudiation, provided there is default and the contract is discharged. For example, in Sprague v Booth279 there was sufficient default under a contract for the sale of railway stock where performance was prevented by a third party to whom the stock was entrusted, and for whom the purchaser was responsible. Again, in Duncan v Mell280 a contract for the sale of a lease became impossible of performance on refusal of the Minister’s consent to the contract. The refusal was due to the conduct of the purchaser and the Full Court of the Supreme Court of New South Wales held that the deposit was validly forfeited. [page 457]

A forfeiture provision in a ‘consumer contract’ may be an unfair term under Pt 2-3 of the Australian Consumer Law.281

(ii) Jurisdiction [1139] General. The law on relief against forfeiture is surprisingly complex. In relation to the forfeiture of property, there are two potential sources in addition to statutory jurisdiction, and the ‘special heads’ of relief, namely, fraud, accident, surprise or mistake.282 First, relief against forfeiture may be given if the ‘primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the court, and where the forfeiture provision is added by way of security for the production of that result’.283 Second, in Legione v Hateley284 the High Court recognised that in exceptional cases reliance may be placed on the general jurisdiction of the court to grant relief by injunction or specific performance in respect of the ‘forfeiture’ of the payer’s interest in the subject matter of the contract, at least where the payee has engaged in unconscionable conduct.285 However, where the contract is discharged for breach of an essential time stipulation, the court’s later decision in Tanwar Enterprises Pty Ltd v Cauchi286 suggests that in order to establish a claim for specific performance of a contract for the sale of land:287 [A]t least where accident and mistake are not involved, it will be necessary to point to the conduct of the vendor as having in some significant respect caused or contributed to the breach of the essential time stipulation.

[page 458] In the first type of case there must be a provision by way of security.288 Therefore, the loss of an interest in the subject matter of a contract is not per se a forfeiture. Equally, in these cases it is not essential that relief in respect of a payment of money also be at issue. Relief by the grant of specific performance or injunction, although not

in itself restitution for an unjust enrichment, may prevent the unjust enrichment of the party against whom the relief is granted.289 That was the position in Legione.290 However, given the emphasis in Tanwar on the ‘special heads’, it is now difficult to support Legione on the basis that discharge of a sale of land contract for breach or repudiation is of itself a ‘forfeiture’ of the purchaser’s equitable interest in the land.291 [1140] Monetary benefits. The principal concern is with monetary benefits.292 In all cases where relief is given against the forfeiture of money, unjust enrichment is at issue. That concept is the proper basis for analysis, both in relation to part payments and in relation to deposits.293 Since relief is more readily obtained in relation to a part payment than a deposit, the first question is always one of construction. In Stockloser v Johnson,294 Denning LJ said that a ‘vendor cannot forestall relief by describing an extravagant sum as a deposit, any more than the vendor can recover a penalty by calling it liquidated damages’. The description of a sum as a deposit is therefore not conclusive, particularly if there is no provision for forfeiture.295 If the sum at issue is not appropriately described as a ‘deposit’, the jurisdiction to grant relief against forfeiture is an application of the jurisdiction to grant relief against the forfeiture of a part payment.296 As Lord Denning’s reference to liquidated damages implies, an analogy may be drawn with the principles regulating the distinction between liquidated damages and penalties.297 Thus, in Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd298 the Privy Council said that a purchaser of land was entitled to restitution of a 25 per cent deposit, because the amount had been fixed by extraneous considerations having nothing to do with [page 459] ‘encouragement to perform the contract’.299 There was evidence that although 10 per cent was formerly the customary figure in Jamaica,

changes to the tax laws led vendors to insist on larger sums. However, there was no liability to pay tax on contracts which were not completed. The vendor’s security was therefore substantially increased, with a likely windfall on default.300

(iii) Exercise of jurisdiction [1141] Introduction. There are various ways to achieve relief against forfeiture. The form of relief will depend on the circumstances. Those of a timid disposition insist that the only relief consistent with the sanctity of the contract is an extension of time to perform.301 In some cases this may be sufficient relief, or all that is justified by the circumstances. But the view that this is the limit to available relief belongs to a bygone era. Where specific relief is given, the impact is to prevent unjust enrichment. For example, in Kilmer v British Columbia Orchard Lands Ltd302 a contract for the sale of land made time of the essence and provided that it was to be ‘null and void’ on breach by the purchaser, with money already paid to be absolutely forfeited to the vendor. After payments were made, the purchaser defaulted and the vendor purported to forfeit the money paid. In response to the vendor’s suit for a declaration that the agreement was null and void, the purchaser counter-claimed for specific performance, paying into court the outstanding money. Specific performance was ordered, so as to relieve against the forfeiture of the money. Similarly, in any case where the decision is made to grant relief against forfeiture of a purchaser’s interest in land under an instalment contract, the order prevents the vendor being unjustly enriched by forfeiture of the payments made.303 Moreover, since valid discharge of a contract for the sale of land following breach by the purchaser would lead to the forfeiture of the purchaser’s deposit, an order for specific performance in that context will also prevent what might be otherwise be an unjust enrichment. Thus, if relief is granted against the ‘forfeiture’ of the purchaser’s proprietary interest by an order for specific performance, as was

contemplated in Legione v Hateley,304 the purchaser’s deposit is applied towards the price. [page 460] In none of these cases is there an award of restitution. However, it is clear that the forfeiture of money which might otherwise occur can influence the decision to grant relief.305 [1142] Restitutionary basis. Under the jurisdiction in relation to executory promises alleged to be penalties, the relationship between the amount of the contemplated payment and the loss likely to be suffered on breach is an important consideration.306 However, in a relief against forfeiture case, the mere fact that the payee can forfeit a sum which materially exceeds the loss which it is likely to suffer is not in itself a basis for (restitutionary) relief.307 It follows that the principles regulating relief against the forfeiture of money paid are more complex than those applied to executory promises to pay agreed damages. Provided account is taken of the fact that relief against forfeiture is discretionary, and granted on terms, there seems no reason to doubt Denning LJ’s statement of principle in Stockloser v Johnson.308 Relief from a forfeiture provision (express or implied) designed to secure performance by the payer is restitutionary relief for an unjust enrichment which depends on the presence of two factors.309 First, the provision must be in the nature of (analogous to) a penalty. Second, there must be unconscionable conduct on the part of the payee. As Denning LJ explained, these factors operate at different times. Whether a payment is analogous to a penalty is decided at the time of entry into the contract. Whether the payee engaged in unconscionable conduct falls to be determined at the time of forfeiture.310 The importance of the first factor is that the parties’ agreement is impeached. The second factor emphasises that, because the court is being asked to lend its aid to deny the exercise of a contractual right, the payee’s conduct (forfeiture) must also be impeached. Although in such cases the usual

requirement of total failure of the agreed return is displaced, the fact that relief against forfeiture is granted on terms protects the payee. A requirement of substantial restitution will apply.311 Lord Denning’s judgment in Stockloser has not commanded universal respect.312 Moreover, outside the sale of land context, there appear to be [page 461] no Australian cases in which relief has been given. There are a number of reasons for this. One is that instalment payments subject to forfeiture provisions are rarely found outside the context of sale of land. Another is that statute may be the applicable basis for relief.313 A third reason is the frequent use of guarantees, letters of credit and agreed damages clauses to provide security for non-performance.314 In these cases, the issue does not arise.315 However, there are certainly cases which assume (or state) that relief against forfeiture extends beyond sale of land context.316 Significantly, in On Demand Information Plc v Michael Gerson (Finance) Plc317 the English Court of Appeal considered that a lessee of goods under a finance lease may be entitled to relief against the forfeiture of its right to possession following discharge of the lease for non-payment of hire. The court rejected the view that relief is restricted to interests conferred under contracts involving land. But the majority held that no relief was possible because the equipment had been sold by a receiver.318 On appeal,319 the House of Lords reversed that decision and held that sale by the receiver did not disentitle the lessee to relief. In effect, the lessee was entitled to pecuniary restitution. Moreover, a lessee’s right to possession so long as rent is paid was acknowledged as a sufficient interest to enliven the jurisdiction to grant relief against forfeiture.320 Whether the same approach would be taken in the context of an operating lease has been doubted.321 [1143]

Relief from forfeiture of part payments. In the context of

sale of land contracts the jurisdiction to order restitution by the grant of relief against the forfeiture of part payments is well established, and usually granted more or less as a matter of course. Thus, in McDonald v Dennys Lascelles Ltd322 Dixon J said:323 Although parties might by express agreement give the vendor an absolute right at law to retain the instalments in the event of the contract going off, yet

[page 462] in equity such a contract is considered to involve a forfeiture from which the purchaser is entitled to be relieved.

In Lexane Pty Ltd v Highfern Pty Ltd,324 McPherson J remarked that relief against forfeiture provides the basis for recovery in ‘proceedings for restitution’. The object of relief against the forfeiture of a part payment is to reverse an unjust enrichment. A direct order for restitution was approved in Steedman v Drinkle,325 which involved a contract for the purchase of 160 acres of land in Saskatchewan for $16,000. A sum of $1000 was paid on signing the contract, and the balance was payable by annual instalments. The contract made time of the essence, and provided that if the purchaser defaulted in payment the vendor could ‘cancel’ the contract and retain payments made as ‘liquidated damages’. A notice of cancellation was given when the first of the deferred instalments was not paid on time. Although the purchaser’s claim for specific performance was refused, relief was given against forfeiture of the money. The term conferring the right to retain payments was in the nature of a penalty, and the purchaser was entitled to relief, on terms. In McDonald v Dennys Lascelles Ltd,326 Dixon J approved Pitt v Curotta.327 In that case, Pitt agreed to purchase a block of land for £777. The contract required payment of a 10 per cent deposit and 12 equal quarterly instalments. It also provided that if Pitt failed to comply with any of the terms of the contract the money paid would be forfeited to the vendor, who would be at liberty to ‘rescind’ the contract. When the eighth quarterly instalment was not paid on time, the forfeiture

clause was invoked. Long Innes J was satisfied that the provision was penal in nature. He also considered that the circumstances justified the grant of relief by way of restitution of the part payments. The decision has been followed, and similar relief granted, in many cases.328 In contrast, and in our view wrongly, a majority of the Full Court of the Supreme Court of Western Australia refused relief against forfeiture of part payments in Coates v Sarich.329 The contract — relating to land — was discharged for the purchaser’s default. Given that the vendor was also held to be entitled to retain a deposit which was nearly three times the amount of the loss alleged in its statement of defence, the decision seems quite remarkable. [page 463] [1144] Relief from forfeiture of deposits. Although relief is rarely given, it has been recognised that restitution by way of relief against forfeiture may sometimes be granted. Subject to statute,330 the criteria stated by Denning LJ in Stockloser v Johnson331 apply. Thus, the sum must be in the nature of a penalty, and there must be evidence of unconscionable conduct. Of the first criterion it may be said that although a deposit payment does not become payable by reason of a breach of contract, an analogy with the distinction between liquidated damages arises if breach is the occasion for forfeiture.332 Because 10 per cent is the conventional figure in most jurisdictions, such a deposit will not be regarded as penal.333 Cases in which deposits of a materially greater proportion have not been regarded as penal are controversial. As to the second factor, if breach or repudiation on the part of the payer has led to discharge by the payee, the express or implied provision for forfeiture will show that, prima facie, retention of the deposit is not unjust. However, the payee’s right of forfeiture is not conclusive. For example, in Smyth v Jessep334 Monahan A-J dealt with two contracts for the sale of land providing for deposit payments of, respectively, £6500 and £1500. It was held that the defendants’ discharge of the contracts

for breach by the plaintiff was justified by the terms of the contract. Monahan A-J adopted Denning LJ’s statements in Stockloser v Johnson, and tested the penal nature of the provision at the time of entry into the contracts. He had no difficulty in saying that for the first contract (where the deposit represented about 40 per cent), the sum was penal. If the two contracts were taken together the total amount (£8000) was over 30 per cent of the total price, and Monahan A-J thought this was also penal. He then considered the defendant’s conduct. He pointed to the following facts: discharge occurred when an action between the parties, involving a claim by the plaintiff for fraud, was pending; the plaintiff’s offer, in which the defendants apparently acquiesced, to remain in possession pending determination of the claim; and the fact that a very bad flood resulted in the property returning considerably less than expected. Accordingly, Monahan A-J granted relief, on terms. More commonly, however, relief has been denied, even for a deposit substantially in excess of the conventional proportion. For example, in Re Hoobin335 O’Bryan J refused relief against forfeiture of a 25 per cent deposit paid under a contract for sale of a hotel freehold. He did not regard the sum as analogous to a penalty: the balance of the price was payable [page 464] eight years after possession was given, and the contract permitted resale by the purchaser. Although sceptical of Denning LJ’s statements in Stockloser v Johnson, he added that there was no evidence of unfair conduct. Similarly, in Coates v Sarich336 the Full Court of the Supreme Court of Western Australia held that a deposit of £1500, when the contract price for a stud farm was £5500, was not penal in nature, even though it represented 27 per cent of the total price. The court considered that the proportion agreed could be explained by the

considerable financial risk contemplated by possession by the purchaser for approximately 16 years before a transfer of title. Again, in Tropical Traders Ltd v Goonan (No 2)337 Jackson J held that a 21 per cent deposit in a sale of land contract was not a penalty. The sale was on terms, spread over five years. Although the property was not likely to deteriorate, it was not an attractive one, and did not rise in value on a generally rising market. Jackson J expressed some hesitation, and unfortunately did not deal with the question of unconscionable conduct. Similarly, in Yardley v Saunders338 Kennedy J held that a deposit of 20 per cent was not a penalty. The contract was for the sale of a taxi business, but there is no genuine discussion of the issue beyond the recitation of the nature and terms of the contract, and the fact of agreement to the deposit.339 Whether these cases would be decided in the same way today is open to doubt. Unless explicable by unusual circumstances, any sum substantially in excess of 10 per cent of the price is in the nature of a penalty. Relief in any such case should therefore be controlled by the conduct of the payee at the time of forfeiture. On this approach, Coates v Sarich may be doubted. The sum was very large for a deposit. Arguably, it was a part payment. But as a deposit, it was penal in nature. The court did not consider the conduct of the vendor at the time of forfeiture. Since the resale of property was at a price of £325 less than the contract price, and the deposit was nearly five times that amount, there were good reasons for characterising the vendor’s conduct as unconscionable. [1145] Prospective relief against forfeiture. Although the point has not been the subject of much discussion in the cases, in principle the rules governing relief against forfeiture should be relevant as a defence to a claim to recover a deposit — or any other overdue payment — the subject of a forfeiture provision.340 The approach to prospective failure of the agreed return341 seems a sufficient basis for arguing that a payer should be entitled to raise relief against forfeiture by way of defence. It might also be suggested that, since the aid of the

court is sought by the payee, there is no difference in this context between penalties and forfeiture. [page 465] The cases appear to insist that, as where total failure of the agreed return is raised as a defence, the plaintiff must be seeking to recover a liquidated sum following discharge of the contract.342 This is logical enough, and in our view implies that, if the sum fell due for payment prior to discharge, it should not be open to a plaintiff to obtain a procedural advantage by framing the claim as one for damages.343 If the substance of the argument is that the sum is a loss to the plaintiff because of the right to forfeit the payment, the plaintiff ought to be no better off by framing the claim as one for damages rather than for a contract debt.344

(d) Recovery Based on Statute [1146] Introduction. Some statutes recognise restitutionary rights, including in relation to a contractual payment, but leave it to the courts to work out the governing principles. Unless the statute has a particular policy objective, general principles of restitution for unjust enrichment apply. For example, the sale of goods legislation states that its provisions do not affect the right of the buyer to recover a money payment the consideration for which has failed.345 This has been taken to incorporate the general law on failure of the agreed return.346 That includes the requirement of total failure.347 [1147] Recovery based on partial failure. Whereas the sale of goods legislation merely recognises restitutionary claims under the general law, express statutory rights of ‘refund’ are conferred by the Australian Consumer Law348 in favour of ‘consumers’349 following

discharge of a contract for the supply of goods or services, or discharge of a contract for the supply of goods and services.350 [page 466] This is a right to restitution for payments made prior to discharge of the contract for the supplier’s failure to comply with a consumer guarantee.351 There are three relevant points. First, although there is no suggestion that a total failure of the agreed return is required, in most cases involving discharge by the rejection of goods, a total failure will be present. However, where a contract for the supply of services is discharged, refund is limited to unconsumed services, that is, restitution of a proportionate part of the agreed return. Second, the provisions are not restricted to the recovery of monetary payments: the ‘consideration’ provided may take some other form, as in an exchange of goods. Third, the operation of the applicable provisions cannot be excluded by the parties.352 The apportionment legislation353 may justify a claim based on partial failure of the agreed return. The legislation states that all rents, annuities, dividends and other periodical payments in the nature of income are considered to accrue from day to day (like interest on money lent) and are apportionable in respect of time accordingly. Arguably, if a payment is made (or payable) under contract, but the contract is discharged prior to the expiry of the period covered by the payment, there is a right to claim the amount attributable to the balance of the period in question. However, in Ellis v Rowbotham354 it was held that the legislation does not apply to payments which accrued due prior to discharge of the contract. A lease required payment of rent in advance, and a payment fell due before the lessor re-entered. The lessee paid into court an amount sufficient to cover rent which had accrued on a day-to-day basis. The refusal of the court to apply the legislation meant that the lessee was liable to pay the full amount. On this approach, the lessee would not have been able to claim restitution

had the rent been paid. It is difficult to maintain that the legislation was not intended to apply in such circumstances. [1148] Discretionary orders. Where a contract is discharged for breach or repudiation, a court may enjoy a statutory jurisdiction to make discretionary orders for restitution, or analogous to restitution.355 Some are statutory examples of relief against forfeiture. Thus, in New South Wales and Victoria,356 a discretionary power is conferred on the court when refusing to grant specific performance of a contract for the sale of land, or in any proceedings for return of the deposit. If it thinks fit, the court may order repayment of any deposit, with or without interest. The position may [page 467] be similar where a court is given jurisdiction to re-open a contract.357 For example, under the consumer credit legislation, a court may reopen an unjust credit contract or mortgage or guarantee, and make consequential orders, including to relieve a defendant from the payment of any amount in excess of what is considered to be reasonably payable.358 In conferring a discretionary jurisdiction these statutes confer a power to order restitution but do not invoke unjust enrichment. Instead, the discretions are informed only by the object of the legislation itself, which will not always be clear. Thus, the discretionary power to order restitution of a deposit offers no criterion. In such cases it is left to the courts to work out the principles. Where relief is sought in relation to a deposit the court may order the return of the deposit if specific performance is refused on discretionary grounds. The discretion may be exercised even though a right to terminate the contract for breach or repudiation (with consequent forfeiture of the deposit) has been exercised.359 However, no general principle governing the discretion has been worked out in the large number of cases in which the provision has been discussed, and varying views have

been expressed.360 In Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd,361 Street CJ said that the provision is ‘designed to provide relief to a purchaser against an unjust and inequitable consequence of forfeiture of a deposit’. Cases suggesting a liberal approach362 take the matter no further. The presence of unconscionable conduct has perhaps been recognised as a proper basis on which the court can exercise its discretion in the plaintiff’s favour,363 which suggests general consistency with the principles of relief against forfeiture discussed above.364 Although the deposit need not be characterised as penal in nature, relief will not be granted in respect of the usual 10 per cent deposit.365 Nor is the fact that the land has increased in value, or that the [page 468] vendor has managed to dispose of the property at a higher price, sufficient to entitle the purchaser to relief.366 [1149] International sales. The United Nations Convention on Contracts for the International Sale of Goods 1980367 states a general right to restitution following discharge (‘avoidance’). It provides that on avoidance of a contract, a ‘party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party had supplied or paid under the contract’.368

4. Restitution for Non-monetary Benefits (a) The Contractual Background [1150] Introduction. Claims in respect of non-monetary benefits conferred under contracts which have become ineffective transactions by reason of discharge for breach or repudiation369 are generally

quantum meruit claims. In our preferred terminology,370 these are claims for reasonable remuneration, for example, in respect of work done (or other services rendered). Claims may arise in relation to other non-monetary benefits, such as goods or improvements to land. However, claims based on the acceptance of goods are usually for a contract debt. In every case where the contract is discharged for breach or repudiation by the defendant, the plaintiff is entitled to damages. But the plaintiff is also entitled to reasonable remuneration for any nonmonetary benefit conferred, at least where the contract price is not recoverable.371 Therefore, the more general perspective in this context is simply that the plaintiff conferred a benefit for which no contractual right to payment is enjoyed. By contrast, if the contract was discharged by the defendant for the plaintiff’s breach or repudiation, the plaintiff is not entitled to damages or the contract price. In most cases, any claim for reasonable remuneration will also fail. A brief analysis of the law on contract performance is therefore called for.372 [1151] Entire contracts. There is a basic distinction between entire and severable contracts. In Baltic Shipping Co v Dillon (The Mikhail Lermontov)373 Mason CJ explained that an ‘entire contract or, perhaps more accurately, [page 469] an entire obligation, is one in which the consideration for the payment of money or for the rendering of some other counter-performance is entire and indivisible’. An entire contract is therefore one in which complete performance by one party (the plaintiff) is a condition precedent to the obligation of the other to perform, that is, pay the contract sum.374 The ‘doctrine’ of the entire contract, is that if the condition precedent fails, for whatever reason, the plaintiff cannot recover the contract price.375 As originally conceived,376 this was

simply a way of saying that the defendant did not come under an obligation to perform. Although the analytical value of the distinction between entire and severable contracts largely disappeared once the modern rules on the order of performance were established at the end of the eighteenth century,377 it is still employed today and has tended to dictate the approach to restitution. Many of the classic cases on the law of quasicontract involved entire contracts, and were decided by reference to the plaintiff’s inability to enforce the contract, rather than discharge of the contract for the defendant’s breach or repudiation. In the classic case, Sumpter v Hedges,378 the court denied that a quantum meruit was available for the very same reason that no claim could be brought in contract, namely, that the contract was ‘entire’ and only partly performed. It was left to the legislature to develop specific exceptions to this approach,379 the common law being content to ameliorate the position by developing a concept of substantial performance. [1152] Substantial performance. Gradually, the original formulation of complete performance as the condition precedent was relaxed. Nowadays, particularly in relation to contracts for the provision of services, the requirement is substantial performance. The seeds were sown by Lord Mansfield in the famous case of Boone v Eyre.380 His statement, that ‘where a breach may be paid for in damages … the defendant has a remedy on his covenant, and shall not plead it as a condition precedent’, was treated as allowing a plaintiff to recover the contract sum subject to a claim for compensation for deviations from the required performance, provided that the performance rendered was substantial. As much as this allowed the law to take a less formalistic approach, it also served to create much confusion.381 [page 470] It is a confusion which remains today. Three questions may be raised,

although it is not necessary to provide complete answers for the purposes of this book. These are posed mainly to provide background for the analysis of reasonable remuneration claims. First, does substantial performance operate because the court can ignore the fact that the parties have agreed that complete performance is a condition precedent? Although some cases have suggested that the substantial performance doctrine applies even though the contract is entire,382 this cannot be taken literally. Unless the law operates as a way of granting a unique form of relief against forfeiture, if the contract is entire a court has no jurisdiction to award the contract price unless the condition precedent has been fulfilled. However, this theory is consistent with cases in which relatively minor deviations have been treated as indicating that performance is less than substantial.383 Second, does substantial performance operate because the defendant is not entitled to treat the contract as discharged? This is probably the way in which most contract lawyers view the doctrine today.384 It is symmetrical, since it treats discharge by performance as the converse of discharge for breach. There is no middle ground, where there is neither substantial performance nor a right of discharge. It is also analytically pure, since it does not conceive of the court departing from the agreement of the parties. Thus, as Mason CJ recognised in Baltic Shipping Co v Dillon (The Mikhail Lermontov),385 it is perhaps more accurate to speak, not in terms of entire contracts, but instead of contracts with entire obligations. However, there are cases in which this approach has been rejected.386 Moreover, if substantial performance by the plaintiff depends on the defendant not enjoying a right of discharge, a plaintiff ought to be entitled to recover the contract price unless the breach is serious. However, that has not been the usual approach.387 [page 471] Third, does substantial performance operate because the condition precedent is presumed to be substantial performance unless the parties have expressly said that complete performance is required? Whether a

contract provides for a condition precedent, and what that condition precedent is, are both issues of construction.388 Formalistic approaches based on the form of the consideration are not appropriate today. A provision stating that a contractor is entitled to be paid on completion does not necessarily require exact performance. The analysis below tends to emphasise the third approach, as reflecting what courts actually do. There is general symmetry with the law of discharge. The condition precedent is promissory in character, so that if performance is not substantial the plaintiff has breached a condition,389 and there is a right of discharge. However, whatever the correct view, in most cases, the right of the plaintiff to recover the contract price depends on proof of substantial performance, rather than complete and exact performance. In general, the measure of whether the plaintiff has substantially performed is the cost of remedying defects in the work done,390 rather than the value of the work. This reflects the general approach to the assessment to damages in building contracts when work is done on the principal’s land.391 That is the context in which the doctrine of substantial performance has most frequently been applied. However, it also creates a potential for unjust enrichment, since a performance which is objectively very valuable may require considerable expense to ‘remedy’. The decisions are perhaps moving towards a flexible approach, sensitive to the likelihood that the work done will go unremunerated if the plaintiff cannot claim the contract sum.392 Of course, this is the point at which the law of restitution takes over from contract. [1153] Severable contracts. A contract is ‘severable’ (or ‘divisible’) if it makes provision for more than one payment and apportions payment to each severable part of the promisor’s performance.393 But a contract is not ‘severable’ merely because the contract price is payable by instalments. Therefore, a building contract is not a severable contract merely because

[page 472] it provides for progress payments towards a lump sum price.394 And a sale of land contract remains an entire contract even though the price may be payable by instalments over time. In other words, for a contract to be severable it must be possible to identify a distinct agreed return for each payment.395 From a contractual perspective, if the plaintiff sues for a contract debt payable on performance of a severable part of a contract, the impact of the contract being severable is a shift in focus. Thus, in respect of each severable part, substantial performance is usually a sufficient basis for recovery of the agreed sum.396

(b) Quantum Meruit (i) General [1154] Introduction. Restitutionary claims to recover reasonable remuneration are made following partial performance. Claims based on full performance are contractual, and in any event are rarely associated with discharge for breach or repudiation.397 If the plaintiff is entitled to recover an agreed sum in respect of partial performance, or to enforce an express or implied promise to pay a reasonable sum, the claim is contractual.398 Only if the plaintiff has not earned the contract price, or a component of the contract price, can the plaintiff sue for restitution. Thus, in Hoenig v Isaacs399 Denning LJ said that a question of reasonable remuneration arises only if a breach sufficient to prevent recovery of the price has occurred. Similarly, in Steele v Tardiani400 Dixon J said that recovery in restitution becomes relevant only on failure of a claim in contract to recover a severable payment. [1155] Rule in Sumpter v Hedges. Where the plaintiff’s breach or repudiation led to termination, the general rule established in Sumpter v

Hedges401 is that reasonable remuneration is not available to recover the value of part performance. [page 473] In Sumpter v Hedges, the plaintiff sued as on a quantum meruit for the value of work done and materials supplied under a lump sum building contract. Although progress payments were made, the plaintiff ran out of money and abandoned the work before it was complete. The court held that the builder could not recover in respect of work for which no progress payment was due. The stated basis was that there was ‘no evidence from which the inference can be drawn that he entered into a fresh contract to pay for the work done by the plaintiff’.402 For three reasons at least, the decision is the source of much difficulty today. First, the modern perspective is a claim following discharge for repudiation. However, that was not really the perspective taken by the court. Any claim in contract would have failed because the condition precedent to the defendant’s liability was not fulfilled. To the extent that discharge was regarded as relevant, the approach is different from that applied in the modern law. Thus, Collins LJ considered403 that if the builder had ‘merely broken his contract in some way so as not to give the defendant the right to treat him as having abandoned the contract, and the defendant had then proceeded to finish the work himself’, a claim for reasonable remuneration might have been successful. The ground would have been ‘that the defendant had taken the benefit of the work done’. This dictum was applied in Williamson v Murdoch,404 where the Supreme Court of Western Australia upheld a local court’s decision to award a contractor a reasonable sum for fencing work accepted by the defendant notwithstanding that the contractor had breached the contract. Under the current law, if the defendant is not entitled to treat the contract as discharged it is liable in contract not restitution.405 Second, there is the obvious point that the court applied the implied contract theory which has since been rejected.406 Since ‘acceptance of

benefit’ — the criterion adopted under the implied contract theory — remains applicable,407 it must be explained by reference to unjust enrichment.408 Third, the emphasis on breach of contract is arguably too great. The rule in Sumpter does not apply if the contract was discharged for the defendant’s breach or repudiation. However, in principle, there is no reason why the fact that the plaintiff breached the contract should be conclusive. Nevertheless, it is clear that, for the purposes of analysis, it is necessary to draw the distinction.409 The contract in Sumpter was an ineffective contract. Whether or not the defendant elected to terminate the contract prior to the commencement of proceedings, from a modern perspective that was the position. This is [page 474] important. Sumpter cannot be explained simply by saying that the plaintiff failed in its claim for restitution because the contract was still ‘open’ or ‘on foot’. [1156] The unjust enrichment perspective. Proof that a contract has been discharged for breach or repudiation, although necessary, is not in itself a basis for restitution. The non-gratuitous intent of the plaintiff in acting in response to a request found in a contract is similarly insufficient. In order to conclude that the defendant was unjustly enriched there must be an independent basis for liability.410 Because restitution is a response to an enrichment, rather than a response to reliance per se,411 the benefit at issue must have formed part of the agreed return.412 But establishing a prima facie entitlement to restitution requires proof of more than that the contract was partly performed. Recitation that the performance was requested is insufficient.413 The conventional approach therefore exposes a distinction between a claim for reasonable remuneration and one based on failure of the agreed return. Whereas receipt of part of the agreed

return will defeat the latter, conferral of part of the agreed return does not generate a claim for restitution.414 The factors adopted generally in the context of restitutionary claims for reasonable remuneration are acceptance and incontrovertible benefit.415 There is no reason to deny the relevance of these factors in claims based on part performance of a contract discharged for breach. The difficulty lies in their application and utility. The utility of incontrovertible benefit cannot be doubted but it rarely operates. Although acceptance of benefit is the orthodox basis for establishing an entitlement to reasonable remuneration,416 it is a troublesome concept. In an unjust enrichment analysis, one explanation is that acceptance satisfies both ‘benefit’ and ‘injustice’.417 Under this explanation, although a person who bargains for services, or a finished product such as an improvement to land, also bargains for all necessary services, including any step essential to the completion of performance, the defendant is not ‘enriched’ by the receipt of part performance. In other words, partial performance of an entire contract is not regarded as beneficial: contractual receipt is insufficient to establish that element of unjust enrichment. This is certainly one perspective on the rule in Sumpter v Hedges.418 The preferential treatment of a restitutionary claim by a plaintiff who elected to terminate the contract for the defendant’s breach or repudiation then stems from the fact that a defendant in breach is not permitted to deny that part performance [page 475] is beneficial: contractual receipt is sufficient.419 Because this facility is not available to a plaintiff in breach, benefit must be proved independently of contractual receipt.420 It is, however, difficult to see how proof of breach by the defendant establishes that it was benefited. Moreover, the fact that in a claim against a defendant contractual receipt is sufficient must cast doubt on a ‘no benefit’ analysis of Sumpter v Hedges.421 An alternative analysis therefore emphasises the need to establish the injustice element of unjust enrichment where the

contract was discharged for the plaintiff’s breach. Since the law is moving towards a more objective approach to benefit, where the claim is brought by a plaintiff whose breach led to discharge, it may be preferable to regard acceptance as relating to injustice.422 Of course, any enrichment of the defendant must also be at the plaintiff’s expense. Although this generally presents no difficulties, it is usually423 an essential element of the claim. Consider the line of cases of which Rowland v Divall424 is the best known. Where a person purports to sell goods that it has no right to sell, use of the goods by the buyer prior to discharge of the contract by the buyer is not regarded as a benefit to the buyer. Accordingly, the seller has no defence to the buyer’s claim based on total failure of the agreed return. If the seller were to make a claim for reasonable remuneration based on the buyer’s use of the goods it would also fail. From a reasonable remuneration perspective, it seems sufficient to say that any enrichment was obtained at the expense of the owner, rather than the plaintiff.425

(ii) Acceptance of benefit [1157] Introduction. In Steele v Tardiani,426 Latham CJ adopted427 as correct the following rule, stated in Bullen and Leake:428 Where work is done by one party under a special contract, but not according to its terms, the other may refuse to accept it; but if he does accept it and takes the benefit of it, he may be sued for the value on this [common indebitatus] count [for work done].

Application of the rule does not depend on who treated the contract as discharged. However, it has a differential operation. Acceptance is either irrelevant, or deemed to occur, if performance of the contract was not completed due to breach by the defendant.429 By contrast, if the defendant [page 476] elected to treat the contract as discharged acceptance must be proved independently of contractual receipt.

[1158] Forms of acceptance. Acceptance is an ambiguous concept.430 Contractual varieties must be distinguished from restitutionary forms. There may also be varieties within restitution itself. Partial performance of an entire contract does not give rise to a liability to pay the contract sum. Except against a defendant in breach, quasi-contractual liability could not be implied on the basis of part performance alone.431 In other words, the default position for a plaintiff in breach was that a defendant who was not liable in contract was not liable at all. Acceptance of benefit displaced the default position. In cases where the defendant is held liable in restitution, the courts have often employed the word ‘acceptance’, or expressions such as ‘taking of benefit’ or ‘advantage’, but without defining their content.432 Even when intended to describe a restitutionary concept, and to explain that acceptance may be actual or implied from conduct, they do not distinguish conduct at the time of receipt from subsequent conduct.433 Moreover, much the same terminology has been used to describe election between rights. Accordingly, the contractual form may be actual or implied. Thus, if a purchaser ‘accepts’ a delivery of goods,434 the right to reject the goods is lost. The buyer must pay the agreed price. More generally, if a promisee acts in a way which is inconsistent with exercise of the right of discharge, that right is lost. An election against discharge is implied or inferred.435 To these categories of actual and implied (or inferred) acceptance we may add a third, namely, cases where acceptance is ‘deemed’. In this category acceptance is a form of preclusion. The restitutionary version relies on conduct by which the defendant is precluded from denying liability to pay a reasonable sum for the benefit conferred.436 Under the contractual version, a ‘deemed’ acceptance refers to the fact that the defendant is estopped from asserting a right of discharge. These ideas come together when it is said that a defendant is liable because the condition precedent of full (or substantial) performance has been dispensed with, expressly or otherwise. In the leading case on

[page 477] restitution by a plaintiff in breach, Steele v Tardiani,437 Dixon J said that the deviation from the contract had been acquiesced in, so that the defendant’s realisation of a benefit from the plaintiffs’ work could be seen as either a ‘dispensation from precise performance or an implication at law of a new obligation to pay the value of the work done’.438 This is a contrast between the effect of the contractual version of acceptance (‘dispensation from precise performance’) and the effect of the restitutionary version (‘implication at law of a new obligation’).439 Since it is generally correct to treat references in quasicontractual analysis to bases on which a contract may be implied as references to bases for awarding restitution, Dixon J’s concept of an ‘implication at law of a new obligation’ is a reference to restitution for unjust enrichment based on acceptance of benefit.440 [1159] Effect of acceptance. Where a contractual version of acceptance operates, the contract is not discharged. The defendant is therefore liable to pay the contract price. In other words, the condition precedent of full (or substantial) performance having been dispensed with, there is no entitlement to treat the contract as discharged.441 By contrast, where a restitutionary version operates, the parties are discharged but there is a liability to pay reasonable remuneration. The condition precedent of full (or substantial) performance is dispensed with only to the extent that it is not a defence to the restitutionary claim. Of course, our main concern442 is with situations in which ‘acceptance’ leads to a restitutionary claim.443 However, the ambiguity of the concept of acceptance makes it problematic as a guide to unjust enrichment. The position may perhaps be summarised in three basic rules. First, restitutionary analysis assumes that the contract has been discharged for breach or repudiation. Accordingly, contractual versions of acceptance are not relevant.

[page 478] Second, where the claim is made by a plaintiff in breach, acceptance must generally be ‘free’, that is, there must be an opportunity to reject the performance which is put forward as a benefit in a claim for reasonable remuneration.444 In a claim by a plaintiff whose breach or repudiation led to discharge, only rarely is acceptance ‘implied’, on the basis that the defendant is precluded by its conduct from denying receipt and acceptance of a benefit.445 Third, against a defendant whose breach or repudiation provided the basis for discharge, acceptance is either irrelevant, or deemed to occur.446 [1160] Alternatives to acceptance. Acceptance is not the only basis by which an unjust enrichment may be established in a claim for reasonable remuneration. There is always the possibility of incontrovertible benefit.447 However, in this context claims based on the existence of a benefit which it is merely realisable are usually rejected.448 Other possibilities — not usually leading to a claim for reasonable remuneration — are restitution on an equitable basis,449 a proprietary claim450 and statute.451 The rule in Sumpter v Hedges452 can only be departed from by the High Court. However, it has been heavily criticised.453 Various suggestions have been made for circumventing the rule. One is application of failure of consideration. The approach suggests that there will be cases where total failure of the agreed return applies to make the enrichment unjust. But unless and until the law adopts partial failure of the agreed return as a basis for relief, Sumpter v Hedges stands unaffected, since the builder had received progress payments. More generally, we have considerable difficulty in seeing how failure of the agreed return can be applied.454 Another suggestion455 is that in cases of partial performance the defendant is enriched, so that the proper basis for supporting Sumpter v Hedges is that, generally, a defendant may rely on the contract to show that its enrichment is not unjust.456

However, the plaintiff may seek restitution under principles analogous to relief against forfeiture.457 A more generous version treats discharge of the [page 479] defendant from the obligation to pay the contract sum as raising a prima facie claim for restitution.

(iii) Claims by party in breach [1161] Introduction. The rule in Sumpter v Hedges458 was formulated in relation to claims for reasonable remuneration by parties in breach. The court relied on the implied contract theory of quasicontract to reach its decision. As we have explained,459 the fact that the case was decided on that basis does not of itself mean that the case was wrongly decided. Indeed, given the adoption of the decision in Steele v Tardiani,460 it is impossible in any court other than the High Court to argue that recognition of unjust enrichment itself dictates a different result.461 It can, however, at least be said that the argument in Sumpter, that the plaintiff’s right to remuneration continues to be governed by the express contract, is elliptical.462 In Sumpter v Hedges ‘acceptance’ was regarded as a basis for implying a contract. It is enshrined in the statement in Bullen and Leake, quoted earlier.463 This may be applied today, but by reference to unjust enrichment rather than implied contract. Reference must always be made to what the defendant has said and done. Moreover, although the rule stated in Bullen and Leake is in terms that the defendant accepted the benefit of performance with knowledge that it is not in accordance with the contract, under the modern law this will usually amount to an election against discharge,464 giving rise to contractual liability. Free acceptance giving rise to a restitutionary liability is a rare phenomenon because it is difficult to find situations where ‘acceptance’ is not

contractual. That is true whether acceptance should be seen as the criterion for both benefit and injustice, or only the latter. [1162] Relevance of contract terms. The general rule applicable to a plaintiff in breach asserts that the parties’ rights are governed by the terms of their contract. Therefore, the difficulty lies in establishing an independent liability.465 [page 480] The rule in Sumpter v Hedges466 has its main application to lump sum contracts where full or substantial performance by the plaintiff is the agreed return for performance of the defendant’s obligation to pay the contract price. However, the rule also applies to a claim arising from part performance of a severable part of a severable contract. In this situation, full or substantial performance of the severable part is the agreed return for the price in respect of that part. The leading case is Steele v Tardiani.467 If a prima facie claim for restitution is established, the terms of the contract are relevant to valuation of the plaintiff’s remuneration.468 [1163] General requirement of free acceptance. Whether examined at the time of receipt or the time of discharge, the cases insist that acceptance must be voluntary;469 require a ‘waiver’470 by the defendant of the right to reject the benefit proffered, or the contractual basis for remuneration; or insist that the defendant must have ‘acquiesced’471 in the benefit of part performance. In the context of work done, in Steele v Tardiani472 Dixon J referred to ‘taking the benefit of the work’, and said that this assumes the exercise of some choice actually open to the defendant. [1164] Unsuccessful claims. Where work is commenced, but not finished, it is virtually impossible to prove that there was an acceptance of benefit at the time of receipt. The relevant conduct is referable to the

contract.473 If the part performance was in accordance with the contract, there is a contractual obligation to accept the performance; but no contractual obligation to pay. It would be strange if in such cases restitution should immediately step in and provide a remedy, simply on the basis that the part performance was objectively beneficial. And it would be even stranger for restitution to be available if the reason for discharge of the contract is that the performance was not in accordance with the contract. Thus, an employer who lawfully dismisses an employee for breach after (some) work has been done is not regarded as having accepted any ‘benefit’ which, objectively, that work conferred.474 [page 481] Acceptance may be found in conduct after the receipt of performance, including the failure to return a benefit which can be returned. However, most of the cases have concerned improvements to the defendant’s own property. A landowner cannot be compelled to pay for an improvement simply because it has been made. The fact that the defendant completes the work commenced by the plaintiff does not of itself establish a restitutionary liability. In practice, therefore, the position in relation to acceptance is usually no different when the defendant’s subsequent conduct is taken into account. For example, a consignee is not required to pay for the carriage of goods delivered to the wrong port simply because it has taken delivery of its cargo;475 and a repairer is not entitled to payment merely because the goods have been taken back by their owner.476 [1165] Successful claims. Cases in which free acceptance has been established are rare. Nevertheless, in Sumpter v Hedges,477 the trial judge’s allowance of quantum meruit in respect of loose building materials used by the defendant when completing the work was not disturbed. Presumably, this was because the defendant, having the opportunity to return them, treated the materials as his own.

The leading case is Steele v Tardiani.478 The defendant was a registered firewood producer who employed the plaintiffs — Italian internees released during the War — to cut his timber into firewood. In the Supreme Court of Queensland, E A Douglas J found that the contract required the timber to be cut to a diameter of six inches. Payment was originally agreed at six shillings per ton, but after three weeks the rate was raised to eight shillings. In all, some 1500 tons were cut, in diameters ranging from six to 15 inches, before the plaintiffs left their employment. There was evidence that the defendant knew that much of the timber was being cut to diameters in excess of six inches. The plaintiffs assumed they would be paid. Apparently, they relied on the defendant’s conduct, including a statement that they would be paid their wages following delivery of the timber to a buyer. Although the timber was subsequently sold, the plaintiffs were not paid. The defence to the claim for payment — that the timber had not been cut to the required diameter — was not taken until crossexamination at the trial. E A Douglas J held that although no contractual claim was available, the plaintiffs were entitled to reasonable remuneration. On appeal to the Full Court, a majority (Stanley AJ dissenting) varied that judgment, by holding that the plaintiffs had substantially performed the contract. However, the High Court held that the performance was not substantial and restored [page 482] the trial judge’s decision. In relation to the reasonable remuneration claim, Dixon J reasoned as follows.479 First, in order to succeed in their claim the plaintiffs had to prove what Dixon J described480 as ‘circumstances removing their right to remuneration from the exact conditions of the special contract’. Second, although the plaintiffs had turned standing timber into valuable firewood, this was not a sufficient basis for the claim, since it is ‘not enough that the work has been beneficial’481 to the defendant. Third, examining the evidence, the benefit to the defendant was

obtained by, or associated with, conduct amounting to an acceptance of benefit. Dixon J therefore referred482 to ‘a taking of the benefit of the work’ as having been established, and as amounting to a ‘dispensation from precise performance’. This suggests a contractual basis.483 Alternatively, and more relevantly, Dixon J allowed for ‘an implication at law of a new obligation to pay the value of the work done’. Notwithstanding apparent overtones of implied contract,484 it seems clear that Dixon J regarded the ‘implied’ obligation as one imposed by law on the basis of the conduct of the defendant. The benefit of the plaintiffs’ work had been accepted, either as a matter of fact or because the defendant’s conduct (acquiescence) precluded him from denying that he had taken the benefit of the work. There is no reference, in terms, to unconscionable (or ‘unconscientious’) conduct.

(iv) Claims against party in breach [1166] Introduction. In cases where a partially performed contract has been discharged for breach or repudiation by the defendant, the plaintiff is entitled to damages. However, there is no obligation on the plaintiff to seek compensation: restitution may be claimed. Against a defendant in breach, benefit is determined objectively: partial performance of the contract is sufficient. If used to explain the right to restitution, ‘acceptance’, in effect,485 refers to the defendant being precluded from relying on its own wrongdoing to deny the obligation to pay. In other words, if acceptance enters the picture at all, it is deemed to have occurred. However, there are two distinct categories of case, according to whether the plaintiff provided part of the agreed return.486 If the plaintiff validly elected to terminate the contract, it is no objection to the restitutionary claim that the plaintiff breached the contract prior to discharge. Thus, in Renard Constructions (ME) Pty Ltd v Minister for Public Works487 the fact that the contractor was in default through delay [page 483]

in performance was no obstacle to its claim for reasonable remuneration. It was sufficient that the defendant’s conduct in wrongfully terminating the contract had been treated as a basis for discharge. [1167] Quantum meruit based on deemed acceptance. There are many examples of reasonable remuneration claims having succeeded following provision of part of the agreed return. In Ettridge v Vermin Board of the District of Murat Bay,488 the plaintiff agreed to erect 54 miles of ‘vermin proof fence’ for £37 per mile. The defendant defaulted in his obligation to supply materials. However, the plaintiff, for a time, continued to perform. Eventually, after further disputes, he treated the contract as repudiated. The Full Court of the Supreme Court of South Australia held that the plaintiff could recover reasonable remuneration as restitution for the benefit conferred. Similarly, in Brooks Robinson Pty Ltd v Rothfield489 a builder who had partially performed a contract to supply and install a cocktail cabinet was held to be entitled to reasonable remuneration following ‘rescission’ of the contract for the defendant’s repudiation. The repudiation occurred after the cabinet had been partially built and installed. Renard Constructions (ME) Pty Ltd v Minister for Public Works490 is illustrative of several more recent cases,491 each having broadly similar facts. A builder’s claim for reasonable remuneration succeeded when a schedule of rates building contract was discharged following the principal’s repudiation. The principal wrongfully took over the work and excluded the contractor from the site. This took place after the builder had partially completed the work. The same approach has been applied to contracts for professional services and employment contracts. For example, in Stevenson v Hook492 a surveyor recovered the value of work done prior to discharge of the contract for repudiation by the defendant. Similarly, in Segur v Franklin493 an arbitrator was held to be entitled to reasonable remuneration for services rendered where a party to arbitration proceedings, in breach of contract, prevented the arbitrator earning his

fee by concluding the arbitration. In relation to employment contracts, it has been the law since Goodman v Pocock494 that [page 484] an employee, dismissed in breach of contract after partial performance of a lump sum contract, is entitled to reasonable remuneration for work done prior to dismissal. The High Court agreed with this analysis in Automatic Fire Sprinklers Pty Ltd v Watson.495 We can generalise from these cases, and say that a plaintiff is entitled to claim reasonable remuneration where performance is not completed due to the defendant’s breach of contract.496 The cases proceed on the basis that an objectively established benefit is sufficient to show enrichment of the defendant. In so far as the concept has been treated as relevant, acceptance is fictional, or ‘deemed’. In most cases, the rationalisation is that the defendant prevented the plaintiff from completing performance.497 However, from a purely factual perspective, prevention of performance is also often deemed (or notional), rather than actual.498 In searching for a broader solution from an unjust enrichment perspective, since benefit is established in contractual receipt, it may be preferable to say that the basis for restitution (the injustice element) is the defendant’s breach of duty.499 Adoption of this rationale is analytically more compelling, since the defendant’s breach is the reason why acceptance or prevention is deemed to have occurred. However, it is integral to this rationale that the performance was part of what was bargained for. [1168] Quantum meruit based on deemed benefit. If a contract is discharged for the defendant’s breach, the plaintiff is entitled to claim damages. If the plaintiff is also entitled to restitution, two remedies are available to the plaintiff. A broader basis for the cases discussed above,500 is that following acceptance of the defendant’s repudiation the plaintiff enjoys a general right to elect between damages and reasonable remuneration501 as alternative remedies. This approach has

been taken to permit a plaintiff to claim restitution without being required to show that the plaintiff provided part of a bargained-for benefit. [page 485] The root of the cases is Planché v Colburn.502 The defendant repudiated a contract to pay for a commissioned work prior to completion of the manuscript. Apparently, the plaintiff’s ‘restitutionary’ claim for reasonable remuneration was allowed, and based on the circumstances that the plaintiff had spent money viewing a collection of armour, and had also partially completed the manuscript.503 However, no part of the manuscript was ever delivered.504 The election idea is explicit in De Bernardy v Harding,505 where the plaintiff and defendant entered into a contract under which the plaintiff agreed to assist in promoting the sale of tickets to view the funeral procession of the Duke of Wellington. The plaintiff, who was promised a percentage on the tickets sold, spent money promoting the venture. Prior to the plaintiff selling any tickets, the defendant repudiated the contract and sent the defendant applications for tickets received. Although the defendant paid off the third parties engaged by the plaintiff, he refused to pay anything to the plaintiff. It was held that the plaintiff could recover damages or reasonable remuneration.506 In Planché and De Bernardy the right to elect in favour of a claim for restitution following repudiation was conceived as a genuine election between inconsistent rights leading to alternative remedies, namely, damages and restitution. The claim in restitution was predicated on exercise of a right to rescind the contract ab initio; whereas the damages claim involved enforcement of the contract.507 This reasoning is not open today, because a repudiation does not confer a right to rescind the contract ab initio.508 Therefore, in the recent cases, the plaintiff’s claim in restitution has been predicated on an effective discharge, rather than rescission (ab initio). It is sufficient that the contract was discharged for the defendant’s breach or repudiation.

Four problems then arise. The first is that restitution and damages cannot be conceived as alternative remedies. Subject to rules on double recovery, both may be claimed if the contract is discharged for breach or repudiation.509 [page 486] Accordingly, the doctrinal basis for the cases on which the modern law is based has disappeared.510 Second, because there is no direct appeal to benefit received, it is irrelevant that the claim is for a reliance loss.511 Third, if the only criterion for relief is discharge of the contract for the defendant’s breach or repudiation, it is difficult to see how the claim is independent of the contract.512 Fourth, the most likely situation in which restitution will be sought is where the contract was an unprofitable one. Thus, none of the cases allowing a right of election between damages and restitution insist that the plaintiff prove that performance of the contract would have been profitable.513 The discussion below addresses the second problem. On the approach derived from Planché v Colburn, a reliance loss which was not an element of the agreed return may be the subject of a claim for reasonable remuneration. Because no general requirement of restitutio in integrum applies, the benefit to the defendant of its reliance is retained. It is a peculiar law of restitution which allows a plaintiff who has purchased materials in anticipation of performance to retain the materials and recover their price.514 A case like Hyundai Heavy Industries Co Ltd v Papadopoulos515 could give rise to a claim for reasonable remuneration. The reasoning of the majority, to the effect that the contract (for the construction of a ship) was analogous to one for the provision of services, suggests that the builders could have sued in restitution for work done. It is similarly odd that the sub-contractor in Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd516 should have been allowed to recover reasonable remuneration, when Fitzgerald P described517 the benefit conferred on the contractor as ‘only a valueless right to be paid’ for the sub-contractor’s work.

Even if unjust enrichment is merely a unifying concept, in the absence of benefit no claim for restitution is available. The claim must be for damages,518 or pursuant to an express or implied term of the contract.519 It therefore becomes important to identify the benefit which is the subject of the claim. The obvious source is the contract. There is a benefit where the plaintiff provided part of the agreed return, or at the request of the defendant did work that it was not obliged to carry out.520 If there is no [page 487] benefit on either basis, restitution ought not to be available,521 even under an objective approach to benefit.522 In Planché v Colburn, what the defendant bargained for was a completed manuscript. The defendant did not agree to purchase the plaintiff’s time. It would be impossible to turn back the clock completely, by saying that there is a right to restitution only where there is an independent liability based on free acceptance of benefit.523 The element of injustice in an unjust enrichment analysis may be found in the defendant’s breach.524 However, benefit must still be established. In Heyman v Darwins Ltd,525 Lord Porter suggested that: [T]he injured party may sue on the contract forthwith whether the time for performance is due or not, or, if he has wholly or partially performed his obligation, he may in certain cases neglect the contract and sue upon a quantum meruit.

Whether or not, by referring to ‘certain cases’, Lord Porter intended to restrict the plaintiff’s right to cases where the agreed return has been rendered in part, it is in our view an appropriate limitation. The better approach to cases where there is no benefit is to acknowledge that the plaintiff’s claim is for damages.526

(c) Analogous and Other Claims [1169]

Introduction. Not only are there various forms of acceptance

of benefit,527 it is also true that in various situations a plaintiff may recover payment for partial performance without resort to restitution. Reference may be made to analogous claims, not based on acceptance, to contractual claims, and to ‘other’ relief the effect of which is to prevent unjust enrichment.528 In certain circumstances a plaintiff may have a proprietary claim against a defendant where non-monetary benefits were conferred on a promisee under a contract prior to its discharge for breach or repudiation. Subject to statute, this may arise from the operation of the so-called ‘Romalpa clause’. This is a reference to Aluminium Industrie Vaasen BV v Romalpa Aluminium Ltd,529 where a contract for the sale of goods reserved the seller’s ownership and provided that articles manufactured from the goods would be held by the [page 488] buyer as security for amounts owing to the seller. The bailment relation between the buyer and the seller was of a fiduciary nature, and the seller enjoyed a proprietary claim against money in the defendant’s possession which was identifiable as derived from the sale of the goods. There are also cases in which, although no direct claim for restitution is made, the plaintiff obtains relief the effect of which is to prevent unjust enrichment. For example, in Legione v Hateley530 purchasers of land were let into possession prior to completion. They improved the land by building a house. This was, of course, an unrequested ‘benefit’ to the vendors. Nevertheless, because the improvements were made, the potential for an unjust enrichment arose when the vendors elected to terminate the contract for breach. Effective discharge might have provided the vendors with what Gibbs CJ and Murphy J described531 as ‘an ill-merited windfall’. Although no claim for restitution was made, the relief against forfeiture of the purchasers’ interest in the land, which a majority of the court considered to be available through the remedy of specific performance,532 would have prevented the improvements being an unjust enrichment.

[1170] Analogous claims. A restitutionary claim analogous to reasonable remuneration may arise under principles derived from equity. Where a contract for the sale of land is discharged, restitution may be claimed for permanent improvements made to the land while the purchaser was in possession with the consent of the vendor. This is a matter to be dealt with by way of adjustment on discharge.533 By contrast, if the right to payment for improvements is expressly excluded, restitution cannot be granted except on the basis of relief against forfeiture. In P C Developments Pty Ltd v Revell,534 a purchaser of land for development purposes was let into possession under an express contractual licence which granted permission to demolish existing structures and to commence building work. But this was on terms that the purchaser was not entitled to remove the works or claim compensation or reimbursement if the sale did not proceed to completion for any reason other than the default of the vendor.535 Following discharge by the vendor, the purchaser sought relief against forfeiture of his interest in the land, or relief on the basis that the provision dealing with improvements was a penalty. The objective [page 489] was to retain the benefit of the work done, or to make the vendor pay for improvements to the land.536 Prior to the hearing, the vendor sold the land. It was therefore conceded that, if relief was granted, the purchaser’s entitlement was to receive the increase in the price obtained on resale attributable to the improvements. The New South Wales Court of Appeal considered both relief against forfeiture and the penalty rules. However, on the basis that there was no unconscionable conduct justifying relief against forfeiture, and because (Clarke JA dissenting) the term in question was not a penalty, the purchaser’s claims failed.537 Relief against forfeiture is relevant to a claim based on improvements to land only if there is an express provision for forfeiture.538 However, in T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd539 the

Appeal Division of the Supreme Court of Victoria appears to have held that relief against forfeiture must be sought even if the contract does not deal expressly with improvements made following entry into possession. A purchaser of land claimed restitution in the form of payment for improvements made to the land with the vendor’s consent, and also sought relief against the forfeiture of part payments. Relief was granted. The court relied on the vendor’s unconscionable conduct to justify an order for restitution equal to the value of the improvements. We do not support this approach. What the court regarded as a ‘forfeiture’ was simply a consequence of discharge. Consistently with High Court authority on relief against forfeiture,540 two courses were open to the purchaser. First, the purchaser could have sought specific performance, thus avoiding any restitutionary inquiry. Second, the purchaser could have sought restitution of the payments,541 and also claimed restitution for the improvements by way of adjustment on discharge.542 If they were the subject of an express forfeiture clause, unconscionable conduct was an appropriate consideration in relation to the part payments. However, the contract did not deal with the improvements. And since these were made with the vendor’s consent, forfeiture was not relevant to that part of the claim.543 [1171] Contractual claims based on partial or additional performance. A claim made following complete or substantial performance of an entire contract, or the severable part of a severable contract, is a claim under the contract, usually for a contract debt.544 Restitution cannot be [page 490] claimed.545 There are also various situations in which a contractual claim may be made in respect of partial or additional performance, whether or not the contract is discharged.546 First, payment may fall due under a contractual mechanism. For example, building contracts typically provide for variations, extensions

of time or omission of work by the principal. All impact on the scope of the contractor’s obligations, and are governed by express mechanisms providing for remuneration on a predetermined basis.547 Restitution is not available.548 Again, work done after discharge of a contract for breach may represent a loss within an indemnity clause.549 Second, payment may be made by way of contract variation, or to settle a dispute. If the scope of a contract is varied by conduct, but there is no express agreement, a contract may be implied.550 For example, if a contractor is requested to carry out additional or different work which is not provided for by the contract, a genuine contract with a different payment promise may be implied.551 However, a claim for restitution may be available if no contract can be implied. General principles apply and it is irrelevant whether the contract has been discharged.552 Indeed, since the entitlement of the plaintiff is to ‘reasonable remuneration’, there may be no practical difference between implied contract and restitution.553 [page 491] Third, conduct amounting to a unilateral dispensation from the precise requirements of the contract was recognised by Dixon J in Steele v Tardiani554 as possibly giving rise to a liability in contract. Fourth, discharge of a contract for breach or repudiation may leave in place a relationship created by the contract, such as that of bailor and bailee. The parties may then ‘owe to one another by operation of law fresh primary obligations of which the contract is not the source’.555 These may include an obligation to make restitution for benefits conferred.556 Fifth, affirmation of the contract following breach may be a basis for recovery of payment by the promisor, subject to the promisee’s claim for damages.557 Since the right to terminate will have been lost, in these cases the contract is discharged by performance.558 Sixth, if work is done after a contract has been discharged for breach,

it may be possible to imply a contract.559 For example, the parties may be in dispute as to whether the contract has been validly terminated. But the mere fact that the circumstances require one party to benefit the other notwithstanding that the contract may have been discharged is not a sufficient basis for implying a contract.560

(d) Statute and Reform [1172] Introduction. Statute may be relevant in various ways if a contract has been discharged for breach or repudiation. Our objective is to identify the main situations and relevant issues.561 Where the statute does no more than recognise a right to claim restitution, the claim is governed by general principles.562 However, if the statute confers a right which is restitutionary in nature, those principles are unlikely to be invoked. Therefore, unjust enrichment may not be the rationale for an award. Nevertheless, even if the jurisdiction is purely discretionary,563 [page 492] the goal of preventing or reversing an unjust enrichment must logically inform its exercise.564 Instead of conferring restitutionary rights, statute may change the contract rules. Thus, the sale of goods legislation requires payment to be made where non-complying goods are accepted. The concept of acceptance is contractual in nature.565 [1173] Apportionment legislation. The apportionment legislation provides566 that all rents, annuities, dividends and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) are considered as accruing from day to day (like interest on money lent) and are apportionable in respect of time accordingly. The legislation, which does not apply if the

parties have ‘expressly stipulated’ that apportionment is not to occur, defines567 ‘annuities’ as including ‘salaries and pensions’.568 The concept of ‘dividends’, although broadly defined, does not include payments in the nature of a return or reimbursement of capital. ‘Rents’ include all periodical payments or renderings in lieu of or in the nature of rent. Where a sum of money has not fallen due as a contract debt because it has not been earned, as where an entire contract is partially performed, the legislation may justify an action to recover an apportioned part of the sum.569 Although analogous to a claim in restitution for reasonable remuneration, the claim is either contractual or statutory in nature. Since the legislation is of a reforming character, it should operate independently of fault. Therefore, although the contrary has been suggested,570 the better view is that a claim cannot be denied simply on the basis that the plaintiff’s breach or repudiation led to discharge of the contract.571 [page 493] [1174] Accepted goods. Prior to the enactment of the sale of goods legislation, if a seller sold specific goods with a warranty, there was no right to reject goods if property passed under the contract. Accordingly, the buyer was required to pay the contract price but could set up the breach of warranty by way of diminution. By contrast, in a contract for the sale of goods by description, acceptance of defective goods, or a quantity different from that contractually provided for, was conceived to give rise to liability in quasi-contract.572 However, it was also recognised that the buyer might come under a contractual obligation, where the requirements of the contract were dispensed with, or ‘waived’.573 The sale of goods legislation now renders academic debate on the proper basis. Most claims are contractual in character. The scope for application of unjust enrichment is very limited. This is the overall effect of legislative provisions relating to the passing of property in specific goods and, more generally, acceptance of

goods which the buyer was entitled to reject. Where applicable, these deny the right of the buyer to treat the contract as ‘repudiated’ (discharged).574 The buyer must therefore pay the contract price, and claim damages for the loss suffered by the seller’s breach.575 If the wrong quantity (whether less or more) is tendered and accepted, there is an obligation to pay at the contractual rate.576 The position is a little different if the seller tenders goods of the contract description mixed with goods of a different description. If the buyer accepts the whole, the buyer does not come under a liability to pay at the contract rate: a reasonable sum must be paid.577 The sale of goods legislation brought about a significant alteration of the law in relation to goods which do not conform to their contractual description.578 Under the legislation, the buyer must pay the contract price and claim damages. But it has also been suggested that where the goods are [page 494] different in kind (such as beans for peas), ‘acceptance’ should be regarded as giving rise to a distinct liability.579 [1175] Supply of goods or services to consumers. The Australian Consumer Law580 applies where goods or services (or goods and services) are supplied to a ‘consumer’.581 A consumer who rejects goods, or terminates a contract for the supply of services, for failure to comply with a consumer guarantee is entitled to a ‘refund’.582 This may include the value of a non-monetary consideration. There are also more specific examples. In Victoria, the same rights are available if a contract for the supply of goods to which Pt 3.1 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) applies is discharged for repudiation or breach of condition by the supplier.583 There is an additional provision under the Australian Consumer Law and Fair Trading Act 2012 (Vic), again limited to contracts to which Pt 3.1 of the Act applies. Section 25(6) states that if a buyer discharges a

contract for the supply of goods for repudiation or breach of condition by the seller,584 but the buyer used the goods prior to discharge, the court may allow the seller to recover from the buyer an amount equal to the whole or any part of the fair value to the purchaser of the purchaser’s use of the goods. However the court must consider it just and convenient to do so having regard to all the circumstances of the case. And it is also subject to a requirement that the seller acted honestly and reasonably in selling the goods. The provision enlarges the jurisdiction to order restitution in relation to non-monetary benefits conferred by a party in breach. Where it operates, the buyer is liable to make restitution whether or not the common law requirement of acceptance of benefit is satisfied. The provision may also contradict the requirement of unjust enrichment that the benefit be obtained at the plaintiff’s expense. If an order is made in circumstances where the seller had no right to sell the goods, any benefit to the buyer was actually obtained at the expense of the owner of the goods.585 The provision does not deal with a claim by the true owner following the making of an order against the buyer. The obvious procedural device, namely, a requirement that the owner be joined in the proceedings, was not adopted. [1176] International sales. Where a contract is avoided586 under the provisions of the United Nations Convention on Contracts for the International [page 495] Sale of Goods 1980,587 a party who performed the contract (either wholly or in part) may claim restitution from the other party of whatever the first party supplied or paid under the contract.588 A buyer is also required to account to the seller for all benefits derived from the goods or part of them.589 This includes cases where it is impossible for the buyer to make restitution of all or part of the

goods, or to make restitution of the goods substantially in the condition in which they were received. This regime is materially different from the domestic law of restitution. Although not expressly based on unjust enrichment, since it has considerable international recognition it would seem appropriate to apply the concept. However, given that use of the domestic law concept would be inappropriate, its relevance is as a general legal norm. [1177] Statutory reform. The principles regulating restitution for benefits conferred under contracts discharged for breach or repudiation have some very rough edges. There is potential for unjust enrichment to smooth out some of these. However, it must be conceded that the prospect of this occurring is unlikely, and the option of statutory reform should not be dismissed lightly. We would reject as ill-advised enactment of a general statutory discretion to make orders (including for restitution) in such terms as the court thinks fit.590 Similarly, we do not see enactment of a discretion to order restitution when it is ‘just and equitable’ to do so as an appropriate way to deal with the matter. Without some rationale, this is equivalent to a general jurisdiction to do what is ‘fair’. Although fairness in result may be an objective of granting relief in any context, it is inadequate as a statement of principle. Specific solutions have been suggested in the reports591 of two law reform agencies. Both have been criticised.592 The fact that they have not been adopted by legislation, and that they were made 30 years ago, suggests that detailed discussion would be inappropriate. An initial problem is that the reports did not anticipate developments in the law of restitution over the past 30 years. The reports suggest that partial performance of a contract [page 496] discharged by the defendant for breach by the plaintiff should confer a right to restitution. Under cl 1 of the Draft Bill included in each report,

a party in breach is entitled to recover the value of a benefit conferred, subject to a ceiling expressed in terms of a proportionate amount of the sum payable under the contract.593 Such a provision takes away the incentive to perform, and might compel the defendant to realise whatever benefit was obtained from partial performance. From the more practical perspective, the other party is exposed to litigation, and required to establish the amount of loss caused by the plaintiff’s breach. However, a similar approach has been applied in some American cases.594 There are also less generous approaches to reform. One is to require payment of the value of the work done if the work was completed (by the defendant) following discharge of the contract. Another is to allow restitution but to limit the claim to the increase in the value of the defendant’s property attributable to the work, whether readily realisable or not. A third approach would restrict the claim to readily realisable benefits. In each case, a proportionate amount of the contract price would limit recovery.595 However, there seems little point in piecemeal reform. If one aspect of restitutionary claims in relation to discharged contracts is reformed, so also ought the other aspects. Thus, there is a good case for rejecting total failure of consideration as the basis for money claims.596 Similarly, the supposed right of a plaintiff to ‘elect’ between restitution and damages deserves close scrutiny. Restitution ought not to be available unless the defendant is benefited. A more general reform would be adoption of a requirement of restitution and counter-restitution in all cases of discharge for breach or repudiation.597

1.

See [1102].

2.

On the place of a contract subsequently discharged for breach or repudiation within the scheme of ineffective contracts see [902], [904]. See [908].

3. 4. 5.

See [145], [917]. However, headings are traditionally expressed. This is a modern perspective. The conception under quasi-contract was generally rescission ab initio. See [1105], [1168].

6. 7.

See [1156]. See also [1172]–[1177] (statute and reform). The general law requirement of total failure of the agreed return is sometimes displaced by statute (see, eg [1147]) or by a requirement of substantial restitution (see [1116], [1142], [1433], [1438]). See also [1127] (suggestions that partial failure sufficient), [1177] (reform).

8. 9.

See [926] and further [1117], [1119]. See [1103].

10. Sometimes the leave of the court is necessary, and the right of election may be affected by statute. See generally Chapter 23. 11. See also [1207], [1225]. This is also the position where a contract is frustrated. See [1207]. 12. The position is otherwise for benefits conferred without obligation. See the discussion in Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 271ff. See also [1171] (claims based on part performance), [1302] (excess payment). 13. See Steele v Tardiani (1946) 72 CLR 386 at 402 per Dixon J, with whom McTiernan J agreed (‘open and, to that extent, unperformed’). See also [909], [916]. 14. See also [918] and further [1105], [1106], [1110], [1116], [1168], [1408], [1411], [1429], [1430], [1433], [1438]. 15. See [916]. 16. Cf Restatement (Second) Contracts, §373(1). 17. The requirement that the benefit be at the plaintiff’s expense is assumed to be satisfied. But see [1156], [1175]. 18. See Carter’s Breach of Contract, §§6-97, 7-79. But see [1154]. 19. See generally J W Carter, ‘Discharge as the Basis for Termination for Breach of Contract’ (2012) 128 LQR 283. See also [919]. 20. See Carter’s Breach of Contract, §1-18. See also Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 385; 111 ALR 289 and further [1152] (substantial performance). 21. See [919]. 22. See Steven Lurie, ‘Towards a Unified Theory of Breach: Tracing the History of the Rule that Rescission Ab Initio is Not a Remedy for Breach of Contract’ (2003) 19 JCL 250. 23. (1853) 2 El & Bl 678 at 685; 118 ER 922 at 924. See also Fitt v Cassanet (1842) 4 Man & G 898 at 903; 134 ER 369 at 371; Ehrensperger v Anderson (1848) 3 Ex 148 at 158; 154 ER 793 at 797; Goodman v Pocock (1850) 15 QB 576 at 580, 582, 583; 117 ER 577 at

579, 580. See generally Carter’s Breach of Contract, §3-25. 24. See [1103]. 25. See [918], [1118]. 26. See [917], [1430]. 27. See [2333]. 28. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477–8; Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 225; Holland v Wiltshire (1954) 90 CLR 409 at 416; Johnson v Agnew [1980] AC 367 at 397. 29. See, eg Boomer v Muir 24 P 2d 570 at 573 (DCA, Cal, 1933); Alder v Drudis 182 P 2d 195 at 201 (Cal, 1947); Oliver v Campbell 273 P 2d 15 at 17–18 (Cal, 1954); Riess v Murchison 503 F 2d 999 at 1008 (CA, 8th Cir, 1974). 30. For statements apparently to the contrary, see Guy-Pell v Foster [1930] 2 Ch 169 at 181; Coates v Sarich [1964] WAR 2 at 11; Moschi v Lep Air Services Ltd [1973] AC 331 at 356. See also Sir Michael Mustill, ‘Anticipatory Breach’, Butterworth Lectures 1989-90, 1990, pp 36, 49 and further [1168], [1405], [1411], [1428]–[1430] (election between damages and restitution). 31. An express right of discharge may also be activated by an event which is not a breach of contract. See generally Chapter 12. 32. See J W Carter, ‘Termination Clauses’ (1990) 3 JCL 90. 33. There is no general statutory right, although one may arise in specific contexts. See generally Carter’s Breach of Contract, §§3-16–3-17. 34. See generally Carter’s Breach of Contract, Chapter 5. 35. See, eg Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Dalkia Utilities Services Plc v Celtech International Ltd [2006] 1 Lloyd’s Rep 599; [2006] EWHC 63 (Comm). 36. See generally Carter’s Breach of Contract, Chapter 6. 37. See, eg Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 at 339. 38. Failure to comply with the notice evidences a repudiation. See Louinder v Leis (1982) 149 CLR 509; 41 ALR 187. 39. An analogous position arises under the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2). ‘Consumers’ enjoy statutory rights to reject goods or terminate a contract for the provision of services for a major failure by the supplier in relation to a consumer guarantee. 40. The fundamental breach may be actual or anticipated, and the United Nations Convention on Contracts for the International Sale of Goods 1980 also contains a statutory analogy to the notice procedure applied to time stipulations under domestic law. 41. The parties may exclude the application of all or any part of the Convention. See Art 6. 42. See generally Carter’s Breach of Contract, Chapter 7, 8. 43. See generally Carter’s Breach of Contract, Chapter 9. 44. See Carter’s Breach of Contract, §§7-37–7-39. 45. This is also generally the position where termination is in the exercise of an express right. See Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54

CLR 361 at 369, 379; Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 225; Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574. 46. See generally [1431]–[1439]. 47. The parties may exclude the application of all or any part of the Convention. See Art 6. 48. See Art 81(1). 49. See [1149], [1176]. 50. See further [1129]. 51. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469–70; Berger & Co Inc v Gill & Duffus SA [1984] 1 AC 382 at 395; Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck) [1992] 1 AC 233 at 262–3; Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 144 ALR 234 at 260–1. For discussion see Carter’s Breach of Contract, §§12-03, 12-31. 52. The promisor may also make such claims. See generally Carter’s Breach of Contract, Chapter 13. 53. See further [1113]. 54. See further [1138]. 55. See further [1131]. 56. See [1146]–[1149]. For the interaction between damages and restitution see [1403]–[1414]. 57. See Woolwich Equitable Building Society v IRC [1993] AC 70 at 165. See, eg China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama (The Mihalios Xilas) [1979] 1 WLR 1018 at 1024, 1036 (right to recover unearned payments under time charterparty); Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 (express provision). See also [915]. But see [1130] (sums due but not paid). 58. Cf Cargill International SA v Bangladesh Sugar and Food Industries Corp [1998] 1 WLR 461 at 469, 471 (although a performance bond was subject to an express provision for ‘forfeiture’, as a matter of construction this merely expressed an intention that buyer could recoup its loss by payment under the bond). 59. See further [1126], [1138]. 60. See also [921] (classification of payments over time) and further [1151]–[1153]. 61. See, eg Sumpter v Hedges [1898] 1 QB 673 (see [1155]); Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194 (see [1222]). Cf Smith v Jones (1924) 24 SR (NSW) 444 (provision entitling shearer to draw portion of earnings did not make contract divisible). See further [1153]. 62. See [919]. 63. See [1121], [1133]. 64. See, eg Palmer v Temple (1839) 9 Ad & E 508 at 520–1; 112 ER 1304 at 1309; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477; Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 412; Mussen v Van Diemen’s Land Co [1938] Ch 253 at 260; Fehlberg v Stanton [1960] ALR 299 at 301. See also [113], [117], [217] and further [1116]. 65. See [1116]–[1135].

66. See [924], [925]. 67. See [1136]–[1145]. 68. See [911]. See also [446]. 69. See further [1128]–[1134], [1145]. See also [1135] (position of guarantors). 70. (1804) 5 East 449; 102 ER 1142. 71. (1831) 2 B & Ad 456; 109 ER 1212. 72. (1831) 2 B & Ad 456 at 462, 464; 109 ER 1212 at 1214, 1215. See also Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587. Cf Towers v Barrett (1786) 1 TR 133; 99 ER 1014 (express term). 73. For the current position see [1146], [1147], [2333]. See also [1149] (international sales). 74. Lord Wright suggested in Spence v Crawford [1939] 3 All ER 271 at 290 that Hunt v Silk was a case of affirmation. But the case (and also Street v Blay) has, particularly in the context of rescission for misrepresentation, generally been treated as dealing with inability to achieve restitutio in integrum. See [1433]. 75. On whether total failure should be rejected in favour of restitution and counter-restitution see [918] and further [1177], [1433], [1434], [1438], [1439]. 76. Of course, damages can be recovered from a defendant in breach. See [1407]. 77. For contrary suggestions see [1127]. For situations in which a requirement of restitutio in integrum applies see [1438]. 78. Restitution based on relief against forfeiture or statute may be available. See generally [1136]–[1149]. 79. See generally [2315], [2318], [2319], [2320]. See also [2308], [2322] (impact of estoppel). 80. [1967] 1 QB 534 at 550. See also Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 487–8; McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126 at 1134; Berger & Co Inc v Gill & Duffus SA [1984] 1 AC 382 at 395; NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699 at 712; Whitecap Leisure Ltd v John H Rundle Ltd [2008] 2 Lloyd’s Rep 216 at 230–1; [2008] EWCA Civ 429 at [50]. Cf Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; 57 ALR 609 (unregistered lease). Revesting of ownership of goods on discharge is expressly recognised in the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2), s 264(6). See also Australian Consumer Law and Fair Trading Act 2012 (Vic), s 25(4) (supply of goods to which Pt 3.1 applies). Contrast [2333] (passing of property in specific goods). 81. See Laird v Pim (1841) 7 M & W 474 at 478; 151 ER 852 at 854 (adopted McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 470, 477–8). A claim to retain (or recover) a payment would therefore be inconsistent with the election to treat the contract as discharged. 82. (1933) 48 CLR 457. 83. (1933) 48 CLR 457 at 477. Rich and McTiernan JJ agreed. 84. See [919], [1113]. 85. But see [936]–[941], [1123], [1134] (relevance of reliance). 86. See [930].

See the masterful summary by Deane and Dawson JJ in Baltic Shipping Co v Dillon (The 87. Mikhail Lermontov) (1993) 176 CLR 344 at 376–7; 111 ALR 289. 88. See, eg [1121], [1122]. 89. See, eg [1123], [1124]. 90. See [926]. Cf [1127]. 91. See [1136]–[1145]. 92. See also [1133] (independent and unconditional promises to perform). For the impact of reliance on a payment see [1134]. 93. (1954) 54 SR (NSW) 203. 94. In fact, since the £1500 was paid into a joint bank account, part of which was withdrawn and spent on the vessel, the claim related to so much of the money as could not be obtained from proceeds remaining in the account. 95. See, eg Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 475. 96. See, eg Whitecap Leisure Ltd v John H Rundle Ltd [2008] 2 Lloyd’s Rep 216 at 230; [2008] EWCA Civ 429 at [50] (buyer who rejected defective goods entitled to return of price). Cf Finch Motors Ltd v Quinn (No 2) [1980] 2 NZLR 519. 97. See Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 377–8; 111 ALR 289 per Deane and Dawson JJ (a ‘worthless’ consideration may ‘for the purposes of unjust enrichment’ be no consideration at all). For illustrations see Elder Smith Goldsbrough Mort Ltd v McBride [1976] 2 NSWLR 631 (total failure of consideration where animal sold as ‘a breeding bull’ was useless for breeding); Heywood v Wellers [1976] 1 QB 446 (solicitors’ services were useless and money paid was recoverable as on a total failure of consideration). See also [1408]. 98. Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 923 per Kerr LJ, with whom Nicholls LJ agreed (adopted David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382, 388; 109 ALR 57). See also [919]. 99. [1923] 2 KB 500. The authority of the decision was recognised in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 382–3; 109 ALR 57; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 351, 389; 111 ALR 289. See also Butterworth v Kingsway Motors Ltd [1954] 2 All ER 694; Cheers v Pacific Acceptance Corp Ltd (1959) 60 SR (NSW) 1 at 3, 5, 7; Australian Guarantee Corp Ltd v Ross [1983] 2 VR 319 at 323–4, 332; Barber v NWS Bank Plc [1996] 1 WLR 641 at 647 (see Janet Ulph, [1997] LMCLQ 12). For a critical survey of the case law see M G Bridge, ‘The Title Obligations of the Seller of Goods’ in Interests in Goods, pp 148ff. Cf Treitel, Remedies, pp 387–8. 100. See [1174], [2323]. 101. See also Butterworth v Kingsway Motors Ltd [1954] 2 All ER 694. Cf Patten v Thomas Motors Pty Ltd (1965) 65 SR (NSW) 458; [1965] NSWR 1457 (principle of feeding title). 102. [1923] 2 KB 500 at 506–7. He also said that the provision relating to acceptance of goods (see [1174], [2323]) was inapplicable. 103. An argument that the contract in Rowland v Divall was void was rejected by Devlin J in Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 477. 104. See McRae v Commonwealth Disposals Commission (1951) 84 CLR 377.

105. (1933) 48 CLR 457. See also [923]. 106. (1933) 48 CLR 457 at 477. Rich and McTiernan JJ agreed. 107. See Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) 19 VR 512 at 531; [2008] VSC 50 at [82]. 108. See J W Carter and G J Tolhurst, ‘Conditional Payments and Failure of Consideration: Contract or Restitution?’ (2001) 9 APLR 1 at 7. See also [930]. 109. (1839) 9 Ad & E 508 at 521; 112 ER 1304 at 1309. 110. See also Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 at 120; Marsh v Mackay [1948] St R Qd 113 at 128. In accord: Kicks v State Bank of Lisbon 98 NW 408 (ND, 1904). See further [1122]. 111. See [1438]. 112. [1924] AC 980 (see [1125]). 113. [1923] 2 KB 500 (see [1121]). 114. [1989] 1 WLR 912 (see also [1131]). 115. See Shaw v Ball (1962) 63 SR (NSW) 910 at 916–17 (probable rationale is that possession is merely an incidental benefit). See also [1121]. 116. (1991) 5 WAR 563 at 573. 117. See Coates v Sarich [1964] WAR 2 at 8–9. Cf Hunt v Silk (1804) 5 East 449; 102 ER 1142 (agreement to lease — see [1116]); Hodder v Watters [1946] VLR 222 at 231 (sale of land and business). 118. See [1151]. 119. (1993) 176 CLR 344; 111 ALR 289. See Jane Swanton, (1993) 67 ALJ 379; Hugh Stowe, [1993] CLJ 384; Kit Barker, [1993] LMCLQ 291; J W Carter and Gregory Tolhurst, ‘Restitution: Payments Made Prior to Discharge of Contract’ (1994) 7 JCL 273. 120. See also (1993) 176 CLR 344 at 385–6; 111 ALR 289, where Gaudron J suggested that recovery depends on non-fulfilment of a condition, not total failure of the agreed return. 121. See [208], [908]. 122. See [941]. See also on reliance [1134]. 123. (1993) 176 CLR 344; 111 ALR 289. 124. (1993) 176 CLR 344 at 351; 111 ALR 289. Brennan and Toohey JJ agreed. Cf Beach Petroleum NL v Johnson (1993) 115 ALR 411 at 591–2. 125. See also Edler v Auerbach [1950] 1 KB 359 at 374 (lessee obtained demise); Douglass v Lawton Pty Ltd [2007] NSWCA 89 at [112] (substantial benefit obtained). 126. (1962) 63 SR (NSW) 910. See also Campbell v Manly Municipal Council (1949) 17 LGR 213; Fehlberg v Stanton [1960] ALR 299 at 301; Berger v Boyles [1971] VR 321 at 331. Compare Wilcher v Steain (1961) 79 WN (NSW) 141, a case where the purchaser’s claim was for rescission based on fraud, and a partial failure of the agreed return was established. 127. But see [1116], [1438], [1439], [2331] (counter-restitution is required). 128. See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 64–5; Fehlberg v Stanton [1960] ALR 299 at 301; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 374–5; 111 ALR 289. See further [1132]. 129. See Yeoman Credit Ltd v Apps [1962] 2 QB 508; Cheers v Pacific Acceptance Corp Ltd

(1959) 60 SR (NSW) 1 at 5; O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 392–3; 45 ALR 632. See also Deputy Commissioner of Taxation v Hadidi (1994) 51 FCR 453; 123 ALR 48 at 56–7 (executed consideration under settlement agreement discharged for breach). Cf Fehlberg v Stanton [1960] ALR 299 at 303 (payment under sale of business contract). But see Australian Guarantee Corp Ltd v Ross [1983] 2 VR 319 at 324. 130. Contrast [1132] (context of claims by payees to recover overdue payments). 131. (1933) 48 CLR 457. 132. (1933) 48 CLR 457 at 478. 133. [1924] AC 980. See also Palmer v Temple (1839) 9 Ad & E 508; 112 ER 1304; Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41 at 55; Reid Motors Ltd v Wood [1978] 1 NZLR 319 at 325; Delbridge v Low [1990] 2 Qd R 317. 134. (1933) 48 CLR 457 at 478 per Dixon J. Rich and McTiernan JJ agreed. Compare at 470 per Starke J: a purchaser who is not in default is discharged from further performance of the contract and entitled to ‘recover any money paid or property transferred by him thereunder; he is entitled to take proceedings in equity to assert his right and secure restitution, or to sue at law’. See also Cowan v Stanhill Estates Pty Ltd (No 2) [1967] VR 641 at 650; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 453–5; Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59 at 64–5; Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) 19 VR 512 at 530; [2008] VSC 50 at [77]. 135. [1939] 1 KB 724 at 744. 136. See [1127]. 137. (1993) 176 CLR 344 at 352, 386, 390; 111 ALR 289. 138. (1993) 176 CLR 344 at 352; 111 ALR 289. Brennan and Toohey JJ agreed. Cf Berger v Boyles [1971] VR 321 at 331. 139. (1993) 176 CLR 344 at 390; 111 ALR 289 (approving Birks, p 238). 140. Cf French Marine v Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz [1921] 2 AC 494 at 505, 527; Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 589. 141. See, eg Stickney v Keeble [1915] AC 386 at 411 (purchaser in default); Ashok Trading Pty Ltd v Kintay Pty Ltd [1983] 1 Qd R 273 (anticipatory breach of sale of land contract). Cf Brisbane Board of Waterworks v Hudd [1910] QWN 11 (inapplicability of provision for forfeiture meant that deposit had to be returned); R v Brown (1912) 14 CLR 17 at 25 (implication of right to recover balance of security money remaining after contractual deductions). 142. See Farrant v Leburn [1970] WAR 179 at 184; Bot v Ristevski [1981] VR 120 at 123. 143. [1926] VLR 400. 144. [1923] 2 KB 500 (see [1121]). 145. (1989) 168 CLR 385; 88 ALR 413 (see J W Carter, (1990) 3 JCL 70). See also Howe v Smith (1884) 27 Ch D 89; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 470, 478; Torr v Harpur (1940) 40 SR (NSW) 585; Re Stone and Saville’s Contract [1963] 1 WLR 163; Asikas Investments Ltd v Tasker [1967] SASR 43; Terra Nova Pty Ltd v Nalanda Pty Ltd [1977] Qd R 296; Country and Metropolitan Homes Surrey Ltd v Topclaim Ltd [1996] Ch 307. Cf Walsh v Borough of Albury (1901) 18 WN (NSW) 30 (relief against

forfeiture). 146. See [1144], [1148]. 147. [1939] 1 KB 724 (see [1125]). 148. [1939] 1 KB 724 at 743. 149. [1980] 1 WLR 1129 at 1134, 1142, 1148. But see Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 589 (the claim in Dies was contractual). 150. See [1125]. 151. (1993) 176 CLR 344 at 352; 111 ALR 289. Brennan and Toohey JJ agreed. Mason CJ also referred to the seller as having accepted the plaintiff’s repudiation and ‘thus itself effected the discharge of the contract’. Brennan and Toohey JJ agreed. 152. (1993) 176 CLR 344 at 390; 111 ALR 289. 153. See [918] and further [1147], [1438], [1439]. See also [2331] (defence of restitutio in cases of discharge). 154. (1991) 174 CLR 64 at 117; 104 ALR 1. 155. See [926]. 156. See further [1131]. 157. See [1110], [1111]. 158. Payments which would later have fallen due are recoverable, if at all, as damages. See Carter’s Breach of Contract, §13-05. See also J W Carter and M J Tilbury, ‘Remedial Choice and Contract Drafting’ (1998) 13 JCL 5. 159. See Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 (discharge without breach — see [1225]); Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 (discharge for repudiation). Cf Russell v Adwan Pty Ltd (2000) 144 ACTR 1 at 11 (unpaid component of deposit not recoverable except as damages where payment postponed). See Carter’s Breach of Contract, §13-27. 160. See generally J Beatson, ‘Discharge for Breach: The Position of Instalments, Deposits and Other Payments Due Before Completion’ (1981) 97 LQR 389 (reprinted as revised in Beatson, p 45). For relief against forfeiture see [1136]–[1145]. 161. See also [919], [1105], [1133]. 162. See ACT: Sale of Goods Act 1954, s 52(2); NSW: Sale of Goods Act 1923, s 51(2); NT: Sale of Goods Act 1972, s 51(2); Qld: Sale of Goods Act 1896, s 50(2); SA: Sale of Goods Act 1895, s 48(2); Tas: Sale of Goods Act 1896, s 53(2); Vic: Goods Act 1958, s 55(2); WA: Sale of Goods Act 1895, s 48(2). 163. See Geeveekay Pty Ltd v Director of Consumer Affairs Victoria (2008) 19 VR 512 at 529–30; [2008] VSC 50 at [75] (citing Pordage v Cole (1669) 1 Wms Saund 319 at 320; 85 ER 449 at 451–2). 164. See Jackson, p 85 and further [1137]. 165. For illustrations and discussions, in various contexts, see Workman Clark & Co Ltd v Lloyd Brazileño [1908] 1 KB 968; Martin v Hogan (1917) 24 CLR 234 at 261, 267; Garske v Urquhart (1921) 21 SR (NSW) 483; Ruddenklau v Charlesworth [1925] NZLR 161 at 164– 5 (adopted McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 475–6); Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 466; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 253, 267–8; 77 ALR 205.

166. See, eg [1133]. 167. [1980] AC 827 at 849. See also Carter’s Breach of Contract, §11-29. 168. See, eg McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469–70 (discharge of unperformed obligations); Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 at 355 per Fitzgerald P (contract is determined ‘insofar as it is unperformed’); Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 341; 128 ALR 81 at 92 per Brennan J (‘no contractual right or obligation survives termination so as to be enforceable as such’). Cf McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477; Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 225. 169. See, eg Moschi v Lep Air Services Ltd [1973] AC 331 at 345 per Lord Reid (‘all the obligations in the contract come to an end’); Lombard North Central Plc v Butterworth [1987] 1 QB 527 at 535 (both parties relieved from unperformed obligations); State Trading Corp of India Ltd v M Golodetz Ltd [1989] 2 Lloyd’s Rep 277 at 285 per Kerr LJ (‘subsisting primary obligations’). See also Contractual Remedies Act 1979 (NZ), s 8(3)(a) (contract ‘cancelled’ so far as it was ‘unperformed’ at the time of cancellation). 170. [1980] 1 WLR 1129. 171. [1980] 1 WLR 1129 at 1141. See also Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VR 184 at 192; Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 589; Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] 1 QB 27 at 41; [2009] EWCA Civ 75 at [28]. 172. G H Treitel, The Law of Contract, 5th ed, Stevens & Sons, London, 1979, p 641. 173. (1839) 9 Ad & E 508; 112 ER 1304. 174. (1839) 9 Ad & E 508 at 520–1; 112 ER 1304 at 1309 per Lord Denman CJ for the court. Cf Gasparin v Federal Commissioner of Taxation (1994) 50 FCR 73; 121 ALR 179 (no debt until money due and payable). 175. (1933) 48 CLR 457 at 477. See also Berger v Boyles [1971] VR 321 (sale of business). 176. See Farrant v Leburn [1970] WAR 179; Bot v Ristevski [1981] VR 120; Millichamp v Jones [1982] 1 WLR 1422; Damon Compania Naviera SA v Hapag-Lloyd International SA (The Blankenstein) [1983] 2 Lloyd’s Rep 522 (affirmed on other grounds but approved [1985] 1 WLR 435 at 449, 451); Coast Securities No 9 Pty Ltd v Alabac Pty Ltd [1984] 2 Qd R 25 at 27–8; Ashdown v Kirk [1999] 2 Qd R 1 at 8; Griffon Shipping LLC v Firodi Shipping Ltd (The Griffon) [2014] 1 All ER (Comm) 593 at 602; [2013] EWCA Civ 1567 at [15]. For actions on bills of exchange see Carter’s Breach of Contract, §13-45. 177. See, eg Lowe v Hope [1970] 1 Ch 94 at 98, 100; Lyon v Magnet Nominees Pty Ltd [1978] VR 673 at 676; Kathopoulos v Bjelica Investments Pty Ltd (1979) 25 NTR 309. Cf Johnson v Jones [1972] NZLR 313, not followed in Pendergrast v Chapman [1988] 2 NZLR 177. See generally Carter’s Breach of Contract, §§13-40–13-44. See further [1403]–[1414], [1823] (restitution and damages). 178. [1980] 1 WLR 1129 at 1132. 179. Article 10(b) of the contract stated that any money paid was to be returned on cancellation otherwise than in accordance with art 11, which was the term invoked by the builders. 180. See also [1124] and further [1132], [1133]. 181. See, eg Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056

(advance freight due under voyage charterparty recoverable on basis of accrued right, notwithstanding discharge for repudiation); see J R Crabtree, [1989] LMCLQ 289. See also Vagres Compania Maritima SA v Nissho-Iwai American Corp (The Karin Vatis) [1988] 2 Lloyd’s Rep 330. See further [1135] (liability of guarantors). 182. See [911], [1131]. 183. (1933) 48 CLR 457 (see [1121]). 184. (1933) 48 CLR 457 at 476. 185. [1921] VLR 14 at 17. See also Coast Securities No 9 Pty Ltd v Alabac Pty Ltd [1984] 2 Qd R 25 at 27. Cf Workman Clark & Co Ltd v Lloyd Brazileño [1908] 1 KB 968 (instalment due under undischarged shipbuilding contract). 186. See (1933) 48 CLR 457 at 479 (adopted Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 931, 936). 187. See [923], [1121]. 188. See [1126] (purchaser entitled to restitution). 189. See, eg Stockloser v Johnson [1954] 1 QB 476 at 483, 489–90; Elson v Prices Tailors Ltd [1963] 1 WLR 287 at 291; Berger v Boyles [1971] VR 321 at 330; Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129 at 1136, 1147. 190. (1933) 48 CLR 457 at 476–8. 191. [1989] 1 WLR 912. See Peter Birks, ‘Restitution after Ineffective Contracts: Issues for the 1990s’ (1990) 2 JCL 227. 192. See, eg Canas Property Co Ltd v K L Television Services Ltd [1970] 2 QB 433; Shevill v Builders Licensing Board (1982) 149 CLR 620; 42 ALR 305. 193. [1909] 1 KB 98. See also Chatterton v Maclean [1951] 1 All ER 761; Overstone Ltd v Shipway [1962] 1 WLR 117; Financings Ltd v Baldock [1963] 2 QB 104. Cf Leslie Shipping Co v Welstead [1921] 3 KB 420 (recovery of hire due under time charterparty prior to withdrawal of vessel). For an illustration of a successful claim by a party in breach see Yeoman Credit Ltd v Apps [1962] 2 QB 508 (hire-purchase). 194. See [1909] 1 KB 98 at 102 per Bigham J. 195. See, eg Mavor v Pyne (1825) 3 Bing 285; 130 ER 522; Mersey Steel and Iron Co Ltd v Naylor Benzon & Co (1884) 9 App Cas 434; Workman Clark & Co Ltd v Lloyd Brazileño [1908] 1 KB 968. 196. (1906) 8 WALR 208. See also Ritchie v Atkinson (1808) 10 East 295; 103 ER 787 (pro rata freight on carriage of goods). 197. See McLaughlin v Nourse [1928] SASR 230 (contractor earned right to recover payment at contract rate for earth removed from dams prior to discharge for contractor’s abandonment of contract). 198. See [1129]. 199. (1933) 48 CLR 457 at 477. 200. See [1131]. 201. See [1132]. 202. See [1153]. 203. See Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005] 1 WLR 3850 at

3861; [2005] EWCA Civ 814 at [23]. See also Bovis Construction (South Eastern) Ltd v Greater London Council (1985) 9 Con LR 1 at 12 (purpose is to entitle builder to recover debt). 204. See J W Carter and G J Tolhurst, ‘Recovery of Contract Debts Following Termination for Breach’ (2009) 25 JCL 191 at 208–10. 205. [1980] 1 WLR 1129. The case is discussed by McHugh J in Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 391; 111 ALR 289. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383; 109 ALR 57. 206. See further [1135]. 207. Lords Russell and Keith expressed doubts on the ability of the builders to sue. 208. See Reid v Macbeth [1904] AC 223; McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126. Cf Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] 1 QB 27 at 35; [2009] EWCA Civ 75 at [12]. 209. See the discussion of total failure of the agreed return [1980] 1 WLR 1129 at 1134–6, 1142, 1147–8. 210. [1980] 1 WLR 1129 at 1134. See also [1980] 1 WLR 1129 at 1141. 211. See, eg Moschi v Lep Air Services Ltd [1973] AC 331 at 345; Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 147–8; Womboin Pty Ltd v Savannah Island Trading Pty Ltd (1990) 19 NSWLR 364 at 368. Cf Berger v Boyles [1971] VR 321 at 328– 9. 212. See [1980] 1 WLR 1129 at 1134, 1135–6, 1142, 1148–9. 213. See [1132]. 214. See Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 931. 215. Since the final instalment was agreed to fall due three days prior to the scheduled delivery date, the majority’s analysis was applicable to the whole price. 216. See [1980] 1 WLR 1129 at 1141. 217. (1933) 48 CLR 457 at 476. 218. Lord Fraser thought that the buyers had conceded performance, thus suggesting that proof of failure to perform might have made a difference. 219. [1989] 1 WLR 912 (see [1122]). 220. [1989] 1 WLR 912 at 930. 221. See [941] and further [1134]. 222. See also Workman Clark & Co Ltd v Lloyd Brazileño [1908] 1 KB 968 (recovery of instalment due under undischarged shipbuilding contract). 223. See Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 931. See also McEntire v Crossley Bros Ltd [1895] AC 457 at 464. 224. Cf Walker v Council of the Municipality of Randwick (1929) 30 SR (NSW) 84 at 88, affirmed (1930) 45 CLR 604 (claim for reasonable remuneration not available in the absence of direct evidence that work has been done). 225. [1998] 1 WLR 574 (see J Beatson and G Tolhurst, [1998] CLJ 253; J W Carter, (1998) 13 JCL 156; Gerard McMeel, [1998] LMCLQ 308). 226. The analysis in Stocznia is somewhat undermined by the view that in McDonald v Dennys

Lascelles Ltd Dixon J regarded a purchaser’s right to repayment as contractual. See [930]. 227. See [1996] 2 Lloyd’s Rep 132 (see J W Carter, (1997) 12 JCL 65). 228. See [1998] 1 WLR 574 at 585. 229. [1943] AC 32 (see [941], [1223]). See Carter’s Breach of Contract, §13-38; Jones, p 105. 230. [1998] 1 WLR 574 at 600. 231. For a more general survey of the role of reliance see [149], [936]–[941]. See also [1223] (contract discharged without breach). 232. See generally Chapter 24. 233. (1962) 63 SR (NSW) 910 (see [1124]). 234. [1980] 1 WLR 1129 (see [1133]). 235. [1980] 1 WLR 1129 at 1148, 1150. 236. [1980] 1 WLR 1129 at 1148. 237. [1958] 1 WLR 1126. 238. [1989] 1 WLR 912 at 932, 937. 239. (1988) 1 WAR 144 at 147–8. 240. Wallace J, although taking a different view on the construction of the contract, did not dissent from the analysis. Kennedy J did not refer to the point. 241. See J W Carter and J C Phillips, ‘The Liability of Debtors and Guarantors Under Contracts Discharged for Breach’ (1992) 22 UWALR 338; J W Carter and G J Tolhurst, ‘Recovery of Contract Debts Following Termination for Breach’ (2009) 25 JCL 191 at 210–12. 242. On the liability of a guarantor to meet a claim for reasonable remuneration see Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 at 591. 243. (1933) 48 CLR 457 (see [1121]). 244. See Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VR 184 at 195–6. The obligation of such a guarantor is to pay compensation to the creditor for the amount of its loss. See, eg Moschi v Lep Air Services Ltd [1973] AC 331; Womboin Pty Ltd v Savannah Island Trading Pty Ltd (1990) 19 NSWLR 364 (see Elisabeth Peden, (1991) 13 Syd LR 221). See also Sandtara Pty Ltd v Abigroup (1996) 42 NSWLR 491 at 494 (following termination for repudiation by lessee of land, the lessee’s guarantor was liable in debt for rent due at time of termination and in damages for lessee’s repudiation). Cf Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; 77 ALR 205 (debtor did not become liable). Contrast Coast Securities No 9 Pty Ltd v Alabac Pty Ltd [1984] 2 Qd R 25 (contract remained on foot). 245. This may be crucial if the principal contract was an inherently ineffective contract. See, eg Yeoman Credit Ltd v Latter [1961] 1 WLR 828. See also Wayne Courtney, Contractual Indemnities, Hart Publishing, Oxford, 2014, §9-17. 246. [1980] 1 WLR 1129 (see [1133]). 247. See Moschi v Lep Air Services Ltd [1973] AC 331 at 344. Cf McGuinness v Norwich and Peterborough Building Society [2012] 2 All ER (Comm) 265; [2011] EWCA Civ 1286; see Wayne Courtney and J W Carter, ‘Debts, Liquidated Sums and the Enforcement of Claims under Guarantees and Indemnities’ (2013) 30 JCL 70.

248. The court approved Hyundai Shipbuilding & Heavy Industries Co Ltd v Pournaras [1978] 2 Lloyd’s Rep 502, where guarantors were held liable for payments due under a similarly worded contract on a writ issued prior to discharge. See also Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 256–7, 269; 77 ALR 205. Cf Trafalgar House Construction (Regions) Ltd v General Surety & Guarantee Co Ltd [1996] AC 199 at 208. 249. See Carter’s Breach of Contract, §13-48 (would have been more logical to conclude that the guarantors were liable to pay damages). 250. See Carter’s Breach of Contract, §13-46. 251. See Michael Bryan, ‘Equitable Relief from Forfeiture: Performance or Restitution?’, in C E F Rickett, ed, Justifying Private Law Remedies, Hart Publishing, Oxford, 2008, p 363. 252. Cf UK Housing Alliance (North West) Ltd v Francis [2010] Bus LR 1034 at 1039; [2010] EWCA Civ 117 at [11] (no forfeiture where party reclaiming own property). 253. At least this is the orthodox approach. Cf [1139]. 254. This is the basis upon which Restatement (Second) Contracts, §374(2) operates. Cf Sir Anthony Mason, (1989) 1 JCL 265 at 266. 255. (1933) 48 CLR 457. 256. (1933) 48 CLR 457 at 478. Rich and McTiernan JJ agreed. See also (1933) 48 CLR 457 at 470. But cf O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 392; 45 ALR 632. 257. See (1933) 48 CLR 457 at 478 (see [1143]). 258. Cf UK Housing Alliance (North West) Ltd v Francis [2010] Bus LR 1034 at 1040; [2010] EWCA Civ 117 at [14] (loss of contingent right to payment of a contract debt is not a ‘forfeiture’). 259. See O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 391–2; 45 ALR 632. 260. See [1142]. 261. But see cases recognising partial enforcement: Jobson v Johnson [1989] 1 WLR 1026 (see D R Harris, [1990] LMCLQ 158); Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; 290 ALR 595; [2012] HCA 30 (J W Carter, Wayne Courtney, Elisabeth Peden, Andrew Stewart and G J Tolhurst, ‘Contractual Penalties: Resurrecting the Equitable Jurisdiction’ (2013) 30 JCL 99). 262. (1983) 152 CLR 406 at 445; 46 ALR 1. Cf Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 at 555; Nutting v Baldwin [1995] 1 WLR 201. 263. See NLS Pty Ltd v Hughes (1966) 120 CLR 583 at 589; Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 at 518. 264. Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 at 86 per Lord Dunedin. 265. At least prior to Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; 290 ALR 595; [2012] HCA 30. 266. [1982] WAR 231 at 237. See also Hinton v Sparkes (1868) LR 3 CP 161; Dunton v Warnambool Waterworks Trust (1893) 19 VLR 84. 267. See Law Commission, Penalty Clauses and Forfeiture of Monies Paid, Working Paper No 61, 1975, paras 65–66, 68. See also Birks, pp 214–15. Cf Rossiter, pp 108–9. The Restatement

(Second) Contracts adopts the criterion of reasonableness for both executory promises (see §356(1)) and provisions for forfeiture (see §374(2)). 268. [1993] AC 573 (see [1140]). 269. See [1993] AC 573 at 578. See also Federal Commissioner of Taxation v Guy (1996) 137 ALR 193 at 202–3 (not followed on another point in Brooks v Federal Commissioner of Taxation (2000) 173 ALR 235). 270. Cf UK Housing Alliance (North West) Ltd v Francis [2010] Bus LR 1034 at 1039; [2010] EWCA Civ 117 at [12] (the deposit in Dojap was payable on breach). 271. Compare, in relation to agreed damages, Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1447; Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504 at 527. 272. See, eg Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59 (sale of land). Cf Rossiter, p 118. See also Delbridge v Low [1990] 2 Qd R 317, where rectification was ordered to reduce the sum to an amount conforming to the parties’ intention. Following rectification, the excess was recoverable as restitution. 273. Ultimately, this difference in approach may simply impact on procedure. See [1414]. 274. [1924] AC 980 (see [1125]). See also McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 478. 275. See also Carter, Construction, §15-34. 276. See generally Howe v Smith (1884) 27 Ch D 89 at 95, 98, 101; Soper v Arnold (1889) 14 App Cas 429 at 433, 435; Coates v Sarich [1964] WAR 2 at 6, 14; NLS Pty Ltd v Hughes (1966) 120 CLR 583 at 589; Yardley v Saunders [1982] WAR 231 at 236–7. 277. Cf Coates v Sarich [1964] WAR 2 at 15; Reid Motors Ltd v Wood [1978] 1 NZLR 319 at 327. See also [1140] (describing a payment as ‘liquidated damages’ does not deprive it of the character of a deposit). See Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 at 518. 278. See, eg Crabb v Gleeson [1920] VLR 189 (deposit was liable to forfeiture where a sale of land contract was discharged for payer’s breach of an essential term); White Trucks Pty Ltd v Riley (1948) 66 WN (NSW) 101 (since the contract provided for retention on default, seller was entitled to forfeit deposit paid under contract discharged for buyer’s repudiation); Stockloser v Johnson [1954] 1 QB 476 (entitlement to forfeit instalments paid for plant and machinery under express provision). See also Howe v Smith (1884) 27 Ch D 89; Gibson v Lees (1913) 13 SR (NSW) 519; Ward v Ellerton [1927] VLR 494; Zieme v Gregory [1963] VR 214. 279. [1909] AC 576. 280. (1914) 14 SR (NSW) 333. See also Porter v Board of Land and Works (1870) 1 VR (L) 207; Stafford v Mayor Councillors and Citizens of South Melbourne [1908] VLR 584. Cf Soper v Arnold (1889) 14 App Cas 429 (purchaser of land who accepted vendor’s title was unable to recover deposit after discharge by the vendor even though the vendor’s title was later found to be defective). 281. Competition and Consumer Act 2010 (Cth), Sch 2. See also Australian Securities and Investments Commission Act 2001 (Cth), ss 12BF–12BM. See further [1148] (contract reopened under statute). 282. See Shiloh Spinners Ltd v Harding [1973] AC 691 at 723 (adopted Legione v Hateley (1983)

152 CLR 406; 46 ALR 1; Stern v McArthur (1988) 165 CLR 489; 81 ALR 463). See generally Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; 201 ALR 359; [2003] HCA 57. 283. Shiloh Spinners Ltd v Harding [1973] AC 691 at 723 per Lord Wilberforce (adopted Legione v Hateley (1983) 152 CLR 406; 46 ALR 1; Stern v McArthur (1988) 165 CLR 489; 81 ALR 463). See also Forestry Commission of New South Wales v Stefanetto (1976) 133 CLR 507 at 524; 8 ALR 297; O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 391; 45 ALR 632; BICC Plc v Burndy Corp [1985] Ch 232; Jobson v Johnson [1989] 1 WLR 1026. Cf Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR 131 at 143–4, 151, 155; 84 ALR 99. 284. (1983) 152 CLR 406; 46 ALR 1. See K G Nicholson, ‘Breach of an Essential Time Stipulation and Relief Against Forfeiture’ (1983) 57 ALJ 632; W M C Gummow, ‘Forfeiture and Certainty: The High Court and the House of Lords’ in Essays in Equity, p 30. 285. See also Ciavarella v Balmer (1983) 153 CLR 438; 48 ALR 407; Stern v McArthur (1988) 165 CLR 489; 81 ALR 463; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 263; 77 ALR 205; Hill v Terry (1990) [1993] 2 Qd R 640. See Mr Justice M J R Clarke, ‘Penalties, Forfeiture and Dilution’ [1989] AMPLA Yearbook 1; J W Carter, ‘Problems in Enforcement — Part II’ (1993) 6 JCL 1; Lionel Smith, ‘Relief Against Forfeiture: A Restatement’ [2001] CLJ 178. 286. (2003) 217 CLR 315; 201 ALR 359; [2003] HCA 57 (see G J Tolhurst and J W Carter, ‘Relief Against Forfeiture in the High Court of Australia’ (2004) 20 JCL 74). See also Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; 201 ALR 399; [2003] HCA 58. 287. (2003) 217 CLR 315 at 335; 201 ALR 359; [2003] HCA 57 at [58] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. See also Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 (see Hossein Abedian and M P Furmston, ‘Relief Against Forfeiture After Breach of Essential Time Stipulation in the Light of Union Eagle Ltd v Golden Achievement Ltd’ (1998) 12 JCL 189). 288. See, eg Bland v Ingrams Estates Ltd [2001] Ch 767 at 784; Bland v Ingrams Estates Ltd (No 2) [2002] Ch 177 at 183, 187; [2001] EWCA Civ 1088 at [12], [23]. 289. See further [1141], [1169], [1170]. 290. The purchasers had entered into possession and improved the land. See the discussion in Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 at 521–2. 291. See Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 333; 201 ALR 359; [2003] HCA 57 at [53] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ (‘[r]eliance upon the “interest” … does not assist; it is bedevilled by circularity’). 292. For relief under statute see [1148]. 293. Cf Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR 131 at 155; 84 ALR 99. 294. [1954] 1 QB 476 at 491 (approved Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573 at 579). See also Coates v Sarich [1964] WAR 2 at 6, 15; Iannello v Sharpe (2007) 69 NSWLR 452 at 461; [2007] NSWCA 61 at [31]. 295. See [1138]. See also Elson v Prices Tailors Ltd [1963] 1 WLR 287 at 291–2; Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59 at 65–6, 69.

296. On forfeiture of part payments see [1143]. 297. Denning LJ treated money expressly paid as a deposit as paid under a forfeiture clause. See [1954] 1 QB 476 at 490–1. See also Delbridge v Low [1990] 2 Qd R 317 at 330 (sum equal to 23 per cent not a true deposit in sale of land contract). 298. [1993] AC 573. See Hugh Beale, (1993) 109 LQR 524; Charles Harpum, [1993] CLJ 389; J W Carter, ‘Two Privy Council Cases’ (1993) 6 JCL 266. 299. [1993] AC 573 at 581. See also Delbridge v Low [1990] 2 Qd R 317, where restitution was ordered where the amount of the deposit had been increased for reasons which had nothing to do with its function as a deposit. 300. Nevertheless, the Australian approach appears to treat the payer as entitled to relief on the basis that the amount is excessive, so that the payee is entitled to retain a reasonable sum. See [1137]. 301. See Mussen v Van Diemen’s Land Co [1938] Ch 253 at 263–4 (relief against forfeiture of instalments of purchase money already paid only available by way of extension of time to purchaser willing and able to complete the contract); Stockloser v Johnson [1954] 1 QB 476 at 499 per Romer LJ (‘further chance and further time to pay the money which is in arrear’ if the payer is ‘able and willing to do so’). 302. [1913] AC 319. See also Re Dagenham (Thames) Dock Co; Ex parte Hulse (1873) LR 8 Ch App 1022 (where contract entitled a vendor of land to forfeit instalments of purchase price already paid, and retake possession on discharge, the provision was a penalty and relief was granted by requiring completion on terms). 303. Cf Stern v McArthur (1988) 165 CLR 489; 81 ALR 463 (see K G Nicholson, (1989) 2 JCL 148). 304. (1983) 152 CLR 406; 46 ALR 1. The case was remitted to the Supreme Court of Victoria. See also [1170] (improvements to property). 305. See Legione v Hateley (1983) 152 CLR 406 at 449; 46 ALR 1. Cf Stern v McArthur (1988) 165 CLR 489 at 526–7; 81 ALR 463. 306. See AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 190; 68 ALR 185. See also Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; 222 ALR 306; [2005] HCA 71 (see Elisabeth Peden and J W Carter, ‘Agreed Damages Clauses — Back to the Future?’ (2006) 22 JCL 189). Cf Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; 290 ALR 595; [2012] HCA 30. 307. See, eg [1144]. 308. [1954] 1 QB 476 at 491–2. Compare [1954] 1 QB 476 at 487–8 per Somervell LJ (relief against forfeiture not limited to payer ready and willing, or cases of fraud or sharp practice). See also Billson v Residential Apartments Ltd [1992] 1 AC 494 at 535 (forfeiture of lease may unjustly enrich landlord at the expense of tenant). But see Rossiter, pp 112– 18. 309. Cf Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 at 520 (matter of discretion). 310. See Smyth v Jessep [1956] VLR 230 at 232; Yardley v Saunders [1982] WAR 231 at 237; Kratzmann Holdings Pty Ltd v University of Queensland [1982] Qd R 682 at 685; Stern v McArthur (1988) 165 CLR 489 at 501; 81 ALR 463. See also Reid Motors Ltd v Wood [1978] 1 NZLR 319 at 329. Cf Mussen v Van Diemen’s Land Co [1938] Ch 253 at 262; Legione v Hateley (1983) 152 CLR 406 at 443–4; 46 ALR 1.

311. See [1439], [2331]. 312. Cf Legione v Hateley (1983) 152 CLR 406 at 443–4; 46 ALR 1; Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana [1983] 2 AC 694 at 702–3. 313. See [1148]. 314. See [1135]. 315. See also [1137] (distinction between penalties and liquidated damages). 316. See, eg Ward v Ellerton [1927] VLR 494 at 501 (dicta in contract where deposit alleged to be money and goods); Yardley v Saunders [1982] WAR 231 (dicta in relation to deposit payable under contract for the sale of a taxi business); O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 at 392; 45 ALR 632 (dicta in context of lease of goods); Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR 131 at 151; 84 ALR 99 (dicta in context of hire of goods). But cf R P Meagher, ‘Penalties in Chattel Leases’ in Essays in Equity, p 46. 317. [2001] 1 WLR 155 at 167–8, 171, 175–6, 181. See also Stockloser v Johnson [1954] 1 QB 476 at 487–8, 490 (dicta in context of sale of goods by instalments); Barton Thompson & Co Ltd v Stapling Machines Co [1966] 1 Ch 499 at 509 (dicta in claim for relief against forfeiture of interest under chattel lease); Reid Motors Ltd v Wood [1978] 1 NZLR 319 (relief against forfeiture granted in relation to payment under hire-purchase contract). 318. See [2001] 1 WLR 155 at 175. 319. [2003] 1 AC 368. 320. See [2003] 1 AC 368 at 373, 379. 321. See Celestial Aviation Trading 71 Ltd v Paramount Airways Private Ltd [2011] 1 Lloyd’s Rep 9 at 17–18; [2010] EWHC 185 (Comm) at [52], [56]–[57]; see Lee Aitken, (2010) 126 LQR 505. 322. (1933) 48 CLR 457. 323. (1933) 48 CLR 457 at 478. Rich and McTiernan JJ agreed. See also (1933) 48 CLR 457 at 470. 324. [1985] 1 Qd R 446 at 455. 325. [1916] 1 AC 275. See also Brickles v Snell [1916] 2 AC 599 at 604, 605; Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 58. The Privy Council decisions (Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319, Brickles and Steedman v Drinkle) were adopted (as explained) by the High Court in Legione v Hateley (1983) 152 CLR 406; 46 ALR 1. Steedman v Drinkle was explained as illustrating that jurisdiction to grant relief against the forfeiture of a property interest by specific performance does not depend on the presence of a term in the nature of a penalty. See Charles Harpum, ‘Relief Against Forfeiture and the Purchaser of Land’ [1984] CLJ 134; Carter’s Breach of Contract, §10-72. This was confirmed in Stern v McArthur (1988) 165 CLR 489; 81 ALR 463. It does not affect the ability to make a direct order for restitution. 326. (1933) 48 CLR 457 at 478. Rich and McTiernan JJ agreed. 327. (1931) 31 SR (NSW) 477. Contrast Stockloser v Johnson [1954] 1 QB 476 (sale of goods — no unconscionable conduct). 328. See, eg Berry v Mahony [1933] VLR 314; Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 11; Tropical Traders Ltd v Goonan (1964) 111 CLR 41; Tropical

Traders Ltd v Goonan (No 2) [1965] WAR 174; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446; Sturt v Cusack (1989) 12 QL Rep 84. Cf Delbridge v Low [1990] 2 Qd R 317. 329. [1964] WAR 2 (see also [1144]). Cf Reynolds v Davies (1911) 13 WAR 181. 330. See [1148]. 331. [1954] 1 QB 476 at 491–2 (see [1142]). 332. See Commissioner of Public Works v Hills [1906] AC 368 (sum lodged as guarantee of performance was a penalty). See also Boucaut Bay Co Ltd v The Commonwealth (1927) 40 CLR 98 at 103 (and on appeal (1927) 40 CLR 98 at 107). Cf Lord Elphinstone v Monkland Iron and Coal Co Ltd (1886) 11 App Cas 332 at 346; Pearl Assurance Co Ltd v Government of the Union of South Africa [1934] AC 570 at 583–4. 333. See Alleyn v Thurecht [1983] 2 Qd R 706 at 715; Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59 at 66. 334. [1956] VLR 230. 335. [1957] VR 341. 336. [1964] WAR 2. 337. [1965] WAR 174. The matter had been remitted by the High Court in Tropical Traders Ltd v Goonan (1964) 111 CLR 41. 338. [1982] WAR 231. 339. He considered that the authority of Stockloser v Johnson [1954] 1 QB 476 was open to question in the light of McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457. This view is not tenable. 340. Cf Iannello v Sharpe (2007) 69 NSWLR 452 at 461; [2007] NSWCA 61 at [34] (payment labelled as ‘deposit’ would have been a penalty). 341. See [911], [1131]. 342. Cf Barton Thompson & Co Ltd v Stapling Machines Co [1966] 1 Ch 499 at 508, where Pennycuick J doubted the legitimacy of a claim for relief against forfeiture brought prior to proceedings for possession of goods or land. 343. See further [1413]. But see Damon Compania Naviera SA v Hapag-Lloyd International SA (The Blankenstein) [1985] 1 WLR 435 (see [1823]). 344. Cf Reid Motors Ltd v Wood [1978] 1 NZLR 319 (relief against forfeiture where action was brought on a stopped cheque). If the plaintiff must frame the claim as one for damages, because the deposit never fell due, the forfeiture right cannot be relied upon. Recovery of the amount of the deposit must therefore depend on proof that it represents the loss suffered by the plaintiff. See [1413], [1819]. 345. See: ACT: Sale of Goods Act 1954, s 57; NSW: Sale of Goods Act 1923, s 55; NT: Sale of Goods Act 1972, s 55; Qld: Sale of Goods Act 1896, s 55; SA: Sale of Goods Act 1895, s 53; Tas: Sale of Goods Act 1896, s 58; Vic: Goods Act 1958, s 60; WA: Sale of Goods Act 1895, s 53. 346. Relief against forfeiture is governed by the general law. But cf [1337] (difficulty in applying principles derived from equity). 347. For illustrations see [1121], [1125]. 348. Competition and Consumer Act 2010 (Cth), Sch 2.

349. As defined Australian Consumer Law, s 3. 350. Australian Consumer Law, ss 263(4) (rejection of goods), 265(3) (contract for supply of services connected with rejected goods), 269(3) (termination of contract for supply of services), 270(1) (supply of goods connected with terminated services). See also Australian Consumer Law and Fair Trading Act 2012 (Vic), s 25(5) (supply of goods to which Pt 3.1 applies). 351. The concept includes an ‘express warranty’ (as defined Australian Consumer Law, s 2(1)) which takes effect as a consumer guarantee in relation to goods. See Australian Consumer Law, s 59. 352. See Australian Consumer Law, ss 64, 64A. 353. See [1173]. 354. [1900] 1 QB 740. See also Inman v Ackroyd & Best Ltd [1901] 1 QB 613 at 616; Bans Pty Ltd v Ling (1995) 36 NSWLR 435 at 438–9 (legislation did not apply to rent payable by lessee where time for payment had not fallen due when lease was terminated). 355. The remedial jurisdiction under the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) may apply if discharge is associated with prohibited conduct such as misleading or deceptive conduct. Cf Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470; 114 ALR 355. For the relevant legislation see [1047], [1315]. For a general provision applicable on discharge for breach see Contractual Remedies Act 1979 (NZ), s 9. 356. See NSW: Conveyancing Act 1919, s 55(2A); Vic: Property Law Act 1958, s 49(2). Cf Property Law Act 1974 (Qld), s 69. 357. See [1316]. 358. See National Credit Code (National Consumer Credit Protection Act 2009 (Cth), Sch 1), ss 76, 77. 359. See Zsadony v Pizer [1955] VLR 496. 360. See, eg Wilson v Kingsgate Mining Industries Pty Ltd [1973] 2 NSWLR 713 at 734–6; Thors v Weekes (1989) 92 ALR 131 at 145; Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367; 201 ALR 399; [2003] HCA 58; Aussie Invest Corp Ltd v Pulcesia Pty Ltd (2005) 13 VR 168 at 208–9; [2005] VSC 362; Midill (97PL) Ltd v Park Lane Estates Ltd [2009] 1 WLR 2460 at 2468; [2008] EWCA Civ 1227 at [31]. See also Carter’s Breach of Contract, §13-54. 361. [1973] 2 NSWLR 268 at 272. 362. See Maralinga Pty Ltd v Major Enterprises Pty Ltd [1972] 2 NSWLR 101 at 106–7 (affirmed on other grounds (1973) 128 CLR 336); Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 at 272. 363. See, eg Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41 (no ‘equity’ where purchaser’s conduct was a calculated repudiation). On whether a narrower approach has been taken in Victoria see Re Hoobin [1957] VR 341; Poort v Development Underwriting (Victoria) Pty Ltd [1976] VR 779 (affirmed [1977] VR 454); Kadissi v Jankovic [1987] VR 255 at 259. 364. See [1144]. There is no reason why the statutory power should not be relied on as a defence to a claim in relation to an unpaid deposit. 365. See, eg Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268

(not unjust or inequitable for vendor to insist on forfeiting 10 per cent deposit on default by purchaser of land for commercial purpose); Midill (97PL) Ltd v Park Lane Estates Ltd [2009] 1 WLR 2460; [2008] EWCA Civ 1227. Contrast P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615 (majority decision to allow purchaser relief in relation to a 5 per cent deposit paid under a contract for the sale of commercial property where vendor had benefited from improvements made by purchaser and the land was resold for a sum in excess of the purchase price). 366. See, eg Nassif v Caminer (2009) 74 NSWLR 276 at 296–7; [2009] NSWCA 45 at [97]– [99]; Midill (97PL) Ltd v Park Lane Estates Ltd [2009] 1 WLR 2460 at 2476; [2008] EWCA Civ 1227 at [54]. Contrast P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615. 367. It is open to parties to exclude the application of all or any part of the Convention. See Art 6. 368. See Art 81(2). See [1176]. If both parties must make restitution, they must do so concurrently. See [1436], [2332]. 369. For the general principles governing discharge of contracts for breach or repudiation see [1102]–[1111]. 370. See [145], [912]. 371. On the relationship between damages and restitution see [1403]–[1414]. 372. See also [919], [920]. 373. (1993) 176 CLR 344 at 350; 111 ALR 289. Brennan and Toohey JJ agreed. 374. Cf G L Williams, ‘Partial Performance of Entire Contracts’ (1941) 57 LQR 373. 375. See, eg Cutter v Powell (1795) 6 TR 320; 101 ER 573 (see [1229]); Chanter v Leese (1839) 5 M & W 698; 151 ER 296; Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423; Lucas v Borough of Drummoyne (1895) 16 LR (NSW) (L) 55; Sumpter v Hedges [1898] 1 QB 673 (see [1155]); Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124 at 130; Walker v Council of the Municipality of Randwick (1929) 30 SR (NSW) 84 (affirmed (1930) 45 CLR 604); Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221; Healy v Law Book Co of Australasia Pty Ltd (1942) 66 CLR 252 at 255, 259; Bolton v Mahadeva [1972] 1 WLR 1009; Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249 at 254; [2006] QCA 145 at [3]. 376. See [919]. 377. See [1113]. 378. [1898] 1 QB 673 (see [1155]). 379. See further [1172]–[1176]. See also [1177] (statutory reform). 380. (1777) 1 H Bl 273n; 126 ER 160. The case is reported as a note to The Duke of St Albans v Shore (1789) 1 H Bl 270; 126 ER 158. 381. See, eg Oliver v Campbell 273 P 2d 15 at 20 (Cal, 1954). See also Restatement (Second) Contracts, §373(2); S M Waddams, ‘Restitution for the Part Performer’ in B J Reiter and John Swan, Studies in Contract Law, 1980, p 157. The statement in Connor v Stainton (1924) 27 WALR 72 at 73–4, that a claim following substantial performance is for restitution was made per incuriam: Simpson Steel Structures v Spencer [1964] WAR 101 at 104. Cf S J Stoljar, ‘Substantial Performance in Building Contracts’ (1954–56) 3 UWALR 293 at 307 (prevention of unjust enrichment is the basis).

382. See, eg Bolton v Mahadeva [1972] 1 WLR 1009 (no substantial performance of contract to install a heating and hot water system where a sum equal to one-third of contract price was required to make the work conform). Cf Simpson Steel Structures v Spencer [1964] WAR 101 (lump sum contract for construction of building not substantially completed where cost of making good defects in the work was one-third of the contract price). See also Anthony Beck, ‘The Doctrine of Substantial Performance: Conditions and Conditions Precedent’ (1975) 38 MLR 413. 383. Cf Corio Guarantee Corp v McCallum [1956] VLR 755 (breach of essential term prevented discharge by performance). 384. See H Dakin & Co Ltd v Lee [1916] 1 KB 566; Riverside Motors Pty Ltd v Abrahams [1945] VLR 45; Hoenig v Isaacs [1952] 2 All ER 176; Corio Guarantee Corp v McCallum [1956] VLR 755; Lemura v Coppola [1960] Qd R 308; Morgan v S & S Constructions Pty Ltd [1967] VR 149 at 156; Zamperoni Decorators Pty Ltd v Lo Presti [1983] VR 338; Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1. Cf Dakin v Oxley (1864) 15 CBNS 646; 143 ER 938, approved Gaudet v Brown (1873) LR 5 PC 134 at 159 (freight earned by substantial performance of contract to load and carry full cargo). 385. (1993) 176 CLR 344 at 350; 111 ALR 289 (see [1151]). Brennan and Toohey JJ agreed. Mason CJ adopted Hoenig v Isaacs [1952] 2 All ER 176 at 180–1. See also (1993) 176 CLR 344 at 384. Cf G H Treitel, ‘Some Problems of Breach of Contract’ (1967) 30 MLR 139. 386. See Vigers v Cook [1919] 2 KB 475 at 483–4. Cf Hunter v Council of the Municipality of West Maitland (1923) 23 SR (NSW) 420 at 426 (breach went to the root of the contract). 387. Cf Zamperoni Decorators Pty Ltd v Lo Presti [1983] VR 338 (performance of contract to paint business premises substantial even though cost of remedying defects was one-half of contract price). 388. See J W Carter, ‘Conditions and Conditions Precedent’ (1991) 4 JCL 90. 389. Cf Mondel v Steel (1841) 8 M & W 858 at 870–1; 151 ER 1288 at 1293; Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 per Jordan CJ (reversed on construction of the contract sub nom Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286). 390. See, eg Connor v Stainton (1924) 27 WALR 72 (performance not substantial where defects meant that fencing work had to be done again); Hoenig v Isaacs [1952] 2 All ER 176 (contractor entitled to balance payable under work and materials contract where cost of remedying defects was small in proportion to the work the contractor agreed to do). 391. See Bellgrove v Eldridge (1954) 90 CLR 613 at 617, 620 (remedy in damages given to ensure equivalent of substantial performance). See also Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; 253 ALR 1; [2009] HCA 8 and further [1820]. 392. See Finlayson v James [1986] BTLC 163 (work substantially complete although damages were equal to one third of the contract price). The flexibility has been part of American law for some time. See Jacob & Youngs Inc v Kent 129 NE 889 (CA NY, 1921). Cf Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344 at 367. 393. See Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 (promise to grant title to 5000 acres of land for each mile of railway constructed on completion of each five-mile section). See also [1113].

See, eg Kirkland v Archbold 113 NE 2d 496 (CA Ohio, 1953); Gilbert-Ash (Northern) Ltd v 394. Modern Engineering (Bristol) Ltd [1974] AC 689 at 717. See also Besser Industries (NT) Pty Ltd v Steelcon Constructions Pty Ltd (1995) 129 ALR 308 at 311 (no necessary inconsistency). 395. The fact that the contract has not been fully performed in no way impairs the plaintiff’s claim in respect of a severable part. See also [1159]. 396. See Steele v Tardiani (1946) 72 CLR 386 at 401 per Dixon J, with whom McTiernan J agreed (severable employment contract ‘entire’ in the sense that each application of the contract only satisfied by performance, not partial, but ‘substantially complete’). See also Hunter v Council of the Municipality of West Maitland (1923) 23 SR (NSW) 420 at 426–7. But cf McLaughlin v Nourse [1928] SASR 230 (stipulation for payment per yard of earth removed did not make contract to remove earth from two dams severable). 397. See [1104]. For a suggestion that a restitutionary claim based on full performance is available where a contract has been discharged for repudiation see Heyman v Darwins Ltd [1942] AC 356 at 397. 398. See [1153]. See also [1038], [1045]. Cf [1171]. 399. [1952] 2 All ER 176 at 181. 400. (1946) 72 CLR 386 at 402. McTiernan J agreed. 401. [1898] 1 QB 673. See Ben McFarlane and Robert Stevens, ‘In Defence of Sumpter v Hedges’ (2002) 118 LQR 569. 402. [1898] 1 QB 673 at 675 per Chitty LJ. See also at 676 per Collins LJ, adopted Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656; 247 ALR 412; [2008] HCA 27 at [51] (‘The mere fact that a defendant is in possession of what he cannot help keeping, or even has done work upon it, affords no ground for such an inference.’). 403. [1898] 1 QB 673 at 676. 404. (1912) 14 WALR 54. 405. See [909] (absence of inconsistent contractual promise) and further [1166] (discharge by plaintiff). 406. Cf Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656; 247 ALR 412; [2008] HCA 27 at [52] per Gleeson CJ (‘may reflect’). 407. See [914]. 408. See [1156], [1157]–[1159]. See also [1160] (alternatives to acceptance). See also [931]–[935]. 409. See [1161]–[1168]. 410. See J W Carter, ‘Services Rendered Under Ineffective Contracts’ [1990] LMCLQ 495. 411. See [149]. See also [936]–[941]. 412. See [1119]–[1123]. It does not matter who breached the contract. See [1125]. On reliance expenditure see [1168]. 413. See the general analysis in [931]–[935]. 414. See [1124]. But cf [926], [928], [1438]. 415. See [931]–[935]. 416. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656; 247 ALR 412;

[2008] HCA 27 at [52]. 417. See [157], [174], [934]. 418. [1898] 1 QB 673 (see [1155]). Cf Zannoth v Booth Radio Stations Inc 333 Mich 233; 52 NW 2d 678 (1952) (no factual benefit). 419. See [1168]. 420. See [1157]–[1159] (acceptance of benefit). For discussion of suggestions that failure of the agreed return is the basis see [928], [1160]. 421. Cf [1168], [1408]. 422. See also [934]. 423. But see [1175]. 424. [1923] 2 KB 500 (see [1121]). See also Butterworth v Kingsway Motors [1954] 2 All ER 694; Australian Guarantee Corp Ltd v Ross [1983] 2 VR 319 at 324, 332. But see [1175] (statutory illustration not necessarily dependent on unjust enrichment). 425. See also G H Treitel, ‘Some Problems of Breach of Contract’ (1967) 30 MLR 139 at 147– 9; Law Commission, Sale and Supply of Goods, Law Com No 160, 1987, §§6.4, 6.5. 426. (1946) 72 CLR 386. 427. (1946) 72 CLR 386 at 393. See also at 402; Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 234, 246; Earthworks and Quarries Ltd v F T Eastman & Sons Pty Ltd [1966] VR 24 at 28–9. 428. Bullen and Leake, p 41 (citations omitted). 429. See [1159], [1166]. 430. See also [158], [934]. 431. See [934], [1166]. 432. See, eg Morrison v Grovenor (1884) 5 LR (NSW) (L) 195 (work must be adopted); Lucas v Borough of Drummoyne (1895) 16 LR (NSW) (L) 55 at 58 (adoption of work done); Sumpter v Hedges [1898] 1 QB 673 at 676, adopted Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656; 247 ALR 412; [2008] HCA 27 at [51] (taking the benefit of work done); Horton v Jones (1934) 34 SR (NSW) 359 at 367–8, affirmed on other grounds (1935) 53 CLR 475 and approved Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246 (acceptance of benefit); Steele v Tardiani (1946) 72 CLR 386 at 393 (acceptance of benefit), 402 (advantage received); Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 374; 111 ALR 289 (acceptance of the benefit of part of the consideration). 433. Cf [174]. The concept of constructive acceptance (see [934], [1025], [1031], [1032]) appears to have no operation in the context of discharge for breach or repudiation. 434. See [1174], [2323]. 435. See further [2319]. 436. See also the discussion in [1035], [1046]. 437. (1946) 72 CLR 386 at 405. McTiernan J agreed. For the facts see [1165]. 438. The statement relates back to a quotation ((1946) 72 CLR 386 at 402–3) from Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280. 439. In Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 319–20, Jordan CJ treated

acceptance as relevant to both the restitutionary form of reasonable remuneration and its contractual form, and in Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 235 Starke J, in the context of a contract unenforceable for want of written evidence, cited cases on the substantial performance and restitution for the proposition that the defendant is liable on acceptance or retention of the benefit of work done. 440. The alternative view is that Dixon J was referring to a genuine implied contract. See generally G J Tolhurst and J W Carter, ‘Acceptance of Benefit as a Basis for Restitution’ (2002) 18 JCL 52. See further [1165]. 441. It appears that conduct which would under the modern law of discharge for breach be treated as affirmation of a contract (resulting in loss of the right to terminate) was formerly regarded as an ‘acceptance’ giving rise to a quasi-contractual liability. See [1155], [1174]. In so far as the court in Sumpter v Hedges [1898] 1 QB 673 (see [1155]) placed any reliance on discharge of the contract, it was considered sufficient to recite that the plaintiff abandoned the contract. 442. See also [1170] (analogous claims), [1171] (contractual claims), [1172]–[1176] (claims under statute). 443. See generally Peter Birks, ‘Restitution for Services’ [1974] CLP 13 at 16; Gareth Jones, ‘Restitutionary Claims for Services Rendered’ (1977) 93 LQR 273; J W Carter, ‘Services Rendered Under Ineffective Contracts’ [1990] LMCLQ 495; G J Tolhurst and J W Carter, Acceptance of Benefit as a Basis for Restitution’ (2002) 18 JCL 52. Cf Michael Garner, ‘The Role of Subjective Benefit in the Law of Restitution’ (1990) 10 OJLS 42; Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 105. Contrast A S Burrows, ‘Free Acceptance in the Law of Restitution’ (1988) 104 LQR 576. 444. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656–7, 661; 247 ALR 412; [2008] HCA 27 at [53], [75]. 445. See further [1161]–[1165]. When made in relation to a severable part of the contract, the claim is contractual. See [1171]. 446. See further [1166]–[1168]. 447. See generally [151]–[153], [932]. Cf [1170], [1438], [1439] (improvements to land). 448. See, eg Nicholson v Burnett (1922) 25 WALR 101 (survey of land which might be used in the future). But see the questionable decision in Home Management Maintenance Pty Ltd v Doyle (1992) 107 FLR 225. 449. See [839], [1170]. 450. See [1169]. 451. See [1172]–[1176]. See also [1177] (statutory reform). 452. [1898] 1 QB 673 (see [1155]). 453. For suggestions of reform see [1177]. 454. See [934]. See also [1025]. 455. See Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, pp 113–15. 456. See [1156]. But see Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 (reversing W Cook Builders Pty Ltd (in liq) v Lumbers (2007) 96 SASR 406; [2007] SASC 20, where the court effectively equated objective benefit with incontrovertible benefit).

457. See Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 114. See also Kirkland v Archbold 113 NE 2d 496 at 500 (CA Ohio, 1953). Cf Simpson Steel Structures v Spencer [1964] WAR 101 at 105 per Hale J (suggested introduction of ‘equity’ relieving against forfeiture); T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd [1991] 1 VR 610 (see [1170]). 458. [1898] 1 QB 673 (see [1155]). 459. See [1160]. 460. (1946) 72 CLR 386. 461. See also Cleveland Bridge UK Ltd v Multiplex Constructions (UK) Ltd [2010] EWCA Civ 139 at [138] (Sumpter v Hedges binding on English Court of Appeal). But see Tea Tree Gully Builders Co Pty Ltd v Martin (1992) 59 SASR 344 (see [909]). 462. Compare Steele v Tardiani (1946) 72 CLR 386 at 402 per Dixon J (with whom McTiernan J agreed), quoting Steven v Bromley & Son [1919] 2 KB 722 at 727 per Scrutton LJ (it is a ‘commonplace of the law that there can be no implied contract as to matters covered by an express contract until the express contract is displaced’). See also Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] AC 190 at 202; Markham v Bernales (1906) 8 WALR 208 at 210; Nicholson v Burnett (1922) 25 WALR 101 at 104; McLaughlin v Nourse [1928] SASR 230 at 233. 463. See [1157]. 464. See [1155], [1159]. See further [2316], [2319]. 465. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656; 247 ALR 412; [2008] HCA 27 at [52]. 466. [1898] 1 QB 673 (see [1155]). 467. (1946) 72 CLR 386 (see [1165]). 468. See Chapter 14. 469. See Chanter v Leese (1838) 4 M & W 295 at 31112; 150 ER 1440 at 1447 (affirmed (1839) 5 M & W 698; 151 ER 296); Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423 at 427, 428; Sumpter v Hedges [1898] 1 QB 673 at 676; Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] AC 190 at 202, 204; City Bank of Sydney v McLaughlin (1909) 9 CLR 615 at 632–3. 470. See, eg Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423 at 431. 471. See Burn v Miller (1813) 4 Taunt 745 at 748–9; 128 ER 523 at 525; Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423 at 429; Steele v Tardiani (1946) 72 CLR 386 at 403, 405. 472. (1946) 72 CLR 386 at 402. McTiernan J agreed. 473. The classic example is Sumpter v Hedges [1898] 1 QB 673 (see [1155]). See also Nicholson v Burnett (1922) 25 WALR 101 (work done by surveyor). 474. See, eg Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 Ch D 339 at 364–5 (lawfully dismissed employee not entitled to recover reasonable remuneration where request was made under lump sum contract). Cf Lucas v Borough of Drummoyne (1895) 16 LR (NSW) (L) 55 (no quantum meruit in respect of work done under surveyor’s contract to align streets). Contrast SOS Kinderdorf International v Bittaye [1996] 1 WLR 987 at 994 (entitlement of employee to recover in debt or damages in respect of unpaid salary for period prior to lawful dismissal).

475. See, eg Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423 at 427, 428, 429 (common count not available where consignee did not voluntarily accept goods delivered to the wrong port since the request was to deliver to named port). Cf Hain SS Co Ltd v Tate & Lyle Ltd (1936) 41 Com Cas 350 at 357–8, 370, 373 (position of a consignee following deviation of vessel left open). 476. See, eg Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] AC 190. See also Steele v Tardiani (1946) 72 CLR 386 at 402. 477. [1898] 1 QB 673 (see [1155]). 478. (1946) 72 CLR 386. See also Morrison v Grovenor (1884) 5 LR (NSW) (L) 195 (defendant adopted work done). 479. McTiernan J agreed. Although Latham CJ agreed with Dixon J’s conclusion, he attached more importance to implied contract. See (1946) 72 CLR 386 at 394 (‘sufficient evidence to support an inference of a new contract’). See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 at 656; 247 ALR 412; [2008] HCA 27 at [52] per Gleeson CJ (‘reference to an “inference of a new contract” may reflect an approach since overtaken’ by Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577). 480. (1946) 72 CLR 386 at 402. 481. (1946) 72 CLR 386 at 402. Dixon J was referring to an objective concept of benefit. 482. (1946) 72 CLR 386 at 402–3, 405. 483. See [1158]. 484. Dixon J relied on Munro v Butt (1858) 8 El & Bl 738; 120 ER 275, where such an analysis was employed. See also [1158]. 485. Cf Birks, p 232 (‘limited acceptance’). 486. See [1167], [1168]. 487. (1992) 26 NSWLR 234 (see [1167]). 488. [1928] SASR 124. For further proceedings see [1930] SASR 210. See also Lodder v Slowey [1904] AC 442 (see [1428], [1429]). 489. [1951] VLR 405 at 409. See also Earthworks and Quarries Ltd v F T Eastman & Sons Pty Ltd [1966] VR 24 at 28–9. 490. (1992) 26 NSWLR 234. 491. See Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350; Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510; 257 ALR 182; [2009] VSCA 141. 492. (1956) 73 WN (NSW) 307. See also Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 140–1 (agent); Bolot v Capper (1957) 75 WN (NSW) 316 (architect); Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249 at 254; [2006] QCA 145 at [3] (solicitor); Richard Buxton (a firm) v Mills-Owens (Law Society intervening) [2010] 1 WLR 1997 at 2013, 2014; [2010] EWCA Civ 122 at [53], [55] (solicitor). For comparable American cases see, eg Noyes v Pugin 27 P 548 at 549 (Wash, 1891); Stephen v Camden & Philadelphia Soap Co 68 A 69 (CEA, NJ, 1907); Hunter v Vicario 130 NYS 625 (1911); Polak v Kramer 166 A 396 (SCE Conn, 1933); Sterling v Marshall 54 A 2d 353 (DC, 1947). Cf Wellston Coal Co v Franklin Paper Co 48 NE 888 (Ohio, 1897). 493. (1934) 34 SR (NSW) 67. See also Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 319.

494. (1850) 15 QB 576 at 580, 582, 583; 117 ER 577 at 579, 580. Some decisions suggested that the employee could recover wages under a doctrine of constructive employment. See the discussion in Emmens v Elderton (1853) 4 HLC 624; 10 ER 606. This was rejected in Williamson v The Commonwealth (1907) 5 CLR 174 at 185; Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 451, 452, 461, 465, 476. See Smith’s Leading Cases, vol 2, pp 51ff; Carter’s Breach of Contract, §11-46. 495. (1946) 72 CLR 435 at 450–2, 462. Cf Independent Education Union of Australia v Canonical Administrators Barkly St Bendigo (1998) 157 ALR 531 at 550, 552. 496. For criticism see Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 514; 257 ALR 182; [2009] VSCA 141 at [9]. 497. See Hoenig v Isaacs [1952] 2 All ER 176 at 181, where Denning LJ stated the general principle that a building contractor who has not substantially performed can succeed on a claim for reasonable remuneration if it was the principal’s fault that the work was incomplete. 498. See Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] AC 190 at 202; Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 319; Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 at 369. 499. Cf [1502] (persons should not profit from their own wrongs). 500. See [1167]. 501. See Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124 at 131; Segur v Franklin (1934) 34 SR (NSW) 67 at 72; Chandler Bros Ltd v Boswell [1936] 3 All ER 179 at 186; Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97 at 114; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350. See also Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 140–1 (contract for work and labour). There is a long line of American cases, referred to in [1428]. 502. (1831) 8 Bing 14; 131 ER 305. See also M’Leod v Artola Brothers (1889) 6 TLR 68 at 69. Contrast Boyd & Forrest v Glasgow and South-Western Railway Co 1915 SC (HL) 20 at 26. Cf [116] (common count for money paid). 503. The report is not clear on whether the jury’s verdict was for the claim in restitution or the alternative claim in damages. See Goodman v Pocock (1850) 15 QB 576 at 582; 117 ER 577 at 580. However, the verdict is usually treated as having been for the restitutionary claim. See, eg Slowey v Lodder (1901) 20 NZLR 321 at 362 (affirmed sub nom Lodder v Slowey [1904] AC 442); Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 258. See Charles Mitchell and Charlotte Mitchell, ‘Planché v Colburn (1831)’, in Charles Mitchell and Paul Mitchell, Landmark Cases in the Law of Restitution, Hart Publishing, Oxford, 2006, p 65. 504. Query what the position would have been had the plaintiff completed and tendered the manuscript. Cf [1404] (relevance of mitigation). 505. (1853) 8 Ex 822; 155 ER 1586. 506. See (1853) 8 Ex 822 at 824; 155 ER 1586 at 1587 per Alderson B (plaintiff may sue for breach or ‘rescind the contract and sue on a quantum meruit for the work actually done’). The trial judge directed a verdict for the defendant on the basis that the action should have been for damages. A rule nisi, for damages or a new trial, was made absolute. See also Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd

(1993) 60 SASR 525 at 536. 507. See Carter’s Breach of Contract, §13-55; see also §7-18 (influence of conception that a repudiation is an offer to rescind the contract ab initio). 508. See [916], [1105], [1106] and further [1408], [1411], [1429], [1430]. 509. See [1405], [1410], [1430]. 510. See David Campbell, ‘Better than Fuller: A Two Interests Model of Remedies for Breach of Contract’ (2015) 78 MLR 296 at 312–13. 511. See also [940] and further [1430]. 512. See J W Carter, ‘Discharged Contracts: Claims for Restitution’ (1997) 11 JCL 130. 513. See [1428]–[1430]. 514. Cf Jones, p 104. 515. [1980] 1 WLR 1129 (see [1133]). 516. [1995] 2 Qd R 350. 517. [1995] 2 Qd R 350 at 359. Contrast United States v Algernon Blair Inc 479 F 2d 638 (CA, 4th Cir, 1973). 518. Compare Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 at 361, where McPherson JA, although referring to restitution for unjust enrichment, said that the plaintiff was entitled to be ‘compensated for work done’. See generally [938], [1407], [1810], [1811], [1812]. 519. An express provision may apply notwithstanding that the plaintiff’s breach led to discharge, and irrespective of whether a restitutionary claim would succeed. See, eg Bosca Land Pty Ltd v Wruck [1982] Qd R 111 (contractual provision entitling purchaser to recover money expended in subdividing land). 520. Cf Restatement (Second) Contracts, §373(1) (restitution for any benefit conferred by way of part performance or reliance); see also §370 Ill 2. 521. See Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, pp 140ff. See Noyes v Pugin 27 P 548 (Wash, 1891), where damages were awarded to an architect whose plans were not adopted by the defendant. Cf Cheers v Pacific Acceptance Corp Ltd (1959) 60 SR (NSW) 1 at 6. 522. Cf [1167]. 523. See also [1405], [1408], [1411], [2309] (difficulties in treating plaintiff as faced with choice between inconsistent remedies); [1430] (difficulties inherent in approach to valuation). 524. See [1167]. 525. [1942] AC 356 at 397. Cf Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 141. 526. Cf Inchbald v Western Neilgherry Coffee Tea and Cinchona Plantation Co Ltd (1864) CBNS 733 at 740; 144 ER 293 at 296 (Planché v Colburn cited in context of claim damages for loss of chance). And see Stoljar, p 231 (quantum meruit was basis assessing damages for breach of contract). A claim based on unjust enrichment is not compensation. See [108], [145], [209]. 527. See [1158]. 528. For statutory bases see [1172]–[1176]. See also [1177] (statutory reform).

17 for for for

529. [1976] 1 WLR 676. Cf Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588; 171 ALR 568; [2000] HCA 25. 530. (1983) 152 CLR 406; 46 ALR 1. 531. (1983) 152 CLR 406 at 429; 46 ALR 1. But see [1170]. 532. See [1141]. 533. See Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 at 123–4; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 455; Sibbles v Highfern Pty Ltd (1987) 164 CLR 214 at 232; 76 ALR 13; Stern v McArthur (1988) 165 CLR 489 at 509; 81 ALR 463. See also Ward v Ellerton [1927] VLR 494 (restitution of non-monetary element of purchase price paid under contract for sale of land discharged for purchaser’s breach); Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 at 226 (although the approach is not limited to cases where the contract of sale is by instalments, the vendor must know of the purchaser’s conduct). Cf Bosca Land Pty Ltd v Wruck [1982] Qd R 111 at 119–20; Rossiter, pp 184–5. See further [1438] (adjustments by way of restitutio in integrum) and cf [1439] (relief against forfeiture on terms). 534. (1991) 22 NSWLR 615. See also Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 at 227. Cf Rossiter, pp 78ff. 535. The builder could also be asked to reinstate the land, but this provision had not been invoked. 536. Unlike the position in Legione v Hateley (1983) 152 CLR 406; 46 ALR 1 (see [1169]). 537. Since an element of the increased price received on the resale was due to the work done by the purchaser, it could have been argued that the vendor was incontrovertibly benefited. 538. Cf [1143], [1439] (terms imposed on relief against the forfeiture of part payments). 539. [1991] 1 VR 610 (see Peter Butt, (1992) 66 ALJ 446). 540. At least on the basis of Legione v Hateley (1983) 152 CLR 406; 46 ALR 1. See [1141]. 541. Relying on decisions such as McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457. Since the land was resold at a profit, the purchaser was bound to succeed (see [1121]), even if there was a provision for forfeiture (see [1143]). 542. See also [1143], [1439] (terms imposed on relief against forfeiture of part payments). Cf [1438] (restitutio in integrum in cases of discharge). 543. It might of course be said that the retention of the benefit of the improvements without payment was unconscionable. But that is different from requiring unconscionable conduct as a basis for relief against the ‘forfeiture’ of the improvements. 544. Contrast Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 (accrued right to receive a transfer of land notwithstanding discharge of the contract for the plaintiff’s breach). 545. See [1152], [1153]. See also [1205]. In relation to severable contracts see also Restatement (Second) Contracts, §373 Com (c). 546. See further [1174] (acceptance of goods). 547. See, eg Duncan v Shrigley (1870) 1 VR (L) 139; Astilleros Canarios SA v Cape Hatteras Shipping Co Inc (The Cape Hatteras) [1982] 1 Lloyd’s Rep 518 at 524; Bovis Construction (South Eastern) Ltd v Greater London Council (1985) 9 Con LR 1 at 12; Atlantic Civil Pty Ltd v Water Administration Ministerial Corporation (1992) 39 NSWLR 468 at 483–4. For

the position where the contractor does not comply with the contractual requirements see Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; see Peta Spender, (1991) 4 JCL 158 (principal may be estopped from denying that contractor has complied). 548. The general principle in [909] applies. 549. See ENE Kos 1 Ltd v Petroleo Brasileiro SA (The Kos) (No 2) [2012] 2 AC 164; [2012] UKSC 17 (see Wayne Courtney, ‘Indemnities in Time Charterparties and the Effect of the Withdrawal of the Vessel’ (2013) 30 JCL 243). 550. See, eg Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280 (implied contract to pay for work or chattel); Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423 at 427 (implied contract to pay for delivery of goods to wrong port); Sumpter v Hedges [1898] 1 QB 673 at 674, 675, 676 (fresh or implied contract to pay for work done); Steele v Tardiani (1946) 72 CLR 386 at 403, 404 (implied contract to pay for improvements to defendant’s property); Hoenig v Isaacs [1952] 2 All ER 176 at 181 (implied contract to pay for work done). 551. See, eg Liebe v Molloy (1906) 4 CLR 347 at 353–5 (requested and accepted work outside scope of building contract); Steven v Bromley & Son [1919] 2 KB 722 at 727, adopted Steele v Tardiani (1946) 72 CLR 386 at 402 (work done outside contract remunerated at current rate); Riverside Motors Pty Ltd v Abrahams [1945] VLR 45 (reasonable sum for additional repair work); Greenmast Shipping Co SA v Jean Lion et Cie SA (The Saronikos) [1986] 2 Lloyd’s Rep 277 at 278 (shipowners entitled to remuneration at market rate for additional time spent at port at charterers’ request). See also Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 272. Cf Balfour Beatty Power Construction Australia Pty Ltd v Kidston Goldmines Ltd [1989] 2 Qd R 105 at 134–5. 552. See Liebe v Molloy (1906) 4 CLR 347 at 354. 553. See, eg Batis Maritime Corp v Petroleos Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345 at 353 (although charterers’ order to proceed to port which had not been nominated was a breach of contract, shipowners who acted on it were entitled to reasonable remuneration). Cf Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile) [2012] 2 Lloyd’s Rep 594 at 612–13; [2012] EWHC 2107 (Comm) at [78] (affirmed [2013] 1 WLR 3440; [2013] EWCA Civ 184). 554. (1946) 72 CLR 386 at 402–4. See also, in relation to contracts of repair, Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280 (dispensation); Forman & Co Pty Ltd v The Ship ‘Liddesdale’ [1900] AC 190 at 204 (acquiescence or ratification); Cooper v Australian Electric Co (1922) Ltd (1922) 25 WALR 66 at 68 (waiver). 555. Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 850 per Lord Diplock. 556. See ENE Kos 1 Ltd v Petroleo Brasileiro SA (The Kos) (No 2) [2012] 2 AC 164 at 180, 181; [2012] UKSC 17 at [27], [29], [31]. 557. See, eg Royle v Trafford Borough Council [1984] IRLR 184 (affirmation of employment contract). 558. See also [1174], [2317], [2323]. 559. Cf Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 369 (seller may recover restitution for goods delivered after termination). 560. See ENE Kos 1 Ltd v Petroleo Brasileiro SA (The Kos) (No 2) [2012] 2 AC 164 at 172;

[2012] UKSC 17 at [5] (no implied contract where vessel completed voyage following termination of time charterparty). 561. On whether statute operates to deny contractual remedies in relation to an unenforceable contract discharged for breach or repudiation see [1019], [1024], [1029]–[1032]. 562. Cf [1176]. 563. The discretionary jurisdiction to make orders in respect of a contravention of the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) may be relevant here. However, it is more appropriately discussed in the context of rescinded contracts. See [1315], [1334]. Cf [1838] (statutory basis to award benefits obtained as damages). 564. See [229] and further [1334]. Cf [1436]. 565. See [1174], [2323]. 566. See ACT: Civil Law (Property) Act 2006, s 250; NSW: Conveyancing Act 1919, s 144; NT: Law of Property Act 2000, s 212(1); Qld: Property Law Act 1974, s 232; SA: Law of Property Act 1936, s 64; Tas: Apportionment Act 1871, s 2; Vic: Supreme Court Act 1986, s 54; WA: Property Law Act 1969, s 131. 567. See ACT: Civil Law (Property) Act 2006, s 248; NSW: Conveyancing Act 1919, s 142; NT: Law of Property Act 2000, s 211; Qld: Property Law Act 1974, s 231; SA: Law of Property Act 1936, s 63; Tas: Apportionment Act 1871, s 5; Vic: Supreme Court Act 1986, s 53(1); WA: Property Law Act 1969, s 130(1). 568. On whether directors’ fees are ‘salaries’ see Moriarty v Regent’s Garage and Engineering Co Ltd [1921] 1 KB 423 at 434 (reversed on other grounds [1921] 2 KB 766). The interpretation of the legislation suggested by Paul Matthews, ‘“Salaries” in the Apportionment Act 1870’ (1982) 2 Legal Studies 302 was not adopted in Item Software (UK) Ltd v Fassihi [2005] ICR 450; [2004] EWCA Civ 1244. 569. See S M Waddams, ‘Restitution for the Part Performer’ in B J Reiter and John Swan, Studies in Contract Law, 1980, p 162. See also Carter’s Breach of Contract, §13-19. 570. See Moriarty v Regent’s Garage and Engineering Co Ltd [1921] 1 KB 423 at 434–5; but cf at 449, reversed without reference to the point [1921] 2 KB 766 (doubted whether the legislation applied to a claim by a director lawfully removed from office). 571. See Item Software (UK) Ltd v Fassihi [2005] ICR 450 at 478–9; [2004] EWCA Civ 1244 at [120]–[121]. See also Sim v Rotherham Metropolitan Borough Council [1987] Ch 216 at 255. 572. See Mondel v Steel (1841) 8 M & W 858 at 871; 151 ER 1288 at 1293 (acceptance or nonreturn of goods which buyer could reject evidence of new contract on a quantum valebat); Clay v Yates (1856) 1 H & N 73 at 80; 156 ER 1123 at 1126 (law implies a promise to pay); Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280 (implied contract to pay on acceptance of goods not in accordance with contract). See also Shipton v Casson (1826) 5 B & C 378; 108 ER 141; Oxendale v Wetherell (1829) 9 B & C 386; 109 ER 143; Colonial Insurance Co of New Zealand v Adelaide Marine Insurance Co (1886) 1 App Cas 128 at 138–9. Cf Summers v The Commonwealth (1918) 25 CLR 144 at 153, affirmed (1919) 26 CLR 180 (seller in breach not entitled to payment in form of quantum valebat where no circumstances to remove contractual delivery requirements). See also [119]. 573. See, eg Munro v Butt (1858) 8 El & Bl 738 at 752; 120 ER 275 at 280 (dispensation).

574. See [2323]. 575. For set-off against the price see ACT: Sale of Goods Act 1954, s 56; NSW: Sale of Goods Act 1923, s 54; NT: Sale of Goods Act 1972, s 54; Qld: Sale of Goods Act 1896, s 54; SA: Sale of Goods Act 1895, s 52; Tas: Sale of Goods Act 1896, s 57; Vic: Goods Act 1958, s 59; WA: Sale of Goods Act 1895, s 52. See Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584 at 601, 610–11. 576. See ACT: Sale of Goods Act 1954, s 34; NSW: Sale of Goods Act 1923, s 33; NT: Sale of Goods Act 1972, s 33; Qld: Sale of Goods Act 1896, s 32; SA: Sale of Goods Act 1895, s 30; Tas: Sale of Goods Act 1896, s 35; Vic: Goods Act 1958, s 37; WA: Sale of Goods Act 1895, s 30. 577. See also Law Commission, Sale and Supply of Goods, Law Com No 160, 1987, §6.22 and contrast Sale of Goods Act 1979 (UK), s 30. 578. See Carter’s Breach of Contract, §4-14. 579. See Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 at 404; F M B Reynolds, ‘Warranty, Condition and Fundamental Term’ (1963) 79 LQR 534 at 550. Cf J L Montrose, ‘The Operation of Description in a Contract of Sale of Goods’ (1937) 15 Can BR 760 at 769ff. 580. Competition and Consumer Act 2010 (Cth), Sch 2. For international sales regulated by statute see [1176]. 581. Defined Australian Consumer Law, s 3. 582. See [1147]. 583. See s 25(5). The provision also applies if the contract is rescinded for misrepresentation. See [1339], [1420]. 584. The provision also applies if the contract is rescinded by the buyer for misrepresentation. See [1339], [1420]. 585. See [1156]. See also Duncan Miller, ‘Transfer of Title: A New Legal Regime in only Three Paragraphs’ [1994] LMCLQ 322 at 325–6. 586. For the right of avoidance see [1108]. For the consequences of avoidance see [1110], [1209]. 587. It is open to parties to exclude the application of all or any part of the Convention. See Art 6. 588. See Art 81(2). See also [1149] and further [1239]. If both parties are bound to make restitution they must do so concurrently. See [1436]. 589. See Art 84(2). See also [2332] (defence of restitutio). 590. See [1148] (court may, if it thinks fit, order the repayment of any deposit). But cf Contractual Remedies Act 1979 (NZ), s 9(4)(d) (jurisdiction to make orders, where ‘just and practicable’ to do so, in respect of (inter alia) the value of any work or services performed). See Francis Dawson and D W McLauchlan, The Contractual Remedies Act 1979, 1981, pp 140–9; Brian Coote, ‘Remedy and Relief under the Contractual Remedies Act 1979’ (1993) 6 JCL 141. 591. See Law Commission, Pecuniary Restitution on Breach of Contract, Law Com No 121, 1983; Law Reform Committee of South Australia, Nineteenth Report, Relating to the Reform of the Law Regarding Entire Contracts and the Rule Usually Known as the Rule in

Cutter v Powell, 1986. 592. See A S Burrows, (1984) 47 MLR 76; H O Hunter and J W Carter, ‘Quantum Meruit and Building Contracts — Part I’ (1989) 2 JCL 95 at 112; Jones, pp 122–4. Cf Jack Beatson, ‘Should There Be Legislative Development of the Law of Restitution?’ in Burrows, Essays, pp 297–8. Contrast C J F Kidd, ‘Partial Performance of Lump Sum Contracts: Proposals for Reform’ (1985) 59 ALJ 96. 593. See Law Commission, Pecuniary Restitution on Breach of Contract, Law Com No 121, 1983, para 2.53; Law Reform Committee of South Australia, Nineteenth Report, Relating to the Reform of the Law Regarding Entire Contracts and the Rule Usually Known as the Rule in Cutter v Powell, 1986, pp 26–7. 594. See, eg Kirkland v Archbold 113 NE 2d 496 (CA Ohio, 1953). See also Restatement (Second) Contracts, §374(1). Compare the regime of the United Nations Convention on Contracts for the International Sale of Goods 1980 (see [1176]). 595. For the current law see Chapter 14. 596. This was one object of the frustrated contracts legislation. See [1236]–[1268]. 597. See J W Carter, ‘Discharged Contracts: Claims for Restitution’ (1997) 11 JCL 130. See also [918], [1433], [1434], [1438], [1439].

[page 497]

Chapter Twelve

Contracts Discharged Without Breach 1.

2.

3.

General ….

[1201]

(a) Introduction ….

[1201]

(b) Contractual Background …. Recovery of Money Paid ….

[1203] [1215]

(a) General ….

[1215]

(b) Total Failure of Consideration …. Restitution for Non-monetary Benefits ….

[1217] [1227]

(a) General ….

[1227]

(b) Quantum Meruit for Benefits Conferred Prior to Frustration …. [1229] (c) Quantum Meruit in Other Situations …. 4.

Frustrated Contracts Legislation ….

[1232] [1236]

(a) General ….

[1236]

(b) Objects and Bases for Recovery ….

[1237]

(c) Scope and Application ….

[1239]

(d) Impact on Contract and Contract Claims …. [1242] (e) Recovery Under New South Wales Legislation …. [1245]

Recovery Under South Australian Legislation (f) …. [1253] (g) Recovery Under Victorian Legislation ….

[1258]

1. General (a) Introduction [1201] Objects. The words ‘without breach’ in the title to this chapter signify that, whether or not the contract was breached prior to discharge, breach was not the basis for discharge.1 Contracts discharged by frustration comprise the most significant category of contracts discharged without breach. Although cases in which contracts are frustrated are few in number, they are a source of considerable interest. From a restitutionary perspective, statute has had a far greater impact than in any other category of ineffective contracts. The need to take account of three different regimes2 means that the section on the frustrated contracts legislation is the largest section in this chapter. However, the common law governs most restitutionary claims in relation to contracts discharged [page 498] without breach for reasons other than frustration. Moreover, the common law remains important,3 even where discharge occurs by reason of frustration. In most jurisdictions the common law applies. Even where legislation has been enacted, some contracts are exempted,4 and the legislation may be excluded by agreement.5 Statute also regulates restitutionary claims arising out of sale of goods contracts to which the United Nations Convention on Contracts for the International Sale of Goods 19806 applies.

[1202] Classification of restitutionary claims. As in other chapters, common law claims are classified according to whether money paid is sought to be recovered, or the claim relates to a nonmonetary benefit conferred. The origin of these personal claims7 is, of course, quasi-contract. In the old terminology, the former claim — for money had and received by the defendant to the use of the plaintiff — depended on proof of total failure of consideration.8 The latter — for restitution on a quantum meruit basis — depended on the implication of a fresh contract to pay arising from acceptance of benefit.9 Both are now analysed by reference to unjust enrichment.10 Thus, in Pavey & Matthews Pty Ltd v Paul11 Deane J said12 that the fact that a contract is frustrated provides the ‘occasion for’, and ‘part of the circumstances giving rise to’ the ‘imposition by law of the obligation to make restitution’. Although Deane J was referring principally to quantum meruit claims, the general acceptance in the Australian cases of Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd13 suggests that unjust enrichment is also the rationale for restitution of money paid prior to discharge.14 The requirements of unjust enrichment15 therefore determine the fate of most non-statutory restitutionary claims.16 [page 499] We employ ‘failure of the agreed return’ and ‘reasonable remuneration’ in preference to the quasi-contractual terminology of failure of consideration and quantum meruit.17

(b) Contractual Background (i) General [1203] Categories. Contracts discharged without breach are divided, at least in broad terms, into two categories: ‘consensual discharge’;18 and contracts discharged by ‘operation of law’. The

former includes contracts discharged by subsequent agreement and those discharged under their own terms. Discharge of the parties provides a setting in which an obligation to make restitution may be imposed by law. Restitutionary issues may therefore arise in relation to either category, but in practice, restitution is more relevant where discharge is by operation of law. We briefly consider two matters: the bases for discharge; and the consequences of discharge. The main reason for discussing this contractual background is to indicate how restitutionary issues arise.

(ii) Consensual discharge [1204] Introduction. The concept of consensual discharge embraces three main situations: (1) discharge by performance; (2) discharge by (subsequent) agreement; and (3) discharge under a term of the contract. Of course, in cases of consensual discharge the parties are likely to have dealt expressly with its consequences. [1205] Contracts discharged by performance. In order for a contract to be discharged by performance the requirements of the contract must be substantially fulfilled.19 An effective contract fully performed by both sides,20 although within the description ‘contract discharged without breach’, is not an ineffective contract. There is little scope for a claim for restitution in respect of a benefit conferred in discharge of an obligation created by the contract.21 It is, however, necessary to take account of the decision in Roxborough v Rothmans of Pall Mall Australia Ltd.22 In that case, restitution was ordered in relation to payments made under contracts discharged by performance. The contracts were not ineffective, but the payments at issue were referable [page 500]

to the obligation of the payee to pay licence fees imposed by unconstitutional legislation. Although an implied term analysis could have been employed,23 this was rejected by the High Court. The claim was characterised as restitutionary in nature.24 [1206] Contracts discharged by agreement. At any time prior to discharge by performance, the parties to a contract may agree to its discharge, either expressly or under a contract having that effect.25 Contracts discharged by agreement are not examples of ineffective contracts.26 However, particularly in cases where agreement is inferred from conduct amounting to an abandonment of the contract, the contract of discharge may leave restitutionary issues unsettled. Accordingly, restitution may be relevant to benefits conferred under the prior contract.27 An express agreement for discharge after breach is usually the compromise of a disputed claim. Assuming that the contract is effective, whether it deals with benefits conferred prior to discharge is a question of construction.28 Although such agreements tend to be construed narrowly,29 claims for restitution are rare. If one contract purports to discharge another, it may itself be ineffective. If it is inherently ineffective, issues of the type already considered may arise.30 Alternatively, the contract may subsequently become ineffective. One possibility is subsequent discharge following breach or repudiation.31 Another is discharge by operation of law, in which case the principles considered in this chapter will apply. Finally, it is possible that a contract of discharge may become ineffective by subsequent rescission. Restitutionary claims then fall to be considered under the principles governing rescinded contracts.32 [1207] Contracts discharged under contractual term. In the majority of cases, discharge occurs because one party has exercised a right to terminate the contract. There are three main possibilities. In each case, except where the contract also deals with the consequences of discharge, there is scope for the application of the principles of restitution, either at common law or statute.

First, an express term of the contract may confer a right to terminate on the occurrence of a specified event not amounting to breach. A common [page 501] example is an express right to terminate on failure of a condition precedent to performance of the contract. Second, the right to terminate may be inferred by construction, or based on an implied term. The right to terminate a contract of indefinite duration by giving reasonable notice may arise on either basis.33 Such a right may also arise where there is an unfulfilled condition precedent going to the performance of the contract.34 Neither party is entitled to withdraw from the contract until the time for fulfilment has passed. But once it is clear that the event will never occur, the parties are in effect discharged without breach. Third, a contract may be discharged by the occurrence of a condition subsequent.35 Since the view that frustration operates on the basis of an implied term of that nature has been rejected,36 cases of frustration are dealt with as examples of discharge by operation of law, rather than discharge under a term of the agreement.37 Although contract terms providing for automatic discharge are fairly rare, a contract may contain what is, in effect, a contractual frustration clause.38 However, where a contract provides for automatic discharge on the occurrence of various events, one or more of which may be brought about by one of the parties, the presumption is that the contract confers a right of termination, even when there is in fact no element of fault.39

(iii) Discharge by operation of law [1208] Introduction. Discharge by operation of law may occur under statute, by supervening illegality or by frustration. Discharge under statute is a relatively unimportant category.40 For practical purposes, the consequences of discharge by supervening illegality are

those applicable on discharge by impossibility of performance. Since this is a category of frustration,41 discharge by frustration is the central concern. Where the plaintiff seeks to recover the contract price, that is, a money sum promised as the agreed return for non-monetary performance, a substantial performance will usually suffice.42 It is rare for a substantially performed contract to be discharged by operation of law.43 Moreover, a claim for the [page 502] contract price based on full or substantial performance by one party is a claim for an agreed (contract) sum.44 It is not a restitutionary claim.45 [1209] Discharge under statute. So far as domestic law is concerned, statute usually goes no further than recognition that a contract has been discharged. That is the position under the frustrated contracts legislation.46 There are, however, examples of statutes which describe the circumstances in which a contract is discharged by operation of law. It is sufficient to refer to two examples under the sale of goods legislation.47 First, a contract to sell goods at a price to be fixed by the valuation of a third party is ‘avoided’ if the third party does not or cannot make the valuation.48 The buyer must pay a reasonable price for goods (or any part thereof) delivered to and appropriated by the buyer.49 Otherwise, common law principles, preserved by the legislation,50 apply. Second, a sale of specific goods is ‘avoided’ where, without any fault on the part of the seller or buyer, the goods perish before the risk passes to the buyer.51 Although in each case the use of the word ‘avoided’ might suggest rescission, rather than discharge of the contract, the first illustrates discharge by failure of a condition precedent.52 The second is an illustration of discharge by frustration.53 In any event, because neither

party is in breach, and since there is no statutory requirement of counter-restitution, the restitutionary consequences are the same as when a contract is discharged without breach.54 Common law principles apply. However, except in the second case, there is little scope for their operation.55 Frustration of a contract of sale to which the United Nations Convention on Contracts for the International Sale of Goods 1980 applies56 is, subject to [page 503] the agreement of the parties,57 governed by the Convention. The concept is one of ‘exemption’ rather than ‘frustration’. If an exemption under the Convention operates, there is no liability for failure to perform. A situation analogous to frustration arises if the circumstances are such that a party’s failure to perform would otherwise amount to a fundamental breach. There is then a right of avoidance but no right to claim damages.58 By contrast with the situations explained above, the Convention also deals with claims for restitution.59 [1210] Discharge by frustration. Australian law has adopted60 Lord Radcliffe’s formulation of the principle of frustration in Davis Contractors Ltd v Fareham UDC.61 This is in terms that frustration occurs whenever the law recognises that ‘without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract’. There are three main categories: (1) impossibility of performance; (2) frustration of commercial purpose; and (3) supervening illegality. Subject to public policy considerations in cases of supervening

illegality, the same principles of restitution apply to each category.62

(iv) Consequences of discharge without breach [1211] Introduction. As in the case of discharge for breach,63 the fundamental rule is that the consequences of discharge of a contract depend on the intention of the parties. Default rules are applicable where the contract does not deal with this matter. These do not differ significantly from those applicable where the contract is discharged following breach or repudiation.64 The difference is that whereas discharge for breach or repudiation requires an election to terminate, discharge by frustration is automatic.65 [page 504] [1212] Extent of discharge. The position of the parties following discharge of a contract without breach can be summarised in three rules.66 First, discharge extends to the duty to perform, or to be ready and willing to perform, all unperformed obligations. Second, discharge does not affect rights and liabilities which have accrued unconditionally. These rights may relate to performance or damages for a breach which occurred prior to discharge. Third, terms intended to regulate the parties’ rights following discharge continue to apply. The principal examples are exclusion clauses and dispute resolution provisions such as arbitration, choice of forum and choice of law clauses. An allegation of frustration does not prevent reliance on an arbitration clause; and in the absence of an express contrary agreement, the arbitrator has jurisdiction to order restitution.67 Unless the frustrated contracts legislation applies,68 restitutionary claims are dealt with under general principles. These assume the operation of the three default rules. However, the contract may also deal with claims in restitution. That includes an agreement that

frustrated contracts legislation which would otherwise apply does not operate. [1213] Accrued rights. If either party breached the contract prior to its discharge, the accrued right to damages remains enforceable.69 But assessment of damages must take into account the fact of (and basis for) discharge.70 The obligation to pay a liquidated sum may have accrued due prior to discharge of the contract. At one time it was thought that payments due at the time of frustration always remained payable.71 The question is one of construction. However, the general rule is that the payment must have been earned prior to discharge. Since discharge is now recognised as a sufficient basis for restitution,72 whether discharge of the contract prevents recovery by the payee of a payment due prior to frustration can usually be tested by considering the restitutionary position. The accrued right is not [page 505] unconditional if the payer would have an immediate right to restitution on the basis of failure of the agreed return.73 [1214] Discharge as a basis for restitutionary claims. Discharge without breach — rather than rescission ab initio — is a sufficient basis for considering a restitutionary claim. Although it took a long time to establish in the context of frustration, this occurred in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.74 The House of Lords rejected the view that restitution is unavailable because frustration is not a rescission ab initio. In doing so, it overruled a prior line of authority which had, arguably, been adopted by the High Court in Re Continental C & G Rubber Co Pty Ltd.75 Mason CJ stated in Baltic Shipping Co v Dillon (The Mikhail Lermontov)76 that Fibrosa ‘correctly reflects the law in Australia and, to the extent that it is inconsistent, should be preferred to the decision’ in Re Continental. Albeit that it was

only in a footnote, there is no reason to doubt the efficacy of discharge by frustration as a basis for raising a restitutionary claim.77 The absence of fault in the context of contracts discharged without breach does not of itself lead to any significant differences in the restitutionary analysis, as compared with the position where a contract is discharged following breach or repudiation.78 Major differences arise under the frustrated contracts legislation.79

2. Recovery of Money Paid (a) General [1215] Introduction. Where a contract is discharged without breach, and a plaintiff-payer seeks to recover money paid to the defendant-payee, the first question is one of construction.80 In the absence of agreement, express or implied, the claim is one for restitution which at common law depends on proof of a total failure of the agreed return.81 The same is usually true where a plaintiff-payee seeks to recover from the defendant-payer an overdue payment.82 There is no entitlement to recover the payment as a contract debt if the defendant would have an immediate [page 506] claim for restitution based on total failure of the agreed return.83 However, this assumes that the payee is seeking the payment simply on the basis that it was earned prior to discharge. Failure of the agreed return is not a defence for a payment if the contract expressly provides that the sum in question remains payable notwithstanding discharge.84 In practice, the common law requirement of total failure of the agreed return is a requirement of substantial failure. However, the position may be qualified by statute.85

[1216] Agreement. Where the contract expressly provides for discharge on the occurrence (or non-occurrence) of a particular event, it may also indicate what is to happen to payments made prior to discharge. For example, a contract for the sale of land may confer a right to terminate if a plan of subdivision is not approved within a specified period, and provide that money paid under the contract must be returned if the right is exercised.86 If not dealt with expressly, the question is whether an agreement can be inferred, or whether a term should implied.87 Thus, where a contract is discharged without fault, and a provision of the contract entitles one party to retain a payment only in cases of default, the construction of the contract may be that the payment must be returned. However, searching for an implied term is unnecessary in cases of total failure of the agreed return.88

(b) Total Failure of Consideration (i) General [1217] Introduction. The basis for restitution derived from quasicontract is total failure of the agreed return for a payment. The requirement of total failure was influenced by the implied contract theory,89 the general refusal of the common law to apportion payments,90 as well as the view that rescission ab initio is a precondition for restitution.91 Thus, in a number of Coronation cases — Chandler v Webster92 is the best known — it was reasoned that because frustration does not cause a rescission ab initio there can be no total failure of consideration. It was not until Chandler was overruled in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd93 that total failure of the agreed return became available as a basis for restitution of payments made prior to frustration. [page 507]

Fibrosa is an important staging post in the movement from quasicontract to the modern concept of restitution for unjust enrichment.94 The reasoning in Fibrosa is part of Australian law. This can be seen in dicta in some of the Australian frustration cases,95 by decisions in analogous contexts,96 by Mason CJ’s statement in Baltic Shipping Co v Dillon (The Mikhail Lermontov),97 as well as dicta in many other cases.98 [1218] Issues. Although in practice applied as a requirement of substantial failure, the total failure requirement still applies. One issue is therefore how a total failure of the agreed return is established, including as a defence to the recovery of a payment overdue at the time of discharge. Subsidiary issues also arise, such as the impact of expenditure in reliance. The scope of restitutionary recovery extends to failure of the agreed return for a severable payment. Reference may also be made to specific statutory qualifications outside the frustrated contracts legislation.

(ii) Cases of total failure [1219] Failure of condition precedent. Discharge without breach may occur when a non-promissory condition precedent fails. One such situation is where the failure of the contingency discharges the contract without either party being at fault.99 In any such case, an argument may be made in favour of an implied term. If so, an order for repayment simply gives effect to the parties’ agreement.100 However, if no term can be implied, restitution may be ordered if the agreed return for any payment made under the contract fails totally. Since fault is irrelevant in relation to a part payment,101 restitution is not affected by the fact that, at some time prior to discharge, the payer breached the contract. [page 508]

If a deposit was paid prior to discharge, it is generally recoverable following discharge without breach. However, various explanations are possible. Although the contractual consideration for such a payment may be entry into the contract, the deposit is also an element of the purchase price. On that basis, a total failure of the agreed return occurs on discharge. However, the scope of any forfeiture clause must be considered.102 In Clifton v Coffey,103 a deposit was paid under an agreement to purchase the lease and goodwill of a hotel. The contract stated that part of the purchase price was to be financed from money to be advanced by a brewery company. It was discharged when that company failed to advance the money. The High Court said that justice required the repayment of the money. No precise basis is stated, but since there was no right to forfeit the deposit it was a clear case of total failure. Again, in Jones v Walton104 the parties entered into a contract for the sale of land on subject to finance terms. When the purchaser was unable to obtain finance, it treated the contract as discharged. The Full Court of the Supreme Court of Western Australia held that the deposit which the purchaser had paid was recoverable. [1220] Frustration. The leading frustration case is Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.105 Buyers prepaid £1000 on account of an initial payment of £1600 due under the contract. The latter was a component of the total price of £4800 which was payable for machinery to be built and supplied by the sellers. Because the buyers resided in territory occupied by enemy forces during the Second World War,106 and because delivery was to be made in occupied territory (Gdynia), the contract was frustrated. Tucker J and the English Court of Appeal dismissed the buyers’ claim for restitution of the £1000 payment.107 However, the House of Lords held that they were entitled to restitution on the basis of total failure of the agreed return. Lord Wright referred108 to cases of frustration, impossibility and discharge for any reason not involving fault on the part of the payer as ‘characteristic instances’ where recovery for an unjust enrichment may be based on total failure of the agreed return. It was also recognised109 that

[page 509] the concept applies to severable payments, provided the agreed return for the severable part has failed. It follows from Fibrosa that if a buyer of goods pays the price in advance, the amount paid is recoverable as restitution (unless there is an express term to the contrary) if subsequent discharge by frustration causes a total failure of the agreed return. Thus, in Comptoir d’Achat et de Vente du Boerenbond Belge SA v Luis de Ridder Limitada (The Julia)110 there was a total failure of the agreed return when frustration prevented delivery of goods under an international sale. The buyers had paid the price in exchange for a delivery order, but since title to the goods was not transferred the buyers were entitled to restitution.

(iii) Scope of the concept [1221] Cases of partial failure. Total failure of the agreed return is restricted to payments for which no part of the agreed return is received.111 Unless immaterial or incidental, the receipt of part of the agreed return prevents restitution being ordered. For example, where risk attaches under an insurance policy prior to discharge by frustration of the contract, there is merely a partial failure of consideration, and restitution will be denied under common law principles.112 The classic case is Whincup v Hughes.113 Hughes agreed to instruct George Whincup (the son of the plaintiff), for six years in the business of a watchmaker and jeweller. The plaintiff paid a £25 premium. After 12 months Hughes died and the plaintiff sought to recover the money, or at least part of it. The trial judge held that although the full sum was not recoverable, it could be recovered in part for failure of the agreed return. The Court of Common Pleas held that the trial judge was wrong: the plaintiff could recover nothing. It was reasoned that since the instruction of Whincup amounted to part performance, there was only a partial failure of the agreed return on Hughes’s death. Moreover, there was no basis for apportioning the payment made.

More recently, in Hodder v Watters114 the plaintiff agreed to purchase a business and land, and paid £50 by way of deposit and £150 on taking possession. However, the Treasurer’s consent was refused. The refusal was not due to the plaintiff’s breach. Therefore, the forfeiture clause in the contract did not apply and the deposit was held to be recoverable. But the £150 was not recoverable:115 any failure of the agreed return was merely partial. The better view, however, is that this aspect of the decision was wrong. Putting express or implied agreement to one side, there are at least two exceptions to the requirement of total failure of the agreed return. The first is statute.116 [page 510] The second exception is that a severable payment is recoverable on the basis of partial failure of the agreed return.117 This exception is of course more apparent than real because the requirement of total failure applies to the payment at issue. Where a contract is severable in the sense that there is a distinct agreed return for each payment, restitution is available if, in relation to the payment, failure of the agreed return is total. A third exception may have been created by the High Court in Roxborough v Rothmans of Pall Mall Australia Ltd.118 Rothmans, a manufacturer and wholesaler of tobacco products, passed on the cost of certain licences to retailers, including the applicants. The invoices issued by Rothmans in respect of goods supplied included (as required by legislation) a separate component referable to and identified as the licence fee. Retailers who made such payments were not required to obtain their own licences.119 In substance, the licence fees were excise duties, and on that basis the legislation under which the licences were issued was invalid.120 The retailers sought restitution of the fees which, although paid to Rothmans, would not be paid to the government. They raised various bases, including failure of the agreed return. The Full Federal Court held121 that because the contracts had been

performed, any failure of the agreed return was merely partial. Therefore, restitution was not available. The retailers were successful in the High Court.122 Payments referable to the licence fees were regarded as a separate and distinct component of the overall price paid by the retailers for the supply of goods. The invalidation of the legislation meant that there was a total failure of the agreed return in respect of that component.123 However, Rothmans did not promise to pass on the amount paid to the government. The price of the goods was certainly severable in the sense that it was possible to identify the amount added to the price of the goods. Accordingly, the view apparently expressed is that ‘failure of the agreed return’ may apply even though there is, as a matter of contract construction, no designated agreed return for the payment in question.124 On the facts, a failure of the agreed return was caused by failure of a non-promissory condition.125 [page 511] The severability concept applied in Roxborough relates to supplementary payments. Although the ‘licence payments’ were invoiced as a component of the price, in fact they were payable in addition to the price of the goods. Once it was established that the legislation did not require the retailers to obtain licences for the period attributable to the payments made, no benefit could be obtained for the payments made to Rothmans.126 From that perspective, there was a failure of the agreed return and the applicants were entitled to restitution.127 Given that the facts established ‘a failure of a distinct and severable part of the consideration for the net total payments’,128 it was plainly otiose to say that Rothmans acted unconscionably in refusing to return the payments.129 Gummow J nevertheless considered130 that it was ‘unconscionable for Rothmans to enjoy the payments in respect of the tobacco licence fee, in circumstances in which it was not specifically intended or specially provided that Rothmans should so enjoy them’. In

his view, Rothmans was not entitled to ‘enjoy’ the payments because there was a ‘failure of consideration’ in the sense of a ‘failure to sustain itself of the state of affairs contemplated as a basis for the payments the [retailers] seek to recover’.131 But that proposition would hold true for any payment for which the agreed return was not fully provided prior to discharge (for any reason), and also for any payment for which the contract does not identify a distinct agreed return. The judgment therefore appears to proceed on the basis that any partial ‘failure of consideration’ is sufficient, or sufficient provided unconscionability in retention can be established. [1222] Identification of the agreed return. It is always crucial to identify the agreed return for a payment.132 In Whincup v Hughes,133 Montague Smith J said that the ‘action for money received cannot lie where the contract has been partly performed’. This is too wide. It is not part performance per se which renders the failure of the agreed return partial. Instead, it is the receipt of part of the agreed return for the payment in question. The High Court’s refusal to award restitution in Re Continental C & G Rubber Co Pty Ltd134 may be supported on the basis of partial failure. [page 512] In April 1914, Continental contracted with W Anderson & Sons Pty Ltd for the building of machinery and its erection on Continental’s land. Clause 22 provided that payments were to be made to Anderson at the rate of 90 per cent ‘on the value of the machinery in progress’, as certified by an engineer. Payments totalling £6000 (for which certificates were given) were made, but no part of the machinery was delivered. Substantially all Continental’s shares were owned by enemy aliens and Isaacs J appointed a controller for the period of the war or until further order. Subsequently, an order was made to wind up the business. The contract was then frustrated.135 Isaacs J referred a summons by the controller to the Full High Court, seeking the

determination of certain questions,136 including whether the controller was entitled to restitution of the £6000 paid. It was held that there was no entitlement.137 The most straightforward justification is that the failure of the agreed return was inapplicable. Clause 22, in providing that payment was to be made ‘on the value of the machinery in progress’, as certified by an engineer, indicated either that payments fell due under an agreed procedure or that any failure of the agreed return was merely partial.138 Either way, restitution was not available. However, the court also relied on a broader basis. Knox CJ and Barton J cited139 Appleby v Myers140 and Civil Service Co-operative Society v General Steam Navigation Co141 for the view that frustration does not cause a total failure of the agreed return. The former dealt with a claim for reasonable remuneration, and said nothing about failure of the agreed return. But the latter proceeded142 on the reasoning later rejected in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd,143 namely, that there can be no total failure of the agreed return unless a contract is rescinded ab initio. This reasoning is also apparent in Isaacs and Rich JJ’s statement144 that ‘failure of consideration … is based on the assumption that either the common law on the outbreak of war made the delivery impossible or the [Enemy Contracts Annulment Act 1915 (Cth)], subsequently but retrospectively, did so’. They had earlier invoked145 the implied contract theory of quasi-contract. These aspects of the court’s reasoning must now be regarded as erroneous.146 Re Continental can be confined to its own facts, including the agreement in cl 22. [page 513] As indicated above,147 the decision in Roxborough v Rothmans of Pall Mall Australia Ltd148 may suggest a broader view of what should be regarded as the ‘agreed return’. Thus, the High Court treated payments made as licence fees as paid in respect of an agreed return which failed even though there was no reciprocal obligation in relation to the payments.

[1223] Expenditure in reliance. In Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd149 the House of Lords pointed out that if the sellers had incurred expenses there was an element of injustice in ordering restitution of the buyers’ prepayment. It was thought unfair that a payee who has incurred expenditure in reliance should be liable for the whole part payment. This injustice was soon remedied by the English frustrated contracts legislation.150 However, Fibrosa clearly shows that at common law expenditure in reliance on a prepayment does not of itself prevent failure of the agreed return being total. Therefore, it is not a defence to a claim for restitution that the payee has incurred a reliance loss.151 However, in some such situations the defence of change of position may now apply, and reduce the amount of the payer’s claim.152 [1224] Exclusion of the concept. Restitution of money paid prior to discharge on the basis of a total failure of the agreed return is not available if a provision of the contract excludes the concept. Generally, such an agreement must be express.153 However, Re Continental C & G Rubber Co Pty Ltd154 is explicable as a case of implied agreement. Isaacs and Rich JJ emphasised155 that cl 22, which referred to payment for ‘executed’ work, excluded the total failure of the agreed return concept for payments made under the clause. It is also arguable that if the agreement is that a sum can be retained unless discharge is based on the payee’s fault, the implication is that the payment is not recoverable where discharge occurs without either party being at fault. Thus, where a deposit payment is made subject to a provision for forfeiture if the contract is discharged otherwise than by reason of the fault of the payee, the deposit may be forfeited provided the payee was not at fault. For example, if a contract is discharged for failure of a condition there may be an element of fault on the part of the payer. In Duncan v Mell,156 the court was influenced by the purchaser’s conduct in contracting to purchase a second [page 514]

lease which led to a refusal of the Minister’s consent. Although the contract was not discharged for default, the purchaser’s conduct was held to activate the forfeiture provision. [1225] Recovery of sums due. Recovery by the intended payee of a payment under a contract discharged without breach is a question of construction.157 The issue, in most cases, is whether the right to payment was earned prior to discharge. If the payment was not earned, it is open to a payer to put forward prospective total failure of the agreed return as a defence to the claim.158 The line of cases supported by the authority of McDonald v Dennys Lascelles Ltd159 applies. Indeed, McDonald may have been a case where discharge occurred without breach.160 The presumption of dependency of obligation161 implies a general rule that an unpaid sum is not recoverable once the contract has been discharged. Unless the agreed return has already been provided, discharge results in a total failure of the agreed return. However, one aspect of Chandler v Webster162 was the view that a payment that was due at the time of discharge remained payable following discharge. This view was overturned in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.163 Lord Atkin said:164 I should add that, if it was wrong in Chandler v Webster [1904] 1 KB 493 to refuse the plaintiff relief on his claim, it was also wrong to give the defendant judgment on his counterclaim. It is true that the right to receive the balance had accrued before frustration, but if the money had been paid it could have been recovered back as the £100 [paid] could, and the principles relating to circuity of action would afford a defence to the counterclaim.

However, the Chandler v Webster view influenced the High Court in Re Continental C & G Rubber Co Pty Ltd.165 The summons referred by Isaacs J to the Full High Court included the question whether the contractor (W Anderson & Sons Pty Ltd) was entitled to payments in addition to the £6000 received. Since payment was due only on certification by the engineer, no money was payable. Whether total failure of the agreed return would have provided a defence to the claim did not need to be considered. However, given the citation166 by Knox CJ and Barton J of Chandler v Webster and Elliot v Crutchley,167 it seems

clear that the court would not have entertained the defence had the money become payable on a specified date. Although the rejection of those cases in later decisions implies that this part of the reasoning in Re Continental is no longer good law, the decision was correct on the facts. [page 515] If a payment has been earned by the payee, in partially performing the contract, it remains payable. For example, in Hirsch v The Zinc Corp Ltd,168 in the context of frustration under trading with the enemy legislation, it was said that liability to pay for deliveries of goods made prior to discharge by frustration could be enforced, although the ability to do so might be suspended. Such claims can only be brought after the right to payment has accrued. Generally, that will occur prior to discharge. But that is not always the position. In Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd,169 Dixon and Evatt JJ said170 that ‘whether an inchoate liability arising [under a contract] does or does not become enforceable must in the end be governed by the intention of the parties’. In that case, the plaintiff sued to recover commission on the sale of machinery payable under an agency contract. The contract provided for the defendant to pay commission on arrival of the machinery at Fremantle. However, the contract was stipulated to terminate automatically on the discharge of another contract between the plaintiff and a manufacturing company. That contract was discharged while machinery the subject of the agency agreement was on its way to Fremantle. It was held that as the commission was earned prior to discharge of the contracts, payment could be enforced even though the time for payment arrived after discharge. No defence based on prospective failure of the agreed return was raised, and none could have been raised.171 [1226] Claims under or affected by statute. Even if the frustrated contracts legislation172 is inapplicable, restitutionary claims to recover

money paid may be affected by statute.173 The sale of goods legislation preserves a buyer’s right to restitution for total failure of the agreed return.174 This may apply where a contract for the sale of specific goods is ‘avoided’ under the sale of goods legislation,175 where the contract is discharged under an express term which makes no provision for the consequences of discharge, or if the contract is discharged by frustration under the general law.176 Unjust enrichment is the rationale for all such claims. A claim for restitution of payments made under an international sale of goods contract may be governed by the United Nations Convention on [page 516] Contracts for the International Sale of Goods 1980.177 Once the contract has been ‘avoided’,178 a party who has performed the contract, either wholly or in part, is entitled to restitution.179 In relation to money paid, there is no requirement of total failure of the agreed return.180

3. Restitution for Non-monetary Benefits (a) General [1227] Introduction. There is very little case law on restitution for a nonmonetary benefit conferred prior to a contract becoming ineffective by reason of discharge without breach. If a contract is discharged by agreement, the matter will be governed by express terms. Claims for reasonable remuneration following discharge under a contractual term, do not appear to exist under Australian law.181 That leaves discharge by frustration as the most likely source of authority. In Hoenig v Isaacs,182 Denning LJ ventured to suggest that a building contractor who has not substantially performed may succeed on a claim for reasonable remuneration if the failure in performance is due to

impossibility or frustration. However, an award of restitution for a nonmonetary benefit conferred prior to discharge by frustration is virtually unknown to the common law. This is due, in large part, to the influence of the implied contract theory of quasi-contract.183 The adoption of unjust enrichment as the basis for restitution in the context of ineffective transactions in general184 means that the implied contract analysis is no longer applicable. Instead, unjust enrichment is the basis for analysis.185 Whether that will lead to adoption of the principle stated by Lord Denning remains to be seen. And given that frustrated contracts legislation now operates in a number of Australian jurisdictions (as well as in England), the wait may be a long one. The relevant criterion for unjust enrichment is acceptance of benefit.186 Although benefits conferred prior to frustration must be distinguished from those subsequently conferred, acceptance is an extremely difficult criterion to satisfy. Restitutionary claims for reasonable remuneration have therefore rarely succeeded. On one view,187 ‘acceptance’ establishes both benefit and [page 517] injustice. Under this approach, partial satisfaction of a contractual request does not of itself enrich the defendant. The other view is that acceptance goes simply to injustice, receipt of part of the agreed return being a sufficient benefit. Whichever view is correct, the general rule is that ‘acceptance’ must be ‘free’. Therefore, the requirement is satisfied if the defendant enjoyed a free choice to accept or reject the benefit. If the frustrating event destroys the benefit, restitution is not available. [1228] Presumptions as to risk. In analysing the right to restitution the contractual allocation of risk is important. The risk of premature discharge of a contract affects all contracts. Materialisation of that risk without either party being at fault does not, under the current law, establish a right to restitution in respect of prior (non-monetary)

performance. However, it does provide a setting in which restitution can be considered. Discharge by agreement illustrates that contracting parties may themselves cause the risk to materialise. Discharge (without breach) under a contractual term gives effect to a particular risk allocation. Although discharge by frustration, as an example of discharge by operation of law, assumes that the parties did not allocate the risk that the frustrating event would occur, it is nevertheless true that, at the moment before frustration, the parties were governed by an agreed risk allocation. In other words, any prior performance was given and received on an agreed basis.188 If the parties have expressly dealt with the impact of discharge on prior performance, their agreement governs the matter and no issue of restitution arises. That is the usual position in cases of discharge by agreement. There may also be an express agreement where discharge is pursuant to a contractual term, or on failure of a condition precedent.189 But express terms dealing with the impact of discharge by operation of law are unusual.190 Restitutionary issues are therefore most likely to arise in the context of discharge by frustration. An obvious question is what conclusion should be drawn from the failure of the parties to address the matter. In Appleby v Myers,191 a claim for reasonable remuneration failed when a contract to construct machinery was discharged by frustration. A fire occurred at the defendant’s premises which also destroyed the partially constructed machinery. In the Exchequer Chamber, it was said that the plaintiffs were fortunate that the fire had not merely damaged the machinery. If the contract had not been frustrated, delivering the judgment of the court, Blackburn J said192 that the plaintiffs ‘must have done that part again, in order to fulfil their contract to complete the whole and “put it to work …”’. It is therefore unsurprising that the implied contract approach of quasi-contract treated the inability of the builder to sue on the contract as conclusive against restitution. There is, however, an ellipsis in saying that because the

[page 518] contract has not been performed there is no right to restitution. Not only has the implied contract approach been rejected, but it is also clear that the rule providing for discharge by frustration says nothing about independent claims. In other words, merely reciting that frustration discharges the parties is not a complete statement of the remedial position of the parties. Although there is no necessary inconsistency between an award of reasonable remuneration following discharge of the bargain, restitutionary analysis must necessarily respect the parties’ initial risk allocation. Since it is clear in a case like Appleby v Myers that the contract price cannot be recovered, the first question is whether the contract deals with the circumstances which have occurred. So, if a consequence of frustration is the destruction of partially completed building work, the issue is whether that risk was allocated. A detailed construction contract may well include provisions capable of being applied. If, for example, an insurance obligation deals with the situation restitution may have no role to play. In other cases it is necessary to deal with the impact of the event which discharges the contract. Restitutionary analysis qualifies considerably the approach of the common law at the time when Appleby v Myers was decided — unless a contract could be implied, loss and benefit lie where they fall.193 Liabilities are now often imposed by law even though the parties failed to deal with a matter with which they could have dealt. In relation to reasonable remuneration claims, the difficulty lies in formulating bases for restitution which do not undermine the parties’ allocation of risk.

(b) Quantum Meruit for Benefits Conferred Prior to Frustration [1229] The influence of quasi-contract. Most claims for reasonable remuneration have concerned non-monetary benefits alleged to have been conferred prior to frustration. The well known

examples in quasi-contract are Cutter v Powell194 and Appleby v Myers.195 In the former, the defendant agreed to pay Cutter 30 guineas 10 days after the arrival of the vessel Governor Parry in Liverpool, provided Cutter did his duty as second mate on a voyage from Jamaica to Liverpool. He died before completing the voyage and the court held that his executrix could not recover a reasonable sum for the services rendered prior to his death. The rule applied was that where payment is due under an express contract on the fulfilment of a condition precedent, no contract can be implied if the condition fails. Lord Kenyon CJ considered196 the rule to have ‘prevailed so long as to be reduced to an axiom in the law’. [page 519] In Appleby v Myers, the plaintiffs were engineers who agreed under a contract with the defendant to build 10 items of plant and machinery for a price of £459. The fire that occurred at the defendant’s premises frustrated the contract because it destroyed the eight items previously erected and fixed in the premises. The plaintiffs sued on a stated case to recover £419 for work done and materials supplied. Although the Court of Common Pleas197 gave judgment in the plaintiffs’ favour, the defendant was successful in the Exchequer Chamber. This was on the basis that there was nothing to ‘justify the conclusion that the parties … entered into a fresh contract’.198 [1230] Reception in Australia. The essence of the decisions explained above199 is that, subject to accrued rights, loss and benefit lie where they fall when a contract is frustrated. The law was adopted by the High Court in Hirsch v The Zinc Corp Ltd200 and Re Continental C & G Rubber Co Pty Ltd.201 In the former, in the context of frustration under trading with the enemy legislation, Isaacs J agreed that no contract could be implied where an express contract would be unlawful. In Re Continental, when the contract was frustrated and the company ordered to be wound up, the contractor was not entitled to

prove in the liquidation for work done prior to frustration. There was no contractual right to payment and no liability (in quasi-contract) could be implied. Mason CJ’s statement in Baltic Shipping Co v Dillon (The Mikhail Lermontov),202 that Re Continental is no longer to be followed in Australia, was limited to its inconsistency with Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd.203 Nevertheless, Deane J made the point in Pavey & Matthews Pty Ltd v Paul,204 in the context of his general discussion of claims for reasonable remuneration, that discharge by frustration may provide the occasion for, and part of the circumstances giving rise to, the ‘imposition by law of the obligation to make restitution’. [1231] Impact of unjust enrichment. The adoption of unjust enrichment as the unifying concept for restitution,205 means that it informs any claim for reasonable remuneration following discharge of a contract without breach.206 For those who view the recognition of unjust enrichment as involving, at most, a change in terminology, recognition of unjust enrichment makes no difference to the substantive law. Although that is the wrong approach,207 decisions such [page 520] as Cutter v Powell,208 Appleby v Myers209 and Re Continental C & G Rubber Co Pty Ltd210 remain good law until the High Court rules otherwise.211 The mere fact that valuable performance was rendered prior to frustration does not generate a claim for restitution under the general law. But it seems impossible to say that rejection of the implied contract theory has no impact. At the very least, it requires something to be put in place of the implied contract reasoning. In addition, the enactment of the frustrated contracts legislation shows dissatisfaction with the uncompromising approach of the old cases. It is no longer

acceptable to say, simply, that loss and benefit remain where they fell.212 One way to approach the old cases is to say that the position where a claim to reasonable remuneration is made should mirror the position where the plaintiff claims money paid prior to frustration. If the plaintiff received no part of the agreed return for its performance, it is arguable that injustice is prima facie established.213 But enrichment must also be established. The fact that liability in restitution is independent of contract signals that the inability of the plaintiff to recover the contract price is not determinative. However, one view is that a defendant is not enriched merely because the contract was partially performed prior to its discharge. The usual concept applied to establish benefit, namely, ‘acceptance’,214 is difficult to apply because receipt and retention are referable to the contract. In addition, both parties acted without knowledge that the contract would be prematurely discharged. Nevertheless, as in the context of claims against defendants in breach of contract,215 one possible approach is to treat the (contractual) receipt of partial performance as an enrichment.216 That is consistent with the law’s treatment of contractual receipt prior to frustration provides as a defence to a claim to recover money paid. But in the context of non-monetary benefits, failure of the agreed return seems an inapposite basis for establishing injustice.217 In reassessing the old cases, three situations can be distinguished. First, the performance may, as in Cutter v Powell, be consumed prior to frustration. [page 521] Unless the contract shows a particular risk allocation, the defendant should be liable in restitution. Services consumed over time are necessarily beneficial. The claim is one for reasonable remuneration, and if acceptance provides the appropriate basis or analogy,218 valuation should be at the market rate. However, because the

‘acceptance’ is based on the contract, the contract price (pro-rated) must set a ceiling on recovery.219 Second, an unconsumed performance may be unaffected by frustration. Denning LJ’s suggestion in Hoenig v Isaacs220 — that a building contractor is entitled to reasonable remuneration — appears to assume a case where frustration does not affect the benefit conferred. If the benefit can be returned to the plaintiff, the defendant’s refusal to do so amounts to acceptance. If the benefit cannot be returned, allowing a claim for restitution would contradict Appleby v Myers. Acceptance of benefit must be established independently of contractual receipt.221 Valuation would then be in accordance with the normal reasonable remuneration measure.222 However, there is no reason in principle why the defendant should not be held liable in a sum which represents the increase in the value of the defendant’s assets. Restitution is then based on incontrovertible benefit.223 Third, unconsumed performance may be diminished in value by frustration. The bases for liability referred to above are applicable. In relation to valuation, there are three options:224 ignoring diminution in value; having regard to the impact of discharge on the value of unconsumed performance; and having regard to the frustrating event. It is difficult to deny the importance of considering the impact of the frustrating event. Accordingly, if that event destroys the benefit received, the result is the same as in Appleby v Myers, albeit with a different justification.225

(c) Quantum Meruit in Other Situations [1232] Benefits conferred after frustration. Where a nonmonetary benefit is conferred after a contract has been frustrated, a claim for reasonable remuneration may succeed. In Société Franco Tunisienne D’Armement [page 522]

v Sidermar SpA,226 Pearson J held that a claim for reasonable freight was available to a carrier who was forced by closure of the Suez Canal to take the longer voyage around the Cape. More recently, in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales227 it was assumed by the High Court that building contractors were entitled to reasonable remuneration in respect of work done after a building contract was frustrated. The contractors had agreed to excavate tunnels for the construction of the Sydney Eastern Suburbs Railway. Due to the noise level of its operations, local residents obtained an injunction. This did not stop the work, but it did prevent the contractors completing it on time and the contract did not confer any right to payment for the contractors’ increased costs. The court held that the contract was frustrated. Therefore, payment for work done after the date of frustration was not regulated by the express contract. Since the benefit of the contractors’ work was conferred and accepted independently of the contract, the contractors’ claim could have been characterised as restitutionary in nature. However, that does not appear to have been the court’s conclusion. In principle, there is more justification for treating a case (like Codelfa) where the parties are in dispute as to frustration as leading to a claim for restitution than where work is done with knowledge of the frustrating event. In the latter context, the proper analysis may be implied contract.228 However, even where there is a dispute, it seems somewhat unreal to suggest that a principal’s acceptance of building work is independent of contractual undertakings as to the quality, fitness, and so on, of the work.229 It would similarly be unreal to suggest that a contractor is acting without the benefit of agreed liability limitations. Thus, in Codelfa it appears to have been assumed that performance post frustration incorporated much of the discharged contract. This suggests implied contract, rather than restitution.230 [1233] Contracts discharged for reasons other than frustration. A reasonable remuneration claim may be made in contexts other than frustration.231 For example, a claim might be made where a contract is

[page 523] discharged on the failure of a condition precedent, or by an election to terminate. Such a claim is governed by the same rules which would apply to a common law claim following frustration. Acceptance of benefit is therefore the principal criterion. Assume, for example, that an estate agent is to be paid commission if the principal enters into a contract of sale with a person introduced by the agent. If the principal sells to someone else, or decides not to sell at all, the agency contract is discharged: the condition precedent can never be fulfilled. A claim for reasonable remuneration must rely on the defendant’s acceptance of the benefit of the agent’s services in seeking a purchaser. However, the conventional view is that the issue cannot arise. Any claim to reasonable remuneration will fail unless the conduct of the principal amounted to a breach of contract,232 but in that situation the agent is not required to formulate its claim as being for restitution.233 In Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd,234 the plaintiff accepted an appointment as a superannuation fund administrator and consultant actuary and agreed to promote a superannuation fund. For reasons for which the defendant was not contractually responsible, the fund did not proceed. In those circumstances, there was no express entitlement to payment under the agreement, which said that no remuneration other than that set out would be paid to the plaintiff. The Full Court of the Supreme Court of South Australia refused to imply a term entitling the plaintiff to reasonable costs and expenses. However, the contract appears to have been treated as having been discharged without breach, and a majority of the court held that a claim in restitution for reasonable remuneration succeeded. The case is important in acknowledging that unjust enrichment does not require a tangible benefit.235 However, the risk that the fund might not be established was allocated to the plaintiff by the contract. Accordingly, we agree with the dissenting judgment of Duggan J, who rejected the claim.236

Independent Grocers was distinguished in Smits v Roach,237 where a solicitors’ contract of retainer provided that if a client exercised a right to terminate the contract the solicitors could recover costs up to the time of discharge. There was no corresponding right to payment if the solicitors exercised their power to stop acting for the client. The New South Wales [page 524] Court of Appeal held that the solicitors were not entitled to reasonable remuneration as on a quantum meruit.238 [1234] Reliance expenditure prior to discharge. Recognition of a right to reasonable remuneration for reliance loss would be inconsistent with the requirements of unjust enrichment.239 Since an essential requirement is that the plaintiff conferred a benefit on the defendant, no claim is available for expenses incurred, even if necessary for performance. Thus, in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd240 although the buyers of the machinery successfully claimed restitution of their part payment made prior to frustration, the sellers did not seek ‘restitution’ for any expenses incurred, for example, in purchasing materials. The House of Lords made it clear that such a claim would have failed.241 Because there was a single indivisible request to manufacture and deliver, they were not benefited from any expenses incurred by the buyers. Similarly, in Re Continental C & G Rubber Co Pty Ltd242 the contractor was not entitled to prove in the liquidation for work done prior to frustration. Clearly, that included any expenditure incurred as part of that work. [1235] Claims under or affected by statute. The main legislation applicable to restitutionary claims arising from contracts discharged without breach is the frustrated contracts legislation. This is discussed

separately.243 Brief reference may also be made to certain other legislation. Where there is an agreement to sell goods under terms that the price is to be fixed by the valuation of a third party who cannot or does not make the valuation, the sale of goods legislation provides that the contract is ‘avoided’.244 However, a proviso states that the buyer must pay a reasonable price for goods (or any part of the goods) delivered to and appropriated by the buyer. Since the contract is avoided, the claim must be either restitutionary or statutory in character. Whichever way it is examined, the requirements are those set out in the legislation, namely, delivery and appropriation. However, these requirements are analogous to acceptance of benefit.245 A claim in relation to a benefit conferred under a contract discharged without breach may be made under the apportionment legislation.246 Under this legislation,247 periodical payments in the nature of income are considered as accruing from day to day (like interest on money lent) and are apportionable in respect of time accordingly. Therefore, if a contract [page 525] is discharged without breach by either party, prior to a sum falling due for payment, a claim may be made for a proportionate part of the sum, provided that the payment is a periodical one in the nature of income.248 Since the legislation treats the defendant as benefited to the extent of performance, and liable accordingly, there is an analogy with unjust enrichment. However, valuation is at the contract rate, and the claim is contractual or statutory in character. If an international sale of goods contract is regulated by the United Nations Convention on Contracts for the International Sale of Goods 1980,249 a party who has performed the contract, either wholly or in part is entitled to restitution if the contract has been ‘avoided’.250 This includes cases where breach is not the basis for avoidance.251 The

provision applies to whatever has been supplied (or paid) under the contract. If a buyer must make restitution of goods or part of them, the buyer must account to the seller for all benefits derived from the goods.252 There is no requirement of acceptance of benefit.253 However, the parties may agree to their own regime, or adopt a domestic law regime.254

4. Frustrated Contracts Legislation (a) General [1236] The legislation. The various statutes applicable on frustration state schemes for ‘adjustment’.255 In New South Wales adjustment following discharge by frustration is regulated by the Frustrated Contracts Act 1978 (NSW).256 The enactment of the legislation followed a law reform report in which the only existing model — the Law Reform (Frustrated Contracts) Act 1943 (UK) — was severely criticised.257 In Victoria, claims following discharge by frustration are regulated by Pt 3.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic). This replaces Pt 2C of the Fair Trading Act 1999 (Vic), which in turn replaced the original enactment, namely, the Frustrated Contracts Act 1959 (Vic).258 Unlike the legislation in New South Wales (and South Australia), the regime is modelled on the Law Reform (Frustrated Contracts) Act 1943 (UK).259 [page 526] In South Australia, adjustments are regulated by the Frustrated Contracts Act 1988 (SA).260 The enactment of the legislation followed a law reform report261 in which the absence of a generally accepted model for dealing with the consequences of frustration was treated as justification for a fresh look at the issue.262

Taking account of the common law applicable in other jurisdictions, there are no less than four different regimes dealing with the consequences of frustration.

(b) Objects and Bases for Recovery [1237] Objects. As noted above, one feature common to all the legislative schemes is ‘adjustment’ of rights following discharge of a contract by frustration. Another common feature or objective is reform of the law of restitution, as understood at the time when each regime was enacted.263 The general law concepts of failure of the agreed return and acceptance of benefit are not invoked.264 The New South Wales legislation adopts the basic division of the law of restitution between monetary and non-monetary benefits. It also relies on some logical extensions of the common law consistent with an unjust enrichment perspective. For example, all money paid prior to frustration must be repaid.265 However, the guiding principle is apportionment of loss caused by frustration.266 Thus, the rationale for adjustment is the conception that frustration may cause a loss, rather than a concern that premature discharge may result in one party being unjustly enriched at the expense of the other. This perspective can be seen, for example, in the right to recover expenses incurred purely on the basis of loss sustained.267 In South Australia, the basic object of the legislation is expressed as ‘adjustment between the parties so that no party is unfairly advantaged or disadvantaged in consequence of the frustration’.268 There is an element of [page 527] apportionment in this object, since a loss to a party may be a disadvantage whether or not it is also an advantage to the other.

However, the greater emphasis on benefit received means that there is less emphasis on loss apportionment than in New South Wales. The reforms made by Victorian legislation are explicable on the basis that the object is to prevent or reverse an unjust enrichment. That was the view of Robert Goff J in BP Exploration Co (Libya) Ltd v Hunt (No 2).269 He said270 that the ‘fundamental principle’ underlying the English equivalent to the Victorian legislation is ‘prevention of the unjust enrichment of either party to the contract at the other’s expense’. When the decision was affirmed on appeal there was less enthusiasm for the unjust enrichment concept.271 However, the Victorian legislation is best understood, and measured against, an extended concept of restitution for unjust enrichment, including a requirement of mutual restitution and analogies with change of position. Under the legislation in New South Wales and South Australia there is considerable scope for adjustment by the exercise of a judicial discretion having no counterpart in the general law.272 By contrast, given the overriding concern with unjust enrichment, there are no purely discretionary awards under the Victorian legislation. To the extent that discretion operates, it is concerned with valuation, and generally limited by a concept of ‘benefit’.273 [1238] Basis for recovery. Claims for awards under the relevant legislation are treated as claims in debt or contract.274 In New South Wales the claim is to recover a debt.275 Under the legislation in South Australia and Victoria the claims are deemed to be contractual. The former treats any action seeking an adjustment, and for consequential orders to give effect to such an adjustment, as if it were an action under the contract that arose at the time of frustration.276 The latter deems all actions to recover money payable to be founded on simple contract.277

(c) Scope and Application

[1239] Scope. The frustrated contracts legislation binds the Crown.278 Included within the definition of frustration is avoidance of a contract for [page 528] the sale of goods the subject matter of which perished before risk passed to the buyer.279 Other instances of frustration in the sale of goods context are also governed, because they fall within the scope of the general concept of ‘frustration’. In New South Wales, the legislation applies to contracts for which the time of discharge was later than 1 May 1979.280 In South Australia the legislation applies to contracts made on or after 1 April 1988.281 In Victoria the legislation applies to contracts, whenever made, discharged on or after 29 September 1959.282 However, the legislation does not apply to all contracts entered into (or discharged) after these dates. [1240] Contracts to which legislation does not apply. The frustrated contracts legislation does not apply to contracts entered into283 or discharged284 before the date of commencement of the relevant legislation. Nor does the legislation apply to a contract which excludes its operation.285 Certain specific types of contract are also excluded from the legislation in all jurisdictions: for example, a charterparty which is not a time or demise charterparty; a contract (other than a charterparty) for the carriage of goods by sea.286 Nor will the legislation apply, generally speaking, to a contract of insurance.287 In New South Wales and South Australia there is also general exclusion of a contract embodied in or constituted by an instrument (such as a partnership agreement or a memorandum or articles of association), constituting or regulating a corporation, registrable body, partnership, industrial organisation, association or registered society.288 [1241]

Application to severable contracts. In general, the

approach of the legislation to severable contracts is that where a severable contract is discharged by frustration, the legislation does not apply with respect to any [page 529] severable part performed prior to frustration and which is not frustrated.289 It therefore follows that, expressly290 or impliedly,291 the legislation applies to any severable part which is frustrated.

(d) Impact on Contract and Contract Claims [1242] Time and scope of discharge. Generally, the legislation operates on the basis that the parties are discharged from the time of frustration. There is an express provision to this effect in s 3(1) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), which states that the time of discharge is the time at which the contract becomes impossible of performance, is frustrated or avoided (under the Goods Act 1958 (Vic)). However, the scope of discharge varies from jurisdiction to jurisdiction. Under the New South Wales and South Australian legislation, discharge extends to all unperformed obligations, including those which fell due for performance before frustration.292 In these jurisdictions claims for damages for breach of contract which accrued prior to frustration are preserved.293 Under the Victorian legislation, the parties are discharged from the further performance of the contract,294 but money payable before the time of discharge ceases to be payable.295 In all jurisdictions discharge does not affect terms which the parties intended to operate notwithstanding frustration.296 The term must, however, be applicable to the circumstances which have arisen. Thus, in BP Exploration Co (Libya) Ltd v Hunt (No 2)297 it was held that a term limiting personal liability to repay sums required under the

frustrated agreements applied only to contractual claims and not those brought for restitution under the legislation. [1243] Performance after frustration. Under s 5(1) of the Frustrated Contracts Act 1978 (NSW) the general meaning of ‘performance’ is performance, wholly or in part, of a promise in the contract, or fulfilment [page 530] (wholly or in part) of a condition of or in the contract. Under s 3(1) of the Frustrated Contracts Act 1988 (SA) ‘contractual performance’ (or ‘performance’) refers to performance of contractual obligations, and includes anything done by a party preparatory to the performance of an obligation. There is no definition of performance in the Australian Consumer Law and Fair Trading Act 2012 (Vic). In both New South Wales and South Australia, provisions deal with performance following frustration. Broadly speaking, their effect is to make the legislation applicable as if the performance acts were done prior to frustration, provided that the performing party did not know of the circumstances amounting to frustration,298 or the fact of frustration itself.299 [1244] Damages claims. Frustration does not give rise to a right to claim damages. However, a breach of contract may have occurred prior to discharge. In New South Wales, although a claim for damages is exempted from the general discharging effect of frustration, regard must be had when assessing damages to the fact of frustration.300 A provision to the same effect is included in the South Australian legislation.301 However, that provision also requires account to be taken of any right to an adjustment under the Act. By contrast, in Victoria, there is no provision requiring the court to take frustration into account when assessing damages liability. The common law which therefore applies operates in a way which is

analogous to the position under the New South Wales Act.302 Since there is no provision requiring an award under the legislation to be taken into account, it was held in BP Exploration Co (Libya) Ltd v Hunt (No 2)303 that breach by BP of its obligations in respect of the development of an oil concession would have had no bearing on the assessment of the just sum to be awarded to BP under the corresponding English legislation. There is also an argument that, in an award under that legislation, benefits obtained from the enforcement of non-monetary obligations will ‘not be accounted for’304 as a valuable benefit obtained before the time of discharge. The argument rests on the view, with which we do not agree, that undischarged non-monetary obligations remain enforceable under that legislation. It follows that only in South Australia is there a requirement to have regard to sums recoverable under the legislation when damages claims are assessed. It is therefore the most complete solution to the interaction between damages liability and legislative adjustment.305 [page 531]

(e) Recovery Under New South Wales Legislation [1245] Introduction. A basic feature of the Frustrated Contracts Act 1978 (NSW) is that it distinguishes between recovery in respect of money paid, dealt with in s 12,306 and recovery in respect of nonmonetary benefits conferred, dealt with in s 11.307 However, there is also a distinction between non-monetary benefits received (s 11) and non-monetary benefits not received. The latter are regulated by s 13.308 It is easy to accept the contrast between money and non-monetary benefits, since this is basic to the law of restitution. However, contrasting benefits received and benefits not received is not so obvious. It is tempting to say that this is a contrast between performance

which has the effect of increasing the recipient’s wealth and performance which does not have this effect; or perhaps a contrast between performance at the plaintiff’s premises and performance at those of the defendant. However, under s 5(3), performance of a contract is ‘given and received if received as contemplated by the contract, whether received by a party to the contract or not’.309 It may be that this is directed solely to the question whether performance given to a third party is a contractual performance. But the criterion that performance need only be received ‘as contemplated by the contract’ suggests a general approach of merely looking to what the contract provides. There are many contracts in which performance does not have an end product. The provision of professional services is an obvious example. Even if an end product is contemplated, frustration may occur in circumstances where the contractor has merely taken steps towards the transfer of an asset. The conception under the Frustrated Contracts Act 1978 (NSW) is that the performance of any contractual obligation may be the subject of an award. It is therefore arguable that if a shipbuilding contract like that considered in Hyundai Heavy Industries Co Ltd v Papadopoulos310 is frustrated, the shipbuilder may apply for an award on the basis that contractual performance has been given even if, as in that case, the performance takes place at the builder’s premises. Accordingly, doing design work may be treated as performance, even though it has no agreed price and is retained by the contractor, and notwithstanding that the ultimate object of the contract is the delivery of a finished product. However, it can be conceded that the object of the contrast between s 13 and s 11 is that the latter provision, but not the former, deals with cases in which at the moment prior to frustration there was something to value other than expenses, or a benefit to the performing party. This may be why s 11 treats only ‘incidental’ gains by the contractor. However, [page 532]

the words of s 11(1) which define ‘incidental gain’311 are much the same as in the qualification to s 13.312 This suggests that the words in s 13 — ‘for the purpose of giving performance’ — should be treated as limited to preparatory work. In practice, it hardly seems necessary, or possible, to do so. However, the impact is that where the contract is for supply of a finished product, all the expenses involved in making the product are dealt with under s 13. Section 11 should only be applied if the contract is for work and materials.313 [1246] Recovery of money paid. Under s 12 of the Frustrated Contracts Act 1978 (NSW), where money was paid prior to frustration, the payee must pay an equal sum to the payer. However, the money must have been paid as (or as part of) an agreed return for performance of the contract by the other party. There is, therefore, no right to recover other payments. The ‘agreed return’ of one party’s performance is defined as the performance by the other party contemplated by the contract as consideration for the first-mentioned performance.314 In the context of money, the word ‘consideration’, is used in its quasi-contractual sense, as under the concept of failure of consideration. Translated into the restitutionary concept of failure of the agreed return, the effect of the provision is to abolish the requirement of total failure for a monetary payment. For example, assume that A agrees to design, build and deliver machinery to B for a price of $100,000, and B pays A $50,000, as part of the agreed return ($100,000). If the contract is frustrated after partial construction, B is entitled to $50,000 irrespective of whether any part of the agreed return for the payment was received. Although adjustments may be made, for example, for any benefits obtained by A, the first step in adjustment is that B is entitled to the money paid. [1247] Recovery of expenses incurred. Section 13(1) of the Frustrated Contracts Act 1978 (NSW) provides that a party who suffers detriment by reasonably paying money, doing work or doing or suffering any act or thing for the purpose of giving performance under the contract, is entitled to receive an amount equal to one-half of the

amount that would be ‘fair compensation’ for the detriment suffered.315 Therefore, if A agrees to manufacture and deliver machinery under a contract of sale, and spends $90,000 for that purpose, A is entitled to recover half of whatever would be ‘fair compensation’ for the work done. The concept is not expressly defined, but it must prima facie be the amount spent, that is, $90,000. Half of this amount is $45,000. Of course, this is compensation without breach. It is justified as part of the scheme for apportionment of the ‘loss’ caused by frustration. If it is assumed that B had paid $50,000 by way of part payment, B’s entitlement is reduced to $5000. However, A’s entitlement to payment for expenses does not depend on whether B made (or agreed [page 533] to make) an advance payment. Thus, if there was no such obligation, A is entitled to be paid $45,000.316 The right to recover in respect of detriment suffered in incurring expenses is qualified by s 13(2). It operates if, as a consequence of doing or suffering the act or things for the purpose of giving performance under the contract, property or an improvement to property has been acquired or derived by that party. There is then an obligation to pay the other party an amount equal to one-half of the value of the property or improvement. This is again part of the scheme for apportionment of the ‘loss’ caused by frustration. Therefore, if A obtained a benefit by reason of having partially completed machinery (‘property’ with a market value) this must be brought into account. If we assume that in the example above the machinery had a value of $80,000, B would be entitled to be paid $40,000. In other words, assuming no part payment, A’s entitlement is to receive $5000 ($45,000–$40,000). In this example the ‘loss’ caused by frustration is assumed to be $10,000, arrived at by deducting the amount of A’s expenses ($90,000) from the value of the partially completed machinery ($80,000). Relying on an assumption that equality is

justice,317 the apportionment scheme shares this loss equally between the parties. In the end, A is $5000 out of pocket, and so also is B. The reality, of course, is that this is only a rough guide to what is ‘fair’. It only works, even at this basic level of complexity, because there is no part payment. The existence of a part payment by B to A of $50,000 would result in a final reimbursement to B of $45,000. Once there is a part payment, the individual parties would each describe a different loss. At the moment of frustration, B would say that it has lost $50,000. Although B recovers most of the payment, there is a deduction for half of A’s loss. No account is taken of the benefit to A in having the use of B’s money. Nor is any account taken of either party’s lost opportunities. This provision does not apply to cases where non-monetary performance has been received by the other party.318 [1248] Recovery of non-monetary benefits where full performance. In New South Wales where full non-monetary performance319 by one party is received by the other party prior to the time of frustration, s 10 of the Frustrated Contracts Act 1978 (NSW) provides for payment of an amount equal to the ‘value of the agreed return for the performance’. The ‘other party’ is defined as the party by whom performance is contemplated by the contract ‘as consideration for the performance’.320 As has been explained,321 the ‘agreed return’ in relation to performance is defined as the performance by the other party contemplated by the contract ‘as consideration for the first-mentioned performance’. Therefore, unlike a reasonable remuneration case, where the performing party recovers the [page 534] reasonable value of the work done,322 this provision entitles the performing party to recover the value of the other party’s (promised) performance.

This is somewhat peculiar. Since the provision is limited to full nonmonetary performance by one party, the other party’s performance will usually take the form of the payment of money. The provision therefore seems to suggest that the promised payment must be valued. There is no mechanism for this, and the value of a monetary agreed return must invariably be the dollar amount. It can then be asked why the provision does not state that the other party must pay the price fixed by the contract, or, if performance was to take a non-monetary form, the value of the agreed performance. The only justification for s 10 is that the right of the performing party to receive the contract sum accrued prior to frustration, even though it may have been payable at a later date. This suggests that, in the case of a monetary agreed return, it would have been simpler to state a contractual entitlement. Although comfort can be gained from the fact that contracts are rarely frustrated after full non-monetary performance, the provision looks to place the whole burden of any diminution in the value of the performance caused by frustration or discharge on the receiving party. Section 10 could have been qualified by a further provision, to the effect that: ‘Where frustration has caused a diminution in the value of the performance received, the performing party must pay to the other party a sum equal to half of that diminution.’ However, the effect of s 10 is to cast the entire risk of frustration on the recipient.323 Presumably, the object is to preserve a profit entitlement. Thus, if we assume that a contract by which A agrees to supply machinery to B for a price of $100,000 is frustrated after delivery to B, A is entitled to receive $100,000. It appears to be irrelevant whether any benefit to B is diminished by frustration. However, this seems an appropriate case in which to apportion loss, or (from a restitutionary perspective) to value the benefit to B by reference to the value of the machinery on delivery. Moreover, since the contract does not relate to specific goods, there is no requirement that the machinery be at A’s risk, and no qualification that property must have passed to B. If the machinery is destroyed while at A’s risk it seems absurd to say that A should be entitled to the price. Only if the property and risk have passed to B does s 10 make any sense. But then the contract is unlikely to have been frustrated.

Again, therefore, it is puzzling that s 10 does not simply give effect to A’s accrued right to payment. Assume a slight change to the facts, namely, that A agrees to sell a specific motor car to B for $100,000 under a contract that provides for payment 10 days after B has received delivery. Assume further that the risk of destruction remains with A and that property is to pass automatically on payment. Assume then that the contract is ‘avoided’ because the car is destroyed before delivery. Can it be seriously contended that B is liable to pay the price when B was never in the position of having either the risk of destruction or property in the vehicle? In order to ensure that this is not the result of applying s 10, ‘performance’ must be interpreted to include transfer [page 535] of ownership. Section 11 would then apply, on the basis that the seller’s performance is partial.324 [1249] Recovery of non-monetary benefits where part performance. When we move from full performance to part performance, the New South Wales legislation invokes concepts and calculations which are so complex that it becomes largely unintelligible, including to a lawyer. Section 11(2) of the Frustrated Contracts Act 1978 (NSW) states that where frustration occurs after the receipt of partial non-monetary performance, the recipient must pay to the performing party an amount calculated by reference to the ‘attributable cost’325 of performance and its ‘attributable value’.326 The performing party is entitled to an amount equal to the attributable value of performance, unless attributable cost exceeds attributable value.327 In that situation, the performing party is entitled to an amount equal to the sum of attributable value and one-half of the amount by which attributable cost exceeds attributable value.328 Attributable cost is therefore the controlling concept.

[1250] Attributable cost. Section 11(1) of the Frustrated Contracts Act 1978 (NSW) states three alternative definitions for ‘attributable cost’, the third of which applies if the amount calculated in either of the other two alternatives exceeds the proportionate allowance for performance. It is perhaps best to look first at the concept of ‘proportionate allowance’, since it controls the definition of attributable cost. Section 11(1) defines ‘proportionate allowance’ as such part of the value of the agreed return for complete performance of the contract by the performing party as is appropriate to be charged to the other party for the performance received. Regard must be had to the extent to which the performance received is less than the whole of the performance contracted to be given by the performing party. This suggests a pro rata calculation of performance. If machinery to be supplied at a price of $100,000 is half-built when frustration occurs, the value is half of the contract price, that is, $50,000. Of course, this is totally unrealistic, since it need not approximate either the cost to the performing party, or the value to the receiving party. However, it sets the limit to the amount of attributable cost. This is because if the amount calculated in either of the other two alternatives exceeds the proportionate allowance for the performance, the third definition of attributable cost applies, and restricts attributable cost to such part of the reasonable cost as is equal in amount to that proportionate allowance. The other definitions require consideration of ‘incidental gain’ and the ‘reasonable cost’ of performance. These are also defined by s 11(1). The former relates back to reasonable cost. This is defined as an amount that would be fair compensation to the performing party for any detriment suffered in reasonably paying money, doing work or doing or suffering any [page 536] other act or thing to the extent the detriment was suffered for the purpose of giving the performance so received. The emphasis is on cost

to the performing party, perhaps to take account of the fact that the costs of performance are not necessarily spread evenly throughout the course of performance. ‘Incidental gain’ is defined, in relation to a party to a contract who suffers a detriment referred to in the definition of reasonable cost, as any property or improvement to property acquired or derived as a consequence of doing or suffering the acts or things that caused the detriment. This is reduced to the extent that the property or improvement so acquired or derived is comprised in any performance given under the contract or is expended or disposed of in giving any such performance. The first definition of attributable cost applies where there is no ‘incidental gain’ to the performing party. It is calculated at an amount equal to the ‘reasonable cost’ of the performance. In order to build half the machinery, A may have incurred detriment of say $40,000. There is no statement of what the word ‘reasonable’ signifies, and no necessary correlation between reasonable cost and fair compensation. However, if it is assumed that $40,000 would be fair compensation, this is the attributable cost. Assuming that this is examined without regard to the fact of frustration, the performing party may have no property improvement, that is, no incidental gain. The amount is less than the proportionate allowance, which was $50,000. We call this ‘Calculation 1’. Where a valuable item of property or improvement to property is obtained there is an incidental gain. The second alternative definition of attributable cost deals with this. Thus, A may have purchased equipment in order to build the machinery. The equipment has a value, and attributable cost then means such part of the reasonable cost of the performance as is equal to an amount calculated by deducting from the reasonable cost of the performance the value of that incidental gain. So, if we assume that $75,000 was fair compensation, because A’s costs were in fact greater in the early stages of manufacture, the second alternative definition applies if incidental gain exceeds $25,000. If we assume that $30,000 was the incidental gain, the second alternative will apply. Attributable cost is then $45,000. We call this ‘Calculation 2’. The third definition will apply if in Calculation 2 the incidental gain

was less than $25,000.329 Again, if the detriment to A in Calculation 1 was $75,000, and there is no incidental gain, and we assume that $75,000 would be fair compensation, the amount exceeds proportionate allowance. The third alternative in the definition of attributable cost therefore applies. The amount of fair compensation ($50,000) is then the attributable cost. We call this ‘Calculation 3’. [1251] Attributable value. ‘Attributable value’ is a little simpler. It is defined by s 11(1) of the Frustrated Contracts Act 1978 (NSW) as an amount equal to the value of the proportionate allowance for performance received reduced by the lost value of that performance. The concept of ‘lost value’ is defined (also by s 11(1)) as the amount (if any) by which the value of that [page 537] performance was reduced by reason of the frustration of the contract, that value being assessed as at the time immediately before the frustration of the contract and on the basis that the contract would not be frustrated. It follows that the calculation of lost value does not take into account the effects of frustration on any benefit conferred. It takes account only of the premature discharge of the parties. This is a crucial provision which appears to reverse Appleby v Myers.330 For example, assume that the ‘proportionate allowance’ for the machinery in our example is $50,000. It may also be readily assumed that if performance was received by A, so that the machinery was in B’s possession at the time of frustration, it had a lesser value when account is taken of the fact that half-completed machinery is usually worth less than 50 per cent of the purchase price. The half-completed machinery may have a market value of $30,000, or be worth the same amount on the basis that expenditure of $70,000 is necessary to complete it. Thus, without having regard to the (physical) impact of the frustrating event on the machinery itself, the lost value is $20,000 ($50,000-$30,000), and the attributable value $30,000.

On these figures, as probably in most cases, the attributable cost of the performance in all three cases exceeds its attributable value ($30,000). The second of the two calculations in s 11(2) is then applicable. To attributable value ($30,000) is added half of the difference between attributable cost and attributable value. The three calculations, according to the three values for attributable cost are: Calculation 1 — $30,000+$5000 Calculation 2 — $30,000+$7500 Calculation 3 — $30,000+$10,000

= $35,000 = $37,500 = $40,000

In Calculation 1, A is entitled to $35,000. What is conceived as the loss caused by frustration is $10,000 ($40,000–$30,000). This is borne equally between the parties. A receives $5000 less than its expenses, and B must pay (in total) $105,000 ($70,000+$35,000) for the machinery. In Calculation 2, A is entitled to $37,500. A, who suffered detriment of $75,000, can realise a benefit of $30,000 by selling the equipment used in construction of the machinery. What is conceived as the loss caused by frustration is $15,000 ($45,000-$30,000). This is borne equally between the parties. A receives $7500 less than its expenses, and B must pay (in total) $107,500 ($70,000+$37,500) for the machinery. In Calculation 3, in order to complete construction, B must spend $70,000, and pay A $40,000. What is conceived as the loss caused by frustration is $20,000 ($50,000–$30,000). This is borne equally between the parties. A receives only $40,000 for work which is deemed to be compensated at $50,000, and B pays (in total) $110,000 ($70,000+$40,000), that is, $10,000 more than the contract price, to complete the building of the machinery. The figures are the same if frustration destroys the machinery, as the drafters of the legislation appear to regard the ‘loss’ caused by frustration as not including destruction of the property. However, since no expenditure by

[page 538] B other than payment of the full contract price can achieve the desired end result, the justification is slightly different. For example, in Calculation 3, the loss caused by frustration is still $20,000. A bears half because A receives only $40,000 for work which is deemed to be compensated at $50,000. B bears half because the payment is $10,000 less than the proportion of the contract price. Of course, the parties would disagree. They have their own individual perspectives and are likely to care little about the position of the other party. A would say the loss is $75,000 (the amount spent) and B would say the loss is whatever is the difference between the amount which now has to be paid for the machinery and the price which B agreed to pay A, plus transaction costs. Under the legislation, A receives an amount which is $35,000 less and B pays an amount which is $40,000 greater. [1252] Discretion in making award. Discretion operates in New South Wales in three situations where the court may, by order, exclude a contract from the award provisions of the legislation.331 The court must consider the terms of the frustrated contract and the events which have occurred. First, the court may be satisfied that in respect of the contract, the award provisions are manifestly inadequate or inappropriate.332 Second, the court may consider that application of the award provisions would cause manifest injustice.333 Third, the court may substitute its own award where the application of the award provisions would be excessively difficult or expensive.334 In any of these situations, the court may335 substitute such adjustments ‘in money or otherwise as it considers proper’.336 Where the court’s discretion is enlivened, s 15(2) of the Frustrated Contracts Act 1978 (NSW) states that the orders may provide for the payment of interest and the time when money must be paid. In addition, the court may make orders under s 15(3) for:337 (a) the making of any disposition of property; (b) the sale or other realisation of property;

(c) (d) (e) (f)

the disposal of the proceeds of sale or other realisation of property; the creation of a charge on property in favour of any person; the enforcement of a charge so created; the appointment and regulation of the proceedings of a receiver of property; and (g) the vesting of property in any person. There is, however, no indication of what is ‘proper’. This jurisdiction therefore seems unfettered (and unprincipled). Some object ought to have been stated. Restitution lawyers would suggest ‘so as to ensure that neither party is unjustly enriched at the other’s expense’. The drafters of the legislation might well have said, ‘so that, so far as possible, the loss attributable to frustration is borne equally between the parties’. However, [page 539] anyone serious about loss adjustment would reject this arbitrary choice of equal distribution. They would say ‘so that, so far as possible, the loss attributable to frustration is apportioned between the parties in accordance with the value of the contract to each party’.338 A party who had made a bad bargain would on this approach bear a greater than 50 per cent share of the loss. The closest which the legislation comes to this approach is in cases where the amount of fair compensation for detriment is restricted to the amount of the proportionate allowance. However, this fact is in no way indicative of a bad bargain.

(f) Recovery Under South Australian Legislation [1253] The process. Adjustment following frustration is in South Australia339 based on a four-step process the effect of which is to make

any contrast between monetary and non-monetary benefits unimportant.340 The overall object of the Act is to achieve an adjustment such that no party is unfairly advantaged or disadvantaged in consequence of frustration.341 The four-step process is used to establish a notional ‘fund’ out of which adjustment may be made, and the loss and benefit caused by frustration distributed between the parties. The steps are stated in s 7(2) of the Frustrated Contracts Act 1988 (SA). In the first step the aggregate value of all contractual benefits received up to the date of frustration by each party is assessed as at that date. ‘Contractual benefit’ means a benefit received by a party under the contract, or a benefit that is received by a party otherwise than under the contract. However, in the latter case, it is required that the benefit be at a cost to the party which is either taken into account under the Act in calculating the value of the contractual performance of that party, or one received in circumstances where the receipt of the benefit constitutes part of the contractual performance of that party.342 In the second step the aggregate value of the contractual performance of each party up to the date of frustration is assessed as at that date. As noted earlier,343 performance is defined generally to include the performance by the party of contractual obligations as well as anything preparatory to the performance of a contractual obligation. It is therefore not limited to performances which could count as benefits under the concept of unjust enrichment. In the third step the difference between these two amounts is notionally divided between the parties in equal shares. The amount is therefore arrived at by subtracting the amount arrived at in the second step from the amount arrived at in the first step. The fourth step is that an adjustment is made so that there is an equalisation of the contractual return of each party at the notional figure determined in [page 540]

step three. The ‘contractual return’ of a party to a contract is the figure obtained by subtracting from the value of the contractual benefits of that party the value of the contractual performance of that party.344 The figure may be positive, zero or negative. [1254] Valuation of contractual performance. The valuation process is crucial to the operation of the Frustrated Contracts Act 1988 (SA). In the case of a monetary payment, s 3(2)(a) defines the ‘value of the contractual performance’ as the amount of the payment. In the case of non-monetary performance, value depends on whether the contract places a value on the performance. Under s 3(2)(b), if value is placed on the performance by the contract, or may be ‘deduced from the contract’, its ‘value’ is the amount specified or deduced. Although fully performed contracts are seldom frustrated, a contract clearly places a value on performance by stating the contract price as the agreed return for that performance. Similarly, where the contract is severable, value is placed on each (severable) performance by the severable payment which represents its agreed return. However, the scope of ‘deduced’ value is unclear. At the narrowest it embraces cases where pro-rating is reasonable, as where 10 machines are to be built under a contract stating a lump sum price of $100,000. But the concept may also embrace cases where value can be deduced from performance of the contract. Thus, we might deduce a value of $50,000 where machinery having a total price of $100,000 is half-built when frustration occurs. However, the contract may not value the performance, in which case a calculation must be made under s 3(2)(c). First, there is a calculation of value at the cost that each party has incurred in carrying out, or in preparing to carry out, contractual obligations. This includes, in addition to actual expenditures, a reasonable allowance for work done by the party. Although it is expressly provided that for the purposes of s 3(2)(c) it is ‘immaterial that the other parties to the contract may have received no benefit from the performance referred to’, there is a requirement that account be taken of profit and loss under the contract. If it appears that, had the contract been fully performed, the party

would have made a profit or loss, the percentage profit or loss is estimated, and the amount first arrived at increased or reduced by that percentage. The objective of s 3(2) is to value performance according to what the contract price would have allowed, rather than on the basis of its actual cost. However, as Professor Stewart explains,345 s 3(2) will ‘operate appropriately in the situation where one party makes a profit and the other a corresponding loss’. Many contracts envisage profit for both parties. Some contracts may, if fully performed, be bad bargains for both. Section 3(2) does not allow for these situations. The Act brings the other party’s position into account only if there is a realisable benefit. [page 541] [1255] Impact of frustration. Notwithstanding that benefits and performance are assessed as at the date of frustration, the effect of frustration must be taken into account when making a valuation. Thus, s 3(3) of the Frustrated Contracts Act 1988 (SA) states that where a contract is frustrated by an event that affects the value of contractual benefits received under the contract, the effect on value must be taken into account.346 Where an event occurring before, or resulting in, the frustration of a contract diminishes the value of a contractual benefit, a party is in certain circumstances deemed to have received a benefit equivalent to that diminution. Reference is made in s 3(4) to three cases: (1) where the event consists of, or arises from, a negligent act or omission for which the party is responsible (s 3(4)(a)); (2) where the risk of the event occurring is, by law or custom, to be borne by that party to the contract or is a risk against which that party to the contract should, in accordance with ordinary prudence or good business practice, have insured (s 3(4)(b)); and (3) where the event consists of (or arises from) an act or omission for

which the party is responsible, although extraneous to the contract (s 3(4)(c)). In these three cases, in addition to any benefits actually received, the party is (for the purposes of the Act) deemed to have received a contractual benefit equivalent to the amount of the diminution in value. The rationale, apparently, is that although the benefit to be shared between the parties should not in these circumstances be diminished, the impact of the event should be borne by one party, not both. The responsibility is expressed in terms of a notional benefit, and the effect is to restrict the ‘lost value’ provision in s 3(3). By applying to ‘an event occurring before’ the frustration of a contract, s 3(4) deals with the situation where a party who initially derived a benefit from performance has lost all or part of the value of that benefit by the time frustration occurs. The adjustment exercise is therefore not distorted by including losses which have nothing to do with the transaction. Thus, a party will only be able to have a benefit calculated at a figure reduced from its original valuation where neither party caused the loss, and neither would have been expected to bear the risk of the loss. However, no allowance is made for the possibility of an increase in the value of a benefit. There is an attempt to distinguish between events for which neither party is responsible and events the burden of which ought to borne by only one party. However, paragraph (a) of s 3(4) is to some extent misconceived. Frustration which ‘consists of’ a negligent act or omission will generally prevent discharge under the doctrine of frustration, by rendering the alleged frustration ‘self-induced’.347 The paragraph can only apply to events occurring before frustration which do not contribute to the occurrence of the event. Paragraph (b) will rarely apply, except perhaps in relation to events occurring before frustration, since there will usually be no frustration if the risk is of a type to be ‘borne by that party, or is a risk [page 542]

against which that party should, in accordance with ordinary prudence or good business practice, have insured’. Paragraph (c) seems intended to apply to an act or omission which contributes to the occurrence of the event which has frustrated the contract, but which does not constitute a breach of contract. Perhaps the idea is that although a party may be held responsible for the act or omission, this will not prevent reliance on frustration. [1256] Illustration. Consider, then, our illustration of a contract whereby A agrees to design, build and deliver machinery to B for a price of $100,000. Assume that B pays A $50,000, as part of the price, and that the contract is frustrated after partial construction. We may also assume that half of the machinery is constructed prior to frustration, and that A’s expenditure was $75,000. In the first step of the four step process under the Frustrated Contracts Act 1988 (SA), contractual benefits are valued, that is B’s part payment ($50,000) and the receipt of A’s partial performance. A’s contractual benefit is $50,000. The contractual benefit to B is also $50,000. But this has to be reduced to take account of frustration. Thus, the machinery might have a value of only $25,000. The aggregate value is on this basis $75,000. In the second step contractual performance is valued. The value of B’s contractual performance is clearly $50,000. The value of A’s contractual performance is problematic. The only value which can be deduced from the contract is half of the contract price, that is $50,000. The aggregate here is $100,000. In the third step, subtraction gives a negative figure, $25,000. This is notionally divided between the parties at $12,500. For the purposes of the fourth step, the contractual return is found by subtracting from the value of the contractual benefits of each party the value of contractual performance. In A’s case $50,000 is subtracted from the same sum, giving a zero figure. In B’s case $50,000 is subtracted from $25,000, giving a negative sum of $25,000. The final calculation is the equalisation of the contractual return of each at the notional figure, that is, -$12,500. Thus, A must pay B $12,500.

A second view is that the value of the contractual performance cannot be determined, because value cannot be deduced from the terms of the contract. Value would then be represented by the costs incurred by A. We have assumed this to be $75,000. Account must also be taken of profit. Assuming that A would have made a $10,000 profit on the $100,000 price, the amount ($75,000) is increased by half of that profit, that is, $5000, giving a figure of $80,000. The aggregate here is $130,000. Subtraction gives a negative figure, $55,000. This is notionally divided between the parties in equal shares, that is, $27,500. To determine the contractual return in A’s case we subtract from $50,000 the sum of $80,000, giving a negative figure of $30,000. In B’s case we subtract from $25,000 the sum of $50,000, giving a negative figure of $25,000. In order to equalise the contractual return of each at the notional figure ($27,500), B must pay to A $2500. [page 543] [1257] Orders for adjustment and discretion in making award. In giving effect to an adjustment under s 7 of the Frustrated Contracts Act 1988 (SA), a court may make orders for:348 (a) the payment of money (including interest); (b) the disposition, sale or realisation of property; (c) the creation of a charge on property; (d) the appointment and powers of a receiver; [and] (e) any incidental or ancillary matter. Where a party’s performance is referable to a number of separate contracts, under s 7(3) the court may apportion as it thinks just the value of the performance between the various contracts. There is also a more general discretion under s 7(4). This operates if, ‘in the opinion of a court, there is, in the circumstances of a particular case, a more equitable basis’ for making the adjustment referred to in s 7(1) than the one set out in s 7(2). The court may then make an adjustment on that basis. Therefore, the discretion must be exercised by reference to the

object in s 7(1), namely, ‘adjustment between the parties so that no party is unfairly advantaged or disadvantaged in consequence of the frustration’. However, no content is given to the phrase ‘more equitable basis’.349

(g) Recovery Under Victorian Legislation [1258] Recovery of money paid. Adjustment in Victoria350 begins with the recovery of money paid. Under s 36(1) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), if money was paid prior to frustration, the party who received the money must pay an equal sum to the party who made the payment. Section 36(2) refers to sums payable, but not paid, before the time of discharge. These cease to be payable. However, in Victoria this is subject to s 37, which operates ‘despite’ s 36. Section 37 is applicable if the party to whom the sums were so paid or payable incurred expenses before the time of discharge.351 Unless s 37 operates, the award in the payer’s favour is not subject to the discretion of the court.352 Assume a contract for the construction of machinery. The contract price is $100,000. Assume that B paid the sum of $50,000 to the contractor (A) prior to frustration. This sum must be returned under s 36(1). A is unjustly enriched to the extent of $50,000, and if A incurred no expenses, there is no jurisdiction to reduce this amount. [page 544] [1259] Recovery of expenses incurred. In Victoria, the power to make orders in relation to expenses incurred is limited to cases where an order is made for the return of money paid, or the discharge of a party from an obligation to pay money which should have been paid prior to frustration. Thus, s 37 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) states that if the party to whom the money was

paid or payable incurred expenses before the time of discharge in, or for the purpose of the performance of the contract, the court may, despite s 36, allow the party to whom the money was paid to retain all or part of the amount paid. The court must consider it just to do so, having regard to all the circumstances of the case. The onus is on the party to whom the money was paid or payable to justify an order for deduction, by establishing that expenses were in fact incurred in or for the purpose of performance.353 Expenses which are merely part of the general business overheads are not recoverable under s 37.354 The effect has been described355 as analogous to the operation of the restitutionary defence of change of position.356 In the $100,000 machinery construction contract, although B paid the sum of $50,000 prior to frustration, A may have incurred expenses of $75,000 in designing and building the machinery (not being overhead expenses). There is jurisdiction to reduce the award to B. If the court considers it just to do so, a deduction may be made. However, the maximum which may be allowed to A is the amount by which A would otherwise be unjustly enriched, that is, $50,000. Subject to this, there is no attempt to apportion any ‘loss’ caused by frustration. [1260] Recovery of non-monetary benefits conferred. Section 38 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) applies if a valuable (non-monetary) benefit was obtained by one party to the contract, by reason of anything done by any other party in or for the purpose of the performance of the contract before the time of discharge. The first party is entitled to receive such sum as the court considers just having regard to all the circumstances of the case. However, a payment of money to which s 36 or s 37 applies is not a valuable benefit for this purpose. Thus, in our machinery construction contract, any part payment by B, although clearly beneficial to A, is not a benefit to which s 38 applies. The criterion is the ‘value of the benefit to the party obtaining it’, and the maximum which the court may award is the value of the benefit.357 The court must have particular regard to two matters in determining the just sum: the amount

[page 545] of any expenses incurred; and the effect of the circumstances giving rise to the frustration. There are four steps in making an award under s 38. The court must: (1) value the benefit to the defendant; (3) calculate (and deduct) the defendant’s expenses; (3) take into account the effect of the circumstances amounting to frustration; and (4) calculate the just sum. [1261] Initial valuation. The reference in s 38(1) of the Australian Consumer Law and Fair Trading Act 2012 (Vic), to a ‘valuable’ benefit is in one sense ambiguous. Does it refer to a benefit which is ‘worth something’, or a benefit which has value to the defendant? The court is certainly required to value the benefit, so as to set a limit for the just sum. But it is not clear whether the calculation should be based on the increase in the defendant’s wealth, the reasonable value of the work done, or the cost to the performing party. Since the provision treats as a distinct step taking account of frustration, the initial valuation of benefit is made prior to frustration. In other jurisdictions considerable reliance is placed on two matters: the cost to the performing party; and the proportion which the performance bears to the contract as a whole. However, the context is loss adjustment. The Victorian legislation is rooted in unjust enrichment, not loss adjustment. In BP Exploration Co (Libya) Ltd v Hunt (No 2)358 Robert Goff J appears to have favoured a bargained-for perspective on benefit. He said359 that it is ‘necessary to ask the question: what benefit has the defendant obtained by reason of the plaintiff’s contractual performance’? In his view, where the bargain is for an end product, the words ‘value … to the party obtaining it’ refer to the ‘end product’ of the work or services, to be identified, and valued, at the moment before frustration. An approach which always looked to an end product would

mean that no award under s 38 could be made where the bargain was for personal services.360 Because the ‘benefit … obtained by reason of the plaintiff’s contractual performance’ includes cases where the services are not intended to produce an end product, it is difficult to say that he saw the Act as stating an invariable rule.361 Thus, he accepted362 that ‘where the services consist of doing such work as surveying, or transporting goods’ the benefit may be the services themselves. Although, in our view, Robert Goff J’s approach is based on a correct interpretation of the legislation, there is no reason why the bargain should control this aspect of the calculation. His approach does create difficulties, particularly when account is taken of the effect of frustration.363 Two other approaches may be referred to. The first relies on the usual analysis of claims for work done. These suggest valuation according to the reasonable value of the work done. Where the work is partially completed, there is no end [page 546] product for which the defendant agreed to pay, and since the purpose of this initial process is to set an upper limit to the just sum, little harm can be done by treating the benefit as the sum to which the plaintiff would be entitled in a claim for reasonable remuneration based on acceptance of benefit. The second relies on the extent of completion. If work is half completed, the valuable benefit could be regarded as half of the contract price. Thus, if the bargain contemplates an end product, and this is half complete, the prima facie value is half of the contract price. Similarly, if services have been half completed, the prima facie value of the services might be treated as half of the total contract price. [1262] Expenses incurred. The second step in s 38 of the Australian Consumer Law and Fair Trading Act 2012 (Vic), is to calculate (and deduct) the defendant’s expenses. To the extent that this

is analogous to the defence of change of position,364 the expenses are calculated as part of the deduction to be made from the defendant’s benefit. Although they are therefore an element of the just sum inquiry, it is inappropriate to fix the just sum and then deduct the expenses incurred. In requiring the court to consider the amount of expenses incurred (before discharge) by the benefited party in or for the purpose of the performance of the contract,365 specific reference is made to sums paid or payable, and retained or recoverable under ss 36 and 37. The purpose here is to ensure that the performing party’s expenses are not recovered twice. In other words, to prevent double counting the payer is entitled to have brought into account as expenses incurred any sum retained or recoverable by the payee.366 Thus, in our machinery construction contract, B’s expenses are relevant, and any sum retained by A under s 36 or s 37 is also relevant. Deducting expenses, including sums retained or recoverable under ss 36 and 37, from a valuation based on a partially completed end product will in many cases reduce considerably the sum available for award as a just sum. The fact that expenses include sums paid (or payable) and retained (or recoverable) under ss 36 and 37, to some extent contradicts the view taken above that the initial valuation is controlled by whether the bargain is for work or the end product of work. If the object is to prevent double counting, like should be compared with like. This consideration therefore lends some support to an initial valuation based on the reasonable value of the plaintiff’s services. It also supports an initial valuation based on the proportion of the contract price, since this will include a component of expenses incurred. In our $100,000 machinery construction contract, if a sum of $50,000 is retained by A under s 37, it is not a valuable benefit to which s 38 applies. That only leaves for consideration the amount of any benefit obtained by B by reason of what A has done in or for the purpose of the performance of the contract. Since the award to A under s 38 must not exceed the value

[page 547] of the benefit to B, the benefit must be valued. Assuming the benefit to B is $25,000, since this is the market value of the machinery, $25,000 is the maximum which may be awarded. However, when we take into account B’s expenses (that is, the amount retained by A), there can be no award under s 38 and it is unnecessary to take into account the effect of frustration. Assuming, however, that frustration had no effect, the end result is that A retains the $50,000 paid, for which expenditure of $75,000 was incurred. B obtains a benefit of $25,000 for which $50,000 was paid. For those who see loss adjustment as relevant, the effect is that each party bears an equal loss of $25,000. [1263] Effect of frustration. The third step is the requirement of s 38(3)(a) of the Australian Consumer Law and Fair Trading Act 2012 (Vic) that the court take into account ‘circumstances giving rise to the frustration or avoidance of the contract’. It was held in BP Exploration Co (Libya) Ltd v Hunt (No 2)367 that this must be considered as a ‘distinct step’. It is also the most controversial feature of the Victorian legislation. One view is that once the benefit has been valued, prior to the frustrating event, the event is taken into account simply when assessing the just sum, so that even if there is no benefit remaining, a just sum may be awarded.368 The alternative view was held by Robert Goff J in BP Exploration Co (Libya) Ltd v Hunt (No 2)369 to represent the law. He held that where frustration has the effect of destroying the benefit received prior to frustration there is no benefit to be valued for the purposes of awarding a just sum. Application of this approach implies that, in this regard, the law is just where it was left in Appleby v Myers.370 In our view this is correct.371 Robert Goff J’s approach is supported by three arguments. First, restitution for unjust enrichment is relevant only where a benefit was received by the defendant and remains in existence after the frustrating event. We do not support this argument.

Second, in requiring the ‘circumstances giving rise to the frustration or avoidance of the contract’ to be taken into account, the Act does not refer merely to premature discharge. Rather, it refers to the effect on the benefit valued as a benefit remaining in existence. This seems important. In our view, a basis for disagreeing with Robert Goff J would be present if the legislation said that regard must be had to the effect of discharge on the benefit conferred prior to frustration. Take our machinery construction contract example. Assume that Robert Goff J was correct in treating the relevant criterion as the end product, and that the market value of the half-completed machinery is $40,000. If the legislation referred merely to the [page 548] fact of frustration, that is, discharge of the parties, it would be open to a court to award this sum, notwithstanding the subsequent destruction of the benefit. However, because the Victorian legislation refers to the factual circumstances of frustration, no award can be made if the machinery is destroyed. This is unaffected if we take the view that initial valuation by reference to the reasonable remuneration criterion is appropriate. The benefit to B of part performance is then $75,000, but we must bring into account the effect of frustration. If the Act referred merely to the discharge of the parties, we might reduce the sum to $40,000, on the basis that it would cost B $60,000 to have the work completed, or because $40,000 is the market value of the halfcompleted machinery. But if, as we think, the legislation refers instead to the impact of frustration on the benefit itself, the impact is that no sum can be awarded. The third argument is the scope given to discharge by s 2(5)(c) of the Law Reform (Frustrated Contracts) Act 1943 (UK). That provision excludes a contract frustrated (‘avoided’) under s 7 of the Sale of Goods Act 1979 (UK),372 and ‘any other contract for the sale… of specific goods, where the contract is frustrated by reason of the fact that the goods have perished’. These exclusions show a general concern with

benefits which survive frustration.373 Although this argument supports Robert Goff J’s view, it is not available under the Victorian legislation. The inclusion under that legislation of contracts for specific goods which have perished374 suggests that the survival of something (an end product) to value is not conclusive. Equally, however, the possibility that such contracts were included solely to enable orders to be made in respect of expenses incurred by a seller to whom money was paid or payable, should not be discounted lightly.375 [1264] Calculation of the just sum. Finally, the just sum must be calculated. This step requires another valuation of the defendant’s benefit. In BP Exploration Co (Libya) Ltd v Hunt (No 2),376 a joint venture contract between Hunt and BP was frustrated when the Libyan government appropriated their interests in an oil concession. Hunt had been the owner of the oil concession, and under the agreement BP obtained a half-share in the concession. BP agreed to transfer to Hunt certain contributions (‘farm-in contributions’) in cash and in oil, and to bear the costs of exploration. If oil was found (as it was), BP agreed to develop the field and to produce the oil. It was also agreed that, once oil was produced, BP would receive (from Hunt’s share of the oil) 125 per cent of its farm-in contributions and 50 per cent of the money expended in the exploration [page 549] and development of the field. Following frustration, BP made a claim under the English equivalent of the Victorian legislation. Robert Goff J identified and valued the benefit obtained by Hunt before the time of discharge, which would be the upper limit of any just sum. For Hunt, the benefit was the enhancement in the value of his share in the concession. From this Robert Goff J deducted the amount of expenditure incurred by Hunt before the time of discharge in, or for the purpose of, the performance of the contract. He then took into

account the effect of frustration. Hunt’s benefit — the enhancement in the value of his share in the concession — was reduced substantially by the circumstances giving rise to the frustration of the contract. Accordingly, BP was limited to the benefit of the oil obtained by Hunt from the concession and his settlement with the Libyan Government. Once the effect of appropriation was taken into account, the benefit to Hunt was much less than the benefit initially valued — at the moment before frustration — as the limit on the just sum. BP was entitled to recover the amount of the benefit, as affected by appropriation. In valuing the just sum, Robert Goff J recognised377 the importance to Hunt of the benefits of BP’s ‘experience and expertise, and the risk they took that oil might not be found in commercial quantities’. To value these services, due regard was had to the contract consideration, and account was taken of payments made by Hunt for the services rendered. In fact, the just sum assessed was less than the benefit obtained by Hunt. Therefore, the sum to which BP was entitled did not have to be reduced by reference to the value of the benefit obtained by Hunt. In our more modest machinery construction contract, consider a case in which $60,000 expenses were incurred and a part payment of $20,000 was made. Assume also that the value of the benefit to B before frustration was $40,000. Here we can readily assume that A will retain the part payment. The value of the benefit means that the maximum which A can recover is $40,000. However, B is entitled to have the $20,000 brought into account. If frustration has no effect on the benefit, A is entitled to recover $20,000. The effect is that B pays $40,000 for a $40,000 benefit, as the application of unjust enrichment would imply. Only if frustration affects the benefit does any complication arise. If the benefit is destroyed, it would be appropriate for A to obtain nothing in addition to the contribution towards expenses. Prima facie, and subject to a consideration of insurance obligations, there is no further award to be made. Consider, finally, a case where there was no part payment. If B obtained a benefit of $40,000 from partially completed machinery, this is the maximum which A may recover. It then becomes crucial to know

whether destruction of the benefit is fatal to a claim by A. If the circumstances which gave rise to frustration do not affect the benefit, A is entitled to an award. However, if frustration destroys the benefit, A obtains nothing. Prima facie, and subject to a consideration of services rendered and insurance obligations,378 there is no award to be made. B’s expenses are, as in BP Exploration Co (Libya) Ltd v Hunt (No 2), irrelevant. [page 550] [1265] Personal services and overhead expenses. Section 39 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) provides that in estimating for the purposes Pt 3.2 of the Act the amount of any expenses incurred by any party to the contract, a court may include ‘such sum as appears to be reasonable in respect of overhead expenses’ and any ‘work or services performed personally’ by that party. This provision is particularly important to s 36, since it increases the scope for retention by the recipient of a payment. This provision is not significant to s 38 unless there was nonmonetary performance by both parties to the contract. Take a case where379 beneficial performance in the form of personal services is given prior to frustration. Logically, an award under the Act ought to be available. However, the relevance of s 39 is limited to calculations of the amount of any expenses for the purposes of Pt 3.2. ‘Benefit’ in s 38 does not include expenses incurred by the performing party. It therefore becomes crucial to determine whether personal services may themselves count as a valuable benefit obtained for the purposes of s 38, and provides a substantial stimulus for treating ‘benefit’ in that provision as not limited to cases where there is an end product. In our view, subject to the recipient’s right to claim in respect of expenses incurred, a person who renders personal services prior to frustration ought to be able to make a claim where the agreed return was the provision of those services, rather than an end product. It would seem unlikely that the legislature intended services rendered under a lump

sum contract for personal services to be the subject of an award only if the recipient had made a payment, or a sum was payable at the time of frustration.380 Moreover, the function of s 39 is to deal with personal services which are merely analogous to overhead expenses. [1266] Money payable under insurance contract. Under s 40 of the Australian Consumer Law and Fair Trading Act 2012 (Vic), the court must not take into account381 any sums which have, by reason of the circumstances giving rise to the frustration of the contract, become payable to that party under any contract of insurance. This is subject to a qualification that the court may have regard to an obligation to insure imposed by an express term of the contract, or under any enactment. Section 40 in effect distinguishes between money paid under a contract for insurance before the time of discharge to a party who obtains a valuable benefit, and money which is merely payable under a contract for insurance. Regard may be had to the former but not the latter. Similarly, s 40 distinguishes money payable where there was an obligation to insure and money payable where there was no such obligation. Again, regard may be had to the former but not to the latter. On the crucial question of how the effect of the circumstances giving rise to the frustration is taken into account, the provision is somewhat ambivalent. [page 551] Take again our machinery contract. Assume that the benefit of partial performance is destroyed. This is the situation where insurance is most likely to be relevant, since it may provide for payment for the value of the benefit destroyed. If there was an obligation on A to insure, the benefit of that insurance may be for both A and B or for B alone.382 If it is true to say that under s 38 no claim is available to A, s 40, in making the obligation to insure relevant, can only result in an award to B, which sounds absurd. This suggests that the perspective taken is that regard may be had to A’s obligation to insure so that A does not

recover an excessive amount when claiming under s 38. However, closer examination contradicts this. A’s expense can be claimed under s 36, but if B (or both A and B) is the beneficiary, the benefit must also be brought into account under s 38. Thus, a claim for adjustment may be made by A since the benefit of insurance taken out by A is itself a valuable benefit to B to which s 38 applies, being something done by A in or for the purpose of the performance of the contract. Even if there is no part payment, A may claim that the insurance counts as a benefit to B. Where B took out the insurance, if the court is not entitled to make an award under s 38 where the benefit is destroyed, one perspective is to say that there would be an unjust enrichment of B because it is the destruction of a benefit conferred by A which gives B the right to claim under the insurance contract. Thus, if B was under an obligation to insure, the basis for having regard to the obligation may be an assumption that A has a claim under s 38. However, the better view is that B’s obligation to insure is an expense which cannot be claimed under s 38 unless the benefit is brought into account. The position is perhaps even clearer with regard to insurance benefits obtained prior to frustration. Any recovery by A under an insurance contract prior to discharge is relevant to the just sum recoverable as expenses under s 37, and also to any recovery under s 38. The expenses may have been recouped, or A may have obtained compensation from the insurer in respect of benefits conferred on B. Again, recovery by B prior to discharge under an insurance contract may be relevant to whether B has obtained a valuable benefit under s 38. [1267] Benefits conferred on third parties. Section 38(4) of the Australian Consumer Law and Fair Trading Act 2012 (Vic) extends the operation of s 38 to the following situation. Assume that X is subject to obligations under a contract in consideration of the performance of a promise by Y, by which Y undertakes to confer benefits on a third party (Z). Section 38(4) provides that, irrespective of whether Z is a party to the contract, the court may treat any benefit conferred on Z as a benefit

obtained by X. The court must consider whether the circumstances of the case are such that it is just to do so. [1268] Discretion in making award. Discretion is relevant to awards made under Pt 3.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic). In BP Exploration Co (Libya) Ltd v Hunt (No 2),383 Robert Goff J [page 552] referred to the discretion in respect of the allowance for expenses under (the equivalent to) s 36. Although there are several other references in the legislation to the calculation of ‘just’ sums, this is the only ‘free’384 discretion. There is no residual or overriding discretion, such as exist under the legislation in other jurisdictions. And the discretions apparently conferred by references to ‘just’ sums are qualified, not only by restitutionary principles which the legislation employs, but also in quantification. Indeed, these reinforce each other. For example, under s 38 the just sum must not exceed the value of valuable benefit to the party who obtained it. The closest which the legislation comes to uninformed discretion is in s 38(4), which refers to whether it is ‘just’ to treat a benefit conferred by one party to the contract as a benefit obtained by the other party where the benefit is conferred on a third party. However, this is of minor importance. 1.

On the place of a contract subsequently discharged without breach within the scheme of ineffective contracts see [904].

2. 3.

In New South Wales, South Australia and Victoria. See generally [1236]–[1268]. See generally [1215]–[1235].

4. 5.

See [1240]. See [1235].

6. 7.

See [1209], [1226], [1235]. Proprietary claims rarely arise. Such relief may be available under statute, for example, where a contract is discharged by frustration. See, eg Frustrated Contracts Act 1988 (SA), s

7(5) (for the purpose of giving effect to an adjustment under the Act, a court may make an order for the creation of a charge on property); Frustrated Contracts Act 1978 (NSW), s 15(3)(d) (where adjustments are made, there is a discretion to make an order for the creation of a charge on property). See [1252], [1257]. Compare cases where proprietary relief is granted on the breakdown of a relationship not regulated by contract. See Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429 (de facto relationship); Payne v Rowe (2012) 15 BPR 30,869; [2012] NSWSC 685. On classification of claims, and the difference between proprietary claims and proprietary remedies see generally Chapter 2. 8. 9.

See [1217]. See [1229].

10. See [170], [908]. 11. (1987) 162 CLR 221; 69 ALR 577. 12. (1987) 162 CLR 221 at 256; 69 ALR 577. Mason and Wilson JJ agreed generally with Deane J’s conclusions. 13. [1943] AC 32. See [130], [941] and further [1214], [1220]. 14. See also Muschinski v Dodds (1985) 160 CLR 583 at 618; 62 ALR 429. 15. See generally [140]–[175]. 16. Cf Restatement (Second) Contracts, §377 (restitution for any benefit conferred ‘by way of part performance or reliance’). 17. See [145], [912], [917]. However, headings are expressed in traditional language. 18. Contracts discharged by performance are treated as a species of consensual discharge. 19. See [1152]. 20. For the position where one party only is discharged see [1208]. 21. See Ranger v Great Western Railway Co (1854) 5 HLC 72 at 96–7, 118; 10 ER 824 at 834, 843; Boyd & Forrest v Glasgow and South-Western Railway Co 1915 SC (HL) 20 (case of alleged rescission). See also Oliver v Campbell 273 P 2d 15 at 20 (Cal, 1954). An overpayment is a different matter: the contract need not be ineffective. See [909] and generally Chapter 4 (mistaken payments). 22. (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68 (see [1221]). 23. Even if expressed in terms of ‘failure of consideration’: Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 WLR 161 at 164–5. For a recent example see Tradigrain SA v State Trading Corp of India [2006] 1 Lloyd’s Rep 216; [2005] EWHC 2206 (Comm) (implied term that buyers would account to sellers for amount paid under performance bond in excess of buyers’ loss). See also [915]. 24. See [1221]. 25. See also [1308]–[1309] (agreements for rescission). 26. See Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 30. 27. See further [1216]. 28. See Restatement (Second) Contracts, §283. For the impact of such agreements on restitutionary claims see [2511]–[2522]. 29. See Carter, Construction, §15-34. 30. See generally Chapter 10. The formal requirements derived from the Statute of Frauds

1677 (Imp) do not apply to contracts of discharge or rescission. 31. The principles considered in Chapter 11 apply. 32. See generally Chapter 13. 33. See Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1948] AC 173. 34. Cf Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; 41 ALR 441. 35. The recent cases treat the difference between precedent and subsequent conditions as largely semantic. See Meehan v Jones (1982) 149 CLR 571 at 582; 42 ALR 463. 36. See Carter, Construction, §3-16. 37. See Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; 41 ALR 367. 38. Cf Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109. 39. See generally Carter’s Breach of Contract, §10-03. 40. See [1209]. 41. See [1210]. 42. See William Thomas & Sons v Harrowing SS Co [1915] AC 58 (freight recoverable under lump sum charterparty on delivery of substantial proportion of cargo where the balance was lost by reason of excepted peril). See also [1152]. 43. Contrast [1025], [1030], [1031], [1034] (inherently ineffective contracts). 44. See [913], [1152]. But the question may arise where illegality bars the contractual claim. See generally Chapter 26. 45. Subject to the frustrated contracts legislation. See generally [1236]–[1268]. 46. See [1236]–[1268]. 47. Another example is the partnership legislation, under which a partnership is dissolved as regards all the partners by the death of any partner. See, eg Partnership Act 1892 (NSW), s 33. 48. See ACT: Sale of Goods Act 1954, s 14(1); NSW: Sale of Goods Act 1923, s 14(1); NT: Sale of Goods Act 1972, s 14(1), (2); Qld: Sale of Goods Act 1896, s 12(1); SA: Sale of Goods Act 1895, s 9(1); Tas: Sale of Goods Act 1896, s 14(1); Vic: Goods Act 1958, s 14(1); WA: Sale of Goods Act 1895, s 9(1). 49. See [1235]. 50. See [1336]. 51. See ACT: Sale of Goods Act 1954, s 12; NSW: Sale of Goods Act 1923, s 12; NT: Sale of Goods Act 1972, s 12; Qld: Sale of Goods Act 1896, s 10; SA: Sale of Goods Act 1895, s 7; Tas: Sale of Goods Act 1896, s 12; Vic: Goods Act 1958, s 12; WA: Sale of Goods Act 1895, s 7. 52. See also Wenning v Robinson (1964) 64 SR (NSW) 157 (provision does not apply where the words refer to the value of the goods rather than their valuation by a third person). Cf Pym v Campbell (1856) 6 E & B 370; 119 ER 903 (condition precedent to formation). 53. Thus, in New South Wales, South Australia and Victoria, such ‘avoidance’ is within the scope of frustrated contracts legislation. See [1239]. 54. See [1226].

55. In New South Wales, South Australia and Victoria the frustrated contracts legislation is applicable. See [1239]. 56. The legislation prevails over any other law. 57. It is open to parties to exclude the application of all or any part of the Convention. See Art 6. 58. See Art 79. See A L Diamond, ‘Force Majeure and Frustration Under International Sales Contracts’ in McKendrick, p 265; A H Hudson, ‘Exemptions and Impossibility Under the Vienna Convention’ in McKendrick, p 267. See further [1226]. 59. See [1209], [1226], [1235]. 60. See Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; 41 ALR 367. 61. [1956] AC 696 at 729. 62. Subject to issues of public policy considerations, the frustrated contracts legislation (see [1236]–[1268]) applies to discharge by supervening illegality. See Williams, pp 23–4, referring to legislation on which Pt 3.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) is based. Cf Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226. 63. See [1110]. 64. See [1111]. 65. See [905]. 66. See also [1110], [1111], [1128]. 67. See State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29; 42 ALR 289. See also Heyman v Darwins Ltd [1942] AC 365; BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 829 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). Arbitrators have jurisdiction to apply the frustrated contracts legislation. 68. See generally [1236]–[1268]. Reference is also made to the regulation of international sale of contracts, and the apportionment legislation. See [1235]. 69. See Hodder v Watters [1946] VLR 222. There is no accrued right if an anticipatory repudiation was not accepted prior to discharge by frustration. See Avery v Bowden (1856) 6 E & B 953; 119 ER 1119; Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 250, 259. 70. See Watts Watts & Co Ltd v Mitsui & Co Ltd [1917] AC 227. Cf Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353; [2007] UKHL 12 (had charterparty contract not been discharged for breach, a cancellation right would have been exercised because of war). See also Carter’s Breach of Contract, §13-13. This is of minor importance to restitutionary issues arising following frustration. For the impact of statute see [1244]. 71. See Chandler v Webster [1904] 1 KB 493 (overruled Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32). Cf Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194 (see [1222]). 72. See [909], [1214]. 73. See [1225]. For the general principle see [911]. See also [1128]–[1135].

74. [1943] AC 32. 75. (1919) 27 CLR 194 (see [1222]). Compare Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 371, where Latham CJ queried the ‘propriety of applying a doctrine of restitution as upon a failure of consideration in accordance with the principles of the civil law’. 76. (1993) 176 CLR 344 at 355 n 55; 111 ALR 289. Brennan and Toohey JJ agreed. See also (1993) 176 CLR 344 at 375 (obligation to make restitution prima facie imposed on a total failure of consideration). 77. Deane J had said as much in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; 69 ALR 577. See also Muschinski v Dodds (1985) 160 CLR 583 at 618; 62 ALR 429. For lingering doubts see [1231] (reasonable remuneration). 78. Issues raised by ‘election’ between damages and restitution (see [1166], [1405]) are not relevant. 79. See generally [1236]–[1268]. 80. See further [1216]. 81. See [1217]. 82. See [1225]. For the impact of statute see [1242], [1244], [1248], [1254]. 83. See [1225]. See also [1213]. 84. See further [1216], [1224]. Contrast [1327] (rescission). 85. See [1226], [1242]. 86. See, eg Gilbert v Healey Investments Pty Ltd [1975] 1 NSWLR 650. 87. See, eg Ling v Commonwealth of Australia (1994) 51 FCR 88; 123 ALR 65 (implied term that fees would be returned on termination of contract for tuition). Cf Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33. 88. See [1219], [1220]. 89. See generally [117], [170], [915], [916]. 90. See [918]. 91. See [916]. 92. [1904] 1 KB 493. 93. [1943] AC 32 (see [1220]). 94. See [129]. 95. See, eg Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239 at 245, 246 (dicta that frustration would have caused total failure of consideration); Aurel Forms Pty Ltd v Graham Karp Developments Pty Ltd [1975] VR 202 at 207 (dicta adopting total failure of consideration in context of construction contract alleged to be frustrated by strikes); Re Palmdale Insurance Ltd [1982] VR 921 at 931 (dicta consistent with application of total failure of consideration, on assumption that insurance contract had been frustrated). 96. The most significant decision is McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 (see [1121]), where on one view of the facts, discharge occurred without fault. See further [1225]. See also [908], [916], [1118]. Cf Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 (see [1225]).

97. (1993) 176 CLR 344 at 355 n 55; 111 ALR 289 (see [1214]). 98. See, eg Watney v Mass (1954) 54 SR (NSW) 203 at 219 (dicta that price of goods recoverable following frustration causing total failure of consideration); Muschinski v Dodds (1985) 160 CLR 583 at 618; 62 ALR 429 per Deane J, with whom Mason J agreed (the ‘present tendency of the common law’, in cases of premature termination of a relationship, is to refund payments made where ‘there has been a complete failure of consideration in performance’); Re NIAA Corp Ltd (1993) 33 NSWLR 344 at 362 (total failure of consideration sufficient). Cf Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 587–8; 185 ALR 335; [2001] HCA 68 at [196]. 99. Cf Goss v Chilcott [1996] AC 788 (where a fraudulent alteration to a mortgage discharged the debtor from liability under the document, the creditor was entitled to restitution of the principal); see J W Carter and G J Tolhurst, (1997) 11 JCL 162. 100. See [1216]. Cf Muschinski v Dodds (1985) 160 CLR 583 at 618–20; 62 ALR 429. 101. See [922], [1125]. 102. See [1224]. 103. (1924) 34 CLR 434. 104. [1966] WAR 139. Other subject to finance cases include Lach v Cahill 138 Conn 418; 85 A 2d 481 (1951); Sommerhalder v Burjan [1962] SASR 271. See also Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33 (money paid under agreement to sell land subject to town planning legislation recoverable on basis of total failure of consideration when approval was not obtained). Cf Terra Nova Pty Ltd v Nalanda Pty Ltd [1977] Qd R 296 (recovery of deposit under sale of land contract discharged on failure to register plan of subdivision). 105. [1943] AC 32. 106. The Board of Trade gave the necessary licence to proceed with the appeal, and payment pursuant to the decision of the House of Lords was regulated by the Trading with the Enemy Act 1939 (UK). 107. See Fibrosa Société Anonyme v Fairbairn Lawson Combe Barbour Ltd [1942] 1 KB 12 (on the basis of Chandler v Webster [1904] 1 KB 493). 108. [1943] AC 32 at 64–5 (adopted Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 375; 111 ALR 289). See also Denny Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265 at 275. 109. See [1221]. 110. [1949] AC 293. 111. Cf Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1108. 112. See Re Palmdale Insurance Ltd [1982] VR 921 at 931. 113. (1871) LR 6 CP 78. 114. [1946] VLR 222. 115. Cf Szep v Blanken [1969] SASR 65 at 74, where the contract in Hodder v Watters was treated as being void ab initio. 116. See [1226], [1236]–[1268]. 117. See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 65. See also Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 375; 111

ALR 289. 118. (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. See J Beatson and G J Virgo, (2002) 118 LQR 352; J W Carter and Gregory Tolhurst, (2003) 19 JCL 287; Tang Hang Wu, ‘Unjust Enrichment Within a Valid Contract: a Close Look at Roxborough v Rothmans of Pall Mall Australia Ltd’ (2007) 23 JCL 201. 119. See (2001) 208 CLR 516 at 521, 526, 528; 185 ALR 335; [2001] HCA 68 at [1], [16], [23]. 120. Ha v New South Wales (1997) 189 CLR 465; 146 ALR 355. 121. See Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 167 ALR 326 (affirming (1999) 161 ALR 253). 122. In his dissenting judgment, Kirby J held in favour of Rothmans on the basis that there was no failure of an agreed return. See (2001) 208 CLR 516 at 577–8; [2001] HCA 68 at [166]. See also British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 67–9; 200 ALR 403; [2003] HCA 47 at [92]–[96]; Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 438; 229 ALR 58; [2006] HCA 58 at [103]– [105]. 123. See (2001) 208 CLR 516 at 527, 528–9, 589; 185 ALR 335; [2001] HCA 68 at [19], [24], [199]. 124. Contrast (2001) 208 CLR 516 at 578; 185 ALR 335; [2001] HCA 68 at [168]. 125. See (2001) 208 CLR 516 at 525, 527, 589; 185 ALR 335; [2001] HCA 68 at [16], [21], [199]. 126. The position was complicated by the periodic nature of the licences. See (2001) 208 CLR 516 at 536, 537; 185 ALR 335; [2001] HCA 68 at [52], [56]. 127. See also Fostif Pty Ltd v Campbells Cash and Carry Pty Ltd (2005) 63 NSWLR 203 at 250; 218 ALR 166 (reversed without reference to the point sub nom Campbell’s Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; 229 ALR 58; [2006] HCA 58). Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57 (see [414]). Contrast Britannia Distribution Co Ltd v Factor Pace Ltd [1998] 2 Lloyd’s Rep 420 at 423; Woodgate as Trustee of the Estate of the Late Mrs Marion McGuiness v Keddie (2007) 242 ALR 234; [2007] FCAFC 129. 128. (2001) 208 CLR 516 at 528; 185 ALR 335; [2001] HCA 68 at [24] per Gleeson CJ, Gaudron and Hayne JJ. 129. See also [917]. 130. See (2001) 208 CLR 516 at 557; 185 ALR 335; [2001] HCA 68 at [104]. Gummow J was alone in taking this view. Cf (2001) 208 CLR 516 at 529; [2001] HCA 68 at [23]. But cf the discussion in Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 517; 286 ALR 12; [2012] HCA 7 at [31]–[32]. 131. (2001) 208 CLR 516 at 557; 185 ALR 335; [2001] HCA 68 at [104]. 132. See [920]. 133. (1871) LR 6 CP 78 at 85. 134. (1919) 27 CLR 194. 135. If not by virtue of the common law, then by reason of the Enemy Contracts Annulment Act 1915 (Cth).

136. See also [1224] and further [1231] (reasonable remuneration). 137. One ground given (1919) 27 CLR 194 at 202 by Knox CJ and Barton J (with whom Gavan Duffy J agreed) was that the money was paid pursuant to an illegal contract, and irrecoverable on the basis of Harse v Pearl Life Assurance Co [1904] 1 KB 558. Reliance ((1919) 27 CLR 194 at 201–2, 204) on the reasoning that if the money was paid under mistake, the mistake was one of law, can be ignored. See [414]. 138. Cf [1245]. 139. (1919) 27 CLR 194 at 201. Gavan Duffy J agreed. 140. (1867) LR 2 CP 651 (see [1229]). 141. [1903] 2 KB 756. See also Scottish Halls Ltd v The Minister (1915) 15 SR (NSW) 81 at 89–90; Hirsch v The Zinc Corp Ltd (1917) 24 CLR 34 at 57. 142. See Williams, p 16. In Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194 at 201, Knox CJ and Barton J (with whom Gavan Duffy J agreed) cited Chandler v Webster [1904] 1 KB 493 on the impact of frustration. 143. [1943] AC 32 (see [1220]). 144. (1919) 27 CLR 194 at 204. 145. (1919) 27 CLR 194 at 203. 146. For rejection of the view that rescission is a pre-condition to restitution for total failure of the agreed return see [1214]. 147. See [1221]. 148. (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. 149. [1943] AC 32 at 49–50, 54–5, 71–2 (cf at 76). See Williams, pp 13–15. Contrast Cantiare San Rocco SA v Clyde Shipbuilding & Engineering Co Ltd [1924] AC 226 (Scottish law). 150. See [1247], [1254], [1259]. 151. In accord: Restatement (Second) Contracts, §377 Com (b). For discussion of suggestions to the contrary see [936]–[941]. See also [1234] (no claim for reasonable remuneration). 152. See generally Chapter 24. For a statutory analogy see [1259]. 153. See Carter, Construction, §16-36 (presumption in favour of common law rights and remedies). 154. (1919) 27 CLR 194 (see [1222]). See also Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1108–9 (dicta that advance freight paid under charterparty not recoverable on frustration). 155. See (1919) 27 CLR 194 at 204. 156. (1914) 14 SR (NSW) 333 (see [1138]). 157. For the view that an independent promise to pay is not enforceable following discharge see [1133]. 158. See [911]. 159. (1933) 48 CLR 457 (see [1121]). 160. (1933) 48 CLR 457 at 469, 479. 161. See [916], [1113]. 162. [1904] 1 KB 493.

163. [1943] AC 32. See also Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373, adopted Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 354; 111 ALR 289 (although freight under voyage charterparty had fallen due, it was not earned prior to frustration). 164. [1943] AC 32 at 53. 165. (1919) 27 CLR 194 (see also [1222]). 166. (1919) 27 CLR 194 at 201. Gavan Duffy J agreed. 167. [1904] 1 KB 565. 168. (1917) 24 CLR 34 at 56–7. 169. (1936) 54 CLR 361. 170. (1936) 54 CLR 361 at 379. See also Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1109 and Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 354; 111 ALR 289 (right to unpaid advance freight deemed to be have been earned under voyage charterparty prior to frustration). Cf AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 216; 68 ALR 185. 171. See also CT Bowring Reinsurance Ltd v Baxter (The M Vatan and M Ceyhan) [1987] 2 Lloyd’s Rep 416 at 424–5 (insurance premium accruing on monthly basis). 172. See [1236]–[1268]. 173. For the apportionment legislation see [1235]. 174. See [1146]. 175. See [1209]. However, the frustrated contracts legislation (see [1236]–[1268]) displaces this aspect of the sale of goods legislation in New South Wales, South Australia and Victoria. 176. See Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32; Comptoir d’Achat et de Vente du Boerenbond Belge SA v Luis de Ridder Limitada (The Julia) [1949] AC 293. Both cases are discussed [1220]. 177. The legislation prevails over any other law. But it is open to parties to exclude the application of all or any part of the Convention. See Art 6. 178. See [1209]. 179. See Art 81(2) (see [1149], [1436]). 180. See also [1176] (relevance of unjust enrichment), and further [1436], [2332] (relationship with requirement of restitutio in integrum). 181. Cf Smith v Hartshorn (1960) 60 SR (NSW) 391. But see Rawson v Hobbs (1961) 107 CLR 466 (see [1438]). Contrast Barnes v Eastenders Cash & Carry Plc [2015] AC 1; [2014] UKSC 26 (failure of agreed return). 182. [1952] 2 All ER 176 at 181. Since he cited Law Reform (Frustrated Contracts) Act 1943 (UK), s 1(3), Lord Denning may have intended his statement to be restricted to cases governed by the statute. 183. See [1229]. 184. See [908], [917]. 185. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; 69 ALR 577. Cf Muschinski v Dodds (1985) 160 CLR 583 at 618–20; 62 ALR 429.

186. This is the usual criterion for reasonable remuneration. See [215], [934]. 187. See [934]. See further [1231]. See also [1156]. 188. Compare the rule applicable to the perishing of goods. See [1209] (risk has not passed to the buyer). 189. Cf Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 (see [1233]). 190. However, express exclusion of the frustrated contracts legislation may be common in some contexts. 191. (1867) LR 2 CP 651 (see [1229]). 192. (1867) LR 2 CP 651 at 660. See also at 659 (defendant had not become owner of all the machinery delivered). 193. See Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1108. See generally Andrew Kull, ‘Mistake, Frustration and the Windfall Principle of Contract Remedies’ (1991) 43 Hastings LJ 1. 194. (1795) 6 TR 320; 101 ER 573 (see also [933]). See S J Stoljar, ‘The Great Case of Cutter v Powell’ (1956) 34 Can B Rev 288; Martin Dockray, ‘Cutter v Powell: a Trip Outside the Text’ (2001) 117 LQR 664. 195. (1867) LR 2 CP 651. 196. See (1795) 6 TR 320 at 324; 101 ER 573 at 576. 197. See (1866) LR 1 CP 615. 198. (1867) LR 2 CP 651 at 661 per the court. 199. See [1229]. 200. (1917) 24 CLR 34 at 57. But see Harvey v Hinchinbrook Divisional Board [1903] St R Qd 174, where a claim for reasonable remuneration, although analysed in terms of implied contract, succeeded when the contract under which the work was done became impossible of performance. 201. (1919) 27 CLR 194 (see also [1222], [1225]). 202. (1993) 176 CLR 344 at 355 n 55; 111 ALR 289. Brennan and Toohey JJ agreed. 203. [1943] AC 32. 204. (1987) 162 CLR 221 at 256; 69 ALR 577 (see [1202]). See also Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249 at 274; [2006] QCA 145 at [80]. 205. See [105], [133]–[139], [133]–[139]. 206. See [908], [912], [1202]. 207. See [145]. Cf [135]. 208. (1795) 6 TR 320; 101 ER 573 (see [1229]). See also Horlock v Beal [1916] 1 AC 486 at 496–7. 209. (1867) LR 2 CP 651 (see [1229]). 210. (1919) 27 CLR 194 (see [1225]). 211. See Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249 at 274; [2006] QCA 145 at [80]. 212. See Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment:

The Case for a Reappraisal’ [1992] CLJ 66 at 75. 213. This has led to suggestions that failure of the agreed return is the appropriate criterion for reasonable remuneration. See Birks, p 231; Ewan McKendrick, ‘Frustration, Restitution, and Loss Apportionment’ in Burrows, Essays, p 150. See also [928]. McElroy and Williams, pp xxxviii–xl, 75ff argued that failure of consideration is an integral part of frustration. However, discharge by frustration is not restricted to cases of failure of consideration. See, eg Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194 (see [1222]); National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 at 687, 702. 214. See generally [157]–[158], [933], [934]. 215. See [933], [1161]. 216. This is the approach of Restatement (Second) Contracts, §377. Cf Independent Grocers Cooperative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 at 539 (contrast at 561). But see Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66 at 98. On presumptions as to risk see [1228]. 217. See [928], [1025], [1156]. 218. See Foran v Wight (1989) 168 CLR 385 at 438; 88 ALR 413, and generally [934], [1025], However, discharge of a contract following full non-monetary performance is rare, and in any event a contractual claim is available. If not, the constructive acceptance concept (see [934], [1025], [1031], [1032]) may apply. Cf James v Thomas H Kent & Co Ltd [1951] 1 KB 551 at 556 (quantum meruit available where employment contract fully performed save for period of illness). 219. The frustrated contracts legislation may have this effect. See generally [1236]–[1268]. If the apportionment legislation applies recovery is at the contract rate. See [1235]. See further on the valuation of claims under the general law [1422], [1427]. 220. [1952] 2 All ER 176 at 181 (see [1227]). 221. Cf Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249 at 263–4, 274–5; [2006] QCA 145 at [32], [81] (subsequent use of the benefit of work done prior to frustration). 222. Again, the contract price (pro-rated) must set a ceiling on recovery. See [1427]. 223. See generally [151]–[153], [931]–[935], [1416]. Assuming that this is in fact less than the sum which would be awarded on a reasonable remuneration claim. See further [1416]. 224. Compare the position under statute. See [1251], [1255], [1263]. 225. Cf Ewan McKendrick, ‘Frustration, Restitution, and Loss Apportionment’ in Burrows, Essays, p 150. 226. [1961] 2 QB 278 at 312–15. The case was subsequently overruled in Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 QB 226, on the basis that the contract was not frustrated. See also Kissavos Shipping Co SA v Empresa Cubana de Fletes (The Agathon) [1982] 2 Lloyd’s Rep 211 at 214 (dictum that quantum meruit would be available for services rendered after frustration of charterparty); Adelfamar SA v Silos E Mangimi Martini SpA (The Adelfa) [1988] 2 Lloyd’s Rep 466 at 473 (appropriate claim not put forward). Contrast Horlock v Beal [1916] 1 AC 486, where seamen were not entitled to wages after frustration because there was no service. 227. (1982) 149 CLR 337; 41 ALR 367. For subsequent proceedings see State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29; 42 ALR 289.

228. In Société Franco Tunisienne D’Armement v Sidermar SpA [1961] 2 QB 278 at 312–13 (overruled on other grounds Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 QB 226), Pearson J rejected an implied contract analysis reluctantly. See also Cassidy v Canada Publishing Corp (1989) 41 BLR 223 where an implied contract was subsequently frustrated. 229. Cf Programmed Total Marine Services Pty Ltd v Ship ‘Hako Endeavour’ (2014) 315 ALR 66 at 73, 95; [2014] FCAFC 134 at [34], [163]. 230. Cf Davis Contractors Ltd v Fareham UDC [1956] AC 696 at 722–4. 231. Compare the position under the general law where an interest in property is transferred pursuant to a de facto relationship the breakdown of which (without ‘fault’ — see Payne v Rowe (2012) 15 BPR 30,869; [2012] NSWSC 685) leads to a claim for ‘adjustment’. See, eg Muschinski v Dodds (1985) 160 CLR 583; 62 ALR 429; Jenkins v Wynen (1990) [1992] 1 Qd R 40. See also Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 250. Cf Dwyer v Kaljo (1992) 27 NSWLR 728 (order pursuant to De Facto Relationships Act 1984 (NSW), s 20 giving effect to ‘restitution interest’ not limited to reasonable remuneration). 232. See Chapple v Pagan (1909) 11 WALR 78; Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 140–1. Cf Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 at 553. But see Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428 at 437. 233. For damages liability see [1828]. 234. (1993) 60 SASR 525. 235. See [148], [935]. See also Smits v Roach (2004) 60 NSWLR 711 at 751–2; [2004] NSWCA 233 (affirmed without reference to the point (2006) 227 CLR 423; 228 ALR 262; [2006] HCA 36). 236. See also Winslade Partners Pty Ltd v Steri-Flow Filtration Systems (Aust) Pty Ltd (2012) 113 SASR 69 at 78; [2012] SASCFC 65 at [34] (fully performed contract). 237. (2004) 60 NSWLR 711; [2004] NSWCA 233 (affirmed without reference to the point (2006) 227 CLR 423; 228 ALR 262; [2006] HCA 36). 238. Cf Richard Buxton (a firm) v Mills-Owens (Law Society intervening) [2010] 1 WLR 1997 at 2014; [2010] EWCA Civ 122 at [55] (termination for ‘good reason’ sufficient). 239. See [908]. See also [1223] (expenditure in reliance no defence to claim based on total failure of the agreed return). 240. [1943] AC 32 (see [1220]). 241. See [1943] AC 32 at 49–50, 54–5, 71–2 (cf at 76). See also BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 798 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352) and [1223]. For a more general analysis see [941]. 242. (1919) 27 CLR 194 (see [1225]). 243. See [1236]–[1268]. 244. See [1209]. 245. Cf Sutton, §6.6. 246. For the legislation see [1173]. Compare the legislation discussed [1316]. 247. See the discussion in Williams, pp 69ff.

248. See Nemeth v Bayswater Road Pty Ltd [1988] 2 Qd R 406 at 418–19 (apportionment of utilisation payment under frustrated contract for hire of aircraft). 249. See also [1209]. 250. See Art 81(2) (see [1149], [1176], [1436]). 251. See [1209]. 252. See Art 84(2) (see [1149]). See further [2332] (defence of restitutio). 253. If both parties are bound to make restitution, they must do so concurrently. See [1436], [2332]. 254. Although the legislation prevails over any other law, it is open to parties to exclude the application of all or any part of the Convention. See Art 6. 255. For a comparative analysis see Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66. 256. The Act came into force on 1 May 1979: Frustrated Contracts Act 1978 (NSW), s 2(1). 257. See New South Wales Law Reform Commission, Report on Frustrated Contracts, LRC 25, 1976. 258. The Act came into force on 29 September 1959. 259. The Act formed the model for the Frustrated Contracts Act 1944 (NZ). See Pauline Moran, ‘Restitutionary Principles and the Frustrated Contracts Act 1944’ (1980–83) 4 Auck ULR 56; J F Burrows, ‘Frustration of Contract’ in Law Commission of New Zealand, Contract Statutes Review, Report No 25, 1993, pp 295ff. 260. The Act came into force on 1 April 1988: Frustrated Contracts Act 1988 (SA), s 2. 261. See Law Reform Committee of South Australia, Seventy-First Report, Relating to the Doctrine of Frustration in the Law of Contract, 1983. Earlier, in its Thirty-Seventh Report, Relating to the Doctrines of Frustration and Illegality in the Law of Contract, 1976, the Law Reform Committee had proposed, in the interests of uniformity, to adopt the Victorian legislation. 262. The Law Reform Committee was influenced by the Frustrated Contracts Act 1974 (BC). This was based on Law Reform Commission of British Columbia, Report on the Need for Frustrated Contracts Legislation in British Columbia, 1971. 263. For economic analysis perspective see Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66 at 88. 264. See, eg Frustrated Contracts Act 1988 (SA), s 4(1)(a) (application to frustrated contract irrespective of whether there is, in consequence of the frustration, a total failure of consideration). 265. See Frustrated Contracts Act 1978 (NSW), s 12. Cf s 13(2) (see [1247]). 266. See Frustrated Contracts Act 1978 (NSW), s 11 (see [1249]). For arguments in favour of such an approach see Williams, pp 35–6; A M Haycroft and D M Waksman, ‘Frustration and Restitution’ [1984] JBL 207 at 215–16; Charles Fried, Contract as Promise, 1981, pp 70ff. 267. See Frustrated Contracts Act 1978 (NSW), s 13(1) (see [1247]). 268. See Frustrated Contracts Act 1988 (SA), s 7(1). 269. [1979] 1 WLR 783.

270. [1979] 1 WLR 783 at 799. 271. See [1981] 1 WLR 232 at 243 per the English Court of Appeal (‘we get no help from the use of words which are not in the statute’). The House of Lords [1983] 2 AC 352 made no reference to the concept in affirming the Court of Appeal’s decision. Cf Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1108 per Lord Brandon, with whom the other members of the House of Lords agreed (the Act is an elaborate code by which the parties’ rights are adjusted in an ‘equitable manner’). 272. Cf [166]. 273. See further [1268]. 274. For the operation of statutes of limitation see [2724]. 275. See Frustrated Contracts Act 1978 (NSW), s 14. 276. See Frustrated Contracts Act 1988 (SA), s 8. 277. See Australian Consumer Law and Fair Trading Act 2012 (Vic), s 43. Contrast Law Reform (Frustrated Contracts) Act 1943 (UK), s 1(2) (all sums paid are recoverable as money received for the use of the party by whom the sums were paid). 278. See: NSW: Frustrated Contracts Act 1978, s 4; SA: Frustrated Contracts Act 1988, s 4(3). In Victoria, s 4(2) of the Frustrated Contracts Act 1959 (Vic) provided that the Act applied to contracts to which the Crown was a party. See now Australian Consumer Law and Fair Trading Act 2012, s 4 (Act applies to the Crown). 279. See NSW: Frustrated Contracts Act 1978, s 5(1); SA: Frustrated Contracts Act 1988, s 3(1); Vic: Australian Consumer Law and Fair Trading Act 2012, s 35(1)(c). Contrast Law Reform (Frustrated Contracts) Act 1943 (UK), s 2(5)(c) (see [1263]). 280. See Frustrated Contracts Act 1978 (NSW), s 4(1). 281. See Frustrated Contracts Act 1988 (SA), s 4(2). 282. See Australian Consumer Law and Fair Trading Act 2012 (Vic), s 35(2). 283. See NSW: Frustrated Contracts Act 1978, s 6(1); SA: Frustrated Contracts Act 1988, s 4(2). 284. See Australian Consumer Law and Fair Trading Act 2012 (Vic), s 35(2). 285. See NSW: Frustrated Contracts Act 1978, s 6(1); SA: Frustrated Contracts Act 1988, s 4(1); Vic: Australian Consumer Law and Fair Trading Act 2012, s 41. Cf R C Nicholls, ‘Problems in Project Finance — Fixtures, Force Majeure, Frustration and Fundamental Breach’ in R P Austin and R Vann, eds, Law of Public Company Finance, 1986, pp 563ff. 286. See NSW: Frustrated Contracts Act 1978, s 6(1); SA: Frustrated Contracts Act 1988, s 4(2); Vic: Australian Consumer Law and Fair Trading Act 2012, s 35(3). See, eg Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 at 1108–9 (voyage charterparty). But see M N Howard, ‘Frustration and Shipping Law’ in McKendrick, pp 127–9. 287. See NSW: Frustrated Contracts Act 1978, s 6(1); SA: Frustrated Contracts Act 1988, s 4(2); Vic: Australian Consumer Law and Fair Trading Act 2012, s 35(3) (save as provided by s 40). 288. See NSW: Frustrated Contracts Act 1978, s 6(2); SA: Frustrated Contracts Act 1988 (SA), s 4(2). 289. See NSW: Frustrated Contracts Act 1978, s 6(3); SA: Frustrated Contracts Act 1988, s 5; Vic: Australian Consumer Law and Fair Trading Act 2012, s 42. Cf Aurel Forras Pty Ltd v

Graham Karp Developments Pty Ltd [1975] VR 202 at 207–8 (Victorian legislation applies only where whole contract frustrated). 290. See SA: Frustrated Contracts Act 1988, s 3(1) (‘contract’ includes a severable part of a contract); Vic: Australian Consumer Law and Fair Trading Act 2012, s 42 (Pt 3.2 applies only to the unperformed part (‘remainder’) of a severable contract). 291. See Frustrated Contracts Act 1978 (NSW), s 6(3). 292. See Frustrated Contracts Act 1978 (NSW), s 7(1) (cf Nelson v Kimberley Homes Pty Ltd (1988) 4 BCL 289 at 291 (s 7 assumes that the whole contract has been discharged)); SA: Frustrated Contracts Act 1988, s 6(1) (subject to s 6(2)). Cf [1225]. 293. See [1244]. 294. See Australian Consumer Law and Fair Trading Act 2012 (Vic), s 35(1). 295. See Australian Consumer Law and Fair Trading Act 2012 (Vic), s 36. See further [1244] (damages claims). 296. See NSW: Frustrated Contracts Act 1978 (NSW), s 7(2) (promise which would not have been discharged had it fallen due for performance after the time of frustration); SA: Frustrated Contracts Act 1988, s 6(2)(a) (obligation intended to survive frustration); Vic: Australian Consumer Law and Fair Trading Act 2012, s 41, as a limitation on the power to give effect to Pt 3.2, Div 2 (term which is intended to have effect where circumstances arise which operate or would but for the provision operate to frustrate or avoid the contract or is intended to have effect whether such circumstances arise or not). 297. [1983] 2 AC 352. 298. See Frustrated Contracts Act 1978 (NSW), s 5(4) (application to things done or suffered under the contract after frustration but before the party knows or ought to know of the circumstances giving rise to the frustration). 299. See Frustrated Contracts Act 1988 (SA), s 7(6) (application to purported performance or an act preparatory to performance after frustration, where the party did not know and could not reasonably be expected to have known that the contract had been frustrated). 300. See Frustrated Contracts Act 1978 (NSW), ss 7(1), 8. 301. See Frustrated Contracts Act 1988 (SA), s 6(2). 302. See [1213]. 303. [1979] 1 WLR 783, affirmed [1981] 1 WLR 232; [1983] 2 AC 352 (see [1264]). 304. Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66 at 84. 305. Cf Nelson v Kimberley Homes Pty Ltd (1988) 4 BCL 289 at 292–3 (payment pursuant to Frustrated Contracts Act 1978 (NSW), s 13 not relevant to compensation claim under Real Property Act 1901 (NSW)). 306. See [1246]. 307. See [1249]. 308. See [1247]. 309. Cf Frustrated Contracts Act 1979 (BC), s 5(4) (benefit means something done in fulfilment of contractual obligation); and see, eg Cassidy v Canada Publishing Corp (1989) 41 BLR 223 (benefit included work done in preparing sample chapters of manuscript for textbook under contract which was subsequently frustrated).

310. [1980] 1 WLR 1129 (see [1133], [1168]). 311. Namely, ‘any property or improvement to property acquired or derived’. See further [1250]. 312. Namely, ‘acquired or derived any property or improvement to property’. See further [1247]. 313. Query the position of work not done on the contractor’s premises. 314. See Frustrated Contracts Act 1978 (NSW), s 5(1). 315. See Nelson v Kimberley Homes Pty Ltd (1988) 4 BCL 289 at 291, 292–3. 316. Contrast [1259]. 317. See New South Wales Law Reform Commission, Report on Frustrated Contracts, LRC 25, 1976, p 30. 318. See [1248], [1249]. 319. See Frustrated Contracts Act 1978 (NSW), s 9 (‘performance’ in relation to ss 10 and 11 does not include performance in the form of the payment of money). 320. See Frustrated Contracts Act 1978 (NSW), s 5(2)(b). 321. See [1246]. 322. See [1227], [1231]. For the general approach to valuation see [137] and further Chapter 14. 323. This is, however, consistent with s 11 of the Act. See [1249]. 324. This may be the object of that part of the definition of performance in s 5(1)(b) which includes ‘fulfilment, wholly or in part, of a condition of or in the contract’. 325. See [1250]. 326. See [1251]. 327. See Frustrated Contracts Act 1978 (NSW), s 11(2)(a). 328. See Frustrated Contracts Act 1978 (NSW), s 11(2)(b). 329. If it is equal to that sum, both the second and the third alternative definitions produce the same result. 330. (1867) LR 2 CP 651 (see [1229]). On whether there is a contrast with Australian Consumer Law and Fair Trading Act 2012 (Vic), s 38, see [1263]. 331. That is, the operation of Frustrated Contracts Act 1978 (NSW), ss 9 to 13. 332. See Frustrated Contracts Act 1978 (NSW), s 15(1)(a). 333. See Frustrated Contracts Act 1978 (NSW), s 15(1)(b). 334. See Frustrated Contracts Act 1978 (NSW), s 15(1)(c). 335. Subject to Frustrated Contracts Act 1978 (NSW), s 15(8). 336. See Frustrated Contracts Act 1978 (NSW), s 15(1). 337. See, however, s 15(7) (ss 15(2) and (3) do not limit the generality of s 15(1)). 338. Compare the concept of equalisation of the ‘contractual return’ under Frustrated Contracts Act 1988 (SA), s 7(2). 339. In preparing this section we have relied on Andrew Stewart, ‘The South Australian Frustrated Contracts Act’ (1992) 5 JCL 220.

340. See Frustrated Contracts Act 1988 (SA), s 7(2). 341. See [1237]. 342. See Frustrated Contracts Act 1988 (SA), s 3(1). 343. See [1243]. 344. See Frustrated Contracts Act 1988 (SA), s 3(1). 345. See Andrew Stewart, ‘The South Australian Frustrated Contracts Act’ (1992) 5 JCL 220 at 237. 346. Cf [1251] (approach of New South Wales legislation). 347. See, eg Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524; J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1. 348. See Frustrated Contracts Act 1988 (SA), s 7(5). 349. For criticism see Andrew Stewart, ‘The South Australian Frustrated Contracts Act’ (1992) 5 JCL 220. 350. Reference may be made to commentaries on the English Act, including as adopted in other jurisdictions. See, eg Williams; G L Williams, ‘The Law Reform (Frustrated Contracts) Act 1943’ (1944) 60 LQR 160; R M Sedgewick, ‘Frustrated Contract: The Need for Law Reform’ (1945) 43 Can BR 43 and 469; A M Haycroft and D M Waksman, ‘Frustration and Restitution’ [1984] JBL 207; Ewan McKendrick, ‘Frustration, Restitution, and Loss Apportionment’ in Burrows, Essays, p 147; J F Burrows, ‘Frustration of Contract’ in Law Commission of New Zealand, Contract Statutes Review, Report No 25, 1993, pp 295ff. 351. See [1259]. 352. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 800 (affirmed on other grounds [1981] 1 WLR 232; [1983] 2 AC 352). 353. See Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239 (at the time of the decision the provision was drafted as a proviso). No allowance can be made for expenses incurred after the time of discharge: Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226 at 1235. 354. See s 39 (which also refers to ‘work or services performed personally by the party’). See further [1265]. 355. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 800 (affirmed on other grounds [1981] 1 WLR 232; [1983] 2 AC 352). But see Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226 at 1236. 356. See generally on change of position Chapter 24. For contrasts with the general defence see Ewan McKendrick, ‘Frustration, Restitution, and Loss Apportionment’ in Burrows, Essays, pp 156–7. 357. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 799–801 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 358. [1979] 1 WLR 783 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 359. [1979] 1 WLR 783 at 802 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 360. See further [1265]. 361. But cf Birks, p 252.

362. See [1979] 1 WLR 783 at 801–2 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 363. See [1263]. 364. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 804 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). See also [1259]. 365. See [1259]. 366. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 808 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352); Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728 at 772. 367. [1979] 1 WLR 783 at 801 per Robert Goff J (affirmed [1981] 1 WLR 232; [1983] 2 AC 352 but without reference to this point). 368. Cf Birks, p 253. 369. [1979] 1 WLR 783 at 801 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352 but without reference to this point). See also Parsons Bros Ltd v Shea (1965) 53 DLR (2d) 86 (corresponding provision in Newfoundland legislation). Cf British Columbia v Cressey Development Corp (1992) 97 DLR (4th) 380 (no benefit for purposes of the Frustrated Contracts Act 1979 (BC) where defendant spent money in anticipation of land being rezoned and the contract was subsequently frustrated). 370. (1867) LR 2 CP 651 (see [1229]). 371. See also Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66 at 98–100. Cf Ewan McKendrick, ‘Frustration, Restitution, and Loss Apportionment’ in Burrows, Essays, pp 160ff. 372. For the Australian legislation see [1209]. 373. A case like Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 (see [1220]), where a sale of future goods was frustrated by reason of events resulting from war, is subject to the legislation. 374. See [1239]. 375. Contrast Williams, pp 81ff. 376. [1979] 1 WLR 783. Although the decision was affirmed [1981] 1 WLR 232; [1983] 2 AC 352, the House of Lords held that any power to reflect the time value of money by increasing a restitutionary award beyond the sum originally paid was to be found not in the 1943 Act itself but in the general power to award interest under statute. See Andrew Stewart and J W Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for a Reappraisal’ [1992] CLJ 66 at 90. 377. [1979] 1 WLR 783 at 822. 378. See [1265], [1266]. 379. Cf Cutter v Powell (1795) 6 TR 320; 101 ER 573 (see [1229]). 380. Cf BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 801–2 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). 381. The provision is ‘mandatory’: Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226 at 1234 per Garland J. See also J W Carter and Gregory Tolhurst, ‘Gigs N’ Restitution — Frustration and the Statutory Adjustment of Payments and Expenses’ (1996) 10 JCL 264.

382. Although we put to one side the question how far the insurance obligation affects the question of frustration itself, an express term obliging A to insure for its sole benefit would make frustration unlikely. 383. [1979] 1 WLR 783 at 800 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 384. See G H Treitel, Doctrine and Discretion in the Law of Contract, 1981, p 18. See also Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226 at 1237 per Garland J (‘very broad discretion’).

[page 553]

Chapter Thirteen

Contracts Rescinded or Set Aside 1.

2.

3.

4.

General ….

[1301]

(a) Introduction ….

[1301]

(b) The Contractual Background …. Recovery of Payments Made ….

[1306] [1319]

(a) General ….

[1319]

(b) Total Failure of Consideration on Rescission …. [1322] Discretionary Claims …. [1329] (a) General ….

[1329]

(b) Under the General Law ….

[1331]

(c) Under Statute ….

[1333] [1336]

Sale of Goods Contracts ….

1. General (a) Introduction [1301] Objects. The principal object of this chapter is to explain the restitutionary issues which arise when a contract is rescinded or set aside.1 It is therefore mainly concerned with ‘vitiating factors’, namely, misrepresentation, mistake, duress, undue influence and

unconscionable conduct.2 The historical perspective is important. Differences between common law and equity impact on the relevance of restitution for unjust enrichment in explaining the central concept of restitutio in integrum. It would be quite wrong to assume that all orders made in the context of contracts rescinded3 or set aside4 are for restitution. However, it would be [page 554] equally wrong to regard this area of ineffective contracts as unaffected by developments in the law of restitution, or the sole province of ‘equity’. First, the relevance of rescission is not restricted to vitiating factors: rescission may occur by agreement, and in some contexts statutory relief largely supersedes the equitable perspective. Second, in relation to vitiating factors, restitution is not solely a ‘common law’ remedy, and even if unjust enrichment does not determine the application of restitutio in integrum, a restitutionary concept is at issue.5 [1302] Benefit and contract. Payments made under mistake or compulsion are prima facie recoverable under principles of restitution, since the existence of mistake or improper pressure makes the enrichment of the payee unjust. The law of restitution therefore recognises that payments made otherwise than by way of contract are generally recoverable if made under mistake,6 or improper pressure.7 These bases for restitution may be relevant where there is in fact a subsisting contractual relation between the plaintiff and defendant, if the claim does not depend on prior rescission of the contract. Thus, if there is no contractual variation or fresh agreement, as where a party to a contract simply pays more than was due, by reason of mistake8 or compulsion,9 unjust enrichment is the basis for restitution.10 Of course, restitution in cases involving mistake could previously be denied on the basis that the mistake was one of law not fact.11 Such cases must now

be justified, if at all, on other grounds. An overpayment due to a mistake as to the construction of a contract is prima facie recoverable.12 Unless a gift was intended, a payment made without consideration is recoverable if there was in point of law no contract and a basis for restitution exists.13 Thus, what was regarded by the parties (or one of them) as consideration may not qualify as such, or a mistake may negative consent [page 555] to a transaction. The circumstantial context of these cases is an inherently ineffective contract.14 By contrast, as a general rule, the presence of a vitiating factor such as fraud, mistake or duress, although affecting entry into the contract, does not signify that the contract was void.15 Therefore, in the majority of cases an effective contract supported by valid consideration is present. While the contract remains in place there is no right to restitution of any benefit conferred in discharge of an obligation.16 However, the contract is liable to be rescinded or set aside.17 Once that occurs, restitution is available. [1303] Relevant claims. We deal principally with the recovery of money paid prior to rescission.18 Our emphasis on such claims reflects the fact that, in practice, claims based on the conferral of non-monetary benefits are uncommon except under the adjustment process. Independent claims for a quantum meruit, that is, in our preferred terminology,19 ‘reasonable remuneration’, hardly figure in the cases. However, even when awarded by way of adjustment on rescission, claims in respect of non-monetary benefits have a restitutionary basis.20 Generally, these are personal claims.21 [1304] Restitution and damages. The existence of a vitiating factor such as innocent misrepresentation or duress, although conferring a right of rescission, does not under the general law present

the plaintiff with any right to claim damages, or to elect between restitution and damages.22 Thus, proof of duress establishes no more than that entry into a contract (or a transfer) was vitiated, so that the remedy to which duress gives rise is restitution not an action for damages.23 Similarly, under the general law proof of undue influence or unconscionable conduct does not of itself give rise to a claim for damages. There are, however, exceptions. In some situations the relevant conduct will sound in damages, as where duress happens to amount to a tort, or a misrepresentation is fraudulent or conduct in trade or commerce contravenes a statutory prohibition, for example, misleading or deceptive [page 556] conduct or unconscionable conduct.24 In these cases the plaintiff may be entitled to compensation. Since the claim for damages is in tort or under statute, there is no question of the plaintiff electing between rescission and damages. Accordingly, the plaintiff may claim damages whether or not the contract is rescinded.25 Similarly, claims which the plaintiff would not (on rescission) be entitled to make in the name of restitution may represent losses for which compensation is available.26 [1305] Unjust enrichment. The modern basis of relief in restitution is unjust enrichment.27 Although total failure of the agreed return for a payment is the principal ground handed down by the law of quasicontract, it is not the only basis for satisfying the requirement of injustice in an unjust enrichment analysis.28 The various vitiating factors which provide a right of rescission are familiar — and general — bases for concluding that an enrichment is unjust.29 Therefore, in addition to total failure of the agreed return, mistake, duress, or any other vitiating factor may be called in aid.30 The requirement of restitutio in integrum, which informs much of the law in the present context, was applied both at common law and in

equity. However, the equitable version now prevails, and usually makes it unnecessary for the plaintiff to establish an independent claim in restitution. Even so, restitutio in integrum is primarily concerned with the reversal and prevention of unjust enrichment. Restitutio is usually explained in terms of restoring the parties to the positions they respectively occupied immediately before the contract was made.31 However, that is merely a metaphorical way of saying that adjustments must be made to ensure that neither party is unjustly enriched at the expense of the other.32 Alternatively expressed, counter-restitution is exacted as the price of restitution. Under the modern law the objective is substantial restitutio in integrum or ‘substantial restitution’. Claims in respect of non-monetary benefits are generally made as adjustments required to achieve substantial restitution.33 Since there is an equitable derivation, relief is not restricted to claims formerly within the common counts.34 In other words, no independent claim in restitution [page 557] need be established. In that sense, where the claim is put forward as a necessary adjustment on rescission it is governed by ‘equitable’ principles.35 We consider these under the heading of ‘discretionary claims’.36 There is, however, some scope for independent claims for reasonable remuneration where a contract is rescinded.37 In addition, where a contract is informally rescinded by agreement, including by abandonment of the contract, restitutionary claims are governed by general principles.38

(b) The Contractual Background (i) General [1306] Categories. Before considering restitutionary claims, a brief account of the contractual background is appropriate. The main reason

for discussing the contractual background is to indicate how restitutionary issues are approached, including when analysis of statute is called for. Contracts rescinded or set aside may be placed, at least in broad terms, in three categories: (1) consensually rescinded contracts; (2) contracts rescinded in the exercise of a right; and (3) contracts set aside, rescinded or declared void by court order. [1307] Issues. It is not our object to state in detail the contractual analysis required to establish a right of rescission, or an entitlement to have a contract set aside. No issue of restitution arises on consensual rescission unless the parties have failed to deal with the fate of benefits conferred under the rescinded agreement. We deal only briefly with the contractual background to consensual rescission and concentrate more on contracts affected by a vitiating factor and statute.

(ii) Consensual rescission [1308] Introduction. The concept of ‘consensual rescission’ embraces two types of case. First, the parties to an existing contract may agree a second (‘subsequent’) contract with the express object of rescinding the first (‘former’) contract. Second, the intention of parties to rescind a former contract may be implied or inferred from conduct. In the first type of case, the agreement is to treat that the former contract as if it never existed.39 Of itself, this is largely irrelevant to the law of restitution. However, restitutionary analysis may be relevant if the agreement for rescission does not deal with the fate of benefits conferred by performance [page 558]

of the former contract. Alternatively, and more commonly, the subsequent contract — the contract of rescission — may be an ineffective contract. It is sufficient in the present context to refer to the possibility that the contract of rescission may itself be affected by a vitiating factor.40 Restitutionary issues raised by other bases for saying the contract of rescission is ineffective are dealt with elsewhere.41 [1309] Rescission based on conduct. An intention to rescind a contract may be implied or inferred in a variety of situations, but will generally fall into one of two main categories. First, although there is no express agreement, an intention to rescind the (former) contract is implied or inferred from the terms of a subsequent contract, or the way in which the subsequent contract operates. Thus, the terms of that contract may be inconsistent with the former contract to such an extent that effect can be given to the subsequent contract only by treating it as a rescission of the former contract.42 The second is where the conduct by the parties evinces an intention to abandon the contract which previously bound them. In a case of abandonment, the parties may not have been conscious of the legal effect of their conduct. Thus, abandonment may arise because the parties are estopped from denying that the former contract has been rescinded. There is more scope for restitutionary claims in cases of inferred (consensual) rescission or abandonment than where rescission occurs under an express agreement. That is because the consequences of rescission are implied by law.43

(iii) Contracts liable to be rescinded or set aside [1310] Introduction. A contract valid in its inception may have been induced by fraud or be affected by some other vitiating factor which renders the contract liable to be rescinded or set aside. In these cases, subsequent ineffectiveness arises from one party’s election (‘rescission’), or a court order, in respect of the vitiating factor which affected entry into the contract.

A right of rescission is available for contracts induced by misrepresentation or entered into under duress.44 There are also examples of contracts voidable under statute, where the right of rescission arises under the statute itself, or as a consequence of the other party’s failure to comply with the statute. However, these do not constitute a distinct or coherent category.45 In Alati v Kruger46 Dixon CJ, Webb, Kitto and Taylor JJ stated that rescission ‘is [page 559] always the act of the party’ misled. This is the statement of a general principle which also includes some cases of induced mistake and all cases of duress. Except where intervention is necessary to achieve substantial restitution, an appeal to the discretion of the court is unnecessary.47 A right to approach the court for an order setting aside a contract is available for a contract affected by any factor falling within the concept of ‘equitable fraud’.48 In addition to cases of innocent misrepresentation, this category includes some cases of induced mistake, contracts affected by undue influence and contracts vitiated by unconscionable conduct. At least in theory,49 since in these cases there is merely an ‘equity’ to have the contract set aside, rather than a positive right of rescission, a purported rescission is ineffective until confirmed by the court.50 Additional categories arise under statute. For specified kinds of prohibited conduct, or in relation to unjust contracts or an unjust term, a statutory jurisdiction to grant relief may operate. In many cases, jurisdiction includes setting aside the contract or declaring void the contract or a term of the agreement.51 Under general law principles, the right of rescission is affected by a large number of restrictions.52 The main example is prior affirmation of the contract. Where relevant to restitutionary claims, these are dealt with in the discussion of defences.53 The requirement of restitutio in

integrum has a dual operation. It provides a framework for restitution and counter-restitution; but an inability to achieve substantial restitution will make the plaintiff’s rescission invalid, or lead to denial of relief to set aside the contract.54 [1311] Rescission for misrepresentation or mistake. A misrepresentation is a false statement of fact55 made by one person (the representor) to another [page 560] (the representee) in order to induce the representee to enter into the contract and which has that effect.56 It has always been sufficient to justify rescission that the plaintiff’s mistake arose from a fraudulent representation as to ‘any part of that which induced the party to enter into the contract’.57 In the case of innocent misrepresentation, it is now usually said to be sufficient for the statement to be a ‘material’ one.58 The current approach to innocent misrepresentation contrasts sharply with that formerly taken at common law, including in some cases of uninduced mistake.59 In Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd,60 the common law requirement was expressed in terms of a complete difference in substance between what was supposed to be and what was taken. It follows that the common law did not recognise a right of rescission except in cases of total failure of consideration. Even under the modern law, there is no scope for an application to set aside a contract merely on the basis that one party was mistaken. However, a sufficient connection between one party’s mistake and unconscionable conduct by the other will justify such relief. It is unnecessary to establish a total failure of the agreed return.61 [1312] Rescission for duress. The concept of duress62 includes every species of duress or conduct analogous to duress, actual or threatened, whether by use of force or threats of force.63 To the

traditional categories that include64 duress to the person (including a family member) and duress to a person’s goods, has been added ‘economic’ duress. For the purposes of the latter, duress may be proved by reference to a threat pertaining to a person’s economic well-being.65 The scope of duress is no longer limited by [page 561] a distinction66 between payments for the release of goods, and agreements to pay for their release. Much of the law of duress has been developed in the context of claims for restitution.67 A common situation — that most relevant to the present context — is a threat to breach a contract unless the other party agrees to vary the contract, for example, by increasing the contract price. If the threatened party succumbs, there will usually be a contract by way of renegotiation, typically a variation which requires additional payment. It is the renegotiation contract which may subsequently become ineffective. Any consideration for the promise to pay the additional sum may be a matter of form rather than substance. Most of the modern restitution cases have concerned rescission for economic duress.68 To the extent that duress looks to the quality of the consent or assent of the threatened party, rather than to the unfair conduct of the party making the threat, there is a contrast with unconscionable conduct.69 Accordingly, where a threat is alleged to amount to duress, the relevant question is whether the pressure was such that the choice to enter into the contract was made freely or under pressure which the law treats as ‘improper’.70 Regard may be had to the options open to the party subjected to the pressure, and also to whether that party protested.71 An element of causation must also be established. The pressure must have induced the relevant conduct,72 in this context entry into the renegotiation contract. But the threat need not be the sole or major cause: it is sufficient for the pressure to be a factor.73

Whether the threat is lawful or unlawful may not be crucial, although it must, in the circumstances be improper, that is, amount to illegitimate pressure.74 Accordingly, the mere fact that a person has been pressured prior [page 562] to entry into a contract does not signify duress. Otherwise, any threat made in the context of an existing contractual relation, amounting to no more than a threat to breach the contract unless some new contract is entered into, would constitute duress.75 There are, indeed, good reasons for not treating every threatened breach of contract as sufficient. Not only does the law provide a remedy for threatened breach — in the form of discharge of the contract for repudiation — but the law also encourages the compromise of contractual disputes. Therefore, some attention must be paid to whether the party making the threat was acting bona fide,76 and the other party’s options. The presence of bad faith is important because it means that the new contract cannot be supported as a bona fide compromise.77 Although the presence of an element of exploitation suggests an analogy with the concept of unconscionable conduct,78 they are different concepts. Exploitation of another person’s commercial disadvantage is not duress,79 and duress may be established even though there was no knowledge of vulnerability.80 If duress is established, the element of compulsion means that a contract is voidable. Therefore, the party induced by duress to enter into the renegotiation contract may rescind it.81 Since the contract is not void, the contract may be affirmed. It is therefore misleading to speak of the will of the party affected by duress as having been ‘overborne’.82 [1313] Relief from contracts induced by undue influence. ‘Undue influence’ signifies an influence which may fall short of duress amounting to compulsion, but is nevertheless ‘undue’.83 A

presumption may arise between parties in a particular class of relationship, such as parent and child. Outside [page 563] the established classes (of relationships), undue influence may be presumed on an ad hoc basis;84 but must otherwise be proved on the facts.85 If influence is presumed, the burden rests on the party seeking to uphold the transaction to show that the decision to contract did not result from the influence. Whether independent advice was received by the other party will be significant.86 However, it is not of itself sufficient or essential to establish that substantial consideration was received, or that the transaction was advantageous.87 [1314] Relief from contracts affected by unconscionable conduct. Under general principles, the expression ‘unconscionable conduct’ describes a class of case where the contract may be set aside even though the conduct does not come within any of the vitiating factors so far considered.88 The entitlement arises because of the element of equitable fraud arising from unconscionable conduct.89 Unconscionable conduct looks to the conduct of a stronger party in attempting to enforce a dealing with a person under a special disability (or disadvantage) in circumstances where this would not be consistent with good conscience.90 Thus, it extends to transactions where one party occupied a disadvantageous position of which the other has unconscientiously taken advantage.91 Unconscionable conduct, as a basis for setting a contract aside [page 564] remains a narrow category.92 However, statutory relief may be granted

on a broader basis.93 [1315] Relief from contracts affected by conduct prohibited by statute. Under the Australian Consumer Law,94 certain classes of conduct in trade or commerce are prohibited. The most significant example is conduct that is misleading or deceptive or likely to mislead or deceive.95 Other forms of conduct include statutory forms of duress or unconscionable conduct. The former applies if physical force or undue harassment or coercion is used in connection with the supply of (or payment for) goods or services, or in connection with a sale of (or payment for) an interest in land.96 The Australian Consumer Law states two prohibitions on unconscionable conduct, applicable where the conduct is in trade or commerce:97 (1) unconscionable conduct within the meaning of the unwritten law, from time to time, of the States and Territories;98 and (2) unconscionable conduct in connection with the supply (or acquisition) of goods or services.99 This legislation does not supersede the general law regulating vitiating factors. However, it has reduced its importance. In relation to misrepresentation and duress, the statutory concepts make relief available on different (and often wider) bases than the general law. The Australian Consumer Law does not confer a right of rescission, and the main form of relief envisaged for prohibited conduct is an award of damages.100 However, a plaintiff may seek an order setting aside the contract, or seek orders for compensation or in the nature of restitution, for example, because a disadvantageous contract was induced by prohibited conduct. Such orders may be obtained only at the discretion of the court.101 To the extent that the provisions which confer the discretion on the court permit orders in the nature of restitution, they do not invoke the principle of unjust enrichment.102 Moreover, there is no requirement of rescission prior to the making of any an order in relation to prohibited conduct.103 However,

[page 565] a court may look for guidance in the general law.104 When account is taken of the relief available, cases in which restitutionary relief is determined solely by the general law are uncommon.105 [1316] Relief from unjust contracts. There are additional (and different) legislative provisions which confer jurisdiction re-open transactions, declare certain provisions void or grant various forms of relief. These are applicable to specific categories of contract, to contracts coming within a specified description or between specified parties.106 The legislation is a means by which relief may be sought in respect of contracts obtained by unconscionable conduct or contracts containing unjust or unfair terms whether or not relief would be available under the general law. In New South Wales, the Contracts Review Act 1980 (NSW) was enacted to enable the grant of relief in respect of harsh, oppressive, unconscionable or unjust contracts.107 In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the court must have regard to the public interest and to all the circumstances of the case, including the consequences of compliance or non-compliance with the contract.108 Before relief may be granted under the Contracts Review Act 1980 (NSW), a court must be satisfied that the contract or a provision is unjust. The Act lists various factors to which a court may have regard.109 The court is empowered to set aside a contract, and may have jurisdiction to make other orders, including for or in the nature of restitution. Orders made under the Act varying the terms of a contract may obviate the need to consider restitution.110 However, there is no jurisdiction to order restitution except as a consequence of the grant of relief.111 Moreover, where such orders are made, the prevention or reversal of unjust enrichment may not be the basis for relief.112 Part 2-3 of the Australian Consumer Law113 confers jurisdiction on a

court to declare void a term in a ‘consumer contract’114 which is an ‘unfair’115 term. [page 566] The regime is of marginal significance in the present context. However, it may provide an opportunity to have provisions which impinge on claims for restitution — such as forfeiture clauses — declared void as unfair terms.

(iv) Consequences of rescission [1317] Consequences of consensual rescission. The consequences of a consensual rescission depend on the parties’ agreement. The terms of the contract regulate the rights of the parties, subject only to the possibility that the contract of rescission may itself be an ineffective contract.116 Where the parties have not dealt with the consequences of rescission, and no term can be implied, general principles apply. The rescinded contract is treated as if it never existed. Neither party can insist on performance of the contract: unperformed obligations cannot be enforced, and no claim for damages is available in relation to any breach which preceded rescission.117 The applicable restitutionary principles then operate as default rules. Thus, the principles regulating failure of the agreed return apply118 and, in principle, reasonable remuneration may be claimed.119 [1318] Consequences where contract rescinded or set aside. An effective rescission, whether for misrepresentation or duress inducing a contract, annuls the contract and restores the parties to their precontractual positions. Therefore, unperformed obligations cannot be enforced and contract damages cannot be recovered for any breach which preceded rescission.120 However, except where it brings about a total failure of the agreed return, the mere act of a party may not be

effective to rescind the contract. The court’s aid may be necessary, in order to achieve substantial restitution. The common law took an all or nothing approach to rescission. Rescission was valid if restitutio in integrum was achieved by the act of election, or achieved apart from the repayment of money the consideration for which totally failed.121 In Alati v Kruger,122 Dixon CJ, Webb, Kitto and Taylor JJ explained that the common law lacked the means to ascertain and provide for the adjustments necessary to be made between the parties in cases where a simple handing back of property or repayment of money would not put them in the same position as when they entered into their transaction. Because of its limited scope for orders in adjustment, taking account of changes in position after entry into the contract, in many cases rescission would be invalid. However, principles derived from equity now apply.123 Therefore, as was also explained in Alati v Kruger,124 although a rescission invalid at common law ‘cannot of its own force revest the legal title … if a [page 567] court of equity would treat it as effectual the equitable title to such property revests upon the rescission’.125 More generally, an election to rescind which would otherwise be ineffective may be successfully completed by orders which achieve substantial restitution. The position is similar where a court is asked to set a contract aside, for (spontaneous) mistake, undue influence or unconscionable conduct.126 On the other hand, where relief is ordered for contravention of a statutory prohibitions under the Australian Consumer Law,127 or under legislation such as the Contracts Review Act 1980 (NSW),128 the general consequences of rescission may not apply. The relevant orders (other than in cases where compensation is available as of right), including those for restitution, are subject to the discretion of the court and a court is not obliged to apply the substantial restitution concept.129

2. Recovery of Payments Made (a) General [1319] Introduction. In the old terminology of quasi-contract, a payment made prior to rescission of a contract could be recovered as money had and received by the defendant to the use of the plaintiff.130 Generally, the basis for the quasi-contract action (or common count) was for money paid on a consideration which totally failed.131 The requirement of total failure of the agreed return derives from the perspective taken to claims for the recovery of money paid under contracts in contexts other than deceit.132 Since the common law did not accept that a party’s unilateral act could revest title to property, enjoyment of property rights would deprive the plaintiff of the rights of rescission and restitution.133 Even a brief enjoyment of the benefit of performance, such as a lessee’s [page 568] possession of land, was enough to render the failure of the agreed return merely partial.134 Although the requirement of rescission survives,135 total failure of the agreed return is a sufficient rather than a necessary basis for concluding that a contract has been validly rescinded.136 It can no longer be maintained that rescission is ineffective to revest an interest in personal property,137 and if failure of the agreed return is less than total, the requirement of substantial restitution applies.138 If that requirement cannot be satisfied, rescission will not take effect, or be ordered. [1320] Relevance of requirement of total failure. Under the modern law, total failure of the agreed return is rarely the basis for restitution of money paid under a rescinded contract. However, this does not mean that the concept has no contemporary relevance. As noted above,139 proof of a total failure of agreed return is a sufficient

basis for recovery of any payment made under the contract.140 A total failure is easily established where a contractual payment has been made and rescission does not call for adjustment.141 However, some bases for rescission may be relied on in an alternative analysis.142 Historically, the contrast between common law and equity is crucial.143 However, given the undoubted jurisdiction to make orders to achieve substantial restitution,144 analysis in such terms is outmoded. Today, the only cases in which it is meaningful to draw a contrast between common law and equitable principles are when considering whether there is in fact a right of rescission, or a right to have the contract set aside, or if proprietary relief is sought. In cases of common mistake not induced by misrepresentation, total failure of the agreed return is the only basis under the general law for restitution of payments made under the contract. This is because, in the absence of unconscionable conduct, rescission is governed by total failure of the agreed return. The classic example is Bell v Lever Bros Ltd,145 where [page 569] recovery of payments made under an agreement for early termination of the employment of senior executives was refused, even though the employment contracts could in fact have been terminated without payment. The contracts were not void for mistake and there was no total failure of the agreed return. In the absence of misrepresentation, there was no basis for rescission.146 [1321] Payments made under colourable pretence of contract. The general rule of contract law that consideration must be sufficient entails that a promise to perform an existing duty does not qualify as consideration. The existing duty rule has frequently been criticised, and the courts have been astute to find consideration, sometimes in unlikely places.147 Brief reference to the recovery of payments made under compulsion, where there is merely a colourable pretence of a contractual variation or fresh agreement, is therefore appropriate.148

In these cases, and also where the payee simply demands an extra sum and there is no pretence of a contract,149 recovery does not depend on rescission of the contract, since ex hypothesi there is no contract to rescind. Nor is the requirement of total failure of the agreed return applicable.150 But a basis for restitution must be proved. For example, in T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd151 a purchaser of iron was compelled to increase the price by the seller’s threats of non-performance. Since the increase in price — an increase in the amount of a letter of credit — was not supported by consideration, there was no contractual obstacle to the claim for restitution. The main point taken by the seller was that a payment could not be said to have been made under compulsion where a threat was made by the payee to withhold a contractual right from the payer, as distinct from a right of possession of property, some other proprietary right or a statutory right. The threats were held by the Full Court of the Supreme Court of New South Wales to amount to duress. Although aware of Lord Sumner’s warning in Sinclair v Brougham152 against extending the action for money had and received, the court rejected the contention that recoverability of a payment made under ‘compulsion’ is not available where all that is proved is a compulsive threat to refrain from performing a contractual duty. Accordingly, restitution was ordered. [page 570]

(b) Total Failure of Consideration on Rescission [1322] Requirement of rescission. The availability of restitution was originally tied to the requirement of total failure of consideration. Therefore, restitution could be claimed if the contract could be rescinded, and the contract could be rescinded only if a claim for restitution would succeed.153

Even today, in order to obtain restitution of a payment made, the contract must be rescinded or set aside.154 For example, as Lord Goff said in Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck)155 in the context of duress, until the contract has been avoided, the money in question is regarded as having been paid under a binding contract and is ‘irrecoverable in restitution’. [1323] Consensual rescission. We can deal briefly with cases of consensual rescission. In many of the cases in which payments made prior to the consensual rescission of a contract have been recovered the basis is the intention of the parties, including for failure of condition. For example, in Christie v Robinson156 a contract for the sale of land and stock was cancelled by mutual consent. The contract of cancellation said nothing as to the fate of the purchaser’s deposit. However, it was conceded to be recoverable.157 A payment is also recoverable if a contract is impliedly abandoned by long delay in performance, provided a total failure of the agreed return is proved. Thus, in Summers v The Commonwealth158 a contractor who agreed to supply and deliver blocks of marble adopted an erroneous construction of the contract and did not deliver in conformity with the contract. The contractor failed in an action to recover damages. However, the High Court held that the long period of time which passed during which neither party took any steps to perform amounted to an abandonment of the contract. It then followed that a deposit payment was recoverable. More recently, in DTR Nominees Pty Ltd v Mona Homes Pty Ltd159 a sale of land contract was not performed, and the contract was regarded as lost. Each party alleged that the other had repudiated the contract. The High Court held that although neither party was entitled to terminate for the conduct of the other, their conduct amounted to an implied abandonment of the contract. Applying Summers, the purchaser’s deposit was recoverable. [page 571]

[1324] Mistake. In Bell v Lever Bros Ltd,160 Lord Atkin said that if a contract is vitiated by mistake, the plaintiff can recover money paid under an executed contract on the ground of failure of the agreed return only if the contract is void or a condition precedent has failed. This was approved by the High Court in McRae v Commonwealth Disposals Commission.161 Since spontaneous mistake of itself confers no right of rescission, restitutionary relief for mistake not arising from a misrepresentation is severely limited by the narrowness of the concept of mistake.162 The usual context for restitution is therefore where (spontaneous) mistake is associated with unconscionable conduct.163 [1325] Misrepresentation. Since the common law applied the same approach to cases of innocent misrepresentation as was applied to spontaneous mistake, the requirement of total failure of the agreed return had to be satisfied. As Dixon CJ, Webb, Kitto and Taylor JJ said in Alati v Kruger,164 at common law a plaintiff who is not in a position to return to the defendant that which had been received under the contract ‘in the same plight’ as it had been received could not rescind. Indeed, a right of rescission only arose where a restitutionary claim was unnecessary or would succeed.165 Thus, rescission for innocent misrepresentation is effective if all that remains to be done is for the defendant to repay money paid or to return in specie property received.166 Restitution is then a consequence of valid rescission.167 In all other cases, orders for restitution following rescission are made under the process of restitutio in integrum.168 In cases of fraud, the position has always been different.169 Moreover, the representee can fall back on a claim for damages if rescission is not [page 572] available. Accordingly, recovery of payments made prior to rescission for fraud presents few difficulties.170

[1326] Duress. Virtually all the recent illustrations of duress are in the context of economic duress.171 In Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel)172 Lord Diplock said that the remedy to which economic duress gives rise is an action for restitution of money exacted under such duress and the avoidance of any contract that had been induced by it. Similarly, in Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck)173 Lord Goff said174 that once the contract is avoided, money paid under it is ‘recoverable in restitution, on the ground either of duress or possibly of failure of consideration’. To the extent that restitutio in integrum must be invoked, the approach is the same as in cases of fraud.175 The fact that the plaintiff has received (and enjoyed) the consideration provided by the other party will not prevent recovery under the principle of unjust enrichment if rescission is effective. For example, in Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev)176 shipowners chartered their vessel (the Alev) to charterers who later became insolvent. The defendants were the owners of steel being carried to Muscat under freight pre-paid bills of lading. When the shipowners discovered that the charterers were unable to pay hire, they sought and obtained direct financial contributions from the defendants to whom it was made clear that the cargo would not be delivered unless the contributions were made. The agreement under which the financial contributions were made described as consideration the shipowners refraining from arresting or detaining the cargo and agreeing to abandon any claim against the cargo. However, during discharge of the cargo the defendants rescinded the agreement, arrested the vessel and recovered the money paid in a local court. It was held that although the renegotiation agreement was supported by consideration it was vitiated by duress of goods and economic duress. The defendants’ rescission was valid, and they were entitled to retain the money which they had recovered.177 [page 573]

Similarly, in Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck)178 payments were made by the owners of the Evia Luck under agreements with certain unions who had threatened to ‘blacklist’ the vessel under a campaign against the registration of vessels under flags of convenience. The payments were made under the employment contracts with the crew. The conduct amounted to economic duress. Restitution was available because the agreements were rescinded. [1327] Money payable at time of rescission. Once a contract has been rescinded, the contractual obligations of the parties cease to exist.179 It would be inconsistent with the effect of rescission for money which fell due for payment prior to rescission to be recoverable by action. If a contract is rescinded, for example, for misrepresentation, it is irrelevant to consider whether the payee’s right to the payment was conditional on performance of the contract. Money which was due prior to rescission ceases to be payable, and the idea of prospective failure of the agreed return180 plays no role. For example, in Academy of Health and Fitness Pty Ltd v Power181 the defendant was held to have validly rescinded a contract for membership of a health club for misrepresentation inducing the contract. Although membership dues payable prior to rescission remained unpaid, rescission meant that there was no liability to pay. The fees were not recoverable, and no consequential adjustments were necessary. Similarly, if an agreement is validly rescinded for duress, any money payable at the time of rescission ceases to be payable. In this way, rescission provides a complete defence to an action for damages or a contract debt. For example, in Atlas Express Ltd v Kafco (Importers and Distributors) Ltd182 the defendant was an importer of goods. It secured an order from Woolworths. In order to fill the order, the defendant obtained a large quantity of goods. The plaintiff had agreed to transport the goods. He obtained a variation increasing the amount payable under the contract by conduct amounting to duress. Accordingly, even if the agreement was supported by consideration, the defendant could

deny liability on the promise to pay extra for carriage of the goods. Similarly, in Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd183 the defendant was entitled to rely on conduct analogous to duress, although no threat was expressly made, where it was clear from the circumstances that unless a proposed contract was signed the defendant’s goods would not be released. Therefore, although the contract was signed, rescission by the defendant was a good defence to the plaintiff’s claim under the contract. [1328] Compromise of disputed claim. Compromise of a disputed claim is a recognised exception to the existing duty aspect of the rule that [page 574] consideration must be sufficient.184 Money paid under a compromise is unlikely to be recoverable in restitution on the basis of rescission for an alleged mistake.185 By definition, one party is probably mistaken as to its legal entitlement in relation to the matter compromised. Moreover, while the contract remains effective, mistake is not a basis for restitution for money paid in discharge of a contractual obligation.186 It is difficult to see how, consistently with the importance of compromise in the orderly settlement of disputes, there can be scope for rescission and restitution in the absence of conduct on the part of the defendant inducing the plaintiff’s mistake.187 This seems implicit in the requirement that the claim be bona fide.188 Agreements of compromise are often associated with claim and counterclaim, and threats not to perform. Accordingly, a threat not to perform a contract unless a compromise agreement is made does not of itself render the contract of compromise voidable for duress.189 There is no right to rescind — and therefore no right to claim restitution — where the defendant honestly believed that the claim was genuine. Nevertheless, duress may be found to exist in a compromise. As Lord Denning MR said in D & C Builders Ltd v Rees,190 no person can insist

on a settlement procured by intimidation. In addition, of course, fraud unravels all.

3. Discretionary Claims (a) General [1329] Introduction. No issue of discretion arises in relation to consensual rescission.191 Similarly, discretion is not relevant to cases — relatively rare today — where total failure of the agreed return determines the existence of a right of rescission.192 By contrast, and notwithstanding that rescission for misrepresentation is the act of a party, court orders may be necessary to complete the process of restoration inherent in the idea of rescission. The right will not be available unless the process can be achieved.193 However, [page 575] as Dixon CJ, Webb, Kitto and Taylor JJ explained in Alati v Kruger,194 a court will treat as valid an election to rescind ‘even though precise restitutio in integrum is not possible’, if the parties can be restored ‘substantially to the status quo’. Thus, by determining the extent to which restoration is required, substantial restitution to a large extent determines the fate of restitutionary claims. It follows that discretion is important in two types of case. The first comprises all situations in which although a right to rescind conferred by law is exercised,195 rescission does not cause a total failure of the agreed return. In the second case, where the law does not confer a right of rescission, discretion has a broader relevance and determines both whether the contract should be set aside, for example, for undue influence, and also whether substantial restitution is possible.196 In addition, account must be taken of discretionary awards under statute.197

[1330] Restitutionary perspective. Where discretion is relevant, there are three restitutionary perspectives. First, if substantial restitution is possible the discretion will be exercised in the plaintiff’s favour and restitution will be awarded, on terms. Second, restitutionary principles necessarily inform adjustments necessary to achieve restitutio in integrum. Third, because an inability to achieve substantial restitution implies either that the contract was not validly rescinded or that it will not be set aside, the effect is to bar reliance on any basis for restitution which might otherwise be available. If substantial restitution is impossible the defendant has a valid defence to the claim for restitution.198 Although the main concern in the present context is with the first perspective, unless the plaintiff can establish a total failure of the agreed return it is difficult to ignore the others.199 Nevertheless, the second is better seen as more relevant to the content of the requirement of counter-restitution than to any claim by the plaintiff for restitution.200 And although the third perspective relates to cases where there is a ‘defence’ to a claim for restitution,201 the position is simply that the contract is not ineffective. Discretion is more relevant to cases of innocent misrepresentation, undue influence and unconscionable conduct. Duress is treated in the same way as fraud. The strict common law requirement of restitutio never applied to fraud.202 Nevertheless, if damages would not be an adequate remedy for fraud, [page 576] there is a discretionary jurisdiction to order restitution or compensation to put the plaintiff in as good a position as before the wrong.203

(b) Under the General Law [1331]

Orders for restitution. Where it applies, the requirement of

substantial restitution asserts that (substantial) counter-restitution is the price of restitution.204 In cases where rescission does not result in a total failure of the agreed return, consequential orders must be sought, and these are subject to the discretion of the court. However, it is unnecessary to discuss in detail the orders made on rescission as the price of restitution.205 As conventionally described, the function of the court is to give effect to rescission by making appropriate orders to restore the parties substantially to the positions they respectively occupied prior to entry into the contract.206 Restitution is available even though there is merely a partial failure of the agreed return. Common instances involve a purchaser entering into a contract for the sale of a business or land following misrepresentation. The purchaser’s ability to recover the purchase price depends on whether, by making consequential orders, there is an ability to do what is practically just as between the parties.207 Thus, in Alati v Kruger208 the deterioration of the business purchased following a misrepresentation as to takings did not prevent rescission, and recovery of the purchase price, where orders by way of adjustment could be made. If there is no right to rescind, but the case for an order setting aside the contract is made out, the discretion to grant relief is determined by whether it is possible to make the necessary adjustments. The question is again whether orders may be made to do what is practically just between the parties.209 Restitution is available if the parties can be restored substantially to the positions occupied prior to entry into the contract.210 [page 577] [1332] Money payable at time when contract set aside. If a contract is effectively rescinded, no action can be brought to enforce any obligation to pay money which was due at the time of rescission.211 The position is the same where rescission is confirmed by the court, and discretionary adjustments are made. Even in a case where there is

no positive right of rescission, but merely a right to approach the court, the making of an order setting aside the contract implies that liability which accrued prior to the order no longer exists. Thus, in Commercial Bank of Australia Ltd v Amadio212 a deed of mortgage by way of guarantee securing sums owed by a company was set aside as an unconscionable bargain. There was then no liability to pay the amount due under the deed at the time when the order was made.213 No question of unjust enrichment can arise if a promisor is not obliged to make a payment due, and in that respect setting aside the contract merely prevents unjust enrichment. However, in some cases where a party is entitled to have a contract set aside it appears that an accrued liability may be preserved by a partial setting aside of the contract.214 In Vadasz v Pioneer Concrete (SA) Pty Ltd,215 a guarantor intended to guarantee the future indebtedness of the company, and was induced to enter into the contract by a representation to that effect.216 However, the guarantee also related to the company’s past debts. The creditor sought to enforce the guarantee. Although the creditor had conferred benefits on the company, the guarantor sought an order setting aside the guarantee in toto. The High Court held217 that if ‘such complete and unconditional relief is to be granted, it must be on some basis other than mere entitlement to a practical restoration of the status quo upon rescission or “disaffirmance” of a contract induced by fraud’. In the result, the guarantee was partly set aside or rescinded, so as to leave the guarantee applicable to so much of the debts as the guarantor had been willing to guarantee.218 Deane, Dawson, Toohey, Gaudron and McHugh JJ said219 this [page 578] prevented the guarantor ‘obtaining an unwarranted benefit at the expense of’ the creditor. By contrast, the courts have rightly shown considerable reluctance to treat mistake as a vitiating factor permitting an order to be made setting

aside a compromise contract. The plaintiff’s mistake, for example, in promising to do more than it was already bound to do, is not a basis for relief if valuable consideration for the agreement is found in the element of compromise. Therefore, just as (except in the clearest of cases) entry into such a contract is not vitiated by duress,220 so also a contract should not be set aside for the purpose of excusing nonpayment of money due under a compromise. In the absence of unconscionable conduct, or a statutory basis for relief, it is difficult to see how a court could set aside such a contract solely on the ground of spontaneous mistake. However, in Magee v Pennine Insurance Co Ltd221 a contract to compromise a claim by an insured against his insurer was set aside for mistake, namely, that the policy was voidable for nondisclosure by the insured. Although the insurer’s mistake (in relation to the compromise) was not induced by the insured, a majority of the English Court of Appeal held there was a common mistake as to a matter fundamental to the compromise. The compromise was set aside notwithstanding that, apparently, there was no unconscionable conduct. Even if we ignore the difficulties of reconciling this with other cases on common mistake,222 without proof of unconscionable conduct the absence of misrepresentation ought to have been fatal to the defence which the insurer raised in the proceedings to recover the payment due. As it was, since no terms were imposed, the insurer was in a very happy position. It enjoyed the benefit of the premium paid under the insurance contract. In addition, even though it received precisely what it bargained for, the insurer was relieved from the obligation to pay under the compromise.223

(c) Under Statute [1333] Introduction. In Australia, analysis of rescinded contracts under the general law is qualified considerably by statute, particularly the Australian Consumer Law.224 The principal focus of that legislation is a statutory right to compensation.225 Accordingly, any benefits conferred as a result of contravention of a prohibition stated in the Australian Consumer Law may be dealt with by way of compensation. A

restitutionary perspective is more relevant where the court’s discretionary jurisdiction is invoked. Although activated by specific categories of prohibited conduct which will often have [page 579] direct analogues under the general law, in many cases the discretionary jurisdiction will apply even though restitutionary relief would not be available under the general law. That includes cases where a consequence of the prohibited conduct is entry into a contract. Moreover, even if the context is one in which, under the general law, the requirement of substantial restitution would apply, the principles regulating that requirement are no more than relevant considerations which a court is not obliged to take into account.226 How far the potential for restitutionary relief is in fact increased depends principally on how the courts interpret and exercise the discretionary jurisdiction. However, this does not affect cases where a plaintiff has rescinded a contract and is entitled to restitution as of right under general principles. In addition to jurisdiction under the Australian Consumer Law, reference may be made to claims for relief in respect of unjust contracts. [1334] Statutory discretions in relation to prohibited conduct. The impact of the Australian Consumer Law227 is that where a class of conduct prohibited by the legislation228 is engaged in, the court may make orders against the person who engaged in the conduct.229 Such orders may be made on application by a person who has suffered, or is likely to suffer, loss or damage by conduct in contravention of a prohibition. This is the position not only following contravention of the familiar prohibition on misleading or deceptive conduct, which is itself a ‘passport to … extensive relief’,230 but also the prohibitions on certain forms of duress and unconscionable conduct referred to earlier.231 The stated objects for the discretionary orders are to compensate the

plaintiff in whole or in part for the loss or damage suffered, or to prevent or reduce the loss or damage. Without limiting this discretion, particular types of orders which may be made are listed. There is a jurisdiction to award compensation. Forms of relief most relevant to restitutionary claims include:232 an order declaring the contract to be void wholly or in part either from its beginning or after such date (before the date of the order) as is specified by the order; an order refusing to enforce any or all of the provisions of the contract; an order directing a refund of money, or the return of property; and certain orders in relation to instruments creating or transferring interests in land. [page 580] Clearly enough, the particularising of orders is made for the purpose of indicating what may be done under the discretion, and to emphasise that the court is not limited by the general law, including restitution. There is no requirement that the court pursue the reversal or prevention of unjust enrichment — whether in a technical or intuitive sense — as an objective.233 Where a misrepresentation inducing a contract amounts to misleading or deceptive conduct in trade or commerce, the court may, in its discretion, make orders which include restitution of money paid. Thus, in Haydon v Jackson234 orders were made varying rental payable by the purchasers of a motel business, relieving them from the obligation to make further payments for goodwill and directing prior overpayments to be repaid by those who received them. The same result will be achieved where the order is made declaring the contract void. For example, in National Australia Bank Ltd v Nobile235 a guarantee was declared void ab initio on the ground of misleading or

deceptive conduct, with the result that liability to make any payment which accrued prior to the order was not enforceable. Orders rescinding (or setting aside) a contract (or confirming a prior rescission) may be made, with consequential orders for the payment of money in appropriate cases.236 Whether or not there is the right under the general law to have the contract set aside, if a statutory prohibition is contravened the court may order restitution where the contract is declared void.237 Since in declaring a contract void a court may apply the order to part or all of the contract, consequential orders for restitution of money paid may be made. For example, in Deane v Brian Hickey Invention Research Pty Ltd238 orders were made declaring certain contracts to be void ab initio, and ordering the restitution of money paid. Nevertheless, the restitutionary interests of a defendant who has engaged in prohibited conduct will generally be considered.239 [1335] Unjust contracts. A number of illustrations could be given of restitutionary relief where contracts are re-opened under statute.240 In New South Wales, under the Contracts Review Act 1980 (NSW), relief may be granted by way of the judicial review of unjust contracts.241 Where the court finds a contract or a provision of a contract to have been unjust in [page 581] the circumstances relating to the contract at the time it was made, the court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, make appropriate orders.242 Since the order made must relate back to the ground of injustice,243 if there is no unjust consequence or result no order can be made.244 The discretion is therefore one the exercise of which must seek to achieve a defined object, namely, the avoidance, as far as practicable, of an unjust consequence or result. Assuming an order may be made, the court is also empowered to grant ancillary relief, including such orders as may be ‘just in the circumstances’.245

As under the Australian Consumer Law,246 the Contracts Review Act 1980 (NSW) provides for the grant of relief where none would be available under the general law, and for the making of orders which could not be made to achieve substantial restitution. This is shown in the particularisation of relief247 which may be granted as including, for example, orders: refusing to enforce any or all of the provisions of the contract; varying, in whole or in part, any provision of the contract; declaring the contract void (in whole or in part); or varying, terminating or otherwise affecting the operation or effect of a ‘land instrument’. Surprisingly, there is no reference to orders in the nature of restitution. Nevertheless, restitutionary orders are provided for in Sch 1. This relates to ancillary orders made — where the court makes a decision or order under s 7 — on the basis that they are just in the circumstances. Thus, a court may make orders for or with respect to the making of any disposition of property,248 the payment of money (whether or not by way of compensation) to any party to the contract and the creation (and enforcement) of a charge on property.249 These orders may be made on such terms as the court thinks fit.250 Although pre-contractual conduct is relevant to whether the contract (or provision) is unjust,251 it is perhaps unfortunate that better guidance is not given on the basis for ancillary orders.

4. Sale of Goods Contracts [1336] Introduction. We deal separately with sale of goods contracts to highlight a continuing controversy which affects both the right of rescission and the right to claim restitution following rescission.252 [page 582]

In expressly preserving the ‘rules of the common law’, the sale of goods legislation provides that the rules relating to the effect of fraud, misrepresentation, duress or coercion, mistake or other invalidating cause, continue to apply to contracts for the sale of goods.253 This undoubtedly preserves the ability of a party to a sale of goods contract to exercise a right of rescission for fraud, duress or coercion. Accordingly, the earlier general discussion in relation to these matters254 applies to sale of goods contracts.255 A total failure of the agreed return is therefore a sufficient basis for restitution. However, it has been debated whether the reference to misrepresentation is sufficient to incorporate equitable principles governing rescission.256 That debate raises the question whether substantial restitution is sufficient. The usual focus of the discussion has been rescission for innocent misrepresentation.257 [1337] Application of equitable principles. Prior to the enactment of the sale of goods legislation, a buyer had no general right to revest the property in the seller (and to recover the price as on a consideration which wholly failed) even though there was mistake, or a misrepresentation by the seller.258 In cases of misrepresentation preceding a sale (rather than an agreement to sell) the enjoyment of ownership was sufficient to deny the exercise of a right of rescission except in cases of fraud.259 In effect, therefore, the right of rescission was restricted to three cases:260 (1) fraud or duress by either party; (2) a complete difference in substance between the seller’s performance and what was contracted for; and (3) an express or implied term of the contract. The view that, even today, the principles applied under the general law of contract do not apply to rescission for an innocent misrepresentation has [page 583]

been expressed in some cases.261 This view is supported by the fact that the equitable approach, under which a material misrepresentation is regarded as sufficient, seems not to have been applied to sale of goods contracts prior to the enactment of the legislation.262 Therefore, the only right preserved was the right to rescind in cases of complete difference in substance.263 At the level of statutory interpretation, this narrow view also asserts that the words ‘rules of the common law’ were used in a sense (as a contrast with ‘rules of equity’) which is inconsistent with the Judicature reforms which preceded the English legislation. This is also an assertion264 that sale of goods law was somehow frozen as regards the law of misrepresentation when the legislation was passed. By parity of reasoning, ‘duress’ would not include economic duress, an equally untenable proposition.265 A legitimate interpretation of a statute codifying the common law is to treat the ‘common law’ preserved as including all non-statutory law consistent with the legislation.266 The modern law of contract rejects the view that title to goods cannot be revested by an election to rescind a contract.267 Therefore, even in jurisdictions where the position has not been clarified by legislation,268 it is open to courts to apply the general law of contract, on the basis that the equitable jurisdiction, as it is understood today, was preserved. This approach does not contradict any provision of the legislation, and was accepted by the Full Court of the Supreme Court of South Australia in Graham v Freer.269 A buyer induced to purchase a yacht by an innocent misrepresentation as to the weight of its keel was held to be entitled to rescind under general principles. The buyer’s claim for restitution of the deposit paid under the contract succeeded. In the majority of cases it has been assumed without discussion that the general law applies. For example, in Leason Pty Ltd v Princes Farm Pty Ltd270 a buyer of a racehorse was entitled [page 584]

to restitution of the purchase price on rescission of the contract for sale for an innocent misrepresentation. [1338] Statutory amendment. Doubts about the application of equitable principles regulating rescission have led to amendments to the sale of goods legislation in some jurisdictions. In the Australian Capital Territory and New South Wales, express provisions state that equitable rules apply to misrepresentation.271 In Victoria, s 24 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) states that a contract of supply of goods to which Pt 3.1 of the Act applies may be rescinded after an innocent misrepresentation if the purchaser would have been entitled to rescind the contract by reason of the misrepresentation had the misrepresentation been fraudulent. Section 25(4) states that where a buyer rescinds a contract of supply of goods after an innocent representation is made, the property in the goods revests in the seller. These provisions are reinforced by s 25(5), which provides that on rescission the supplier is liable to the purchaser for money paid and for the value of any other consideration paid or provided under the contract by the purchaser to the supplier. The effect is to remove total failure of the agreed return as the criterion for restitution, and to enable a buyer to recover the value of a non-monetary benefit conferred as part of the price of the goods.272 [1339] Statutory discretions. The statutory discretion under the Australian Consumer Law273 is, of course, unaffected by debates about the position under the sale of goods legislation. Accordingly, if entry into such a contract is induced by misleading or deceptive conduct in trade or commerce, there is a discretion to declare the contract void and to make orders in the nature of restitution.274 In addition, the jurisdiction275 to grant relief against unjust contracts, or to re-open specific types of transactions, including credit sales, may be applicable. However, the ability to obtain restitution may ultimately depend on the exercise of a statutory discretion.276 There is a more specific provision in Victoria, applicable to

restitutionary claims by a seller. In relation to a contract for the supply of goods to which Pt 3.1 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) applies, s 25(6) states that if the purchaser used goods prior to rescission for an innocent misrepresentation, and the supplier acted honestly and reasonably in selling the goods, the court may order the purchaser to pay ‘an amount equal to the whole or any part of the fair value to the purchaser of [page 585] the purchaser’s use of the goods’. The court must be satisfied that it is ‘in all the circumstances … just and convenient to do so’. This effectively operates as an independent, but discretionary, claim in restitution. Expressing the parties’ entitlements in terms of restitution and counter-restitution would have been both succinct and sufficient.277 1.

On the place of a contract subsequently rescinded or set aside within the scheme of ineffective contracts see [902], [904]. As to the jurisdiction of arbitrators in relation to rescission, and to order restitution, see IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 at 477; 100 ALR 361 (relief on the ground of mistake); FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559 at 563, 566–7 (jurisdiction to determine that rescission ab initio was valid and to grant relief to achieve restitutio in integrum). But cf Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (1998) 159 ALR 142. See also ACT: Civil Law (Wrongs) Act 2002, s 172; SA: Misrepresentation Act 1972, s 5.

2.

Lack of capacity to contract and illegality may also be regarded as vitiating factors. The restitutionary issues are discussed in Chapters 5, 10 and 26. See also the explanation in [906]. An obvious example is where damages are awarded for fraud. See [1304].

3. 4.

5.

Compare the orders made in Solle v Butcher [1950] 1 KB 671, a decision not followed in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679; [2002] EWCA Civ 1407. See further [1330].

6. 7.

See generally Chapter 4. See generally Chapter 5.

8.

See, eg Copping v Commercial Flour and Oatmeal Milling Co Ltd (1933) 49 CLR 332 (excess payment under sale of goods contract); Avon County Council v Howlett [1983] 1

WLR 605 (but for defence of estoppel, overpayments made to an employee would have been recoverable on the basis of mistake); National Mutual Life Association of Australasia Ltd v Walsh (1987) 8 NSWLR 585 (excess commission payments made by mistake). Cf Daniell v Sinclair (1881) 44 LT 257 (excess interest paid under mortgage). 9. See, eg Ampol Ltd v Caltex Oil (Australia) Pty Ltd (1982) Unreported, SCNSW (Foster J), 22 December, on appeal (1986) 63 ALR 540 the question did not arise (payments for petrol surcharges made following unlawful demands under a refinery exchange agreement were recoverable as having been made under duress). See also [1321] (colourable contract); and generally Chapter 5. 10. The same is true of payments ‘on account’. See, eg York Air Conditioning and Refrigeration (A/sia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; Attaleia Marine Co Ltd v Bimeh Iran (Iran Insurance Co) (The Zeus) [1993] 2 Lloyd’s Rep 497 at 501. 11. See, eg York Air Conditioning and Refrigeration (A/sia) Pty Ltd v The Commonwealth (1949) 80 CLR 11 at 30. 12. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 370; 109 ALR 57. See generally Chapter 4. See also Cargill International SA v Bangladesh Sugar and Food Industries Corp [1996] 2 Lloyd’s Rep 524 at 531, affirmed [1998] 1 WLR 461 (implied term). Cf Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544 at 555; [2003] NSWCA 180 at [73]. 13. See generally [1015]–[1027] (void contracts). 14. See generally Chapter 10. 15. Mistake rarely renders a contract void. See [1008]. 16. For the general principle see [215], [909]. See also [506], [703] and further [1322]. 17. See further [1306]–[1318] (contractual background). 18. See [1322]–[1326]. See also [1327] (money payable at time of rescission). 19. See [912]. 20. See [458], [1305], [1318]. 21. A proprietary order may be made under statute. See, eg Contracts Review Act 1980 (NSW), Sch 1, cl 1 (see [1335]). And proprietary relief may be granted against a fiduciary, or to secure an adjustment by way of restitutio in integrum. See generally [1437]. 22. Compare ACT: Civil Law (Wrongs) Act 2002, s 175; SA: Misrepresentation Act 1972, s 7(3), under which a court may declare a contract subsisting and award such damages as it considers fair and reasonable in view of the misrepresentation, notwithstanding rescission or a right to rescind. 23. See Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366 at 385; Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 166. See further [1403]. 24. See [1315], [1334]. Note also the jurisdiction to award damages conferred by ACT: Civil Law (Wrongs) Act 2002, s 174; SA: Misrepresentation Act 1972, s 7(1). 25. See further [1403], [1405], [1515]. See also [1636] (money obtained by deceit). 26. See, eg Brown v Smitt (1924) 34 CLR 160 (‘collateral’ losses of purchaser of land arising from carrying on a business on the land recoverable only in a claim for compensation); Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514 at 521.

But see Evans v Benson & Co [1961] WAR 12 (cost of improvements to property which were not a natural and direct result of the fraud, and were not known to vendor, irrecoverable unless they increased the sale value of the property). 27. See generally Chapter 1. For classification see [201]–[208], [218]–[233]. 28. See generally [140]–[175]. 29. See generally Chapter 4 (mistake), Chapter 5 (improper pressure). 30. For such an approach see Restatement (Second) Contracts, §376. See also [1015], [1016], [1302]. 31. See [1433]. 32. See Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 370; 143 ALR 457 at 473 (restitutio in integrum primarily concerned with preventing unjust enrichment of representee). 33. See [1432]. 34. See generally Chapter 1. 35. See O’Sullivan v Management Agency and Music Ltd [1985] QB 428; Cheese v Thomas [1994] 1 WLR 129 at 137 (see M Chen-Wishart, (1994) 110 LQR 173; Martin Dixon, [1994] CLJ 232; John Mee, [1994] LMCLQ 330). 36. See [1329]–[1335]. 37. See, eg Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366 at 385. 38. See Sturt v Cusack (1989) 12 QL Rep 84, where the right of a builder to quantum meruit for work done prior to abandonment of the contract was conceded. 39. For discharge by subsequent agreement see Chapter 12. 40. See [1317]. 41. See also [2515] (contract of compromise may be ineffective). 42. See generally Carter on Contract, Chapter 32. 43. See [1317]. 44. See further [1311]–[1312]. 45. For illustrations of restitution of money paid under contracts for the purchase of shares avoided under statute see Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443; Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603. See also Szep v Blanken [1969] SASR 65, where the claim was barred by affirmation. Contrast the doubtful decision in Landers v Schmidt [1983] 1 Qd R 188 (no total failure of the agreed return because statutory right of avoidance was not exercised). 46. (1955) 94 CLR 216 at 224. See also Abram SS Co Ltd v Westville Shipping Co Ltd [1923] AC 773 at 782; Brotherton v Aseguradora Colseguros SA (No 2) [2003] 2 All ER (Comm) 298 at 311, 316; [2003] EWCA Civ 705 at [27], [45]; Shalson v Russo [2005] Ch 281 at 321; [2003] EWHC 1637 (Ch) at [122]. 47. But see [1331]. 48. See Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125 at 155; 28 ER 82 at 100 (adopted Blomley v Ryan (1956) 99 CLR 362 at 385).

49. See Cockburn v GIO Finance Ltd (No 2) (2001) 51 NSWLR 624 at 634, 638 (as a matter of substance, rescission is available). 50. See, eg Maguire v Makaronis (1997) 188 CLR 449 at 467; 144 ALR 729 at 740 (mortgage liable to be set aside); Bridgewater v Leahy (1998) 194 CLR 457 at 478; 158 ALR 66 at 80 per Gaudron, Gummow and Kirby J (undue influence and unconscionable conduct ‘species of that genus of equitable intervention to refuse enforcement of or to set aside transactions’). Cf Fysh v Page (1956) 96 CLR 233 at 242; Bristol and West Building Society v Mothew [1998] Ch 1 at 22–3 (misrepresentation). See further [1313]–[1314]. See also [1315]–[1316] (relief under statute). 51. See [1315]. 52. The better view is that incorporation of a misrepresentation as a term of the contract is not a bar to restitution. See Carter on Contract, §26-130. The restriction does not apply in cases of fraud (see Alati v Kruger (1955) 94 CLR 216 at 222) or when the discretionary jurisdiction discussed [1315], [1316] operates. It is also rejected in the misrepresentation legislation. See ACT: Civil Law (Wrongs) Act 2002, s 176(1)(b)(i); SA: Misrepresentation Act 1972, s 6(1)(a). See also Sale of Goods Act 1923 (NSW), s 4(2A)(a) (sale of goods). 53. See [2314]–[2323] (election between rights). For other defences see [2322] (estoppel in relation to exercise of right), [2323] (acceptance of goods), [2333] (rule in Seddon’s case), Chapter 26 (illegality) and Chapter 27 (delay). 54. See [1319], [1329], [1330], [2324]–[2335]. 55. Although statements of law are excluded, it may be implied from David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57 that this restriction is no longer applicable. Cf Bibi Sangha, ‘The Law/Fact Distinction in Contract: A Lawyer’s Plaything?’ (1994) 7 JCL 113. 56. See Carter on Contract, §20-010. 57. Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587 per Blackburn J (for the court). 58. See Carter on Contract, §20-220. 59. See further [1336]–[1339] (sale of goods). 60. (1867) LR 2 QB 580 at 587. See further [1325], [1337]. 61. See Taylor v Johnson (1983) 151 CLR 422 at 431–2; 45 ALR 265 (doubting Svanosio v McNamara (1956) 96 CLR 186 at 195–6 if ‘fraud’ was restricted to the common law concept). In Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679; [2002] EWCA Civ 1407 the English Court of Appeal denied the existence of any equitable basis for relief (as applied in Solle v Butcher [1950] 1 KB 671) from common mistake. See also [1008]. 62. See generally A J Stewart, ‘Economic Duress — Legal Regulation of Commercial Pressure’ (1984) 14 MULR 410; R A Conti, ‘Economic Duress’ (1985) 1 Aust Bar Rev 106; Nicholas Seddon, ‘Compulsion in Commercial Dealings’ in Finn, Essays, p 138; Peter Birks, ‘The Travails of Duress’ [1990] LMCLQ 342; R C Nicholls, ‘Conduct after Breach: The Position of the Party in Breach — Part II’ (1991) 3 JCL 163 at 170ff; S A Smith, ‘Contracting Under Pressure: A Theory of Duress’ [1997] CLJ 343; Nathan Tamblyn, ‘Causation and Bad Faith in Economic Duress’ (2011) 27 JCL 140. The influential article by Jack Beatson, ‘Duress as a Vitiating Factor in Contract’ [1974] CLJ

97 is reprinted (as revised) in Beatson, p 95. 63. See Smith v William Charlick Ltd (1924) 34 CLR 38 at 56. See also Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565 at 593; Scolio Pty Ltd v Cote (1992) 6 WAR 475. See also Chapter 5. 64. And also duress colore officii (see Chapter 5). 65. See also [518]. 66. See Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298. See the discussion of Skeate v Beale (1841) 11 Ad & E 983; 113 ER 688 in [506]. 67. See eg Pao On v Lau Yiu Long [1980] AC 614 (see [517]); Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 (see [522]) and generally Chapter 5. 68. See generally North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705 (see [2320]); Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138 (see [1326]); Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833 (see [1327]); Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 (see [1327]); Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 (see [1326]). Cf T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323 (see [1321]. See also [518]. 69. See Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474; 46 ALR 402. 70. See, eg Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 334–5; Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366; Enimont Overseas AG v RO Jugotanker Zadar (The Olib) [1991] 2 Lloyd’s Rep 108 at 114; Kolmar Group AG v Traxpo Enterprises PVT Ltd [2010] 2 Lloyd’s Rep 653 at 663; [2010] EWHC 113 (Comm) at [93]. 71. See, eg Pao On v Lau Yiu Long [1980] AC 614 at 636; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298; Borrelli v Ting [2010] Bus LR 1718 at 1728; [2010] UKPC 21 at [35]. Cf [523]. 72. See [522]. 73. See [522]. But see Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620 at 636, 638 (causation requirement differs between economic duress and duress to the person). Cf Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544 at 556; [2003] NSWCA 180 at [84]. 74. See [501], [504]. Cf Jones, Trends, p 11. 75. See Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 334–5. See also [531]. 76. See Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1 at 11–12; [2012] VSCA 209 at [47]–[48]. 77. See, eg Borrelli v Ting [2010] Bus LR 1718 at 1728; [2010] UKPC 21 at [34]. 78. See Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 46. Cf Equiticorp Finance Ltd v Bank of New Zealand (1993) 32 NSWLR 50 at 109, 149–50; Peter Birks, ‘The Travails of Duress’ [1990] LMCLQ 342 at 346–7. See also Ross McKeand, ‘Economic Duress — Wearing the Clothes of Unconscionable Conduct’ (2001) 17 JCL 1. But see Australia & New Zealand Banking Group Ltd v Karam (2005) 64

NSWLR 149; [2005] NSWCA 149. 79. Cf Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 66, 70; 197 ALR 153; [2003] HCA 18. See also Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620 at 629 (compromise may be obtained by duress); CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 (see J W Carter and Gregory Tolhurst, (1996) 9 JCL 220). 80. See North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] 1 QB 705. See also Spira v Commonwealth Bank of Australia (2003) 57 NSWLR 544 at 555; [2003] NSWCA 180 at [73] (defendant need not know that the threat is unlawful). 81. See North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] 1 QB 705 at 720–1; Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40 at 45; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 302; Scolio Pty Ltd v Cote (1992) 6 WAR 475 at 480–1; Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 166. For illustrations see [1326]. 82. See Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSWLR 40. See also [521]. 83. See generally Carter on Contract, Chapter 24; Meagher, Gummow and Lehane, Chapter 15. 84. Particular facts may create a relationship of confidence justifying a presumption of influence. See, eg Johnson v Buttress (1936) 56 CLR 113; Lloyds Bank Ltd v Bundy [1975] 1 QB 326; O’Sullivan v Management Agency and Music Ltd [1985] QB 428; Farmers’ Cooperative Executors & Trustees Ltd v Perks (1989) 52 SASR 399. Cf Louth v Diprose (1992) 175 CLR 621; 110 ALR 1 (gift). Australian law recognises a special category (derived from Yerkey v Jones (1939) 63 CLR 649) where a wife acts as guarantor for husband’s debt. See Garcia v National Australia Bank Ltd (1998) 194 CLR 395; 155 ALR 614 (see Andrew Phang and Hans Tjio, (1999) 14 JCL 72). Cf N Y Chin, ‘Undue Influence and Third Parties’ (1992) 5 JCL 108; Eoin O’Dell, ‘Restitution, Coercion by a Third, Party and the Proper Role of Notice’ [1997] CLJ 71. 85. See Meagher, Gummow and Lehane, §§15-105–15-115. 86. See, eg Johnson v Buttress (1936) 56 CLR 113, a case illustrating that the doctrine is not limited to transactions by way of contract. See also Mackintosh v Johnson (2013) 37 VR 301; [2013] VSCA 10. 87. See, eg Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608 at 621; Yamaji v Westpac Banking Corp (1993) 115 ALR 240 at 242. Compare the approach under English law. See Royal Bank of Scotland Plc v Etridge (No 2) [2002] 2 AC 773 (see K N Scott, ‘Evolving Equity and the Presumption of Undue Influence’ (2002) 18 JCL 236; Rick Bigwood, (2002) 65 MLR 435; Dominic O’Sullivan, (2002) 118 LQR 337). 88. This category is no longer limited to cases involving ‘catching bargains’, as to which see Meagher, Gummow and Lehane, Chapter 16. 89. See Carter on Contract, Chapter 25. 90. See Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; 46 ALR 402. 91. See Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; 46 ALR 402; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; 298 ALR 35; [2013] HCA 25. See

also Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 249. Relief may be obtained where the transaction does not involve a contract. 92. See Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51; 197 ALR 153; [2003] HCA 18; Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; 298 ALR 35; [2013] HCA 25. But see Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 409–10; 155 ALR 614. 93. See [1315], [1316]. 94. Competition and Consumer Act 2010 (Cth), Sch 2. 95. Australian Consumer Law, s 18. 96. Australian Consumer Law, s 50. 97. See also Australian Securities and Investments Commission Act 2001 (Cth), ss 12CB and 12CC. 98. Australian Consumer Law, s 20. 99. Australian Consumer Law, s 21. The matters to which a court may have regard are stated in s 22 (on a non-exclusive basis). 100. For the legislation see [1047]. 101. For the legislation see [1047]. Compare, in relation to misrepresentation, ACT: Civil Law (Wrongs) Act 2002, ss 174(2), 175(2); SA: Misrepresentation Act 1972, s 7(1), (3). 102. See [229]. 103. See Tenji v Henneberry & Associates Pty Ltd (2000) 38 FCR 471; 172 ALR 679 at 689, 705 (absence of notice of rescission not determinative of relief). See also Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 368; 143 ALR 457. 104. See, eg JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 380 (bars to rescission are factors which go to the exercise of the court’s discretion); Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 367; 143 ALR 457 (principles surrounding remedy of rescission for innocent misrepresentation give guidance in the exercise of the statutory discretion). 105. See further [1334], [1339]. There is no requirement of substantial restitution. See [1334], [2334]. 106. An important illustration is a consumer credit transaction. See National Credit Code, ss 76– 81 (National Consumer Credit Protection Act 2009 (Cth), Sch 1) (court may re-open an unjust credit contract or mortgage or guarantee). 107. For the persons bound by the Act, and those entitled to apply for relief see ss 5, 6. 108. See Contracts Review Act 1980 (NSW), s 9(1). The court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract. See s 9(5). 109. See Contracts Review Act 1980 (NSW), s 9(2). This does not affect the generality of s 9(1). 110. See Ford (by his tutor Watkinson) v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42 at 68; 257 ALR 658; [2009] NSWCA 186 at [113] (variation of contract to limit liability on loan and mortgage). 111. Nor is there a statutory right to compensation. Cf [1315]. 112. See further [1328], [1332].

113. Competition and Consumer Act 2010 (Cth), Sch 2. 114. See Australian Consumer Law, s 23. 115. See Australian Consumer Law, ss 2(1), 24(1). 116. See [1328] (compromise affected by duress), [1332] (compromise affected by mistake). See also [2515] (contract of compromise may be ineffective). 117. See further [1403]. Cf [2311]. 118. See [1319], [1320], [1325]. 119. See [1305]. 120. There may be a right to claim damages in tort or under statute. See [1304], [1315]. Alternatively, a discretionary jurisdiction may apply. See [1315], [1334]. 121. See [1325]. 122. (1955) 94 CLR 216 at 224. See also A H McDonald & Co Pty Ltd v Wells (1931) 45 CLR 506 at 512. 123. But see [1336]–[1339] (sale of goods). 124. (1955) 94 CLR 216 at 224 per Dixon CJ, Webb, Kitto and Taylor JJ. 125. See also Shalson v Russo [2005] Ch 281 at 323–4; [2003] EWHC 1637 (Ch) at [123], [126]; Independent Trustee Services Ltd v GP Noble Trustees Ltd [2013] Ch 91 at 116; [2012] EWCA Civ 195 at [53]. 126. See generally [1431]–[1434], [1437]. 127. See [1315]. 128. See [1316]. 129. See Gregg v Tasmanian Trustees Ltd (1997) 143 ALR 328 at 359 (position under the trade practices and fair trading legislation prohibiting unconscionable conduct); Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482 at 490 (position under Contracts Review Act 1980 (NSW)). See generally [1333]–[1335]. 130. See, eg McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 406; Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366 at 385; Fuller v Happy Shopper Markets Ltd [2001] 1 WLR 1681 at 1689. 131. See [916]. Although in cases of actual deceit rescission may establish a claim for restitution, an action for damages is available irrespective of whether rescission occurs. See [1304] and further [1325], [1403], [1405]. See also [1636] (money obtained by deceit). 132. See [916], [1305]. See further [1320]. The same principle applies to money paid under a contract subsequently rescinded by agreement. See [1323]. 133. See Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34; Abram SS Co Ltd v Westville Shipping Co Ltd [1923] AC 773 at 782–3; Alati v Kruger (1955) 94 CLR 216 at 224. See also [1337], [2330]. For statutory reversals see [1338], [2333]. 134. See, eg Blackburn v Smith (1848) 2 Ex 783 at 792; 154 ER 707 at 711 and generally [1116], [1325]. See also [1337] and further [2333] (rule in Seddon’s case). 135. See [1322]. 136. See [1320], where reference is made to other bases for restitution. See further [1322]–[1328] and contrast [1334], [1335] (statutory jurisdictions not dependent on valid

rescission). 137. See [1318]. 138. See [1329]–[1332]. Cf [1334], [1335] (discretionary statutory jurisdiction not dependent on general law requirements). 139. See [1319]. 140. See, eg Chapman v Greater Midwest Insurance Pty Ltd [1981] 1 NSWLR 479 at 486–7 (entitlement of insured to recover premium on avoidance of policy for material nondisclosure). See further [1325]. 141. See, eg Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587; Svanosio v McNamara (1956) 96 CLR 186 at 207; Cousins v Freeman (1957) 58 WALR 79 at 82. Compare the treatment in Svanosio v McNamara (1956) 96 CLR 186 at 198, 207 of Bingham v Bingham (1748) 1 Ves Sen 126; 27 ER 934 (estate contracted to be sold which in fact belonged to the purchaser). On substantial restitution see [1329]–[1332]. 142. See Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 at 165 (duress). See also [1334], [1335] (discretionary statutory jurisdiction not dependent on total failure of the agreed return). 143. See also [1325]. 144. See [1305]. 145. [1932] AC 161. See also Svanosio v McNamara (1956) 96 CLR 186 at 209. 146. It is impossible to support mistake as a basis for restitution on the facts in Bell v Lever Bros Ltd. See Peter Birks, ‘Restitution after Ineffective Contracts: Issues for the 1990s’ (1990) 2 JCL 227 at 236. Cf Sybron Corp v Rochem Ltd [1984] 1 Ch 112 (misconduct of employee induced mistaken payment). 147. See, eg Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 (pragmatic approach to consideration). Cf Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138 at 147. 148. See also [521]. 149. See, eg Carr v Gilsenan [1946] St R Qd 44. 150. Cf [171], [1015] (whether absence of consideration a basis for recovery). 151. (1955) 56 SR (NSW) 323 (see also [506]). See also Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 336; Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833; Kolmar Group AG v Traxpo Enterprises PVT Ltd [2010] 2 Lloyd’s Rep 653 at 666; [2010] EWHC 113 (Comm) at [118]. Cf Ross Systems v Linden Dari Delite Inc 35 NJ 329; 173 A 2d 258 (1961). 152. [1914] AC 398 at 453–4. 153. See [1318], [1319]. 154. See [215], [506], [1305], [1318] and further [1329], [1330]. 155. [1992] 2 AC 152 at 165. See also Enimont Overseas AG v RO Jugotanker Zadar (The Olib) [1991] 2 Lloyd’s Rep 108 at 118; Fuller v Happy Shopper Markets Ltd [2001] 1 WLR 1681 at 1689. 156. (1907) 4 CLR 1338. Cf Asikas Investments Ltd v Tasker [1967] SASR 43.

The more substantial issue was whether the vendor or the agent was liable. The High 157. Court decided that as the money was not received by the agent as stakeholder, the vendor was liable. 158. (1918) 25 CLR 144 (affirmed (1919) 26 CLR 180). 159. (1978) 138 CLR 423; 19 ALR 223. See also Lombok Pty Ltd v Supetina Pty Ltd (1987) 71 ALR 333 (purchaser’s deposit payment recoverable by reason of total failure of the agreed return); Sturt v Cusack (1989) 12 QL Rep 84 (deposit paid to builder prior to mutual abandonment). 160. [1932] AC 161 at 222. 161. See (1951) 84 CLR 377 at 406, where Dixon and Fullager JJ illustrated the principle by saying that if the purchaser in Couturier v Hastie (1856) 5 HLC 673; 10 ER 1065 had paid for goods before the truth was discovered, he could have recovered it back as money had and received on a total failure of consideration. See also Svanosio v McNamara (1956) 96 CLR 186 at 198–9, 206–7 and [1017]. 162. See [1008], [1319]. 163. See [1329], [1332]. 164. (1955) 94 CLR 216 at 223 (adopted O’Sullivan v Management Agency and Music Ltd [1985] QB 428 at 457). See also Goldsbrough Mort & Co Ltd v Quinn (1910) 10 CLR 674 at 683–4; Watt v Westhoven [1933] VLR 458. 165. See also [1319]. 166. See generally Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587; New Zealand Loan and Mercantile Agency Co v Howes (1888) 4 QLJ 73; William Tibbits & Co v Holt (1890) 16 VLR 714; Picturesque Atlas Publishing Co Ltd v Phillipson (1890) 16 VLR 675 at 680; Hynes v Byrne (1899) 9 QLJ 154 (affirmed (1899) 9 QLJ 198); Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 542–3. 167. See, eg Simons v Zartom Investments Pty Ltd [1975] 2 NSWLR 30 (recovery of deposit paid under contract for sale of home unit subsequently rescinded for innocent misrepresentation). 168. See [1331]. 169. See, eg Edgington v Fitzmaurice (1885) 29 Ch D 459 (plaintiff induced by fraudulent misrepresentation in a prospectus to advance money to a company was entitled to its return on rescission); Coastal Estates Pty Ltd v Melevende [1965] VR 433 (following rescission for fraud, a purchaser of certain allotments of land was entitled to recover money paid under the contract on the basis of total failure of the agreed return). 170. See, eg Murray v Mann (1848) 2 Ex 538; 154 ER 595 (price of goods); Kadner v Brune Holdings Pty Ltd [1973] 1 NSWLR 498 (deposit under sale of land). See also [1636] (money obtained by deceit). 171. See also [518]. 172. [1983] 1 AC 366 at 385. 173. [1992] 2 AC 152. 174. [1992] 2 AC 152 at 165. 175. Cf Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre)

[1976] 1 Lloyd’s Rep 293 at 336 (if the contract is voidable for duress an order for the return of the consideration is made under equitable principles); Halpern v Halpern (Nos 1 and 2) [2008] QB 195 at 222–3; [2007] EWCA Civ 291 at [76]. 176. [1989] 1 Lloyd’s Rep 138 (see P A Chandler, [1989] LMCLQ 270). 177. See also North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705 at 716–17 (variation to contract to build tanker was voidable for duress and avoidance would have led to recovery of the money paid had contract not been affirmed); Kolmar Group AG v Traxpo Enterprises PVT Ltd [2010] 2 Lloyd’s Rep 653; [2010] EWHC 113 (Comm) (increase in price of goods). 178. [1992] 2 AC 152. See Richard O’Dair, [1992] LMCLQ 145; Andrew Phang, ‘Economic Duress — Uncertainty Confirmed’ (1992) 5 JCL 147. 179. See [1317]. 180. See generally [911], [1111], [1131], [1133], [1215], [1216]. 181. [1973] VR 254. 182. [1989] QB 833. Cf B & S Contracts and Design Ltd v Victor Green Publications Ltd [1984] ICR 419 (defence to claim to recover sum due under contract where equivalent sum had already been paid under duress). Contrast Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, where the allegation of duress was not made out. See also [505]. 183. (1991) 22 NSWLR 298. 184. See, eg Wigan v Edwards (1973) 1 ALR 497 at 512; 47 ALJR 586 at 59. For compromise as an aspect of the defence of consideration see generally Chapter 25. 185. See also [447], [507]. 186. See [1302] (position different where the mistake relates to the fact of payment, as where a payment is made twice). For the general rule see [909]. 187. But see [1332]. 188. See, eg Callisher v Bischoffsheim (1870) LR 5 QB 449; Butler v Fairclough (1917) 23 CLR 78 at 96. 189. Compare Wigan v Edwards (1973) 1 ALR 497; 47 ALJR 586, no issue of duress was raised where purchasers of land threatened not to complete unless the vendor-builder agreed to remedy defects in the building work. 190. [1966] 2 QB 617 at 625. See also Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833 at 839; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298. See further [2514]–[2515]. 191. Unless the contract of rescission is itself alleged to be ineffective. See [1308], [1317]. 192. See [1320]. 193. See, eg Greater Pacific Investments Pty Ltd v Australian National Industries Ltd (1996) 39 NSWLR 143 (since party was not in a position to make substantial restitution, or was unwilling to do so, it was not possible to declare put and call options rescinded). See further [2330]. 194. (1955) 94 CLR 216 at 223–4 (adopted O’Sullivan v Management Agency and Music Ltd [1985] QB 428 at 457). Cf Janet O’Sullivan, ‘Rescission as a Self-help Remedy: A Critical Analysis’ [2000] CLJ 509. 195. See [1330]–[1331]. On bases for rescission see [1310]–[1312].

196. See [1330]–[1332]. On bases for applying to have a contract set aside see [1313]–[1314]. 197. See [1333]–[1335]. For the conduct prohibited and the contracts affected see [1315], [1316]. 198. See also [1319], [1329], [2324]–[2335]. 199. See further [1331] (orders for restitution), [1332] (money overdue when contract set aside). 200. See [1431]–[1434], [1437]. 201. See generally [2324]–[2335]. 202. See further [1337] (sale of goods). 203. See Nocton v Lord Ashburton [1914] AC 932 at 951–2; Sibley v Grosvenor (1916) 21 CLR 469 at 486 and further [1722]–[1726]. For recent statements see, eg Hill v Rose [1990] VR 129 at 143–4; Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561 at 573–4; Spedley Securities Ltd v Greater Pacific Investments Pty Ltd (1992) 30 NSWLR 185 at 192–3; Bailey v Namol Pty Ltd (1994) 125 ALR 228 at 235; Greater Pacific Investments Pty Ltd v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153–4. Compare the orders made in O’Sullivan v Management Agency and Music Ltd [1985] QB 428 (see [1437]). 204. See Birks, pp 415–19, and note the analysis from the unjust enrichment perspective in O’Sullivan v Management Agency and Music Ltd [1985] QB 428 at 467. 205. See generally Meagher, Gummow and Lehane, Chapter 24. See further [1437]. See also [2324]–[2330]. 206. See Alati v Kruger (1955) 94 CLR 216 at 224. See also Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278; A H McDonald & Co Pty Ltd v Wells (1931) 45 CLR 506 at 512; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 709ff. For criticism of this perspective see [1305] and further [2329]. 207. See [1437]. 208. (1955) 94 CLR 216. See also Adam v Newbigging (1888) 13 App Cas 308; Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278; Lagunas Nitrate Co v Lagunas Syndicate [1899] 2 Ch 392 at 456–7; Spence v Crawford [1939] 3 All ER 271 at 279–80 and for further illustrations see [1432], [1437]. See also [1332] (money overdue when contract set aside). 209. See [1437]. 210. For illustrations see [1437]. See also [1332] (money overdue when contract set aside). 211. See [1318]. 212. (1983) 151 CLR 447; 46 ALR 402. See also National Australia Bank Ltd v Nobile (1988) 100 ALR 227; Alderton v The Prudential Assurance Co Ltd (1993) 41 FCR 435. 213. Cf Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255, where Steyn J held, as an alternative ground for his decision, that a contract of guarantee could be set aside for common mistake. This meant that the guarantor ceased to be liable to make overdue payments. 214. See generally Andrew Robertson, ‘Partial Rescission, Causation and Benefit’ (2001) 17 JCL 163; D J Meikle, ‘Partial Rescission — Removing the Restitution from a Contractual Doctrine’ (2003) 19 JCL 40; Jill Poole and Andrew Keyser, ‘Justifying Partial Rescission

in English Law’ (2005) 121 LQR 273. 215. (1995) 184 CLR 102; 130 ALR 570 (see J W Carter and Gregory Tolhurst, (1996) 10 JCL 167; Dominic O’Sullivan, (1997) 113 LQR 16). 216. The misrepresentation was perhaps fraudulent. 217. (1995) 184 CLR 102 at 111; 130 ALR 570. 218. See also Australia and New Zealand Banking Group Ltd v Petrik [1996] 2 VR 638 at 644 (relief so as to leave mortgage binding as security for part of debt where mortgagee knew of third party representation as to amount of debt). Contrast Greater Pacific Investments Pty Ltd v Australian National Industries Ltd (1996) 39 NSWLR 143 at 151 (circumstances did not warrant partial rescission of put and call options); Maguire v Makaronis (1997) 188 CLR 449 at 472; 144 ALR 729 (following breach of fiduciary duty, equity was to have whole transaction rescinded). 219. (1995) 184 CLR 102 at 114; 130 ALR 570 at 578. See also Tutt v Doyle (1997) 42 NSWLR 10 at 12–13 (if a contract is set aside because unilateral mistake is associated with unconscionable conduct, the court may make appropriate orders by way of partial rescission); Bridgewater v Leahy (1998) 194 CLR 457 at 493–5; 158 ALR 66. 220. See [1328]. 221. [1969] 2 QB 507. Cf Re Roberts; Roberts v Roberts [1905] 1 Ch 704 (compromise affected by solicitor’s mistake). 222. Bell v Lever Bros Ltd [1932] AC 161 was apparently treated as dealing only with mistake at common law — a view no longer tenable under English law. See Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679; [2002] EWCA Civ 1407. Cf Brennan v Bolt Burdon (a firm) [2005] QB 303; [2004] EWCA Civ 1017. See also N H Andrews, ‘Mistaken Settlements of Disputed Claims’ [1989] LMCLQ 431 at 437–8. 223. Contrast the analysis in Prudential Assurance Co Ltd v C M Breedon Pty Ltd [1994] 2 VR 452. 224. Competition and Consumer Act 2010 (Cth), Sch 2. See [1334]–[1335]. See further [1329] (sale of goods). 225. See Australian Consumer Law, s 236. 226. See, eg Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564– 5; 79 ALR 83 at 102–3; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 714; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608 and further [2334]. 227. Competition and Consumer Act 2010 (Cth), Sch 2. 228. See [1315]. 229. See [1047]. Orders may also be made against a person who was involved in contravention of the prohibition. Cf ACT: Civil Law (Wrongs) Act 2002, s 175; SA: Misrepresentation Act 1972, s 7(3). 230. Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 6 per the Full Federal Court. 231. See [1315]. 232. See Australian Consumer Law, s 243. 233. Cf Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 536; 158 ALR 333. 234. (1988) ATPR ¶40–845. Cf Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36

ALR 23; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 713. 235. (1988) 100 ALR 227. 236. See, eg Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564– 5; 79 ALR 83 at 102–3; Musca v Astle Corp Pty Ltd (1988) 80 ALR 251; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700; Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471; 110 ALR 535; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608. 237. On the scope of the jurisdiction see Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 179 CLR 15 at 37; 117 ALR 321 (approving Trade Practices Commission v Milreis Pty Ltd (1977) 29 FLR 144 at 160–1, 168, 14 ALR 623 at 638–9, 645–6); Tenji v Henneberry & Associates Pty Ltd (2000) 38 FCR 471; 172 ALR 679. 238. (1988) ATPR ¶40–889. See also Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471; 110 ALR 535. 239. See, eg Tenji v Henneberry & Associates Pty Ltd (2000) 38 FCR 471; 172 ALR 679 at 708 (restitution of benefits enjoyed while contract for sale of property was on foot). 240. See also [1329]. 241. See [1316]. 242. See Contracts Review Act 1980 (NSW), s 7(1). See also s 9. 243. See S H Lock (Australia) Ltd v Kennedy (1988) 12 NSWLR 482. 244. See West v AGC (Advances) Ltd (1986) 5 NSWLR 610; P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615 at 638; Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561 at 576. 245. See Contracts Review Act 1980 (NSW), s 8, Sch 1, cl 1. 246. Competition and Consumer Act 2010 (Cth), Sch 2. See [1334]. 247. See Contracts Review Act 1980 (NSW), s 7(1). 248. The terms ‘disposition’ and ‘property’ are defined in Contracts Review Act 1980 (NSW), Sch 1, cl 4. 249. See Contracts Review Act 1980 (NSW), Sch 1, cl 1. 250. See Contracts Review Act 1980 (NSW), Sch 1, cl 2. 251. See [1316]. 252. There is no controversy in relation to consensual rescission. The analysis in [1308]–[1309], [1317] (contractual background), [1323] (recovery of money paid) therefore applies. 253. See ACT: Sale of Goods Act 1954, s 62(1); NSW: Sale of Goods Act 1923, s 4(2); NT: Sale of Goods Act 1972, s 4(2); Qld: Sale of Goods Act 1896, s 61(2); SA: Sale of Goods Act 1895, s 59(2); Tas: Sale of Goods Act 1896, s 5(2); Vic: Goods Act 1958, s 4(2); WA: Sale of Goods Act 1895, s 59(2). The words in the text are taken from the New South Wales provision. 254. See [1310]–[1312], [1318] (contractual background), [1319]–[1322], [1325], [1326] (recovery of money paid), [1327] (money overdue at time of rescission), [1328] (compromise of disputed claim). 255. See generally Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR

2 QB 580 at 587; Clough v London & North Western Railway Co (1871) LR 7 Ex 26; Picturesque Atlas Publishing Co Ltd v Phillipson (1890) 16 VLR 675 at 679–80; Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525. 256. This is one aspect of broader issues. See New South Wales Law Reform Commission, Issues Paper on Sale of Goods, IP 5, 1988, §2.5. 257. See generally New South Wales Law Reform Commission, Sale of Goods, Second Report, LRC 51, 1987, Chapter 2. 258. Indeed, there was no such right even in cases of breach of condition, although this restriction has been removed in a majority of jurisdictions. See [2333]. 259. See Murray v Mann (1848) 2 Ex 538; 154 ER 595; Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580; Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34; William Tibbits & Co v Holt (1890) 16 VLR 714; Picturesque Atlas Publishing Co Ltd v Phillipson (1890) 16 VLR 675 at 680. Cf Whurr v Devenish (1904) 20 TLR 385. 260. See [1311], [1325]. See further [2527]. 261. See Watt v Westhoven [1933] VLR 458 at 465 (applying Riddiford v Warren (1901) 20 NZLR 572). See also Hynes v Byrne (1899) 9 QLJ 154 at 159–63 (affirmed without reference to the point (1899) 9 QLJ 198); Holmes v Burgess [1975] 2 NZLR 311. 262. The key case is Redgrave v Hurd (1881) 20 Ch D 1. 263. See M G Bridge, ‘Misrepresentation and Merger: Sale of Land Principles and Sale of Goods Contracts’ (1985) 20 UBC LR 53 at 89ff. Cf S J Stoljar, ‘Conditions, Warranties and Descriptions of Quality in Sale of Goods — II’ (1953) 16 MLR 174 at 190ff. 264. Cf Wilson v Brisbane City Council [1931] St R Qd 360 at 383. 265. See, eg T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323. Cf North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] QB 705. There is therefore no need to distinguish the contract of sale from the contract (usually by way of variation to that contract) affected by duress. 266. See G L Williams, ‘Language and the Law — III’ (1945) 61 LQR 293 at 302; J G Fleming, ‘Misrepresentation and the Sale of Goods’ (1951) 25 ALJ 443 at 446. The cases no longer pretend that the legislation is a complete code. See New South Wales Law Reform Commission, Sale of Goods, Second Report, LRC 51, 1987, §§1.12ff. 267. See [1318], [1319]. 268. See [1338]. 269. (1980) 35 SASR 424. See also JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 (recovery of price of motor vehicle following rescission for innocent misrepresentation). Cf Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588; 171 ALR 568; [2000] HCA 25 (retention of title — trust created by contract). 270. [1983] 2 NSWLR 381. See also Compagnie Francaise des Chemins de Fer Paris-Orleans v Leeston Shipping Co Ltd (1919) 1 Ll L Rep 235 at 238; Leaf v International Galleries [1950] 2 KB 86; Long v Lloyd [1958] 2 All ER 402; Goldsmith v Rodger [1962] 2 Lloyd’s Rep 249. Cf Robert A Munro & Co Ltd v Meyer [1930] 2 KB 312 (mistake); Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] 2 QB 450 (rectification). 271. See: ACT: Sale of Goods Act 1954, s 62(2); NSW: Sale of Goods Act 1923, s 4(2A). For

discussion see New South Wales Law Reform Commission, Sale of Goods, Second Report, LRC 51, 1987, §§2.13–2.17. 272. For the seller’s claim to restitution see [1339]. 273. Competition and Consumer Act 2010 (Cth), Sch 2. See [1334]. 274. The same is true of the contravention of other prohibitions, such as those relating to unconscionable conduct. See [1315]. 275. For the legislation see [1316]. 276. See [1334]–[1335]. 277. On restitution and counter-restitution cf [1436], [2334], [2335].

[page 587]

Chapter Fourteen

Valuation and Adjustment 1. 2.

3.

4.

General …. Restitution and Damages ….

[1401] [1403]

(a) General ….

[1403]

(b) Advantages ….

[1407]

(c) Damages Where Restitution ….

Plaintiff

(d) Damages Where Restitution ….

Defendant

Entitled

To [1409]

Entitled

To

Valuation of Non-monetary Benefits ….

[1412] [1415]

(a) General ….

[1415]

(b) Relevance of Contract Price …. Restitutio in Integrum ….

[1421] [1431]

(a) General ….

[1431]

(b) Inherently Ineffective Contracts and Statute …. [1435] (c) Contracts Which Ineffective ….

Subsequently

Become [1437]

1. General [1401]

Objects. The main purpose of this chapter is to consider the

valuation of non-monetary benefits recovered as restitution in the ineffective contracts context.1 Mostly, these are claims as on a quantum meruit; in our preferred terminology,2 claims for reasonable remuneration.3 Having dealt in detail with the valuation of claims following discharge by frustration,4 we do not refer, except incidentally,5 to contracts discharged without breach. It is also appropriate to consider relevant aspects of adjustments which may be required when a plaintiff obtains restitution. We do so mainly from the perspective of when counter-restitution is exacted as the price of restitution.6 In essence, this concerns the content of the requirement of substantial restitutio in integrum or ‘substantial restitution’.7 The first section is a general analysis of the relationship between claims for damages and claims for restitution.8 [page 588] [1402] Recovery of interest. Where restitution is ordered for money paid under an ineffective contract, the payer will generally also be awarded interest from the date of payment.9 This is true even in cases where the plaintiff’s breach or repudiation led to the discharge of the contract, or the claim is based on relief against forfeiture.10 Recovery of interest may also be an element of orders made to achieve substantial restitution.11 Whether given as restitutionary relief, by way of adjustment on rescission or discharge, or under statute, the award is usually for simple interest, generally calculated from the time of receipt of the relevant benefit.12 However, compound interest may be awarded under principles derived from equity.13

2. Restitution and Damages (a) General

[1403] Availability of damages. Once a contract has been rescinded (or set aside) contract damages cannot be awarded. However, if the plaintiff elected to discharge a contract for the defendant’s breach or repudiation, the plaintiff is entitled to damages. Loss of bargain damages are available if discharge is on a common law basis.14 Since discharge for breach or repudiation does not divest accrued rights,15 the interaction between restitution and damages is not limited to claims against the party whose breach or repudiation led to discharge. By contrast, in many cases where a claim for reasonable remuneration succeeds there is no contract, or no enforceable contract, and therefore no right to claim contract damages. However, taking tort into account, there are at least five ‘exceptions’ under general principles. First, if a contract is inherently ineffective due to an agent’s want of authority, a claim may be made against the agent for breach of its warranty of authority.16 Second, if a contract is unenforceable under statute, but only by the plaintiff, the defendant may sue on the contract. For example, in Pavey & Matthews Pty Ltd v Paul17 Deane J pointed out that Ms Paul could enforce the building contract against the contractor, since the statute only rendered the contract unenforceable by the builder. Third, a contract discharged without fault may have been breached prior to the discharging event.18 [page 589] Fourth, claims may arise in tort where a ‘vitiating factor’19 happens to be tortious. The principal examples are the torts of negligence and deceit.20 The generally held view is that duress is not a tort in itself.21 Fifth, even if the contract is inherently ineffective, claims may sometimes arise in contract, as where there is a collateral contract.22 In other cases the plaintiff’s options may be limited to a choice between

restitution and compensation for loss.23 For example, a misrepresentation may be incorporated as a term of the contract.24 Damages may be available under statute. The principal example is a claim based on conduct prohibited by the Australian Consumer Law.25 Typically, the award is for contravention of the prohibition on misleading or deceptive conduct in trade or commerce.26 But awards may also be made for contravention of other prohibitions, including those relating to duress and unconscionable conduct.27 Damages may be claimed as of right for loss or damage caused by the conduct complained of,28 for example, in entering into a disadvantageous contract. There is also a discretionary jurisdiction to make orders (including for compensation) in favour of a person who has suffered, or is likely to suffer, loss or damage.29 [1404] Role of causation, remoteness and mitigation. What counts as compensation for loss will, of course, depend on the particular facts. However, any loss (or damage) in respect of which a claim is made must have been caused by the defendant’s breach. In many cases, a criterion of remoteness must also be met. At least under the general law, damages claims are also subject to the principles of mitigation. To the extent that the objective in applying these concepts is to ensure that the plaintiff does not recover a money sum in excess of what is reasonably deserved, they have some relevance to restitutionary principles.30 In one way or another, causation — as a concept going to liability rather than quantum — is often important to claims for restitution. The principal relevance is when the plaintiff seeks to establish its prima facie claim,31 with the impact that valuation is restricted to enrichments which are causally connected to the applicable basis for restitution. In the working out of restitutionary claims, there may also be analogies with remoteness of damage.32 [page 590]

The conventional view is that mitigation is relevant only to damages claims. Therefore, if the claim is to recover a contract debt, mitigation plays no role.33 Since a claim for restitution is analogous to a claim to recover a debt, direct application of mitigation principles seems doubtful. Nevertheless, a plaintiff’s failure to take reasonable steps — an idea basic to mitigation — may affect a plaintiff’s claim in restitution.34 Assume that the plaintiff in Planché v Colburn35 had completed the manuscript after the defendant’s repudiation. Although it is consistent with the decision of the court that if the defendant had refused to accept the manuscript the plaintiff would have been entitled to recover as restitution the value of the work done, this would seem an absurd result.36 [1405] Election. Where a plaintiff establishes a case for two or more alternative remedies, the plaintiff must elect between them.37 Accordingly, if the facts establish damages and restitution as remedial alternatives, the plaintiff cannot have both. A choice must be made prior to taking judgment. An issue of election between contract damages and restitution will arise if the claim in restitution depends on rescission of a contract, or the court setting it aside.38 Taking judgment for restitution assumes (and relies on) the fact that the contract is taken to have never existed, so that damages in contract are not available. However, it is clearly wrong to treat claims against the same defendant for restitution and damages as always being mutually exclusive. If a contract is rescinded for fraudulent misrepresentation, damages (in tort) may be combined with restitution. But the assessment of damages for deceit must take into account any sum recovered as restitution.39 Similarly, a breach of contract always entitles a plaintiff to claim damages. Since a claim in restitution may be available following discharge, the claim in restitution is not of itself inconsistent with a damages award. A plaintiff who seeks both restitution and damages for breach of contract may therefore recover on both claims, whether the restitutionary claim is for money paid or for reasonable remuneration. But since damages are compensatory, the plaintiff is not entitled to recover in respect of a loss which has been

[page 591] addressed by a successful claim for restitution. In short, the plaintiff cannot recover the same sum twice. The concern is therefore with the prevention of double recovery, or recovery on mutually inconsistent bases, rather than with election between remedies.40 [1406] Issues. The discussion below relates to three issues, considered principally from the perspective of the relationship between contract damages and restitution.41 First, how far does a plaintiff obtain an advantage by framing the claim as one for damages (or restitution)? Second, what is the impact on a damages claim of an award of restitution? Third, if the defendant is entitled to restitution, what is the impact of the plaintiff’s entitlement to damages?

(b) Advantages [1407] Advantages of damages recovery. The most obvious advantage42 of contract damages over restitution is that it is not restricted to losses attributable to the conferral of a benefit on the defendant. Indeed, the usual approach is to assess loss on an expectation basis.43 The sum represents the value of the promise breached, or the value of the whole bargain to the plaintiff, rather than the market value of the plaintiff’s performance or the value of a benefit conferred on the defendant. Even in those exceptional cases in which damages are assessed in respect of a reliance loss, proof that the defendant was enriched by the plaintiff’s reliance is not an element of the claim.44 In addition, because the value of any benefit obtained by the plaintiff from the defendant’s performance may be brought into account, a money sum paid to the defendant may in some cases be recovered as damages whether or not a claim in restitution based on total failure of

the agreed return would succeed.45 Thus, in Bostock & Co Ltd v Nicholson & Sons Ltd46 buyers of sulphuric acid paid for the goods in advance. What they received from the sellers was worthless, and they were entitled to a refund of the price as damages even though the goods had been used to manufacture goods sold to a third party. [1408] Advantages of restitution. A claim for restitution in the form of reasonable remuneration falls within the concept of ‘debt or liquidated demand’.47 It may therefore have procedural advantages over a claim for damages. [page 592] In relation to inherently ineffective contracts, restitution may be the only claim available to the plaintiff. This can sometimes be turned to the plaintiff’s advantage. Assessment of reasonable remuneration does not, as a general rule, make allowance for losses which might have been recoverable by the defendant as damages, had the contract been effective. Thus, in British Steel Corp v Cleveland Bridge and Engineering Co Ltd48 although a claim for reasonable remuneration was available to a contractor in respect of work done under a letter of intent which was not effective as a contract, damages could not be recovered for any loss arising from late performance.49 Of course, if the performance was itself defective, it will be valued accordingly. Therefore, any inability to seek compensation is more relevant to consequential losses.50 Although the value of a bargain at the date of breach is important in assessing damages claims, one reason for making a claim for reasonable remuneration where a contract is discharged for breach or repudiation is to avoid a reduced award reflecting the unprofitable nature of the contract.51 The modern law treats cases such as Planché v Colburn52 as illustrating a general principle that reasonable remuneration may be obtained for work done prior to an election by the plaintiff to terminate the contract for breach or repudiation by the defendant whether or not the amount exceeds the contract price. However, the original rationale

for such claims was the conception that the plaintiff enjoyed alternative and inconsistent remedies, namely, contract damages and restitution following rescission ab initio. Accordingly, any advantages in the reasonable remuneration claim stemmed from treatment of the contract as never having existed. Since there is now no right to rescind for breach or repudiation53 except under an express provision, the right of election has ceased to exist. Discharge, not rescission, is therefore the context of the claim.54 Damages will often be the only appropriate basis for an award in the plaintiff’s favour. Under Planché v Colburn, reasonable remuneration may be awarded even if in substance the claim is for expenses incurred, that is, a reliance loss. The advantage here lies in the avoidance of the line of cases which treats damages for a reliance loss as exceptional. Therefore, the claim must be justified by reference to specific considerations. Thus, in Commonwealth of Australia v Amann Aviation Pty Ltd55 the High Court denied that plaintiffs have a general right to ‘elect’ between assessment on an expectation basis and assessment on a reliance basis. It seems to have gone largely unnoticed that the applicant in Amann might well have had a much easier road to success had it sought ‘restitution’ rather than damages.56 More generally, since the plaintiff’s objective in claiming restitution may be to recover more than the [page 593] contract price, these cases raise in an acute way whether the contract price should be a ceiling on recovery in restitution.57 If a seller (or vendor) repudiates a contract for the sale of goods (or land) on a falling market, the buyer’s claim for compensation is generally limited to recovery of transaction costs or a nominal sum. In such a case, the plaintiff made a bad bargain. However, the examples assume that the contract price was not pre-paid. If an advance payment was made, alternative claims for damages or restitution may be available.58 Therefore, the fact that contract damages might be purely nominal has no impact on a claim for restitution of an advance

payment.59 For example, in Foran v Wight60 purchasers of land were able to prove discharge following repudiation by the vendor, and were entitled to restitution of the amount of the deposit paid on entry into a contract. But because their ability to perform the contract was unclear, damages for loss of the bargain might have been nominal. In these cases, the claim is quantified at the amount paid. There is — rightly in our view — no question of the value of the agreed return for the payment being a ceiling on recovery in restitution.61 Accordingly, if the defendant rendered no performance at all, or provided a worthless performance, the plaintiff is entitled to recover the price as restitution, without deduction by reference to the market value of the bargain at the date of delivery.62 In any event, the seller is treated as unjustly enriched from the time of receipt of the payment. The value of the goods at that time is assumed to be the contract price. Of course, the question is largely theoretical: sellers rarely repudiate their contracts on a falling market.

(c) Damages Where Plaintiff Entitled To Restitution [1409] Damages equal to restitution. In some situations, restitution and damages are available as alternative claims to recover the same money sum. In other words, the loss of the plaintiff may correspond exactly to the unjust enrichment of the defendant.63 As illustrated above, the obvious case is where the loss is money which the plaintiff paid pursuant to the contract. If there is a total failure of the agreed return,64 there may be little difficulty in also establishing the benefit obtained by the defendant as a loss suffered by the plaintiff.65 Similarly, recovery on a restitutionary claim for reasonable remuneration may be equal in amount to a defendant’s liability in damages. If there is [page 594]

a lump sum contract to do work for a fixed or reasonable price, but the plaintiff is prevented from completing the work by the defendant’s breach, the court may award as restitution the market value of the work done. The contract price is evidence of the market rate, and provides the usual measure of recovery.66 In a claim for contract damages, assessment would normally be loss of profit, that is, the difference between the contract price and the cost of doing the work.67 But any work done must also be paid for.68 In Planché v Colburn,69 where the court countenanced restitution for work done prior to the rescission of the contract, the same sum was regarded as recoverable under the plaintiff’s alternative claim for damages. [1410] Impact of damages recovery. What would be recoverable in a claim for restitution may also be a component of a damages claim. This is obvious in a case where money was paid prior to discharge, and there is a total failure of the agreed return. For example, in McRae v Commonwealth Disposals Commission70 the plaintiff purchased a tanker from the defendant. It transpired that the tanker did not exist, and the defendant was liable to pay damages for breach of contract. Somewhat unusually, these were assessed by reference to expenditure thrown away. The plaintiff therefore recovered the costs and expenses incurred in searching for the non-existent tanker. One component was the prepaid price of the tanker. Similarly, damages may include a benefit obtained from services rendered. For example, in Automatic Fire Sprinklers Pty Ltd v Watson71 Latham CJ said that an employee suing for wrongful dismissal may claim as an allowance in the damages awarded a sum which might have been recovered as on a quantum meruit on an indebitatus count. A plaintiff cannot recover money paid as the loss caused by the defendant’s breach and also recover the same sum as restitution. So much is necessary in order to prevent double recovery.72 Similarly, no claim in restitution for reasonable remuneration is available if the benefit which the defendant obtained has been taken into account in damages assessment. In such cases, relief by way of damages necessarily excludes relief by way of restitution in respect of any benefit which

formed a component of the damages award. The plaintiff’s loss is equal to or includes the sum which might have been recovered as restitution for an unjust enrichment.73 In practice, restitution is rarely claimed in addition to damages. This is mainly because, as McRae illustrates, the benefit obtained by the defendant is a loss sustained by the plaintiff. However, if restitution is claimed in [page 595] addition, the question is whether as a matter of substance the plaintiff is seeking to recover the same sum twice. For example, in Baltic Shipping Co v Dillon (The Mikhail Lermontov)74 the plaintiff sought damages for breach of a contract of carriage, namely, a leisure cruise. She also sought restitution of the fare paid. The decision of the High Court was that the plaintiff was not entitled to restitution, since the failure of the agreed return was merely partial.75 However, it was also thought that since the trial judge’s award of compensation included the diminution in the value of the cruise caused by the carrier’s breach, restitution would not have been available. Mason CJ said76 that full damages and complete restitution will not be given following breach of contract. He explained77 that the plaintiff will ‘almost always be protected by an award of damages for breach of contract, which in appropriate cases will include an amount for substitute performance or an amount representing the plaintiff’s reliance loss’.78 Deane and Dawson JJ considered79 that the plaintiff had ‘indirectly enforced, and indirectly obtained’ the benefit of the defendant’s contractual promises. In other words, she had already received something (damages) in substitution for the promised performance, and was not entitled to restitution as well. [1411] Impact of recovery in restitution. If damages and restitution are alternative remedies, a successful claim in restitution bars a damages claim. Thus, if a loss which is put forward as the basis

for a claim for damages has been redressed by a successful award for restitution, damages cannot be recovered. This is also true for claims that do not arise under a theory requiring election between inconsistent remedies. For example, had the plaintiff in McRae v Commonwealth Disposals Commission80 recovered the price as restitution it would not have been open to the plaintiff to recover the same sum by way of damages. Similarly, if a plaintiff recovers the reasonable value of services rendered as restitution, this will bar a claim for damages based on the value of the performance given under the contract. It is because restitution and damages are not usually inconsistent remedies81 that a plaintiff may sometimes recover both. Accordingly, the fact that a payer has discharged a contract for breach or repudiation by the payee, and recovered payments made on account of the price as restitution, does not disentitle the plaintiff to recover damages as well. The point is obvious indeed in the context of a sale of goods contract under which a buyer paid in advance on a rising market. But there are other situations as [page 596] well. For example, in McDougall v Aeromarine of Emsworth Ltd82 recovery by the buyer of payments made prior to discharge of a contract to build a yacht for the seller’s repudiation did not disentitle the buyer to recover as damages any additional loss suffered. Such cases are easily explained under the rationale of additional loss. Therefore, although the plaintiff cannot recover as restitution a benefit which has been allowed for in a damages award,83 there is no objection to a plaintiff combining the claim for restitution with a claim for damages in the same proceedings, and being given judgment on both. However, recognition of this implies that one category of restitutionary claims has for a long time been supported by spurious reasoning.84 In the context of discharge of a contract for the defendant’s breach or repudiation, it has often been said that the plaintiff is entitled to ‘elect’ between a restitution (for reasonable

remuneration) and damages.85 This is a relic of the days when such claims were based on a theory of rescission ab initio.86 Today, the restriction is on making claims on inconsistent bases, or recovering the same sum twice. Accordingly, reasonable remuneration cannot be awarded in addition to loss of bargain damages if the impact would be to award loss of profit twice.87

(d) Damages Where Defendant Entitled To Restitution [1412] Introduction. The ability of a plaintiff to claim compensation does not negate a defendant’s restitutionary entitlement. Thus, in many cases a defendant has been awarded restitution of payments made even though a breach (or repudiation) on its part provided the basis for the plaintiff’s election to treat the contract as discharged.88 Two issues are considered below. First, what is the impact of a plaintiff’s decision to seek damages (rather than a liquidated sum) on a defendant’s claim for restitution? Second, what is the impact of a plaintiff’s claim for damages on any liability it may have to make restitution? [1413] Impact on ability to seek restitution. Generally speaking, payments which were not earned at the time of discharge for breach or repudiation by the defendant cannot be recovered as contract debts. Defences based on prospective total failure of the agreed return, or relief against forfeiture, are not relevant to claims to recover such payments as damages.89 Accordingly, the distinction between debt and damages may affect the defendant’s ability to seek restitution. [page 597] A plaintiff’s damages may include unpaid sums payable by the

defendant to the plaintiff at the time of discharge of a contract for breach or repudiation. For example, in Dewar v Mintoft90 a vendor of land recovered damages which included the amount of a deposit which was overdue when the contract was discharged. However, as was pointed out in Bot v Ristevski,91 debt was the proper basis for recovery. Although it seems a mere quibble to say that this aspect of the claim in Dewar v Mintoft should have been framed as one for a liquidated sum, the form of claim apparently affects the ability of the defendant to seek restitution. The case implies that a plaintiff may anticipate (and thwart) a defence based on relief against forfeiture by recovering an unpaid deposit as damages. [1414] Impact on ability to seek damages. Where a defendant recovers as restitution for total failure of the agreed return the amount of payments made prior to discharge of a contract, the plaintiff is entitled to compensation.92 In such cases, the plaintiff may seek to have payments made applied towards damages. However, Dixon J considered in McDonald v Dennys Lascelles Ltd93 that instalment payments under a sale of land which the purchaser is entitled to recover in restitution cannot be so applied. The position is different if the parties have expressly provided to the contrary, including where the contract entitles a vendor exercising a right of resale to apply instalments paid in satisfaction of damages.94 Where the basis for the defendant’s claim for restitution is relief against forfeiture, the plaintiff is entitled to recover compensation,95 including if the basis for relief is statutory.96 Indeed, where relief is given against a forfeiture, it will be a condition of relief that the defendant pay compensation.97 It also follows that, since the payer must consent to relief on terms which include satisfaction of the payee’s claim to compensation, the payee is in effect entitled to apply the payment towards the damages liability.98 Where relief against forfeiture is sought but refused, a deposit must (subject to the terms [page 598]

of the contract) be brought into account by the plaintiff.99 But it is not a limit on the amount of the plaintiff’s damages.100

3. Valuation of Non-monetary Benefits (a) General [1415] Introduction. Any successful claim for restitution must be valued.101 Assessment of a claim for reasonable remuneration is not a discretionary process: it is an exercise of judgment, not discretion.102 Just as a court is not free to apply ‘idiosyncratic notions of what is fair and just’103 when identifying an unjust enrichment, so also a court is not free to treat the amount to be awarded as discretionary. In short, the amount awarded is determined ‘as a matter of law’.104 It is necessary to consider the basis on which liability was established, that is, whether the defendant accepted the benefit, or obtained an incontrovertible benefit.105 In a claim for reasonable remuneration the general criterion for the award is such sum as the court considers just.106 Alternative expressions include so much in money as the plaintiff reasonably deserves to have,107 and fair and reasonable value.108 If the claim for restitution is made in relation to accepted goods, a reasonable or fair price must be assessed.109 The terms of the contract, or such terms as were the subject of concluded contractual negotiation, are relevant. Indeed, in many cases reasonable remuneration will be assessed at the contract rate. [page 599] [1416] Basis for valuation. Generally, the starting point, or prima facie position, for accepted services is that the plaintiff is entitled to recover the market value or price of the services.110 The amount will include a profit element.111 It follows that the amount by which the

defendant’s assets have in fact been increased is not usually the basis for assessment.112 Superficially at least, this suggests that valuation is more concerned with the cost of rendering performance than the actual benefit to the defendant.113 But it can equally be said that the benefit obtained at the plaintiff’s expense is the amount which the defendant would have had to pay a third party to provide the benefit.114 However, the actual costs of the plaintiff in conferring the benefit may be taken into account.115 And where a claim for reasonable remuneration succeeds on the ground of acceptance of a requested benefit, the defendant may be held liable to pay for work, such as preparatory work, which would not have been a distinct component of the price of the completed work, as where an anticipated contract fails to materialise.116 If the services to be valued were rendered by a professional, the above approach leads to valuation at the commercial rate applicable to work of the same kind done by a person of the plaintiff’s standing.117 Account may be taken of custom118 and prevailing rates and practices in the relevant market.119 This may justify an award on a commission basis.120 Of course, account must also be taken of the extent to which the plaintiff was in fact remunerated.121 [page 600] The basis adopted for valuing the restitutionary claim may not be that actually contemplated by the parties, as where the court awards reasonable remuneration even though the parties actually contemplated the transfer of an interest in the defendant’s property.122 Alternatively, there may be no market rate. In Stinchcombe v Thomas,123 an agreement stated that the testator would ‘well reward’ the plaintiff. The agreement was void for uncertainty. However, the plaintiff was entitled to reasonable remuneration for the services rendered in accordance with the defendant’s request. A market rate could not be adopted, as there was no evidence of any usual rate for the services rendered.

Awarding market value assessed by reference to the cost of rendering services or doing work is not the starting point if the obligation is to make restitution for an incontrovertible benefit.124 In such cases, the claim is based on receipt of a realised benefit, or one which is realisable as a money sum. Thus, in BP Exploration Co (Libya) Ltd v Hunt (No 2)125 Robert Goff J said126 that if the ‘sole basis of recovery’ is that the defendant was incontrovertibly benefited, it may be legitimate to limit recovery to the actual increase in the defendant’s wealth. Accordingly, the claim is limited to the money sum which has been realised (or which is realisable), unless that amount is in fact greater than the market value of the work done or other services rendered. In Pavey & Matthews Pty Ltd v Paul,127 Deane J referred to a case in which unsolicited but subsequently accepted work is done in improving property in circumstances where remuneration calculated at the market rate would far exceed the enhanced value of the property. He suggested that the calculation of reasonable remuneration for an unjust enrichment at the market rate for services rendered would not apply.128 However, since the basis for liability is acceptance of benefit, such a course should not be taken unless required by statute.129 The decision in Benedetti v Sawiris130 discusses a further permutation. A majority of the Supreme Court of the United Kingdom was in favour of the view that, in principle, it is open to defendant to establish that, [page 601] subjectively, it valued the benefit at less than the market value (‘subjective devaluation’).131 However, the majority also considered this approach to have no application in cases of free acceptance or incontrovertible benefit.132 And the unanimous view was that it is not open to a plaintiff to prove that the defendant placed a value on the benefit higher than the market price (‘subjective revaluation’). [1417]

Evidence of market rate. The contract price is a good

indication of the market value or rate.133 But if there is no contract price, or the price is stated as a ‘reasonable sum’ or ‘market rate’, evidence must be used to quantify the claim.134 If there is neither an agreed price nor evidence of market rate, the court must fix a reasonable sum as best it can.135 In Brenner v First Artists’ Management Pty Ltd,136 Byrne J applied a presumption of calculation based on what the defendant would have to pay under a ‘normal commercial arrangement’ for managerial services of the type rendered. However, valuation of the claim presented particular difficulties. There was no identifiable market rate, and no distinct and quantifiable increase in the defendants’ assets. There was also a distinct lack of reliable evidence as to what comparable people would have charged, on an hourly rate basis, for the work done. The terms of the incomplete agreements were not of much help, since uncertainty in the amount or basis of remuneration was the main reason for concluding that the agreements were void. Doing the best he could, and taking the cost of rendering performance into account, Byrne J ultimately arrived at an hourly rate. It is, of course, open to the parties to agree the amount. In Pavey & Matthews Pty Ltd v Paul,137 where the unenforceable contract expressed the price in terms of the ‘prevailing’ rate of payment for building work, the sum was quantified by the parties in the course of the proceedings. Byrne J suggested138 in Brenner that regard may also be had to the commission which would have been earned had the relationship not been terminated. In doing so he referred to a ‘predisposition to fulfil the expectation of the parties’ at the time of the request. However, it is difficult to see how this is possible, or consistent with the general approach to reasonable remuneration claims. Unless the commission rate assumes the value of the services to the defendant over time, there is no ability to award future commission except as compensation.139 [page 602]

[1418] Time for valuation. The usual date for valuation is the date of receipt or acceptance of the benefit in respect of which the claim is brought, rather than the time any request was made, for example, for services to be provided.140 Therefore, in most cases the relevant criterion is the current or market price at the date of receipt or acceptance.141 However, if the basis for restitution is incontrovertible benefit, value is in effect determined at the date when the defendant realises the benefit. It appears that, for a benefit which is incontrovertible but merely realisable, valuation should occur on the date at which the plaintiff becomes entitled to claim restitution.142 [1419] Relevance of contract terms. It is elementary that the contract price represents the value attributed by the parties to the agreed return, that is, the services or work to be done under the ineffective contract. The contract price is good evidence of the value of reasonable remuneration for services or work, at least where the contract subsequently becomes ineffective.143 Similarly, other terms of the contract, so far as they have been negotiated, evidence what was required to be done in order to earn the contract price. These terms may, for example, indicate the scope of the work.144 However, agreed terms cannot be conclusive of the plaintiff’s entitlement, particularly if the agreement was not fully negotiated. The position is not very different where reasonable remuneration is assessed on the basis of a genuine implied contract. For example, where work is done outside a binding contract, and the benefit of the work is taken, a contract to pay at the current rate of remuneration may be implied, and the terms of the express contract may be incorporated into the implied contract.145 An entitlement to payment at the market rate is implied if there was no agreement on price.146 But the criterion for assessment may be a distinct issue. Thus, in Way v Latilla,147 apparently under the guise of a genuine implied contract, the House of Lords held the plaintiff entitled to reasonable remuneration for the work done. It was contended that, as

[page 603] the express contract contemplated by the parties envisaged payment by the transfer of an interest in property, the plaintiff should be remunerated on that basis. The plaintiff had certainly assisted in the acquisition of the property, but remuneration was calculated by the award of commission reflecting the agreement for ‘participation’. We deal separately with controversial issues relating to the contract price.148 [1420] Valuation under statute. The valuation of claims made under statute also depends on the basis for the claim. Most examples, other than the frustrated contracts legislation,149 relate to discretionary orders. Often, assessment seems more or less at large. Thus, under s 7 of the Minors Contracts (Miscellaneous Provisions) Act 1979 (SA) a court may order restitution of property to a minor on such terms and conditions as the court considers just. Occasionally, guidance is given.150 Assessment is then regulated by a stated concept or objective. For example, s 25(6) of the Australian Consumer Law and Fair Trading Act 2012 (Vic) states that the valuation of a supplier’s claim in respect of the use of goods prior to discharge or rescission of the contract is to be at a fair value to the purchaser of the purchaser’s use of the goods. If the statute makes no reference to valuation, general restitutionary principles apply. These fall to be applied with due regard to the scheme of the legislation.

(b) Relevance of Contract Price (i) General [1421] Introduction. Although the contract price for work done or other services rendered may be used as evidence to value a reasonable remuneration claim,151 it is not conclusive. The sum awarded may therefore differ from that provided in the contract, and is not necessarily dependent on its terms.152 So much follows from the fact

that the defendant’s obligation to make restitution is independent of the contract. Given that market price may rise or fall, the amount recovered may exceed (or be less) than the contract price, or a rateable proportion thereof. However, there are exceptions. The main purpose of the discussion in this section is to identify the exceptional cases. If there is a general principle controlling the exceptions it is that it may be inherent in the reason why the contract is ineffective that the contract is conclusive evidence. However, since a good reason for the sum recovered as reasonable remuneration to differ from the amount specified in the contract is that the claim relates to a benefit which differs from what was contemplated, account must be taken of whether the claim is directly referable to a contractual request. For example, the contract may have been terminated following a dispute as to the plaintiff’s entitlement to payment for variations to the contract work carried out at the request of the defendant. [page 604] [1422] Evidence of reasonable sum. The contract, or so much of it as was the subject of concluded contractual negotiation, may be referred to as evidence of value in a claim for reasonable remuneration.153 The probative value of the evidence necessarily varies.154 In Horton v Jones,155 Jordan CJ (for the Full Court of the Supreme Court of New South Wales) said that an oral contract which is unenforceable by reason of a provision derived from the Statute of Frauds 1677 (Imp) may be referred to as evidence of the amount of the plaintiff’s entitlement on a claim for reasonable remuneration based on acceptance of benefit. For example, in Scarisbrick v Parkinson156 an oral three-year contract of employment was used to value the services performed under the contract, which was unenforceable for failure to comply with the Statute of Frauds. Although such cases exemplify fully

negotiated unenforceable contracts, the same approach may be taken where the contract is void,157 assuming a price was agreed.158 The decision in Steele v Tardiani159 is an illustration in the context of contracts discharged for breach or repudiation. The benefit of the work done in cutting timber was accepted by the defendant. Dixon J said that in quantifying the plaintiffs’ reasonable remuneration, the court would have regard to the price agreed by the parties. Similarly, Robert Goff J in BP Exploration Co (Libya) Ltd v Hunt (No 2),160 referring to the position at common law where a contract is discharged by frustration, said that the contract consideration is always relevant as providing ‘some evidence of what will be a reasonable sum to be awarded in respect of the plaintiff’s work’. In considering whether the contract price should set a limit to recovery, it is necessary to focus more closely on the context of the claim.

(ii) Contexts other than discharge for breach [1423] Introduction. If the parties’ negotiations did not result in a concluded contract, it would be absurd to treat any money sum referred to in negotiations as limiting recovery in restitution. By contrast, whether [page 605] the contract price limits recovery is an issue squarely raised in relation to negotiated, but inherently ineffective, contracts. The idea of a limit of recovery based on the contract price may perhaps be expressed in various ways.161 However, most discussions focus simply on the money sum which was agreed as the price of the (non-monetary) agreed return. If the agreement was fully performed as contemplated by the parties, the question is whether the claim for reasonable remuneration may exceed the money sum. In cases where

work is only partially completed, the question is whether the claim for reasonable remuneration may exceed an appropriate proportion of the contract price, or the total agreed sum. [1424] Void contracts. The expression of the contract price in a void contract, although relevant to the determination of the plaintiff’s entitlement, does not limit recovery. There is, of course, a difference between an agreement void under statute, and one which is void for uncertainty, including a failure to complete negotiations. It seems obvious that a nominated price is given less weight if the agreement was not fully negotiated. Any price agreed may assume the validity of the contract, or the completion of negotiations on other terms.162 But if the contract is void under statute, the position may be different. A somewhat unusual situation arose in Rover International Ltd v Cannon Film Sales Ltd.163 The defendant relied on the fact that the contract was void to deny the plaintiffs their contractual rights. Having adopted this approach, the English Court of Appeal said it was not open to the defendant to set up the contract to limit recovery. [1425] Unenforceable contracts. If a claim for reasonable remuneration is in respect of work done under a contract unenforceable under statute, the defendant is entitled to rely on the contract, unless it has been rescinded ab initio, to limit the amount of the plaintiff’s remuneration, and also as to the terms of payment. Thus, in Scarisbrick v Parkinson164 wages agreed under an oral contract of employment were assumed to set a ceiling on recovery where the contract was unenforceable by reason of s 4 of the Statute of Frauds 1677 (Imp). Similarly, Deane J said in Pavey & Matthews Pty Ltd v Paul165 that the ‘defendant will also be entitled to rely on the unenforceable contract, if it has been executed but not rescinded, to limit the amount recoverable by the plaintiff to the contractual amount in a case where that amount is less than what would constitute fair and reasonable remuneration’. The policy basis for this approach is fairly obvious, since it would be odd for the plaintiff to

[page 606] recover more than the contract sum where there is merely a procedural bar on enforcement of the contract. Where the duty to comply with legislation is imposed on the plaintiff, it was recognised in Pavey that the contract price may limit recovery. The plaintiff succeeded in showing an entitlement to reasonable remuneration for executed work where the legislation made the contract unenforceable by (but not against) the plaintiff. Since the contract price was fixed by reference to the ‘prevailing’ rate of payment for building work, no issue of a contract price ceiling arose. Deane J made two points. First, since the plaintiff cannot recover more than an amount which is ‘fair and reasonable in the circumstances’,166 the defendant can rely on the unenforceability of the contract to limit liability to a reasonable amount if the ‘agreed remuneration exceeds what is reasonable in the circumstances’.167 Second, Deane J said168 that regard should be had to any detriment sustained by reason of the failure of the plaintiff to ensure satisfaction of the statutory requirements. Had the contract at issue nominated a price, it would clearly have been detrimental to the defendant for the plaintiff to recover more than the agreed sum for the executed work. However, in other situations it may be more appropriate to deal with the detriment in an order for compensation than in the valuation process.169 [1426] Rescinded contracts. There is no reason to treat the contract price as a ceiling where a contract is rescinded or set aside. Therefore, a rescinded contract is not subject to a contract price ceiling.170 One basis for this conclusion is simply that the contract is deemed never to have existed. A contract which never existed can hardly limit recovery in restitution. A more compelling reason is that the initial allocation of risk in the contract was vitiated, by a factor such as fraud or duress. Thus, the justification may be not so much that the contract

never existed as that the conduct which satisfies the requirements of the vitiating factor may have influenced the contractual sum. Of course, independent claims in restitution for reasonable remuneration are comparatively rare where a contract is rescinded. Benefits conferred prior to rescission are usually dealt with by adjustment, that is, restitutio in integrum.171 [1427] Contracts discharged without breach. The principal category of contracts discharged without breach is a contract discharged for frustration. In that context, many claims in the nature of restitution now fall to be established and valued under the frustrated contracts legislation.172 However, there is some support for the view that at common law the contract price is [page 607] a ceiling.173 In principle, this seems correct, and also applicable to contracts which are discharged (without breach) for reasons other than frustration. One justification is the difference between rescission and discharge.174 Whereas rescission is ab initio, a contract does not cease to exist by reason of discharge, and may be relied upon by the defendant. However, the better rationale is again in terms of the allocation of risk. Since discharge of a contract does not impeach the contractual allocation — reflected in the contract price — it should be open to the defendant to invoke the contract price in any case where the claim for reasonable remuneration relates to a benefit which was an element of the agreed return for the contract price.175 The position may be different if the claim arises in respect of a benefit which was not contemplated by the contract. For example, services may be rendered after a contract has been frustrated.176

(iii) Contracts discharged for breach or repudiation

[1428] Contract price not a ceiling. It is now established that if a contract is discharged for breach or repudiation the plaintiff is not limited to recovery at the contract rate unless the plaintiff’s breach or repudiation led to discharge. Indeed, the claim to reasonable remuneration may exceed the total contract price even though the contract was only partially performed prior to discharge. An influential case is Slowey v Lodder,177 a decision of the Court of Appeal of New Zealand subsequently affirmed by the Privy Council.178 A contract for the construction of a tunnel was breached by the defendants when they excluded the contractor from the site, and prevented him from completing the contract. The trial judge rejected a claim for restitution. Because there was no evidence that performance of the contract would have been profitable, he also refused to award more than a nominal sum by way of damages. However, the Court of Appeal said that because the contractor was entitled to elect in favour of reasonable remuneration, rather than damages, the question of profit was immaterial. Accordingly, the restitutionary claim was independent of the contract, including the agreed price. The same approach has been taken in a number of Australian cases. In Brooks Robinson Pty Ltd v Rothfield,179 the Full Court of the Supreme Court of Victoria agreed with Slowey that it is no answer that full performance would not have been profitable. A more recent example is Renard Constructions (ME) Pty Ltd v Minister for Public Works,180 where the New South Wales Court [page 608] of Appeal also approved the decision (but not all the reasoning) in Slowey. The context was the discharge of a schedule of rates building contract based on the principal’s repudiation in wrongfully taking over the work and excluding the contractor from the site. When the arbitrator’s award of reasonable remuneration was combined with payments previously made under the contract, the contractor recovered a sum substantially in excess of the contract price even though the work

was incomplete.181 Renard has since been applied by appellate courts in both Queensland and Victoria.182 Clearly, therefore, it is a statement of Australian law. There are many American authorities to the same effect,183 sometimes with peculiar results. Thus, in the famous case of Boomer v Muir,184 the plaintiff’s damages claim would have amounted to about $20,000. His claim for reasonable remuneration was assessed at $258,000.185 [1429] Justifications of the approach. The reasoning used to justify the conclusion that the contract price is not a ceiling on recovery in restitution is derived from English cases decided at a time when rescission ab initio was regarded as an option available to a promisee following a promisor’s repudiation of obligation.186 This formed an integral part of the reasoning of the New Zealand Court of Appeal in Slowey v Lodder.187 The court treated the claim for reasonable remuneration as based on a rescission of the contract which takes effect ab initio. The same conception is apparent in the American cases.188 For example, in Boomer v Muir189 the court said190 that a ‘rescinded contract ceases to exist for all purposes’. Under American law, the right of rescission remains available as an alternative to discharge following breach.191 It is therefore meaningful to speak of a promisee being entitled to elect either to rescind the contract or to treat it as discharged. To that extent, the claim in restitution is independent of the contract. However, there is no such right under Australian law: the right of election is between affirmation and discharge of the contract.192 Accordingly, [page 609] although in Brooks Robinson Pty Ltd v Rothfield193 the Victorian Full Court appeared to contrast a claim for restitution following rescission ab initio for repudiation with a claim for damages following termination (or affirmation) of the contract, in Renard Constructions (ME) Pty Ltd v

Minister for Public Works194 Meagher JA said this can no longer be put forward in Australia as a justification for ignoring the contract. Nevertheless, as noted above,195 it was held that the contract price does not limit recovery. There appear to be three justifications.196 First, because a claim in restitution is independent of the contract, it is not governed by its terms. Second, assessment of reasonable remuneration is essentially a discretionary inquiry, with the terms of the contract being no more than evidence which may be taken into account. Third, it is not open to a defendant in breach to set up contract terms, including the price, to limit the plaintiff’s recovery. [1430] Critique. We do not support the justifications set out 197 above. In principle, now that the rescission rationale has been discredited,198 the contract must govern the restitutionary claim in circumstances where all that the plaintiff has done is to render part of the agreed return. Our reasons are as follows. First, to say that a claim in restitution is independent of the contract is incorrect if the only basis for the claim is contractual receipt. As explained below, the justification pays insufficient regard to the impact of discharge and the basis for the plaintiff’s entitlement to claim restitution. Second, although the court must arrive at a ‘just’ amount, the inquiry in every reasonable remuneration claim is a principled one: the amount is not determined as a matter of discretion.199 Third, it is insufficient to recite a theory of election between remedies200 because, as we have explained,201 there is no election between remedies. The relevant election is between the right to be discharged and the right to provide and receive performance. Once the parties are discharged, damages and restitution are available. Any restriction on what the plaintiff can recover [page 610]

is to prevent double recovery.202 To allow full restitutionary recovery on a losing contract lies ill with the attitude towards damages claims, where the plaintiff does not have any right to choose between reliance, restitution and expectation as the basis for assessing a claim for compensation.203 There is also little to be said in principle or policy for a rule which provides a clear incentive to manufacture or snatch at a repudiation as a means of escaping a bad bargain.204 Fourth, it cannot be true to say that breach (or repudiation) deprives the defendant of the right to rely on the contract. Although this justification is often put forward,205 it is difficult to reconcile with authorities in analogous contexts. Thus, it is well-established that the mere fact that an action is framed in tort rather than contract does not prevent the application of an exclusion clause. Even if the contract is discharged, what matters is whether the parties intended the clause to apply. The same is true where the claim is for restitution.206 There is, indeed, an unfortunate parallel between the approach of the restitution cases to the agreed price and the fundamental breach rule authoritatively rejected207 in relation to exclusion clauses.208 Fifth, the contract price reflects the parties’ allocation of risk, as do other terms such as exclusion clauses. The factor which renders the contract ineffective — breach or repudiation — does not impugn that allocation. Contract law stresses the contrast between pre-contractual and post-contractual conduct.209 As a matter occurring after contract formation, breach of contract cannot be used to upset a prior risk allocation. There is then a clear contrast with rescission of a contract for misrepresentation, where the plaintiff’s consent was vitiated.210 Of course, consideration must always be given to the subject matter of the claim. If the claim relates to benefits which the plaintiff was not obliged to provide, the contract price may not be directly applicable. But that is because the claim for reasonable remuneration is independent of the contract.211 This leads to the sixth point. Ignoring the contract price pays insufficient regard to the basis on which the defendant is liable in restitution.212 In cases

[page 611] such as Renard Constructions (ME) Pty Ltd v Minister for Public Works,213 the basis is part performance of the contract. In that situation, if ‘acceptance’ has any role at all, it is deemed to have occurred.214 In other words, the basis for the reasonable remuneration claim is the defendant’s contractual receipt. In none of the cases in which the issue has been discussed has the plaintiff been required to establish an independent basis for restitution. The claim is based on the plaintiff having provided part of the agreed return, and being prevented (actually or notionally) from earning the contract price. Valuation should therefore reflect that rationale. Since the restitutionary claim is solely referable to the terms of the bargain, including the contractual obligation of the defendant to receive the performance rendered, it should be valued accordingly.215 The impact of this critique is that in the context of a contract discharged for breach or repudiation the situation in which the contract price ought not to limit recovery is where the services were provided and received independently of the contract. In such a case, the defendant’s restitutionary liability is unaffected by the terms of the bargain. However, it must be acknowledged that the point is only open in the High Court.

4. Restitutio in Integrum (a) General [1431] Introduction. Two issues may be dealt with under the heading ‘restitutio in integrum’. The first is the extent to which restitution by the plaintiff can be insisted on as a requirement for restitution in its favour. In dealing with this issue we do not put forward the view that counter-restitution is an essential ingredient of the modern approach to all restitutionary claims made in the context of

ineffective contracts.216 However, it is important to explain when counter-restitution is a necessary adjustment.217 The second issue — not discussed in detail — is the valuation of non-monetary benefits in cases where the restitutio requirement applies. The main concern is the valuation of non-monetary benefits not within the reasonable remuneration concept already discussed. [1432] Orders. The object of orders by way of restitutio in integrum is to achieve ‘substantial restitution’.218 They fall into three categories.219 [page 612] First, restitution of money paid (with interest) under the contract, usually payments made prior to rescission for a vitiating factor.220 Second, orders to give effect to any further restitutionary rights of the plaintiff, relating, for example, to repairs and improvements during the occupation of land. Third, effect is given to the defendant’s interests by requiring the plaintiff to account for benefits obtained, including from the enjoyment of property prior to rescission. Additional orders may be made which are not of a restitutionary nature. For example, the compensation rights (if any) of the parties are preserved and, in appropriate cases, an indemnity may be awarded against third party claims. Generally, these are made only in favour of the plaintiff. In conveyancing transactions the plaintiff will usually recover conveyancing costs, as damages in cases of fraud or by way of recoupment for necessary expenses prior to rescission.221 [1433] Overview. The view that restitutio in integrum is an essential element of discharge has been rejected.222 By contrast, the requirement of restitutio in integrum is commonplace where a contract is rescinded or set aside ab initio on the basis of a vitiating factor.223 In these cases, the traditional rationale is the concern to restore the parties to the positions which they respectively occupied immediately before the

contract was made.224 Orders for restitution and counter-restitution are made to achieve that objective. The contrast with cases of discharge is that the parties are not restored to former positions.225 Accordingly, the conventional wisdom is that, subject to statute,226 counter-restitution is always associated with rescission. This is, however, somewhat unhistorical. The concept of restitutio in integrum was applied both at common law and in equity. At common law, the requirement was applicable not only to cases of rescission (for example, for misrepresentation) but also in contexts which would today be regarded as involving no more than the discharge of the parties. Thus, Hunt v Silk227 and Street v Blay228 — two influential decisions in what is now regarded as the discharge for breach context — have also regularly been cited to support the restitutio requirement in the [page 613] context of rescission for misrepresentation or mistake.229 This reflects the limited scope at common law for orders by way of counterrestitution, and the view that the unilateral act of a promisee could not cause property to revest in the promisor. In relation to claims to recover money paid, the requirement of total failure of consideration ensured that no relief by way of counter-restitution was required.230 In such cases restitution was simply a consequence of valid rescission, and no consequential adjustments were called for. The subsequent recognition of discharge as a sufficient basis for a restitutionary claim was significant in increasing the scope of restitution.231 For example, a total failure of the agreed return may be established even though frustration does not render a contract void ab initio.232 In addition, discharge of a contract for breach or repudiation may cause title to personal property to revest in the promisor if it passed under the contract.233 Accordingly, the understanding at the time of decisions such as Street v Blay, namely, that the passing of property in specific goods prevents the rejection for breach of

condition, can no longer be maintained.234 It is therefore surprising that courts have not reconsidered the conventional wisdom in relation to restitutio. That the contrast between discharge and rescission should not be seen as determinative of the requirement of counter-restitution is shown by Landers v Schmidt.235 Purchasers under a contract for the sale of land paid $1500 by way of deposit, and a further sum of $5000 to obtain possession of the land. After taking possession the purchasers defaulted and the vendors purported to treat the contract as discharged. It transpired that a failure by the vendors to comply with a statutory provision conferred on the purchasers a right to avoid the contract. Although they had not expressly exercised that right, a majority of the court concluded that it could be used to excuse the purchasers’ failure to perform. Since it must then have followed that the contract was not discharged for the purchasers’ breach, it is difficult to see how restitutionary relief could be denied to the purchasers. But that is what happened. The contract provided that the deposit was to be refunded if the sale was not completed for a reason other than their default, but the court said that the purchasers could not assert that they had avoided the contract ab initio and at the same time rely on the provision.236 Moreover, notwithstanding that possession was taken by the purchasers as tenants from month to month pursuant to a clause which provided that [page 614] the rental for the tenancy was to be satisfied by the payment of interest, recovery of the $5000 was also denied, on the basis that there was merely a partial failure of consideration. There are at least three confusing aspects of this reasoning. The first is the inference that where a contract for the sale of land does not proceed to completion the purchaser must invoke a contractual provision to obtain restitution of a deposit even though non-completion is not due to the purchaser’s default.237 Unless the

contract provides that the deposit is to be forfeited in the circumstances which have occurred, it is recoverable in restitution.238 The second is the influence of quasi-contract. By treating the grant of possession as preventing relief at common law, the court in effect (wrongly) regarded rescission ab initio as a requirement for recovery on the ground of total failure of the agreed return.239 Finally, there is the treatment of the claim as governed solely by common law principles.240 It was in effect held — again wrongly — that a purchaser is entitled to invoke the process restitutio in integrum only in cases of rescission. Moreover, given that there was a statutory right of avoidance, the purchasers were entitled to call in aid the court’s jurisdiction to make adjustments in support of their claim for restitution.241 [1434] Unjust enrichment. The recognition of unjust enrichment ought to lead to reconsideration of the conventional wisdom in relation to restitutio.242 Even when given under principles derived from equity, an order for repayment of money is an order for restitution which prevents unjust enrichment. However, we would go further.243 An ability to achieve restitutio is itself a basis for restitution. Orders by way of adjustment referred to above244 are part of the working out of the plaintiff’s claim. There is no reason why the requirement of counterrestitution should be affected by historical classifications.245 So much flows from two points. First, prior to the fusion of law and equity the requirement of restitutio was applied both [page 615] at common law and in equity. Second, as an instrument of justice under the modern law, the requirement cannot be controlled by historical divisions.246 Isaacs and Rich JJ pointed out in Brown v Smitt247 that ‘[o]ne condition is always inseparable from rescission — restitution by the plaintiff to the defendant of the property transferred’. And in Spence v

Crawford,248 Lord Wright said a requirement of counter-restitution is necessary ‘to prevent the defendant from enjoying the benefit of his fraud at the expense of the innocent plaintiff’. This seems a more satisfying explanation for many orders made in the name of restitutio than a metaphorical restoration of the parties to their former positions.249 If a payer benefited from performance of the contract, that must be brought into account when ordering ‘repayment’ of money. Accordingly, orders that payment be made for improvements, or for the consumption of goods, and also orders for the payment of an occupation rent, illustrate orders in the nature of restitution for benefits conferred. It is unnecessary to require either party to prove an independent claim for restitution based on a matter such as mistake or acceptance of benefit. Even in the context of a discharged contract, there are cases where both parties must make restitution. The fact that in such cases there is no question of restoring the parties to their pre-contractual positions illustrates the need for a more coherent rationale, namely, substantial restitution. By insisting on a requirement of total failure of consideration for rescission, the common law courts were asserting no more than that the plaintiff’s election must itself create a situation where money paid to the defendant is held to the use of the plaintiff.250 It seems idle to deny that payments made under all varieties of ineffective contracts might well have been recoverable in cases of partial failure had more extensive adjustment mechanisms been available under the common law. Given that a fused system of law and equity should promote coherence, the continued application of total failure of the agreed return in relation to payments made under discharged contracts has little to commend it in cases where counter-restitution can be exacted as the price of restitution. As Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said in David Securities Pty Ltd v Commonwealth Bank of Australia,251 in ‘cases where [page 616]

consideration can be apportioned or where counter-restitution is relatively simple, insistence on total failure of consideration can be misleading or confusing’.

(b) Inherently Ineffective Contracts and Statute [1435] Inherently ineffective contracts. Substantial restitution may be required where a claim for restitution is made in relation to an inherently ineffective contract. The issue has been discussed mainly in the context of contracts ineffective under statute.252 However, in such cases the requirement is bound up with a policy issue, namely, whether the restriction on contract validity prevents the defendant from asserting that the plaintiff must also make restitution. Therefore, counter-restitution can be required only if that is consistent with the statutory policy.253 It appears that, largely as an impact of this approach, where a contract is void a plaintiff is required to make restitution only if a form of relief derived from equity is sought.254 [1436] Statute. There are many examples of statutes which expressly or impliedly require substantial restitution. An illustration in the context of minors’ contracts is s 37(4) of the Minors (Property and Contracts) Act 1970 (NSW).255 This requires orders which restore the parties to their pre-contractual positions. Where the United Nations Convention on Contracts for the International Sale of Goods 1980 operates,256 a requirement of concurrent restitution by buyer and seller applies if an order for restitution is sought following avoidance of the contract.257 The Convention provides258 that a ‘party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party has supplied or paid under the contract’. The remedy of restitution is therefore tied to the right of avoidance. ‘Avoidance’ does not, however, refer to rescission for an invalidating cause such as misrepresentation. Rather, it

refers to discharge.259 Although the principal case of avoidance is on default by the buyer or seller, the parties’ entitlements are independent of fault.260 [page 617] Under the Convention, if a buyer must make restitution of goods or part of them, the buyer must also account to the seller for all benefits which were derived from the goods.261 Application of the provision does not depend on the buyer having breached the contract. Use of the word ‘account’ suggests a rationale that the benefit should be regarded as one obtained at the plaintiff’s expense. If the buyer avoided the contract, or required the seller to deliver substitute goods, the buyer must also account to the seller for benefits derived if it is impossible for the buyer to make restitution of all or part of the goods in substantially the condition in which they were received.262

(c) Contracts Which Subsequently Become Ineffective [1437] Contract rescinded or set aside. The requirement of substantial restitution informs the adjustments necessary to achieve restitutio in integrum in any case where a contract is rescinded or set aside.263 Recovery of the contract price depends on whether, by making consequential orders, a court can do what is practically just as between the parties.264 The general principle is that the plaintiff’s rescission is valid if appropriate orders (such as for a taking of accounts and for inquiries as to allowances proper to be made for deterioration of the subject matter) adequately protect the defendant, and do not result in the plaintiff being unjustly enriched at the defendant’s expense.265 The operation of the requirement in cases of rescission for misrepresentation is familiar and generally uncontroversial. Australian courts have worked out the principles mainly in the context of sale of

land and sale of business contracts. For example, in Brown v Smitt266 an order was made for restitution of the purchase price paid for a grazing property. Substantial restitution was achieved by further orders. The plaintiff-purchaser was granted restitution (by account and inquiry) in respect of the cost of necessary repairs, and the value added to the land by permanent improvements.267 Since the vendor [page 618] abandoned an account of the rents and profits, counter-restitution was achieved by way of an order for the payment by the purchaser of an occupation rent. Similarly, in Balfour v Hollandia Ravensthorpe NL268 purchasers of land who had been induced by misrepresentation to enter into a contract of sale were entitled to rescind the contract, and recover the purchase price. But they were also required to pay the rental value of the property. Alati v Kruger269 is the leading case. On rescission of a sale of business contract for fraud, the plaintiff-purchaser was entitled to restitution, by an order for repayment of the purchase price. This was, however, subject to orders made to achieve substantial restitution, including by way of counter-restitution. The purchaser was ordered to return chattels in his possession or control, and an inquiry was ordered into the value of the benefit obtained by the purchaser from the use and sale of the chattels and stock in trade transferred under the contract. Kramer v McMahon270 was another sale of business case. Purchasers were held to be entitled to rescind a contract for the sale of a bakery business induced by a fraudulent misrepresentation as to the quantity of bread sold. They had paid £1300 by way of deposit, and a further £8700 to obtain possession. However, the sale was not completed. After the purchasers vacated the business it was sold by the vendors’ mortgagees, with the result that they could not resume occupation. However, since the purchasers were not at fault, they were entitled to restitution of the £10,000 paid, on terms which protected the vendors (including an obligation to account for profits made).

The ability to achieve substantial restitution is not limited to orders for pecuniary restitution. Orders to secure the return of property may be made to protect the defendant’s interests. For example, on rescission of a contract for the sale of a business orders may be made, as in Alati v Kruger, for the return of chattels.271 Since rescission is valid to revest the beneficial title to property, the requirement is that the purchaser of land or a business be able to restore to the vendor the subject property in the state in which the vendor owned it before the contract.272 Except in cases of fraud or negligence, or under statute, no award may be made for compensation. However, rescission may include a right of indemnity in respect of future claims. Thus, in the famous case of Newbigging v Adam273 agreements were entered into the effect of [page 619] which was to make the plaintiff a partner in the defendants’ business. These agreements were induced by an innocent misrepresentation. On rescission, the plaintiff was entitled to restitution of the money paid as the price, and was also entitled to an indemnity in respect of partnership liabilities. Where restitution is sought following rescission of a contract for the sale of land, and a sum is claimed in respect of repairs made during the plaintiff’s occupation, valuation is based on the amount expended.274 Although the claim does not depend on acceptance of benefit, there is an analogy with a normal restitutionary claim for reasonable remuneration.275 By contrast, it appears that where restitution is sought in respect of permanent improvements made to the land, the plaintiff is limited to the value added.276 There is an analogy with incontrovertible benefit, but in a form not otherwise adopted as a general principle, namely, realisable benefit.277 From the plaintiff’s perspective, restitution must be given of benefits obtained. Where adjustment is made for use and occupation, the usual reference is to the actual value of that use and occupation to the plaintiff, that is, rents and profits.278 Substantially the same position obtains where there is no direct right

of rescission, but the contract is set aside for undue influence or unconscionable conduct. The question is again whether orders may be made to do what is practically just between the parties.279 Particularly where the defendant stood in a fiduciary relation to the plaintiff, the court may make orders for indemnification or an account of profits. An important example is O’Sullivan v Management Agency and Music Ltd.280 On setting aside certain contracts on the basis of undue influence, the English Court of Appeal awarded the plaintiff an account of the profits that the defendants had made from the contracts. However, since the court was required to do what was ‘practically just as between the parties’,281 the orders in the plaintiff’s favour were subject to an allowance of ‘reasonable remuneration’ to the defendants for their work in promoting the plaintiff and his musical works. [1438] Cases of discharge. Counter-restitution is not a general requirement in cases of discharge.282 Thus, in cases of discharge for breach or repudiation, if the effect is to revest title to goods, restitution of the price is not ordered on terms requiring payment for any intermediate enjoyment.283 [page 620] Under conventional analysis, the rejection of a general requirement of restitutio in integrum is supported by two practical considerations and one theoretical justification. The first practical consideration is that receipt of benefit may prevent discharge for breach or repudiation, as where a buyer loses its right to terminate for breach by the acceptance of non-conforming goods.284 Second, in relation to money paid,285 the plaintiff’s claim to restitution usually succeeds on the basis of total failure of the agreed return. Ex hypothesi, no material part of the agreed return was provided by the defendant prior to discharge. Otherwise, the plaintiff’s claim for restitution would fail.286 If the defendant did in fact confer some

benefit, it must be of a purely collateral nature. No issue of counterrestitution arises. The theoretical justification is really an assertion: since discharge operates in futuro (rather than ab initio), the parties do not have to be restored to their pre-contractual positions. However, to the extent that the concept of restitutio is based on the need to ensure that the plaintiff is not unjustly enriched, rather than a (notional) return of the parties to their pre-contractual positions,287 the theoretical justification is weak. Since the impact is to narrow the scope for independent claims in restitution, the issue of principle is whether the plaintiff’s claim ought also to succeed if counter-restitution can be made. In particular, total failure of the agreed return is insisted on even though a more rational approach might well be to allow a claim based on a partial failure in any case where the plaintiff is able to make counter-restitution. Clearly, the requirement of total failure could be relaxed as part of a general insistence on counter-restitution.288 In relation to benefits conferred by a plaintiff whose breach or repudiation led to discharge, the issue is not so much counter-restitution as whether the defendant is adequately protected by its ability to claim damages. But there is no reason why the plaintiff’s claim for restitution should be quantified in the same way as an independent claim for reasonable remuneration based on acceptance of benefit.289 An important area where substantial restitution may be required is where a contract for the sale of land is discharged after the purchaser has been let into possession. The purchaser is entitled to restitution in respect of permanent improvements made to the land.290 Although this claim is not necessarily associated with counter-restitution (and is derived from equity), substantial restitution is required if the purchaser enjoyed benefits through possession. Accordingly, the valuation process may be noted here. The general approach is to value the purchaser’s claim by reference to the enhancement of the [page 621]

value of the land.291 There is an analogy with incontrovertible benefit, that is, realisable benefit.292 The rationale for not awarding a sum analogous to reasonable remuneration293 is that discharge is based on the fault of the purchaser.294 However, the decision of the High Court in Rawson v Hobbs295 illustrates that an award of the cost of the improvements is appropriate where the purchaser is not at fault.296 The claim is based solely on a requirement of substantial restitution. In Rawson, the purchasers of a grazing property were held to be entitled to discharge the contract on account of the vendors’ inability to make title.297 Either the vendors repudiated the contract or had by their conduct made it impossible for the purchasers to obtain the required consent of the Minister to the instrument of transfer. Prior to discharge, title to stock on the property had passed to the purchasers, who had also occupied and enjoyed the land. Discharge did not of itself achieve substantial restitution. Dixon CJ said298 that as ‘the discharge could not amount to a rescission ab initio with complete restitutio in integrum’, the question necessarily became ‘one of the conditions of equitable relief’. Accordingly, the purchasers were entitled to restitution, but they also had to make restitution to the vendors. Orders were made: (1) declaring that the purchasers were discharged from the contract of sale; (2) for restitution of the purchase money; (3) for restitution to the purchasers equal to the cost of permanent improvements made to the land; and (4) for restitution by the purchasers, in respect of benefits received and enjoyed from the sale of stock and chattels, as valued in the contract and by way of deduction from the purchase money. [page 622] [1439] Relief against forfeiture on terms. Because relief against forfeiture has its origin in discretionary equitable principles, relief is

granted on terms. As Dixon J said in McDonald v Dennys Lascelles Ltd,299 the plaintiff must submit to equity as a condition of obtaining relief. These terms are designed to achieve substantial restitution. While resisting the temptation to suggest that restitution for unjust enrichment is necessarily the basis for the orders on terms, it is clear that what is achieved is restitution and counter-restitution. But whether the case involves relief against forfeiture of a payment made prior to discharge, or an order reinstating the contract, there is no question of restoring the parties to their pre-contractual positions.300 Indeed, restoring the parties to their pre-contractual positions cannot be supported as the rationale for requiring substantial restitution. The payer is entitled to restitution of the money which is the subject of relief against forfeiture, as well restitution for other benefits conferred. Thus, in Lexane Pty Ltd v Highfern Pty Ltd301 McPherson J recognised the right of a purchaser of land to ‘restitution in respect of permanent improvements made to the land’. In these cases, as might be expected, the valuation of the improvements is analogous to valuation on an incontrovertible (realisable) benefit basis.302 The payer must also make restitution. Accordingly, if benefits were received from performance of the contract, these must be brought into account, and set-off against the payee’s liability to repay the money paid. For example, in Pitt v Curotta303 the plaintiff was a purchaser of land who was held to be entitled to relief against the forfeiture of part payments made under the contract. He was therefore awarded restitution of the money paid, and also entitled to recover interest and costs incurred. But the plaintiff was required to make counterrestitution. Thus, the defendant was entitled to be paid such amount as the Master found proper for the plaintiff’s receipt of rents and profits, and his use and occupation of the land.304 In addition — to complete the process of adjustment — the defendant was entitled to damages, to retain the deposit, and to have his entitlements set-off against those of the plaintiff. Similarly, in Tropical Traders Ltd v Goonan (No 2)305 relief against forfeiture of part payments was granted on terms, including for the purchaser to make counter-restitution by paying an occupation rent for possession prior to discharge of the contract.

1.

See also [137].

2. 3.

See [145], [912]. See [1415]–[1430]. On the valuation of the enjoyment of property, and improvements to land see [1437], [1438], [1439]. For valuation issues in relation to goods see [1415], [1420], [1436] and cf [1438].

4. 5.

See [1231] (common law claims), [1236]–[1268] (frustrated contracts legislation). See [1420], [1422], [1427], [1433].

6.

See [1431]–[1439]. But see Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 545; 286 ALR 12; [2012] HCA 7 at [114] per Gummow and Bell JJ (‘counter-restitution … an unfortunate expression’). See [1305], [1330], [1331].

7. 8. 9.

See [1403]–[1414]. On whether damages for breach of contract may be assessed on a restitutionary basis see Chapter 18. See generally Chapter 28.

10. See the full discussion by McPherson J in Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 461–2. 11. See, eg Alati v Kruger (1955) 94 CLR 216 (rescission for fraud) and generally [2812]. 12. See generally Chapter 28, especially [2824]. 13. See generally [2805], [2813]–[2817]. 14. Discharge of the contract is required for such claims. See Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; 77 ALR 205. See also [1810]. For claims under unprofitable contracts, where a damages award might be nominal, see [1408], [1428]. 15. See [1110], [1111], [1128]. 16. See, eg Brownett v Newton (1941) 64 CLR 439. 17. (1987) 162 CLR 221 at 263; 69 ALR 577. 18. See [1213], [1244]. 19. For the concept of ‘vitiating factor’ see [1301], [1302]. 20. For the general principles see Gould v Vaggelas (1984) 157 CLR 215; 56 ALR 31. 21. See [1304]. 22. See [1044]. 23. See, eg Alati v Kruger (1955) 94 CLR 216 at 222–3; Williams v Moore (1961) 63 SR (NSW) 765. 24. Although duress may amount to the repudiation of an existing contract, an action for contract damages assumes an election to terminate the contract, rather than to succumb to the threat. See North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) [1979] 1 QB 705 at 719. 25. Competition and Consumer Act 2010 (Cth), Sch 2. 26. See [1315]. 27. See [1315]. 28. See [1047].

29. For the provisions see [1047]. See also [1315], [1334]. 30. See further [1410], [1411] (prevention of double recovery). 31. See, eg [401] (mistake), [501], [522] (improper pressure). 32. See, eg [1033] (impact of risk that anticipated contract will not materialise). Cf [1834] (restitutionary damages). 33. See White and Carter (Councils) Ltd v McGregor [1962] AC 413. See generally J W Carter, Andrew Phang and Sock-Yong Phang, ‘Performance Following Repudiation: Legal and Economic Interests’ (1999) 15 JCL 97. Cf [1410], [1818] (contractual claims for reasonable remuneration). 34. Cf Benedetti v Sawiris [2014] AC 938 at 994, 1002; [2013] UKSC 50 at [140], [174] (any sum offered by defendant may be taken into account as evidence of value). 35. (1831) 8 Bing 14; 131 ER 305 (see [1168], [1408]). 36. Cf White and Carter (Councils) Ltd v McGregor [1962] AC 413 at 431. And see Keith Mason, ‘Restitution in Australian Law’ in Finn, Essays, p 40. Under American law, a claim for a contract debt or restitution may be refused if the plaintiff continues to perform following repudiation. See generally Carter’s Breach of Contract, §§11-53–11-56. 37. See generally [2304]–[2313]. On election between rights see [2314]–[2323]. 38. See, eg Alati v Kruger (1955) 94 CLR 216 at 222. 39. See [1304], [1315], [1334], [1536]. Where the plaintiff’s claim for restitution is based on rescission for misrepresentation, a second defendant may be severally liable (in damages) for fraud. In such cases, it appears that the court may reserve the extent of the second defendant’s liability in damages for further consideration, since the plaintiff’s actual loss depends on whether the judgment against the first defendant is satisfied. See Sibley v Grosvenor (1916) 21 CLR 469. The application of this principle to cases of negligent misstatement is subject to legislation such as Pt 4 of the Civil Liability Act 2002 (NSW). 40. See further [1410], [1411], [1536], [1738]–[1739]. 41. For discussion of the ability to claim damages where the contract is illegal see [1044], [2620]–[2623]. 42. See also [1413]. 43. See [1810], [1822]. See also [1811] (combined claims). 44. See [1410] and further [1802], [1810], [1819]. See also [1811] (combined claims). 45. See further [1819]. 46. [1904] 1 KB 725 at 741. See also Yeoman Credit Ltd v Apps [1962] 2 QB 508, where the failure was clearly partial. Cf Clark v Macourt (2013) 253 CLR 1; 304 ALR 220; [2013] HCA 56. 47. See Segur v Franklin (1934) 34 SR (NSW) 67 at 72; Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723 at 739; [2009] NSWCA 424 at [81]. 48. (1981) [1984] 1 All ER 504 (see [1034]). For criticism see S N Ball, ‘Work Carried Out in Pursuance of Letters of Intent — Contract or Restitution?’ (1983) 99 LQR 572. 49. See also TTMI SARL v Statoil ASA (The Sibohelle) [2011] 2 Lloyd’s Rep 220 at 231; [2011] EWHC 1150 (Comm) at [53]. 50. See also [1031].

51. See [1428]. 52. (1831) 8 Bing 14; 131 ER 305 (see [1168]). 53. See [916], [918], [1168]. 54. See [1168], [1405], [1430]. See further [1411], [1428]. 55. (1991) 174 CLR 64 at 84–5, 107–8, 136–7, 155, 162–3; 104 ALR 1. 56. See J W Carter, ‘Discharged Contracts: Claims for Restitution’ (1997) 11 JCL 130 at 146. 57. See [1428]–[1430]. 58. See also [1809]. 59. See Restatement (Second) Contracts, §373 Ill 1 (repudiation by seller of land on a falling market). 60. (1989) 168 CLR 385; 88 ALR 413. 61. See Jones, pp 112–13. Compare Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 136, where the fact that there is no ceiling in total failure of consideration cases is used to support an argument that no ceiling applies in incontrovertible benefit cases. 62. See [1120]. But see David Campbell, ‘Better than Fuller: A Two Interests Model of Remedies for Breach of Contract’ (2015) 78 MLR 296. 63. See further [1409] and generally [1817]–[1823]. 64. See generally [915]–[930]. And see the examples in [1408]. 65. See, eg Bostock & Co Ltd v Nicholson & Sons Ltd [1904] 1 KB 725 (see [1407]); Beale v Taylor [1967] 1 WLR 1193 (see [1819]). See also Peter Jaffey, ‘Restitutionary Remedies in the Contractual Context’ (2013) 76 MLR 429 at 451. 66. See [1417]. 67. See [1818]. Cf [1820] (damages equal to expense saved). 68. See J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1984] 2 Qd R 413 at 425, affirmed [1984] 2 Qd R 413 at 432 (assessment at contract rate). 69. (1831) 8 Bing 14; 131 ER 305 (see [1168], [1408]). 70. (1951) 84 CLR 377. See also Timmerman v Stanley 51 SE 760 at 761 (Ga, 1905); Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; 104 ALR 1; Clegg v Andersson T/A Nordic Marine [2003] 2 Lloyd’s Rep 32 at 47; [2003] EWCA Civ 320. 71. (1946) 72 CLR 435 at 451. See also Goodman v Pocock (1850) 15 QB 576; 117 ER 577. Cf Noyes v Pugin 27 P 548 (Wash, 1891). 72. See Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] 1 QB 27 at 45; [2009] EWCA Civ 75 at [40]. 73. See further [1515], [1819]. 74. (1993) 176 CLR 344; 111 ALR 289. See J W Carter and Gregory Tolhurst, ‘Restitution: Payments Made Prior to Discharge of Contract’ (1994) 7 JCL 273. 75. See [1123]. 76. (1993) 176 CLR 344 at 355, 359; 111 ALR 289 (approving G H Treitel, The Law of Contract, 8th ed, Stevens & Sons/Sweet & Maxwell, London, 1991, p 834). Toohey J agreed. See also (1993) 176 CLR 344 at 372, 387, 389.

77. (1993) 176 CLR 344 at 359; 111 ALR 289. 78. He reasoned ((1993) 176 CLR 344 at 359; 111 ALR 289) that ‘restitution of the contractual consideration removes, at least notionally, the basis on which the plaintiff is entitled to call on the defendant to perform his or her contractual obligations’. 79. (1993) 176 CLR 344 at 379; 111 ALR 289. See also (1993) 176 CLR 344 at 380 (plaintiff cannot have equivalent of performance without bearing the expense). 80. (1951) 84 CLR 377 (see [1410]). 81. See [1168], [1405], [1408]. But see [1428]. 82. [1958] 1 WLR 1126. See also Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 643, reversed on other grounds sub nom Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 (damages plus restitution for total failure of the agreed return); Heywood v Wellers [1976] 1 QB 446 (additional damages for solicitors’ negligence). 83. See [1410]. 84. See further [1428], [1429], [1430]. 85. See [1166]. 86. See [1408] and further [1429]. 87. For the concept of loss of bargain damages see [1403] and further [1808]. 88. See, eg [1125]. 89. For recovery as damages see [1819]. 90. [1912] 2 KB 373. Cf Damon Compania Naviera SA v Hapag-Lloyd International SA (The Blankenstein) [1985] 1 WLR 435 (see [1823]). 91. [1981] VR 120 at 130. Under English law, an unpaid deposit recoverable as a debt is alternatively recoverable as damages: Griffon Shipping LLC v Firodi Shipping Ltd (The Griffon) [2014] 1 All ER (Comm) 593 at 602; [2013] EWCA Civ 1567 at [15]; Hardy v Griffiths [2015] Ch 417 at [116]; [2014] EWHC 3947 (Ch) at 445. 92. See, eg McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 479; Delbridge v Low [1990] 2 Qd R 317. 93. (1933) 48 CLR 457 at 478–9. Rich and McTiernan JJ agreed. 94. See Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41 at 55; Cowan v Stanhill Estates Pty Ltd (No 2) [1967] VR 641 at 651; Nund v McWaters [1982] VR 575 at 585; Pizzino v Finance Brokers (WA) Pty Ltd (1982) 43 ALR 16; Doubikin Holdings Pty Ltd v Grail Pty Ltd (1991) 5 WAR 563. A right to forfeit payments is sufficient, even if relief against forfeiture is granted: Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 456. 95. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 479; Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114; Smyth v Jessep [1956] VLR 230. Where relief against forfeiture is given by an order for specific performance (see [1139], [1141]), damages are for late performance. 96. As where there is statutory power (see [1148]) to order restitution of a deposit. See Lucas & Tait (Investments) Pty Ltd v Victoria Securities Ltd [1973] 2 NSWLR 268 at 273; Pratt v Hawkins (1991) 32 NSWLR 319 at 324. 97. See [1142], [1143], [1144] and further [1439].

See Berry v Mahony [1933] VLR 314 at 322; Real Estate Securities Ltd v Kew Golf Links 98. Estate Pty Ltd [1935] VLR 114 at 124; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 456. Cf Bosca Land Pty Ltd v Wruck [1982] Qd R 111 at 119–20; Sibbles v Highfern Pty Ltd (1987) 164 CLR 214 at 232; 76 ALR 13. 99. See Howe v Smith (1884) 27 Ch D 89 at 100–1, 104–5; Zieme v Gregory [1963] VR 214 at 219–20; Loughridge v Lavery [1969] VR 912 at 929–30; Farrant v Leburn [1970] WAR 179 at 185; Berger v Boyles [1971] VR 321 at 330; Pizzino v Finance Brokers (WA) Pty Ltd (1982) 43 ALR 16 at 20; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 455; Delbridge v Low [1990] 2 Qd R 317 at 334; Carpenter v McGrath (1996) 40 NSWLR 39 at 45, 63. But see Coates v Sarich [1964] WAR 2 (see [1143], [1144]). 100. See NLS Pty Ltd v Hughes (1966) 120 CLR 583. 101. See generally H O Hunter, ‘Measuring the Unjust Enrichment in a Restitution Case’ (1989) 12 Syd LR 76 at 79ff; Sue Arrowsmith, ‘Ineffective Transactions and Unjust Enrichment: A Framework for Analysis’ (1989) 9 Legal Studies 121. 102. See Benedetti v Sawiris [2014] AC 938 at 995; [2013] UKSC 50 at [143]. But cf Contractual Remedies Act 1979 (NZ), s 9(4)(d). 103. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; 69 ALR 577 per Deane J (see [135]). But see Home Management Maintenance Pty Ltd v Doyle (1992) 107 FLR 225 at 229–30. 104. Benedetti v Sawiris [2014] AC 938 at 1002; [2013] UKSC 50 at [174] per Lord Neuberger PSC. But cf [1429]. 105. See [1416]. 106. See Hoenig v Isaacs [1952] 2 All ER 176 at 182. 107. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251; 69 ALR 577; Benedetti v Sawiris [2014] AC 938 at 1003; [2013] UKSC 50 at [178]. 108. See Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 518; 257 ALR 182; [2009] VSCA 141 at [25]. See also Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 263 (court entitled to take a global assessment, or to increase or reduce the remuneration to reflect fair or reasonable value). 109. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352); Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251; 69 ALR 577. For relevant statutory provisions see [1038], [1039], [1040], [1174]. 110. See Benedetti v Sawiris [2014] AC 938 at 956, 1004; [2013] UKSC 50 at [15]–[16], [180], [182]. 111. See, eg Balfour Beatty Power Construction Australia Pty Ltd v Kidston Goldmines Ltd [1989] 2 Qd R 105 at 135; Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 520; 257 ALR 182; [2009] VSCA 141 at [35]. 112. See Benedetti v Sawiris [2014] AC 938 at 955–6, 1004; [2013] UKSC 50 at [14], [182]. 113. See Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 263 (citing Jennings Construction Pty Ltd v Q H and M Birt Pty Ltd (1988) Unreported, SC(NSW) (Cole J), 16 December); Angelopoulos v Sabatino (1995) 65 SASR 1. 114. See Benedetti v Sawiris [2014] AC 938 at 956–7, 982, 995; [2013] UKSC 50 at [16]–[17], [100], [143] (criterion of reasonable person in position of recipient).

115. See, eg Balfour Beatty Power Construction Australia Pty Ltd v Kidston Goldmines Ltd [1989] 2 Qd R 105 at 135 (includes profit element). 116. See British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1981) [1984] 1 All ER 504 at 511; Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at 1774; [2008] UKHL 55 at [42]. See also Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 (reasonable costs and expenses). In Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 at 903, Sheppard J may have been less generous, eg, in rejecting the claim to certain travel expenses incurred ‘solely in connection with the project’. Such expenses were also refused in Hansen v Mayfair Trading Co Pty Ltd [1962] WAR 148. Cf Balfour Beatty Power Construction Australia Pty Ltd v Kidston Goldmines Ltd [1989] 2 Qd R 105 at 135–6. 117. See Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at 1774; [2008] UKHL 55 at [42] (reasonable remuneration at rate applicable to experienced developer). 118. See Scott v Pattison [1923] 2 KB 723. 119. See Benedetti v Sawiris [2014] AC 938 at 983; [2013] UKSC 50 at [101]. 120. See Way v Latilla [1937] 3 All ER 759 at 764; Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 264 and further [1417]. 121. See, eg Stinchcombe v Thomas [1957] VR 509 (plaintiff was to some extent rewarded under testator’s will); Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; 69 ALR 577 (progress payments received by contractor under unenforceable contract); Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 (progress payments received by contractor prior to discharge of contract). 122. See, eg Deglman v Guaranty Trust Co of Canada [1954] 3 DLR 785 (performance of work in expectation of reward by will). Cf Way v Latilla [1937] 3 All ER 759 (see [1418]). 123. [1957] VR 509. 124. See generally [151]–[153], [931]–[935], [1027], [1036], [1156], [1160], [1170], [1231]. See further [1418], [1430], [1437], [1438], [1439]. 125. [1979] 1 WLR 783 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 126. [1979] 1 WLR 783 at 805 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). See also William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932 (value of work actually realised by defendant rather than professional scales); Angelopoulos v Sabatino (1995) 65 SASR 1 at 14. 127. (1987) 162 CLR 221 at 264; 69 ALR 577. Cf Restatement (Second) Contracts, §371 (choice between reasonable value and increase in value made ‘as justice requires’). 128. See Van den Berg v Giles [1979] 2 NZLR 111 (although the benefit of improvements to property was accepted, the measure of restitution was the enhanced value of the property). Compare Marston Construction Co Ltd v Kigass Ltd (1989) 46 BLR 109, where liability was apparently imposed on the basis of the receipt of a realisable benefit (see [1036]) but the award was simply for assessment of a ‘reasonable sum’. 129. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352), interpreting a provision equivalent to Australian Consumer Law and Fair Trading Act 2012 (Vic), s 38(2), (3). 130. [2014] AC 938; [2013] UKSC 50. See Mitchell McInnes, (2014) 130 LQR 8.

131. See [2014] AC 938 at 957, 958, 960, 1006; [2013] UKSC 50 at [18], [21], [26], [187]. Contrast [2014] AC 938 at 993; [2013] UKSC 50 at [137]. 132. See [2014] AC 938 at 960, 988; [2013] UKSC 50 at [25], [119]. 133. See Benedetti v Sawiris [2014] AC 938 at 1001; [2013] UKSC 50 at [168]. See further [1421]–[1430]. 134. See, eg Bolot v Capper (1957) 75 WN (NSW) 316 at 317 (architect’s scale). 135. See Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 at 539, 559. 136. [1993] 2 VR 221 at 263. For the facts see [1027]. See also Zannoth v Booth Radio Stations Inc 333 Mich 233, 52 NW 2d 678 (1952); Hansen v Mayfair Trading Co Pty Ltd [1962] WAR 148. Cf Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd (2002) 5 VR 577 at 609. Contrast William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932 at 940. 137. (1987) 162 CLR 221; 69 ALR 577 (see [1024]). 138. [1993] 2 VR 221 at 264. 139. See Peet Ltd v Richmond (2011) 33 VR 465 at 485; [2011] VSCA 343 at [105]. 140. See, eg Flett v Deniliquin Publishing Co Ltd [1964-5] NSWR 383 at 386 (void employment contract); Benedetti v Sawiris [2014] AC 938 at 955; [2013] UKSC 50 at [14]. 141. See Flett v Deniliquin Publishing Co Ltd [1964-5] NSWR 383 at 386; Benedetti v Sawiris [2014] AC 938 at 956, 993–4, 995; [2013] UKSC 50 at [14], [139], [143]. Cf BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805–6 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). 142. Cf Brown v Smitt (1924) 34 CLR 160 (see [1437]). 143. See [1416]. 144. See Stevenson v Hook (1956) 73 WN (NSW) 307 at 314; BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 805 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). See also Stinchcombe v Thomas [1957] VR 509 at 513; Thiess Properties Pty Ltd v Ipswich Hospitals Board [1985] 2 Qd 318 (affirmed [1985] 2 Qd 323). 145. See Steele v Tardiani (1946) 72 CLR 386 at 402 (citing Steven v Bromley & Son [1919] 2 KB 722 at 727). Compare Peter Lind & Co Ltd v Mersey Docks and Harbour Board [1972] 2 Lloyd’s Rep 234 (reasonable remuneration for value of completed work where the parties negotiated as to whether a building contract would be at a fixed or variable rate, but no contract was expressly agreed). See also [1232]. 146. See, eg Greenmast Shipping Co SA v Jean Lion et Cie SA (The Saronikos) [1986] 2 Lloyd’s Rep 277 at 279 per Saville J (‘fair commercial rate’ for services provided ‘outside’ charterparty). 147. [1937] 3 All ER 759 (see [1045]). Cf Peet Ltd v Richmond (2011) 33 VR 465 at 483; [2011] VSCA 343 at [94]. 148. See [1421]–[1430]. 149. See [1236]–[1268]. 150. See also [1436] (statutes which insist on requirement of counter-restitution). 151. See [1417].

152. See Heyman v Darwins Ltd [1942] AC 356 at 397. 153. See, eg Peet Ltd v Richmond (2011) 33 VR 465 at 482; [2011] VSCA 343 at [92]. For the general principle see [1417]. 154. See [1423]. 155. (1934) 34 SR (NSW) 359 at 367–8 (affirmed on other grounds (1935) 53 CLR 475). See also Ward v Griffiths Bros Ltd (1928) 28 SR (NSW) 425 at 427; Phillips v Ellinson Bros Pty Ltd (1941) 65 CLR 221 at 246; Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40 at 58; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 250; 69 ALR 577. 156. (1869) 20 LT 175. 157. See Way v Latilla [1937] 3 All ER 759 at 764, 766; Flett v Deniliquin Publishing Co Ltd [1964-5] NSWR 383 at 386, 388; Peet Ltd v Richmond (2011) 33 VR 465 at 482; [2011] VSCA 343 at [92]. 158. See M R Hornibrook Pty Ltd v Eric Newham (Wallerawang) Pty Ltd (1971) 45 ALJR 523 at 524; Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 263. Cf Stinchcombe v Thomas [1957] VR 509 at 513. 159. (1946) 72 CLR 386 at 405ff. McTiernan J agreed. See also Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 277–8; Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350; Issitch v Worrell (2000) 172 ALR 586 at 593; [2000] FCA 477. 160. [1979] 1 WLR 783 at 805 (affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352). 161. For a suggestion that where the defendant’s (performance) obligation is non-monetary the ceiling ought to be the money value of that non-monetary return, rather than the value in money of the plaintiff’s performance, see Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 137. 162. Cf British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1981) [1984] 1 All ER 504, where liability to pay reasonable remuneration was calculated by reference to the price specified in letter of intent (as amended by conduct) even though no construction contract was actually agreed. 163. [1989] 1 WLR 912 (see [1017]). See Jones, pp 109–10, 117. 164. (1869) 20 LT 175 (see [1422]). 165. (1987) 162 CLR 221 at 257; 69 ALR 577. 166. (1987) 162 CLR 221 at 262; 69 ALR 577. 167. (1987) 162 CLR 221 at 263; 69 ALR 577. 168. (1987) 162 CLR 221 at 264; 69 ALR 577. 169. Cf [1416]. 170. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257; 69 ALR 577 (contract price not relevant where unenforceable contract rescinded). But cf Boyd & Forrest v Glasgow and South-Western Railway Co 1915 SC (HL) 20 at 22. 171. See [1431]–[1439]. 172. See [1236]–[1268]. For claims still governed by the common law see [1215]–[1235].

See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 806 per Robert 173. Goff J, affirmed without reference to the point [1981] 1 WLR 232; [1983] 2 AC 352 (rateable part of the contract price). In accord: Restatement (Second) Contracts, §377 Com (b). But cf Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525. 174. See [905], [918], [1103], [1105], [1106], [1168]. 175. See Peter Jaffey, ‘Restitutionary Remedies in the Contractual Context’ (2013) 76 MLR 429 at 443. 176. See [1232]. 177. (1901) 20 NZLR 321. Cf Michael Garner, ‘The Role of Subjective Benefit in the Law of Restitution’ (1990) 10 OJLS 42 at 54, 56. 178. Sub nom Lodder v Slowey [1904] AC 442. 179. [1951] VLR 405 at 409. For the facts see [1167]. 180. (1992) 26 NSWLR 234. Special leave to appeal was refused: see (1992) 20 Legal Rep SL 1. 181. See further [1429]. 182. See Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350; Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510; 257 ALR 182; [2009] VSCA 141. 183. See Restatement (Second) Contracts, §373 Com (d), §374 Com (b) (contract price not a ceiling unless the claim is by a party in breach) and generally H O Hunter and J W Carter, ‘Quantum Meruit and Building Contracts — Part II’ (1990) 2 JCL 189. 184. 24 P 2d 570 (Cal, 1933). See also United States v Algernon Blair Inc 479 F 2d 638 (CA, 4th Cir, 1973). Cf Sterling v Marshall 54 A 2d 353 (DC, 1947). See Andrew Kull, ‘Restitution as a Remedy for Breach of Contract’ (1994) 67 Southern California Law Review 1465. 185. But see the detailed analysis by David Campbell, ‘Better than Fuller: A Two Interests Model of Remedies for Breach of Contract’ (2015) 78 MLR 296 at 314ff. 186. See, eg De Bernardy v Harding (1853) 8 Ex 822 at 824; 155 ER 1586 at 1587 per Alderson B (where one party has absolutely refused to perform a contract the other may ‘rescind the contract and sue on a quantum meruit’). See also Smith’s Leading Cases, vol 2, p 46 and [916], [1168]. 187. (1901) 20 NZLR 321 at 358–60. 188. See [1106]. See also Alder v Drudis 182 P 2d 195 at 202 (Cal, 1947) (damages and restitution are alternative remedies). 189. 24 P 2d 570 (Cal, 1933). 190. 24 P 2d 570 at 577. See also Stephen v Camden & Philadelphia Soap Co 68 A 69 at 70–1 (CEA, NJ, 1907). 191. See [1106]. 192. See [1408]. 193. [1951] VLR 405. 194. (1992) 26 NSWLR 234 at 277. Priestley and Handley JJA agreed. 195. See [1428].

196. See also Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 518; 257 ALR 182; [2009] VSCA 141 at [25]. 197. Most of the commentators have found the justifications uncompelling. See, eg J Beatson, ‘What Can Restitution Do for You?’ (1989) 2 JCL 65 at 72–4 (reprinted as revised in Beatson, p 1); H O Hunter and J W Carter, ‘Quantum Meruit and Building Contracts — Part II’ (1990) 2 JCL 189; Peter Birks, ‘Restitution after Ineffective Contracts: Issues for the 1990s’ (1990) 2 JCL 227 at 231–3; Jones, pp 119–21. Cf Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, pp 135ff. 198. But see Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 517; 257 ALR 182; [2009] VSCA 141 at [21] per the court (suggestion that the cases now proceed on the basis of a ‘fiction’ that that the contract has ceased to exist). 199. See [1415]. 200. See Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 277; Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 519; 257 ALR 182; [2009] VSCA 141 at [28]. 201. See [1168], [1405], [1408]. 202. See [1410]. 203. See [1408]. See also [1812]. 204. See David Campbell, ‘Better than Fuller: A Two Interests Model of Remedies for Breach of Contract’ (2015) 78 MLR 296 at 322. 205. See Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 277–8. See also Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 521, 528; 257 ALR 182; [2009] VSCA 141 at [41], [77] (unsuccessful variation claims revisited and it was irrelevant whether builder complied with contract). 206. See Sue Arrowsmith, ‘Ineffective Transactions and Unjust Enrichment: A Framework for Analysis’ (1989) 9 Legal Studies 121 at 131. See further [2206] (question of construction). 207. See Sydney Corp v West (1965) 114 CLR 481; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. 208. See Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350 (unlike a claim for damages, a claim for restitution (in the form of reasonable remuneration) is not affected by contract terms). 209. See, eg McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477–8. See also [902], [905], [909], [1106], [1426], [1427]. 210. Cf Boyd & Forrest v Glasgow and South-Western Railway Co 1915 SC (HL) 20 at 43. 211. Even so, the detailed building contracts in which the issue has arisen will include agreements on how variations are remunerated. But see Sopov v Kane Constructions Pty Ltd (No 2) (2009) 24 VR 510 at 521, 528; 257 ALR 182; [2009] VSCA 141 at [41], [77]. 212. See [1416], [1418]. Cf [1437], [1438], [1439]. 213. (1992) 26 NSWLR 234. 214. See [931], [934], [1167]. For the forms and effect of acceptance see [150], [156], [157]–[158], [1158], [1159]. 215. Cf Peter Birks, ‘In Defence of Free Acceptance’ in Burrows, Essays, p 136 (argument that valuation may be governed by the terms of acceptance, so that the ‘contract is invoked not

qua contract, but qua evidence of the qualifications subject to which the recipient conceived herself to be accepting’). See also Peter Birks, ‘Restitution after Ineffective Contracts: Issues for the 1990s’ (1990) 2 JCL 227 at 233. 216. That is the approach under United Nations Convention on Contracts for the International Sale of Goods 1980 (see [1436]) and the Restatement (Second) Contracts, §384. 217. See also [2324]–[2335] (inability to achieve substantial restitution may render rescission (or discharge) ineffective). 218. See [1305], [1318], [1320], [1322], [1325], [1329], [1330], [1331]. 219. It is assumed that the plaintiff is the party who seeks restitution. See further [1439] (relief against forfeiture). 220. See [1331]. On interest see [1402] and generally Chapter 28. 221. See, eg Sibley v Grosvenor (1916) 21 CLR 469 at 483; Alati v Kruger (1955) 94 CLR 216. 222. See [909], [918], [1103], [1105], [1116]. See further [1438]. 223. See [1331]. 224. See, eg Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279; Brown v Smitt (1924) 34 CLR 160 at 164, 169; Spence v Crawford [1939] 3 All ER 271 at 288; Alati v Kruger (1955) 94 CLR 216 at 223–4; O’Sullivan v Management Agency and Music Ltd [1985] QB 428 at 449–50; Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 386. 225. Contrast American cases in which restitution is treated as the basis for restoration, on either discharge or rescission. See, eg Stephen v Camden & Philadelphia Soap Co, 68 A 69 (CEA NJ, 1907); Alder v Drudis 182 P 2d 195 at 202 (Cal, 1947); Restatement (Second) Contracts, §384 Com (a). Cf Timmerman v Stanley 51 SE 760 at 761 (Ga, 1905) (no allowance to defendant where benefit was negated by discharge). 226. See [1436]. 227. (1804) 5 East 449; 102 ER 1142 (see [1116]). 228. (1831) 2 B & Ad 456; 109 ER 1212 (see [1116]). 229. See, eg Blackburn v Smith (1848) 2 Ex 783 at 792; 154 ER 707 at 711; Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587; Boyd & Forrest v Glasgow and South-Western Railway Co 1915 SC (HL) 20 at 29; Spence v Crawford [1939] 3 All ER 271 at 284; Cheers v Pacific Acceptance Corp Ltd (1959) 60 SR (NSW) 1 at 5. See also Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 111; 130 ALR 570; Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 542–3. 230. See [1320]. 231. See [916], [1103]. 232. See [1214], [1217]. 233. See [918], [1105]. 234. However, the rule remains under the sale of goods legislation in some jurisdictions. See [2333]. 235. [1983] 1 Qd R 188. 236. See [1983] 1 Qd R 188 at 197–8.

237. Cf [1126]. 238. See [1018]. 239. This is confirmed by reliance ([1983] 1 Qd R 188 at 198) on Hunt v Silk (1804) 5 East 449; 102 ER 1142 (see [1116]); Hodder v Watters [1946] VLR 222 at 231 (see [1221]); and Marsh v Mackay [1948] St R Qd 113. (1) Hunt v Silk was clearly distinguishable: it involved an agreement to lease; (2) in Landers, the contract expressly dealt with the benefit of possession; and (3) Hodder appears to have been based on implied agreement, and was in any event a case of discharge. Marsh relies on the same (outmoded) view of restitutio as was applied in Landers. See also [917]. 240. See [1983] 1 Qd R 188 at 198 per Connolly J with whom Lucas SPJ agreed (the purchasers could ‘show no equity and there is no question of the exercise of the powers of a Court of Equity to bring about restitution’). 241. On this basis the case was doubted by Brennan J in Sibbles v Highfern Pty Ltd (1987) 164 CLR 214 at 232; 76 ALR 13. 242. See Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 370; 143 ALR 457 (restitutio in integrum primarily concerned with preventing unjust enrichment of representee). Cf Benedetti v Sawiris [2014] AC 938 at 982; [2013] UKSC 50 at [99]. 243. See also [1330], [2328]. Cf [1202], [1214], [1237] (unjust enrichment as appropriate perspective on adjustment following frustration). 244. See [1432]. 245. Cf [1438]. 246. Cf Daniel Friedmann, ‘Valid, Voidable, Qualified, and Non-existing Obligations: An Alternative Perspective on the Law of Restitution’ in Burrows, Essays, p 262 (restitutio in integrum ‘inextricably bound with the problem of unjust enrichment’). 247. (1924) 34 CLR 160 at 168. See also Adam v Newbigging (1888) 13 App Cas 308 at 323 per Lord Watson (‘mutual restitution’); Independent Trustee Services Ltd v GP Noble Trustees Ltd [2013] Ch 91 at 117; [2012] EWCA Civ 195 at [54] per Patten LJ, with whom Tomlinson LJ agreed (‘necessary condition for obtaining the assistance of equity’). Cf Cooper v Phibbs (1867) LR 2 HL 149 at 170 (context of mistake). 248. [1939] 3 All ER 271 at 288–9 (adopted Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 114; 130 ALR 570 at 578). See also Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 370; 143 ALR 457; Maguire v Makaronis (1997) 188 CLR 449 at 496–7; 144 ALR 729. 249. Cf MacKenzie v Royal Bank of Canada [1934] AC 468 (although the plaintiff was entitled to restitution on rescission of a contract of guarantee with the bank, she was not obliged to make restitution of money which the bank paid to a third party in reliance on the guarantee). See also Senanayake v Cheng [1966] AC 63 at 84. 250. See [1318], [1325], [1433]. 251. (1992) 175 CLR 353 at 383; 109 ALR 57. See also Goss v Chilcott [1996] AC 788 at 798. 252. See Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 450ff; Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12–13, 19. But cf Cook’s Constructions Pty Ltd v SFS 007298633 Pty Ltd (formerly t/as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661 at 681; [2009] QCA 75 at [73] (no issue arises unless the contract is sought to be rescinded).

253. See, eg Guinness Plc v Saunders [1990] 2 AC 663 (see [1028]); Cook’s Constructions Pty Ltd v SFS 007298633 Pty Ltd (formerly t/as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661 at 681–2, 698; [2009] QCA 75 at [74], [146]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; 286 ALR 12; [2012] HCA 7. 254. See Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 456. See also [1017] (void contracts) and further [2639] (in pari delicto exception to illegality defence). 255. See [1047]. 256. The legislation prevails over any other law. But it is open to parties to exclude the application of all or any part of the Convention. See Art 6. 257. See further [2332] (defence that restitutio impossible). 258. See Art 81(2). See also on restitutionary claims [1149], [1176], [1226], [1235]. 259. For the meaning and scope of avoidance see [1110], [1209]. 260. See [1176] (relevance of unjust enrichment); [1226] (position where exemption operates). 261. See Art 84(2)(a). See further [2332]. 262. See Art 84(2)(b). See also [1176] (relevance of unjust enrichment) and further [2332] (defence of restitutio). 263. See, eg Armstrong v Jackson [1917] 2 KB 822; Boyd & Forrest v Glasgow and South-Western Railway Co 1915 SC (HL) 20; Sibley v Grosvenor (1916) 21 CLR 469. See also [1331]. 264. See, eg Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278; A H McDonald & Co Pty Ltd v Wells (1931) 45 CLR 506 at 512–13; Spence v Crawford [1939] 3 All ER 271 at 283, 288; Alati v Kruger (1955) 94 CLR 216 at 223–4; Guinness Plc v Saunders [1990] 2 AC 663 at 697; Spedley Securities Ltd v Greater Pacific Investments Pty Ltd (1992) 30 NSWLR 185 at 191–2, 193–4; Cheese v Thomas [1994] 1 WLR 129 at 137; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 386– 7; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 585; 130 ALR 1; Maguire v Makaronis (1997) 188 CLR 449 at 458, 470, 474, 496–7; 144 ALR 729; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 367; 143 ALR 457; Bridgewater v Leahy (1998) 194 CLR 457 at 493–5; 158 ALR 665. 265. See, eg Adam v Newbigging (1888) 13 App Cas 308 (business in which plaintiff had become partner was insolvent); Alati v Kruger (1955) 94 CLR 216 (plaintiff was not responsible for deterioration of business); Senanayake v Cheng [1966] AC 63 (restitution on rescission for innocent misrepresentation inducing agreement to enter partnership which had been dissolved); Kramer v McMahon [1970] 1 NSWLR 194 (business was sold by the defendants’ mortgagees). 266. (1924) 34 CLR 160. 267. The purchaser’s ‘collateral losses’ arising from the carrying on of a business on the land were not recoverable: they could be recovered only in a claim for compensation. See also Sibley v Grosvenor (1916) 21 CLR 469 at 485; Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514 at 521. 268. (1978) 18 SASR 240. See also Sibley v Grosvenor (1916) 21 CLR 469 (purchasers of farming land entitled on rescission for fraud to recover the contract price, together with the amount spent on improvements, but subject to the value of use and occupation). 269. (1955) 94 CLR 216.

270. [1970] 1 NSWLR 194. 271. See also MacKenzie v Royal Bank of Canada [1934] AC 468 (return of securities pledged). Cf Shalson v Russo [2005] Ch 281 at 324; [2003] EWHC 1637 (Ch) at [126]. 272. See Alati v Kruger (1955) 94 CLR 216 at 224; Earl of Beauchamp v Winn (1873) LR 6 HL 223. See also Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 111; 130 ALR 570; FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559 at 563–4; Shalson v Russo [2005] Ch 281 at 322; [2003] EWHC 1637 (Ch) at [123]. 273. (1886) 34 Ch D 582, affirmed sub nom Adam v Newbigging (1888) 13 App Cas 308 (adopted Brown v Smitt (1924) 34 CLR 160). See also Sibley v Grosvenor (1916) 21 CLR 469 at 483 (indemnity in relation to negotiated promissory notes). Compare Curwen v Yan Yean Land Co Ltd (1891) 17 VLR 745, where fraudulent concealment by A led B to purchase shares in C, B was entitled to an order that, as between A and B the contract with C was rescinded so that B was entitled to restitution against A (of the sum paid to C) who was compelled to accept B’s obligations to C. 274. See, eg Sibley v Grosvenor (1916) 21 CLR 469 at 475; Brown v Smitt (1924) 34 CLR 160. 275. For the general approach to valuation see [1416]. 276. See Brown v Smitt (1924) 34 CLR 160. But see Sibley v Grosvenor (1916) 21 CLR 469 at 475 (assessment by reference to amount expended). Cf JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 391 (sale of goods). 277. For the general approach to valuation see [1416]. See also [1438], [1439]. 278. See, eg Sibley v Grosvenor (1916) 21 CLR 469 at 475, 483; Brown v Smitt (1924) 34 CLR 160. 279. See [1437]. See also [515] (Williams v Bayley (1866) LR 1 HL 200). 280. [1985] QB 428. See also [1735]. 281. [1985] QB 428 at 466 per Fox LJ. See also at 450, 457, 458, 473. For the general principle see [1331], [1437]. 282. See, eg Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 225. See further [2331]. 283. See [918], [1105], [1118]. 284. See [2323]. 285. Qualifications which might be made on the basis of the statutory provisions referred to in [1148], [1173], [1226], [1235], [1236]–[1268] are ignored. 286. But this justification does not explain the alacrity shown in allowing the terminating party to recover reasonable remuneration for part performance. See [1166]–[1168]. 287. See [1434]. 288. See J W Carter, ‘Discharged Contracts: Claims for Restitution’ (1997) 11 JCL 130. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383; 109 ALR 57 (see [1434]). 289. Cf Benedetti v Sawiris [2014] AC 938; [2013] UKSC 50 (relevance of ‘subjective devaluation’). 290. See [1170].

See Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 at 123–4; 291. Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 455; Stern v McArthur (1988) 165 CLR 489 at 509; 81 ALR 463; P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615 at 648. Cf Bosca Land Pty Ltd v Wruck [1982] Qd R 111 at 119–20. See also Ward v Ellerton [1927] VLR 494 (value assigned by contract as reasonable price of goods delivered in part payment of purchase price under sale of land contract discharged for purchaser’s breach); T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd [1991] 1 VR 610 at 621 (question left open). But cf Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 at 226–7 (knowledge or encouragement required). 292. See [1416], [1418], [1437]. See also [1439]. 293. For the general approach to valuation see [1416]. 294. The purchaser’s claim does not depend on relief against forfeiture. But see T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd [1991] 1 VR 610 (see [1170]). Only if the contract expressly excludes the right to restitution is an application for relief against forfeiture necessary. See P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615 (see [1170]). See further [1439] (relief against forfeiture on terms). 295. (1961) 107 CLR 466. 296. But cf Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd (2010) 15 BPR 28,857 at 28,861; [2010] NSWSC 828 at [15]. 297. Although a term of the contract entitled the purchasers to ‘annul’ the contract if consent was refused, there was no actual refusal and a majority of the court (Kitto J dissenting) held that the term could not be invoked. 298. (1961) 107 CLR 466 at 484. In part this was because of the general approach to the discharge of sale of land contracts, in part it was due to the operation of statutory provisions governing the conditional purchase of leases of grazing land held under statute. Cf Kicks v State Bank of Lisbon 98 NW 408 at 410–11 (ND, 1904). 299. (1933) 48 CLR 457 at 478. Rich and McTiernan JJ agreed. It therefore appears that the issue cannot arise unless breach is the occasion for forfeiture. See Greville v Parker [1910] AC 335. 300. Cf Bland v Ingrams Estates Ltd (No 2) [2002] Ch 177; [2001] EWCA Civ 1088 (relief against forfeiture for non-payment of rent under lease always granted on terms, including payment of costs, but lessor may be required to bring benefits enjoyed as a consequence of re-entry into account). 301. [1985] 1 Qd R 446 at 455. 302. See also [1416], [1418], [1437], [1438]. 303. (1931) 31 SR (NSW) 477 (see [1143]). See also Sandeman v Wilson (1880) 1 LR (NSW) Eq 1; Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 at 123–4. Cf Tropical Traders Ltd v Goonan (No 2) [1965] WAR 174 at 177. 304. McPherson J suggested in Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 456, in our view rightly, that Long Innes J should not have required the purchaser to pay an occupation rent and also to give credit for rents and profits received. On interest, see further [2824]. 305. [1965] WAR 174 (see [1144]). The matter had been remitted by the High Court in Tropical Traders Ltd v Goonan (1964) 111 CLR 41. See also Lexane Pty Ltd v Highfern Pty

Ltd [1985] 1 Qd R 446 at 455.

[page 623]

PART VI

Claims Based on Wrong Committed

[page 625]

Chapter Fifteen

Introduction to Wrongs 1. 2. 3. 4.

5.

General …. Monetary Remedies for Wrongs …. When Reliance on a Wrong is Required …. When Reliance on a Wrong is Permitted ….

[1501] [1507] [1513] [1519]

(a) General ….

[1519]

(b) Extent of Recognition ….

[1522]

(c) Policy, Discretion and Uncertainty ….

[1527] [1530]

Significance of Gain-based Remedies ….

1. General [1501] Objects. The restitutionary claims dealt with earlier in this book mostly involved plaintiffs ‘whose prima facie claim to restitution is that they have lost what the defendant has gained’.1 By contrast, this Part deals with plaintiffs whose prima facie claim to restitution derives from the defendant’s enrichment based on some wrong committed by the defendant. This distinction has been recognised in Australian law.2 We deal separately with the various categories3 because they are identifiable as such in the cases. Nevertheless, we stress the need for unity in the whole topic of restitution for wrongs and point to increasing judicial recognition of this. The pleas of Professor Birks,4 and others5 to fuse legal and equitable principles in this area, and to draw and blend analogies from the ‘separate’ categories have been heeded to some extent in the modern cases.6 The object of this chapter is to introduce the treatment of ‘restitution

for wrongs’. It is necessary to explain both the framework which we have arrived at and the significance of the analysis of wrongs from the perspective of the law of restitution. A defendant may save expense or gain profit by taking or using the plaintiff’s property or otherwise infringing the plaintiff’s rights. Often the plaintiff will be able to recover the value of the benefit. Sometimes, in response to such wrongdoing, a plaintiff may choose between a compensatory and a restitutionary remedy with similar [page 626] effect. At other times the plaintiff will have suffered no loss, with the result that a gain-based remedy offers the only prospect of legal recourse. The principal task of this Part is to identify the wrongs that attract restitutionary remedies; and the principles upon which gainbased remedies for wrongs are available. This Part moves through the branches of liability for civil wrongs: tort;7 breach of fiduciary duty, breach of confidence and infringement of intellectual property rights;8 and breach of contract.9 The same conduct may concurrently be a wrong according to two (possibly three) of these categories. For example, an agent may concurrently breach equitable and contractual obligations.10 Finally, we deal with the forfeiture rule that seeks to preclude enrichment from homicide. [1502] Taking advantage of one’s own wrong. In various branches, and in various ways, the law strives to discourage persons from committing wrongs by providing remedies to the victims of wrongs. It is therefore a loose maxim of the law that persons should not be permitted to take advantage of their own wrongs.11 Although itself a rule of public policy, it is not an immutable one. It must, for example, give way to an express contractual agreement to the contrary, unless the agreement is itself the subject of a (stronger) rule of policy.12 It is, therefore, more accurate to regard the maxim as stating an ideal, rather than a rule of law.

In Attorney-General v Observer Ltd Lord Goff said:13 The statement that a man shall not be allowed to profit from his own wrong is in very general terms, and does not of itself provide any sure guidance to the solution of a problem in any particular case. That there are groups of cases in which a man is not allowed to profit from his own wrong, is certainly true. An important section of the law of restitution is concerned with cases in which a defendant is required to make restitution in respect of benefits acquired through his own wrongful act notably cases of waiver of tort; of benefits acquired by certain criminal acts; of benefits acquired in breach of a fiduciary relationship; and, of course, of benefits acquired in breach of confidence. The plaintiff’s claim to restitution is usually enforced by an account of profits made by the defendant through his wrong at the plaintiff’s expense. This remedy of an account is alternative to the remedy of damages, which in cases of breach of confidence is now available, despite the equitable nature of the wrong, through a beneficent interpretation of the Chancery Amendment Act 1858 (Lord Cairns’ Act) and which by reason of the difficulties attending the taking of an account is often regarded as a more satisfactory remedy, at

[page 627] least in cases where the confidential information is of a commercial nature, and quantifiable damage may therefore have been suffered.

One perspective on the ideal is indicated in Lord Goff’s statement. The law may provide for restitutionary relief, as a way of ensuring that wrongdoers do not profit by their wrongs, in conferring a remedy expressed by reference to the amount of the profit obtained. Another aspect is illustrated in the wrongful death cases. Here, instead of providing a right of recovery, the ‘forfeiture rule’ (which we consider relevant to the law of restitution) deprives a felonious killer of the ability to claim a benefit to which that person would otherwise be entitled.14 [1503] Remedial flexibility. Most common law remedies, including damages and restitutionary remedies derived from the common money counts, issue as of right. If the plaintiff establishes entitlement to relief there is no discretion to withhold it. Some causes of action do not require proof of loss. By contrast, most equitable and statutory remedies are discretionary. Often the compensatory adequacy of the

common law remedy will suffice to deny resort to the equitable remedy, or at least furnish a principled basis for its refusal. Equity’s capacity to fashion proprietary restitutionary remedies such as the constructive trust15 provides (where available) supplementary benefits, such as avoiding the need to prove the extent of the profit gained, and priority over ordinary creditors.16 [1504] Different remedies or different labels? Much confusion stems from labels attaching to the varieties of gain-based remedies. Sometimes, different labels truly reflect different concepts and principles. But often they are the product of a history that saw common law and equity as incapable of cross-fertilisation and that had no role for unjust enrichment as a unifying explanatory concept. There may be no functional distinction between a judgment for money had and received against a person who takes and sells the plaintiff’s minerals17 and an order for account of profits against a fiduciary who misappropriates a corporate advantage and benefits thereby.18 An account of profits is a personal remedy, albeit that sometimes it is superimposed upon a declaration of trust which may or may not be institutional in nature.19 Sometimes, a single label hides and confuses a range of different concepts. For example, ‘damages’ can be used as a synonym for compensatory damages or it can also embrace an award of money designed to strip the defendant’s enrichment (and/or to punish). Sometimes, the word ‘damages’ is used (loosely) to encompass compensatory awards in relation to breaches of duties derived historically from the common law and equity. Often the source is in fact statutory.20 [page 628] ‘Constructive trust’ is another example of a single term that is used loosely and in differing contexts.21

In recent times, enlightened judges and commentators have called for greater clarity as regards the labelling of gain-based awards.22 Responses are affected by attitudes about the importance of preserving equity as a separate system within the general law and about distinguishing the remedies that issue as of right and those that are discretionary.23 Restitution theory focusses upon the common aspects of remedies such as money had and received, mesne profits, money payable for use and occupation and account of profits. The unjust enrichment concept offers a partial explanation, not necessarily to the exclusion of the disciplinary and prophylactic roles of the ‘equitable’ remedies that serve similar functions. [1505] Treatment of wrongful death. Wrongful death must be dealt with separately:24 it does not fit neatly into the idea of ‘restitution for wrongs’. The perspective is a negative rather than a positive one. If a person who is the beneficiary under the will of a person kills that person, the right to take under the will is forfeited. The legal wrong was done to the victim, not the plaintiff. Under the forfeiture rule, the enrichment otherwise accruing to the killer passes to others who do not necessarily represent the victim. And not only is the killer deprived of any benefit accruing from the killing, but so too are those claiming through the killer. This gives effect to the ideal that persons should not be permitted to take advantage of their own wrongs in a distinct way. We later explain in more detail the justification for a treatment of wrongful death in a work on restitution.25 [1506] Restitution in favour of person committing wrong. Although it might be thought that restitution is never awarded in favour of the person who committed the wrong, this is not in fact the position. There are certainly situations in which restitution is awarded to such a person. An obvious example is where a purchaser of goods recovers a prepayment notwithstanding that the purchaser’s own breach led to discharge of the contract by the seller.26 However, for four reasons it is unnecessary to devote much attention to this question in the context of

a discussion of wrongs. First, the present concern is mainly with restitution for wrongs done to plaintiffs,27 and there is no question of the defendant relying on the wrong as a basis for restitution. Second, in cases where there is clearly no general or specific policy impediment, as where a party in breach of contract seeks restitution [page 629] in relation to a payment made prior to termination of the contract, the restitutionary claim is an independent one, based on unjust enrichment rather than a wrong. Third, the defendant’s wrong may have led to the setting aside or rescission of a contract.28 If so, the right of the defendant to restitution depends largely on the scope of the counter-restitution requirement. The claim is more appropriately discussed in the context of adjustments29 and defences.30 Fourth, in cases where the wrong is a serious one, as where the defendant committed a serious crime, public policy will preclude a restitutionary claim.31 Thus, the issue of restitution in favour of the person who committed the wrong is likely to arise as a realistic possibility only in cases where there is no clear prohibition of public policy. One area (itself a controversial one) is where there is a breach of duty by a fiduciary who has rendered valuable services.32

2. Monetary Remedies for Wrongs [1507] Introduction. One perspective of this Part is the recovery of damages assessed on a particular basis. That basis is an award to the plaintiff of the value of a benefit which the defendant obtained as a result of the wrong, in circumstances where that benefit cannot be regarded as a loss to the plaintiff. These are what we refer to as ‘restitutionary’ damages.33 A remedy may serve more than one function even in a simple application. It may seek to compensate, strip an unjust

enrichment, punish and deter. In Hospitality Group Pty Ltd v Australian Rugby Union Ltd,34 Hill and Finkelstein JJ pointed out that ‘damages may be either compensatory or non-compensatory. In the latter category are contemptuous damages, nominal damages, exemplary damages and restitutionary damages’. Since the equitable and statutory remedies of an account of profits serve a restitutionary function they are also addressed.35 [1508] Restitutionary damages and ‘disgorgement damages’. The general object of damages applicable in both contract and tort is to place the plaintiff in the position which would have been occupied had the wrong not occurred.36 The general rule may be the same37 in equity where damages [page 630] are awarded under Lord Cairns’ Act,38 or ‘compensation’ is awarded under equitable principles. However, effect may be given to that general object in more than one way.39 The contractual perspective on damages is to place the plaintiff, so far as money can do so, ‘in the same situation, with respect to damages, as if the contract had been performed’.40 However, in their classic article on the subject, Fuller and Perdue41 drew attention to the way in which damages awards may protect various interests, namely, an expectation interest, a reliance interest or a restitution interest. Indeed, although an approach which seeks to place a plaintiff in a contract action in the same position as if the contract had been performed might well be regarded as the hallmark of expectation damages, in Commonwealth of Australia v Amann Aviation Pty Ltd42 the High Court regarded reliance damages as awarded in order to achieve the same object. Moreover, the High Court denied that the plaintiff has any right to have it achieved by reference to damages assessed on one basis rather than another. In other words, at least in contract, a plaintiff is not

entitled to elect between the various interests which damages awards may protect.43 The concept of restitutionary damages does not sit easily with the idea that an award of damages should place the plaintiff in the position which it would have occupied had the wrong not occurred. Only where the effect of the wrong is to deprive the plaintiff of an agreed return equivalent to the benefit obtained, or where the effect is to deprive the plaintiff of a benefit which would (or might) have been received had the wrong not occurred, can it be said that ‘restitutionary’ damages place the plaintiff in the position which it would have occupied had the wrong not taken place. Although the argument that a restitutionary award is compensatory looks plausible if the benefit in question was one which the plaintiff might have obtained,44 the argument appears to be pure fiction when the evidence is that the benefit was in fact one which the plaintiff could not have obtained. Thus, where the effect of an award of restitutionary damages is to require the defendant to disgorge a benefit for which there was no agreed return, or a benefit which the plaintiff could not have made, it is inaccurate to say that the award places the plaintiff in the same position which it would, but for the wrong, have occupied. However, the difficulty only arises because of the emphasis on a damages award as compensation for a loss. By definition, restitutionary damages are not compensation for a loss. Instead, the money represents an award made to prevent unjust enrichment stemming from the wrongdoing. In [page 631] exceptional cases where the award is of this nature, it is not sensible to seek to apply general or specific compensation perspectives, unless these are redefined to include restitutionary damages. The purpose of a restitutionary award is not to put the plaintiff in a position which it would, but for the wrong, have occupied. Instead, the purpose and effect of the award is to ensure that the defendant does not profit from

the wrong. The perspective more closely resembles placing the defendant in the position which it would have occupied had it not been for the wrong. The idea that restitutionary damages form a legitimate exception to the general rule that damages for common law wrongs are purely compensatory is now recognised in the leading damages texts.45 We are concerned with the distinction between ‘restitutionary’ and compensatory ‘damages’ (or ‘compensation’).46 Restitutionary damages are not reflective of the usual conception of compensation, since ‘compensation’ refers to loss or damage suffered by the plaintiff. Restitutionary damages can be regarded as ‘compensatory’ only if that expression is used in a broad and inaccurate sense extending beyond loss or damage suffered. The benefit obtained by the defendant in respect of which restitutionary damages are sought is not a loss to the plaintiff unless one of two circumstances is present. Either the benefit must be one which the plaintiff conferred, or the benefit must be one which the defendant has acquired by virtue of the wrong done to the plaintiff. Some would confine restitution to the area of autonomous unjust enrichment.47 Others (including the American Law Institute,48 Andrew Burrows, Graham Virgo and ourselves) see the historical and conceptual links to justify a law of restitution that goes beyond the unjust enrichment concept and includes restitution for wrongs49 as well as vindicatory of title in some situations. Amongst those content with a broad category of restitution for wrongs some writers prefer the term ‘profits disgorgement’ over ‘restitutionary damages’.50 More recently, James Edelman has suggested a taxonomic refinement.51 He concluded that the restitution for wrongs cases in fact invoke two remedies of different measure. In some cases, the remedy is limited to that portion of the defendant’s gain which is matched by an extraction of wealth from the plaintiff (for example, through the defendant’s use of the [page 632]

plaintiff’s property).52 Edelman argues that such remedy is properly called restitutionary damages. In other cases, the remedy is not limited in this way, but extends to recovery of the defendant’s entire gain, regardless of any extraction from the plaintiff. Edelman would limit the term ‘disgorgement damages’ to this second category. On this analysis, disgorgement damages would be the equivalent of an account of profits.53 [1509] Account of profits. An account of profits is available as an equitable remedy against a defaulting fiduciary and a statutory remedy for the infringement of intellectual property rights.54 It is available in the alternative to compensatory awards like equitable compensation and common law damages. Its availability in relation to wrongs lying outside statute and equity (that is, in relation to common law torts) is controversial.55 A serious fusionist should use the one expression on both sides of the common law/equity divide. Account of profits is, in any event, a wellestablished restitutionary remedy in relation to at least equitable and statutory wrongs, and outside Australia it has been awarded in some cases of (common law) tort.56 The High Court has drawn attention to the fact that prevention of unjust enrichment is the basis upon which an account of profits is awarded and assessed, at least in the area of intellectual property infringement.57 We would therefore prefer to see the debate as one about the scope of the remedy of account of profits in relation to all types of wrongdoing rather than risk its derailment by semantic disputes concerning the novel term ‘disgorgement damages’. In Attorney-General v Blake58 Lord Nicholls (Lords Goff and Browne-Wilkinson agreeing) said that ‘there seems to be no reason, in principle, why the court must in all circumstances rule out an account of profits as a remedy for breach of contract. I prefer to avoid the unhappy expression “restitutionary damages”’. This ‘in principle’ correctly acknowledges that account of profits may be granted in relation to common law rights.59 The House of Lords returned to the matter in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners60 with three of their Lordships

disapproving the use of the term ‘disgorgement’ except to refer to the stripping of actual profits. [page 633] Whatever the label (account of profits or disgorgement damages), it should be understood that making the remedy accessible to some or all common law wrongs does not necessarily mean that it is appropriate to award it in every situation. According to the Third Restatement, an account of profits will (as a general rule) only be awarded against a conscious wrongdoer.61 [1510] Punishment and compensation. Another perspective on damages draws a contrast between compensatory damages and exemplary (or punitive) damages,62 a contrast between damages awarded as compensation to the plaintiff and damages awarded as punishment of the defendant. In Australian law, punitive damages are not awarded in contract.63 In Australian law, they are, however, available in tort, at least in the contexts of trespass to the person;64 trespass to goods;65 trespass to land,66 inducing breach of contract67 and negligence.68 Australian common law also permits the award of exemplary damages in defamation69 but this was displaced by statute in most jurisdictions in 2005.70 It is because compensation is regarded as the ‘cardinal concept’71 for the assessment of damages in tort and contract that exemplary damages are so rarely awarded in Australian law. This is one explanation for the exceptional nature of restitutionary damages under Australian law. We do not by this mean to imply that restitutionary damages are justifiable only on the basis of punishment.72 However, it is clear that they (like other gain-based awards, including account of profits)73 may serve a deterrent effect. A defendant who knows that any benefit obtained as a consequence of wrongdoing is likely to be awarded to the plaintiff is confronted by a serious disincentive. To the extent that one object of a damages award is to discourage wrongdoing by punishing, there is a

strong policy basis for the capacity to award restitutionary damages as a more finely tuned remedy. [page 634] [1511] Damages and compensation in equity. Where the court has power to grant an injunction against the breach of any covenant, contract or agreement; or against the commission or continuance of any wrongful act; or to order the specific performance of any covenant, contract or agreement, the court may award ‘damages’ to the party injured either in addition to or in substitution for the injunction or specific performance. This is a modern expression of the damages jurisdiction conferred on courts of equity by Lord Cairns’ Act,74 which has counterparts in specific legislation in most Australian jurisdictions.75 Even in jurisdictions where there is no statutory provision,76 it is clear that since the Judicature reforms courts have enjoyed the ability to award damages in addition to or in substitution for the remedies of injunction and specific performance in the auxiliary equitable jurisdiction.77 We have not set ourselves the task of defining the extent of equity’s jurisdiction in relation to damages. For our purposes it is sufficient, at least at this stage,78 to draw attention to two points. First, it is clear that Lord Cairns’ Act authorises damages awards in situations where common law damages are unavailable,79 or (to put it more accurately) where the Court of Chancery was reluctant but not powerless to grant them.80 Second, where damages are awarded under Lord Cairns’ Act in a situation where damages may be awarded at common law, as where damages are awarded in lieu of specific performance of a contract discharged for breach, it has been debated whether damages may be awarded on a basis which differs from the common law approach.81 Apart from Lord Cairns’ Act damages, equity has a well-established inherent jurisdiction to award ‘compensation’ for breaches of equitable

duties.82 The principles relating to equitable compensation appear to be more flexible than those relating to common law damages, although the two may be converging. In principle, ‘equitable compensation’ should be available (in proper cases) according to a restitutionary measure, although there are some cases that suggest it is concerned only with the plaintiff’s loss.83 [page 635] [1512] Damages under statute. Even apart from statutory bases referred to above,84 there are many statutes which confer power to award damages. The statutes most relevant to restitution are the intellectual property statutes, where the power is to award damages or an account of profits.85 In Australia, a very significant area of statutory damages arises under statutes which regulate claims in respect of prohibited conduct, such as misleading or deceptive conduct.86 These are couched in terms of orders in respect of ‘loss or damage suffered’ or in favour of persons who have suffered or are likely to suffer loss or damage. However, these expressions have been widely interpreted, and it may be that they permit awards of restitutionary damages.87

3. When Reliance on a Wrong is Required [1513] Introduction. As we have more than once pointed out, the vast majority of claims in restitution do not rely on the fact that the defendant committed a wrong. The reason why, generally, restitution does not rely on the commission of a wrong is that the unjust enrichment concept focuses on the unjust receipt of a benefit from the plaintiff, or (but less usually) on the unjust retention of a benefit. The reason why the benefit was conferred on the defendant is always

important, but generally speaking whether the defendant committed a wrong is not an element in the requirements for proof of a prima facie case for restitution. Since this Part of the work is concerned with reliance on a wrong as the basis for an award of restitution, it is important to identify situations where the plaintiff is required to rely on the defendant’s wrong in order to claim restitution. This, in fact, leads to a broader area than is in fact under discussion. Two steps are required to emphasise that the claims dealt with in this Part of the work are atypical. First, in order to grasp the relevance and scope of ‘restitution for wrongs’, an important distinction must be drawn between dependent and independent claims.88 The second step involves the explanation of alternative claims in restitution.89 [1514] Dependent and independent claims. The rejection of the implied contract theory90 means that we no longer treat all claims for restitution as based either on the breach of a (fictional) implied (quasicontractual) promise, or the ability to ‘waive’ a wrong such as conversion. Most of the (quasi-contractual) claims which were formerly within the notional breach of an implied promise are now explicated by the unjust enrichment concept, under which the defendant’s obligation is imposed by law in response to the benefit obtained at the plaintiff’s expense. Beyond these, there are three main types of case where the defendant’s wrong is relevant and must to some extent be relied upon in order to establish a claim for restitution. [page 636] One type of case is where the unjust factor91 under the unjust enrichment concept happens also to amount to a wrong. Thus, where money is paid by the plaintiff to the defendant because the defendant subjected the plaintiff to deceit or improper pressure, the prima facie claim may be associated with a legal wrong, since the deceit or improper pressure may amount to a tort or a crime.92 The deceit or

improper pressure constitutes the unjust factor in the unjust enrichment equation, but the enforcement of the defendant’s duty to make restitution is the enforcement of a primary obligation. If by a ‘wrong’ we mean conduct which itself gives rise to a right to recover damages, there are many cases of improper pressure which do not constitute a wrong. Given that, for example, the better view is that there is no right to compensation for duress per se,93 the illustration is a significant one. What brings the various categories of duress together, and justifies their treatment under a heading of ‘improper pressure’,94 is that the obligation to make restitution is imposed, independently of proof of an existing legal wrong, by reference to the injustice of the defendant’s receipt. Thus, in an independent claim for restitution, even one associated with conduct which may amount to a wrong, the mere association with a wrong does not signify that a claim in restitution is one for damages. A second type of case is where the plaintiff places more direct reliance on the defendant’s wrong, where the claim depends on the defendant’s conduct falling within an established category of wrong. These are cases where the plaintiff is entitled to rely on the wrong as a basis for claiming restitution, where the enrichment of the defendant is a direct consequence of the wrong. The principal examples are the situations where the plaintiff was, under the law of quasi-contract, regarded as entitled to bring an action for money had and received as an alternative to a claim for damages.95 Thus, where the defendant converted the plaintiff’s goods by sale, and thereby obtained a benefit, the action for money had and received was available as an alternative to the action (in tort) for damages.96 A third type of case is where the claim for restitution is a claim for restitutionary damages (or an account of profits) based on the commission of a wrong. Here the claim is also a dependent one, but the basis of enforcement of the defendant’s duty to make restitution is a secondary obligation. It is this type of case which we are mainly concerned to investigate in this Part of the book. The important feature is that the claim is not an independent one for restitution so much as a

claim to a gain-based remedy (usually for restitutionary damages or an account of profits) dependent on the commission of a wrong. [1515] Alternative claims. In any given fact situation, a plaintiff may be presented with the opportunity to make alternative claims. Sometimes the [page 637] different claims will lead to different results. Alternatively, the results may be identical, even though based on different causes of action.97 A relevant example arises where a defendant, obliged to make restitution to a plaintiff in respect of a benefit obtained or conferred, can also be sued in a tort action. Thus, the one set of facts may present A with the opportunity to make alternative claims for restitution or for damages. Similarly, assume that A confers a benefit on B in performing a contract which is subsequently discharged by A for breach by B prior to B performing the obligation to provide the agreed return for the benefit. There is no doubt that A is entitled to make a claim in respect of that benefit. If the claim is brought in restitution the basis is the benefit which B received, but has not paid for. It may, for example, be recovered in a claim based on total failure of the agreed return.98 Equally, however, since B’s benefit may also be regarded as equivalent to A’s loss, A may be awarded contractual damages in an amount equal to the benefit. Where the claim is in restitution, B’s liability is a primary one. On the other hand, where the claim is for damages for breach of contract, the obligation of B to pay compensation is a secondary one.99 More relevant are alternative claims which lie within the law of restitution itself. For example, if A is induced by the fraud of B to part with a sum of money, A may recover that money in an action for restitution based on the wrong, or recover the sum as an independent claim based on the injustice of the receipt.100 Another type of example commonly arises in respect of dealings with property. For example, where a defendant converts the plaintiff’s goods by sale, and receives a

payment from a third party, the plaintiff has alternative claims to recover the money obtained as restitution or damages for the conversion. Since the sale price both evidences the value of the goods at the time of conversion and the sum received, tort damages assessed on a restitutionary or compensatory basis will usually be the same amount. [1516] Implications. The examples given above are significant in a number of respects. First, the improper pressure example101 indicates that the fact that the defendant has committed a wrong does not of itself imply that the plaintiff must rely on the wrong to obtain restitution. Conversely, the circumstances may be such that there is no claim for restitution, even though a benefit was conferred and a wrong has been committed. An example is where there is merely a partial failure of the agreed return, but the defendant breached the contract. Second, it also follows from the improper pressure example that the mere fact that an independent claim for restitution is associated with what we might describe as wrongful conduct does not signify that the plaintiff may make alternative claims. For example, although duress may lead to conferral of a benefit which triggers a right to restitution, because duress may or may not amount to legal wrong102 it does not necessarily give rise to a right to [page 638] claim damages. However, an alternative claim for damages will be available if a wrong sounding in damages has been committed. Third, an alternative claim for damages is not necessarily, or even usually, one for restitutionary damages. As the breach of contract example103 shows, the amount of the benefit conferred may be recoverable either as restitution or as compensatory damages: the measure of compensation may be equal to the unjust enrichment of the defendant. Since alternative claims for restitution or damages may arise simply because a benefit recoverable as restitution also amounts to a loss recoverable as damages, it is unnecessary to conceive of all

dependent claims (based on the wrong) as claims for damages assessed by reference to a benefit obtained.104 This is not restricted to contract. For example, where a defendant converts the plaintiff’s property by selling it, compensation equal to the value of the property may be claimed. Fourth, although in many cases the plaintiff will be presented with alternative claims, this is, obviously, not necessarily the case. [1517] Senses of ‘waiver of tort’. The distinction between dependent and independent claims, and the idea that particular fact situations may give rise to alternative claims105 are central to the notion of the so-called ‘waiver of tort’.106 The starting point is the (now) wellestablished rule that a plaintiff may sue in the alternative for inconsistent remedies. This is the position, for example, with alternative claims for damages and for account of profits in intellectual property cases.107 No election between such remedies need be made until the plaintiff applies for judgment.108 The same is true, with respect to a tort, in relation to alternative claims for damages and for restitution. Thus, when it is said that a plaintiff who recovers in restitution a benefit which accrued to the defendant by reason of the wrong ‘waives’ the tort, nothing more is conveyed than that there has been an election in favour of restitution rather than damages. There is no better context in which to summarise the law than by reference to the decision in which ‘waiver’ was authoritatively explained, namely, United Australia Ltd v Barclays Bank Ltd.109 In the United Australia case the appellant before the House of Lords (United Australia) was payee of a cheque for £1900 payable to its order. It was received and indorsed by one Emons (United Australia’s secretary) in favour of MFG Trust Ltd (MFG). Emons had no authority to indorse the cheque. Subsequently, the cheque was received by the respondent (Barclays), which collected the cheque and paid out on it by crediting the account of MFG at one of their branches. By presenting the cheque, and receiving the proceeds, MFG became liable to United Australia in both tort (for conversion), and in restitution (for money had and received). Originally, United Australia

[page 639] sued MFG for the amount of the cheque, rightly asserting that the amount received could be recovered as money lent or money had and received. This action was discontinued before judgment. Subsequently, United Australia sued Barclays for damages in conversion. The defence, upheld by the trial judge and the Court of Appeal,110 was that United Australia had ‘waived’ the tort committed by Barclays by suing MFG in restitution. Treating waiver of tort as a species of election between remedies, the House of Lords held that the defence failed. Since the MFG claims had never been brought to judgment, United Australia had made no election between remedies.111 Accordingly, Barclays was liable to United Australia in conversion. In the majority of its senses, waiver of tort does not extinguish the wrong. We may, with the guidance of the United Australia case, distinguish the various claims. First, where by virtue of a wrong such as conversion the defendant obtains a benefit, the plaintiff may sue in restitution on the basis that the enrichment resulted from the wrong. In these cases the claim in restitution does not involve any adoption or ratification of the wrongful conduct. Although, on one view, the wrong is an integral part of the plaintiff’s claim, the liability for the tort is not extinguished until restitution is recovered. In the United Australia case, had the claim against MFG been brought to judgment, reliance could have been placed on the wrong which it committed in receiving the proceeds of the cheque. United Australia was entitled to sue MFG in restitution for money had and received, relying on the wrong not for the purpose of establishing a claim for damages, but instead for the purpose of establishing their prima facie claim to restitution. The election to take judgment against MFG would then have precluded any claim against Barclays for the same sum as a loss suffered.112 To talk of ‘waiver’ is misleading because it is apt to give the impression (wrongly) that the tort plays no part in the claim. Any conception of a claim based on ‘waiver of tort’ as necessarily involving a denial that a wrong has been committed is seriously erroneous.

Second, in any case where restitutionary damages are available, there may or may not be a tort. But the claim is necessarily based on the wrong and there is no ‘waiver’. Again, therefore, the liability for the wrong is extinguished only when judgment is obtained. The same is true, of course, where the claim is an ordinary one for compensation. Third, and arguably clearest of all, the wrong may play no role at all, since an independent claim for restitution may be available. Thus, in a case where the defendant has been enriched by the plaintiff, the plaintiff may choose simply to ignore any wrong, or to rely on it as part of the proof of the unjust factor in an unjust enrichment analysis. This is the position, for example, where the basis for the claim is mistake, but the mistake has arisen by reason of the defendant’s deceit. The mistake claim is for restitution not damages, and it does not depend on the plaintiff establishing that the conduct of the defendant was such as to give rise to alternative (dependent) claims for restitution and damages. Moreover, it will often be open to the plaintiff to establish an additional loss, as where an unprofitable contract is induced by [page 640] the deceit, so that the tort is not necessarily ‘waived’ by obtaining restitution following a rescission of the contract. There are, however, two other types of case. Thus, fourth, there are cases where the plaintiff is able to ratify the defendant’s conduct.113 This may arise where a defendant deals with a plaintiff’s property by holding itself out as agent for the plaintiff. If the plaintiff adopts the transaction the plaintiff treats the wrongful disposition as a valid one, and relies on the principal–agent relation as a basis for recovery of what the defendant received. In these cases, relatively narrow in their scope, ‘waiver of tort’ does not in terms involve reliance on the wrong. However, the plaintiff’s election can be said to extinguish the wrong or, perhaps more accurately, to treat the conduct in question as not amounting to a wrong at all.114

Fifth, there are cases in which the law permits recovery of restitution, on the basis that a particular wrong has been committed, but independently of the idea of waiver of tort. Thus, the ‘bribe’ cases115 appear to illustrate dependent claims,116 since the defendant’s wrong is the basis for the plaintiff’s claim to restitution. However, the courts have not adopted the waiver of tort analysis illustrated by United Australia to explain such cases. [1518] Claims against third parties. Restitutionary claims based on wrongs committed are sometimes brought against third parties. Where relevant these are discussed in subsequent chapters.117 For present purposes three points may be made. First, the most obvious case where a third party can be sued for restitution in relation to a wrong committed is where the third party actively participated in the commission of the wrong.118 Second, the third party may be a person who has received part or all of the proceeds of a wrong from the wrongdoer. Here it may be necessary to take account of a number of factors. These include whether the third party knew of the wrong, whether the benefit in respect of which the claim is made may be traced into the hands of the third party119 and whether the defences of consideration or bona fide purchaser apply.120 Third, there will be cases where the plaintiff’s title to money or another asset will survive despite its passing to another person or changing form. Restitution on this basis is addressed in Chapter 3. [page 641]

4. When Reliance on a Wrong is Permitted (a) General

[1519] Personal claims. The impact of the above analysis121 is that in a situation where the defendant has committed a wrong to the plaintiff, there may, potentially, be six different personal claims:122 (1) a claim for restitution relying, not on the wrong, but directly (and independently) on the unjust enrichment of the defendant; (2) a claim for restitution relying directly (and dependently) on the wrong; (3) a claim for (compensatory) damages assessed on the basis of the plaintiff’s loss; (4) a claim for damages assessed on a restitutionary basis, by reference to the profit which the defendant obtained by reason of the wrong; (5) a claim for an account of profit on the basis that the defendant is subject to a duty to account, for example relying on a wrong in respect of intellectual property; and (6) (but rarely) a claim based on the defendant’s conduct in dealing with the plaintiff’s property, treating the dealing as lawful and, by ratifying it, extinguishing the wrong. Although for historical reasons we tend to regard these claims as very different categories, it can be seen that the wrong in question is ‘waived’ only in claim (6). A claim in restitution may be described as a ‘waiver’, but this is a loose and often an unhelpful or erroneous description. It is an unhelpful description in claim (1), where the wrong is the unjust factor in a case of unjust enrichment. It is an erroneous description in claims (2), (4) and (5) where the claim is for restitution or for damages assessed on a restitutionary basis. However, it is also true that the scope for these claims is generally circumscribed by the traditional categorisations of wrongs as tortious, equitable and contractual. [1520] No need for specific receipt. Jackson argued123 that the plaintiff must show that a specific sum of money had been received, or would be deemed to have been received, before there could be a waiver of tort. He relied on several old cases, including two in which there are statements to the effect that a sheriff who took goods in execution,

without having yet sold them, was not liable for their value as money had and received.124 There is some support in the cases for Jackson’s thesis, albeit that some sales were presumed rather than proved.125 We would, however, doubt if this requirement was ever the ‘guiding thread’ which Jackson claimed126 explained what torts were ‘waivable’. It certainly did not explain early cases [page 642] where the value of labour was recoverable as money had and received against a defendant who enticed away the plaintiff’s apprentice.127 If the analogy with equitable wrongs that we discuss in this Part is a valid one, they further undermine Jackson’s thesis as a description of the current law under which account must also be taken of claims for restitutionary damages or an account of profits. Jackson used the requirement for an actual or constructive receipt to support his view that some torts, like defamation, cannot be waived.128 However, such an irrelevant fiction should not impede the principled development of this body of law. The need to prove a ‘receipt’ as an essential step to any category of restitutionary remedy has been conclusively exploded.129 [1521] Satisfaction and ratification. Satisfaction, not merely entry of judgment, is generally necessary before a claim against another wrongdoer (tortious or otherwise) is barred in relation to the same facts.130 However, the case of a true ratification131 needs to be distinguished. In Rinbar Pty Ltd (in liq) v Nichevich132 a receiver was appointed over the plaintiff’s assets pursuant to a mortgage debenture, following the plaintiff’s default. The receiver carried on trading for six months and sustained a loss. The plaintiff’s liquidator sued the receiver, claiming that the debenture was void against the liquidator (because the plaintiff was insolvent when the debenture was given), and arguing that the receiver had gone into possession as a trespasser,

thereby converting the plaintiff’s assets. It was held that the plaintiff had elected to treat the defendant as its agent when it had full knowledge of what occurred during the agency, and that this amounted to a ratification of the defendant’s actions during the receivership subject only to his giving a proper accounting, which he had given. This is an example of what Professor Birks called ‘extinctive ratification’, whereby an act which would otherwise have amounted to a wrong is fully adopted and ratified by the injured party.133

(b) Extent of Recognition [1522] Introduction. The types of wrongs which may give rise to a restitutionary response are not limited to fixed categories. The controversial [page 643] claim is that which seeks to have damages assessed on a restitutionary basis where there is, or may be, no loss to the plaintiff. In analyses made in order to provide a proper theoretical basis for restitution for wrongs, attempts have necessarily been made to explain why a restitutionary analysis applies in some situations but not others. It is, for example, clear that while damages for the tort of conversion may be relied on for a restitutionary claim in a wide range of situations, the conventional wisdom is that such claims rarely arise following a breach of contract.134 Faced with the body of case law which we address in the succeeding chapters of this Part of the work, commentators are divided as to the scope of the concept of restitution for wrongs. Several possible approaches are summarised below. [1523] Universal approach. Is there any category of legal or equitable wrong which should not be capable of sustaining a restitutionary remedy in an appropriate case? One possible approach is to say, simply, that any wrong is in principle capable of leading to a

restitutionary response. On this approach categorisation is in effect rejected, since on a given set of facts in which a wrong of any type is established, damages may be obtained on a restitutionary basis.135 We are aware of no Australian case that excludes any category of wrongs, and we find it is hard to see why any should, in point of principle or precedent. If Phillips v Homfray136 is not followed or correctly ‘distinguished’ it presents no impediment, at least as regards the recovery of restitutionary damages. Since (as we argue elsewhere)137 it is properly seen as a case concerned with the survival of causes of action, it ceases to be authority against the proposition that any wrong is capable of carrying a restitutionary remedy at the election of a plaintiff who can prove that the defendant’s illicit gains exceed the plaintiff’s loss calculated according to the compensatory measure. We may also put aside cases decided on the basis of long discarded pleading rules.138 Lord Nicholls has been at the forefront of recent efforts in England to fuse legal and equitable doctrines in this field in the interests of rationality and coherence. We draw attention to his remarks in Attorney-General v Blake139 and Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners140 in their particular contexts. All other approaches require a categorisation of one sort or another. [1524] Anti-enrichment wrongs. The late Professor Birks considered that some wrongs are amenable to a restitutionary analysis (‘anti-enrichment’ wrongs), others not.141 The fact that a particular wrong has not been the subject of precedents recognising restitutionary damages is not conclusive. What matters is whether the wrong is in fact of an anti-enrichment type. Moreover, reliance may be placed not just on the nature of the wrong but [page 644] also on the nature of the conduct, that is, whether the wrong is an

intentional one, or committed with the object of obtaining the profit.142 It is unclear whether the profits from defamation may be recovered.143 There are suggestions in some texts that assault could never be a ‘waivable’ tort.144 These find no judicial support, save in obiter dicta in Phillips v Homfray.145 It is difficult to see why any profits gained from an assault should not be recoverable by the victim, if to refuse relief would leave the wrongdoer in possession of an illicitly gained windfall. In Hambley v Trott146 Lord Mansfield said:147 If it is a sort of injury by which the offender acquires no gain to himself at the expense of the sufferer, as beating or imprisoning a man, etc, there, the person injured has only a reparation for the delictum in damages to be assessed by a jury. But, where besides the crime, property is acquired which benefits the testator, there an action for the value of the property shall survive against the executor.

In making this statement, Lord Mansfield was merely asserting that battery and false imprisonment do not usually result in any profit to the wrongdoer. If the victim of a kidnapping can recover the ransom, why cannot the victim of a contract bashing force the assailant to disgorge the consideration paid? If a bribe to procure a breach of fiduciary duty is susceptible to a restitutionary remedy, why not also the consideration paid to a contracted assailant? A tort which is also a crime should surely be treated, civilly, in the same way as a dishonest breach of trust, in which the wrongdoer is stripped of all profit in favour of the victim. If the victim is killed, then the murderer will be stripped of the unlawful gain,148 although in the absence of a victim to sue, public policy diverts the unlawful gain to the person who (apart from the killer) is entitled to the victim’s estate. [1525] Harm to an institution. Attention might be directed to the institutional basis for the cause of action.149 On this approach, whether restitutionary damages are available depends on the institutional setting of the wrong, so that damages claims based on breach of contract are distinguishable from claims based on breach of a fiduciary duty. In an illuminating article Jackman150 supports the traditional view that restitution is not available for benefits made by every legal wrong. He refers in particular to breach of contract and certain torts (such as defamation) as exceptions. To him,151 the rationale for the right to

restitution for wrongs (where available) is the protection of a variety of private legal facilities, or facilitative institutions, [page 645] namely, private property, relationships of trust and confidence, and (perhaps with some qualification) contracts. Such facilities require protection against those who seek to take the benefits of an institution without submitting to the burdens thereof, and in this way the right to restitution for a wrong is triggered not by harm to a person as such, but by harm to an institution. This explanation of most of the cases where restitution for wrongs is clearly available does not, however, prove the non-availability of restitution for other categories of wrongs. Citing Birks,152 Jackman seeks to dispose of cases allowing restitution for deceit, extortion and inducing breach of contract by showing that they are explicable on other bases (for example, mistake and improper pressure). But surely this presupposes that restitution cases fit only within a single legal pigeon-hole, something which the cases discussed in this Part certainly contradict. Jackman’s emphatic rejection of breach of contract as a restitution-yielding wrong unless the breach involves a concurrent infringement of proprietary rights or fiduciary obligations153 must now be read subject to Attorney-General v Blake.154 However, this may be due simply to conservatism rather than an intrinsic difference between breach of contract and other cases.155 Professor Burrows also takes a ‘conservative’ approach to restitution for wrongs, in the light of the existing law.156 He suggests that ‘additional reasons for restitution’ are needed, beyond the mere presence of a tort. Protecting property and deterring cynical wrongdoing should be important, but not conclusive, markers of the law’s development in this field.157 If the courts are willing to go to the lengths of punishing the profitseeking deliberate tortfeasor, it arguably follows that they ought to be

prepared to go to the lesser length of awarding a restitutionary remedy stripping the deliberate tortfeasor of some or all of the ill-gotten gains. If the wrongdoer’s profit motive is a ground for awarding exemplary damages, why then should not the more finely tuned remedy of damages according to the restitutionary measure referable to the wrongdoer’s profit be available in all tort cases if the circumstances dictate disgorgement of the benefit derived thereby (perhaps with accounting for profits reserved for cynical or conscious wrongdoing)?158 Restitutionary damages are certainly available for equitable wrongs and for breaches of contract in some situations.159 [1526] Conclusion. We do not, in terms, find it necessary to choose between these approaches. Accordingly, although we do not attempt to state in the abstract what wrongs are susceptible to a restitutionary analysis, the structure of this Part of the work relies on established cases which may, by omission, exclude certain categories of wrongs. However, we do not present [page 646] this as part of a theoretical framework which excludes certain wrongs, and we are firmly of the view that the law has developed to the stage where it is no longer possible for courts simply to take refuge in the idea that damages are generally compensatory. Some other explanation must be found, and it may be that in some cases the nature of the wrong, or the institutional setting, will be a part of that explanation. To contemplate that any tort, or other species of wrong, is capable of carrying a personal or proprietary restitutionary remedy in appropriate circumstances, does not guarantee the availability of gain-based remedies in every case. Nor does it foreclose the application of particular policies of, for example, the law of torts. That body of rules has a well-defined set of principles relating to collateral benefits received by a plaintiff which must be brought into account, and benefits which will not go to reduce the measure of compensatory damages.160

For reasons similar to those discussed with respect to overcoming statutory bars,161 there will be occasions when the availability of a restitutionary remedy ought not to permit inappropriate recovery. There is no reason to think that the principles of restitution would trample on the appropriate policies of the law of torts.162 One instance of their sensitivity about ‘gold digging’ plaintiffs can be seen in the rules relating to election and the prevention of double recovery.163 We should, however, make further reference to some relevant policy perspectives, as well as to problems of discretion and uncertainty.

(c) Policy, Discretion and Uncertainty [1527] Policy perspectives. If the principle that persons should not be permitted to take advantage of their own wrongs164 were an overriding principle of law rather than an ideal, the analysis of restitution for wrongs would be simple. We would accept as a general principle that whenever B commits a wrong to A and thereby obtains a benefit, A is entitled to recover the amount of that benefit as restitution or damages. The absence of an overriding principle of law to this effect, and the fact that the law does not yet appear to regard all wrongs as generating a right to claim restitutionary damages, combine to imply that there is no single policy imperative. In any event, the ideal that persons should not profit from their wrongs must in some cases be balanced against the policy of encouraging profitable economic activity.165 In the general survey of the place of restitution in the common law of civil obligations,166 attention was drawn to the (apparently) diverse concerns pursued by the law of tort, by equity and by the law of contract. Although the principle that persons should not be permitted to take advantage of their own wrongs is accepted in all these branches of the law, different results may flow, since the application of the principle is affected by more specific concerns. Thus, the obligation of a fiduciary to account for profits made in

[page 647] breach of that duty is justified (primarily) on the ground that a fiduciary is bound to act in the beneficiary’s interests. On the other hand, the consensual nature of the institution of contract suggests that an award must give effect to the intention of the parties. There may be an institutional basis for denying the claim for restitutionary damages in contract. Thus, a plaintiff who wishes to recover a benefit which the defendant has obtained for itself, or to recover damages otherwise than on a compensatory basis, should have obtained the defendant’s agreement when the contract was negotiated.167 In the law of torts, there appear to be particular bases on which restitutionary damages may be awarded. Thus, where the tort is an intentional one, or arises from a wrongful dealing with the plaintiff’s property, restitutionary damages may be awarded. Where neither basis is present, as where the wrong is simply the breach of a duty of care, the law may possibly deny the claim for restitutionary damages.168 With torts, it must also be remembered that there are many different torts, serving various functions and a range of policy bases.169 The gravitational pull of statutes regulating defamation, unintentional personal injury and other torts needs also to be borne in mind. Account must also be taken of the need for relief by way of damages to be regulated by factors such as causation and remoteness. [1528] Causation and remoteness. Much of the law of damages is concerned with the extent of the defendant’s responsibility rather than the measure of the plaintiff’s loss. Two major concepts are causation and remoteness, which give effect to concerns that compensation should not crush a defendant, or unduly deter the withdrawal from an uneconomic venture. The defendant should only be responsible for loss and damage caused by the breach, and the defendant should not bear responsibility for loss or damage which is too remote.170 In addition, but with more limited impact, concepts such as contributory negligence

and mitigation of loss may determine the extent of the defendant’s responsibility. Because these concepts are directed at the extent of the defendant’s liability to make compensation, and because the recovery of restitutionary damages under common law principles is a fairly rare phenomenon, they have not been the subject of detailed discussion in the restitution cases. No doubt, as the law develops, similar ideas will have to be employed in the context of claims for restitutionary damages. It may be difficult to show that the benefit sought to be recovered by the victim of a tort in a claim for restitution is the direct product of the legal wrong, although the law should, we believe, take a liberal approach in favour of the victims of wrongdoing.171 A widelyheld view that criminals who make profits from writing about their crimes are earning from their criminal conduct as distinct from their literary [page 648] efforts, has led to legislation designed to strip the literary proceeds of crime in some jurisdictions.172 The idea of remoteness may also be important, since, if causation were the sole criterion in relation to profits made following breach, the relief might well be far too extensive.173 Professor Birks foreshadowed the need for the law to develop ‘rules for remoteness of gain’.174 There are signs of growth in some areas, although as yet critical questions such as onus and the relevance of judicial discretion need to be worked out or at least identified more clearly.175 [1529] Discretion and uncertainty. Opinions differ on whether, and to what extent, the law of restitution ought to take upon itself the task of breaking through the barriers constructed by the (historical) development of different causes of action, different institutions and the variety of policy concerns. However, in the modern law of civil obligations there is much to be said for paying greater attention to the

principle that persons should not be permitted to take advantage of their own wrongs. Even so, the recognition of a general right to gainbased remedies must deal with criticism from the perspectives of discretion and uncertainty. Where a wrong is committed, there may be a choice to be made between compensation and restitution. Who makes the choice? On what basis is the choice made? We have already176 drawn attention to the fact that, where only one cause of action is involved, there is an argument that the choice rests with the court: it appears that the plaintiff cannot claim a ‘right’ to have damages assessed on one basis rather than another. It is clear that we need principles to govern that choice. To suggest that restitutionary damages may be awarded or withheld on the basis of an unprincipled curial discretion is inconsistent with the general approach to remedies. Therefore, the choice must be based on principle.177 By contrast with the long history of compensation, general discussion of restitutionary relief is a recent phenomenon. Those who advocate, for example, that restitutionary damages should be awarded for breach of contract, or that an award of an account of profits on an equitable basis is an available and appropriate response to certain torts, look to be meddlers. Some might go so far as to say that they seek to subvert established principle. At the very least, they create an uncertainty. One of the reasons why Australian law has been cautious in allowing punitive damages is the difficulty in their prediction. Established or prima facie measures for contract damages, regulated by causation and remoteness, contrast with restitutionary damages, where the established principles are few.178 [page 649] If the idea of restitutionary damages were to be fully accepted, it might result in much simplification and unification, not only in the labels which we attach to wrongs and the remedies which they provide, but also by requiring a reconsideration of the traditional perspective on

compensation in all its various manifestations. It ought to be possible to establish principles to control uncertainty, as the claims are extended into new areas. While no one would suggest that all the situations in which damages may be awarded can be reduced to a handful of principles applicable to all the various kinds of wrong, the idea that compensation marks out the full extent of relief is so obviously an oversimplification that it cannot itself be the reason for denying restitutionary damages.

5. Significance of Gain-based Remedies [1530] Introduction. In the next chapter we address ‘waiver of 179 tort’. Those who analyse this idea have spilt much ink discussing what torts are ‘waivable’. This was necessary to the extent that procedural and substantive advantages flowed from escaping the tortious straitjacket. Many of the advantages of ‘waiving a tort’ noted in early cases have ceased to have any application.180 However, it remains necessary to identify the advantages (and disadvantages) of pursuing direct restitutionary relief in relation to a wrongdoing and the advantages (and disadvantages) of pursuing restitutionary damages in relation to a wrongdoing that is tortious, criminal, equitable, statutory, or contractual, or any combination of these overlapping categories. [1531] Disgorgement of the defendant’s enrichment. Damages are almost always compensatory.181 However, compensation may be assessed in various ways.182 As a general rule, the basis for assessment in Australian law is the plaintiff’s loss.183 What unites all of the cases on damages discussed in this Part is the aim of the plaintiff to recover more than compensatory damages or equitable compensation payable according to traditional (compensatory) notions. The major modern role for the range of alternative restitutionary remedies discussed (restitutionary damages, equitable compensation going beyond redressing loss, account of profits, constructive trust, and the obligation

to pay the reasonable value of goods, land or services wrongfully intercepted or used by the defendant) is the desire to escape the difficulty or limits of proving the extent of the plaintiff’s loss. In Mason v New South Wales184 Windeyer J said:185 If the defendant be improperly enriched, on what legal principle can it claim to retain its ill-gotten gains merely because the plaintiffs have not been correspondingly impoverished? The concept of impoverishment as a

[page 650] correlation of enrichment may have some place in some fields of continental law. It is foreign to our law.

This remains a quizzical generalisation. In any event, it is hoped that the analysis in this Part will underline the need to see civil remedies as themselves offering a range of alternative responses to different types of wrong, with not every remedy necessarily being available in relation to every type of wrong. [1532] Proof in bankruptcy and company liquidation. Section 82(2) of the Bankruptcy Act 1966 (Cth)186 expressly excludes the right to prove in respect of ‘demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise, or breach of trust’. One effect is to exclude claims for damages in tort where these are unliquidated at the time of the commencement of the bankruptcy or winding up.187 As long ago as 1796 it was recognised that one reason for waiving the tort of trover (conversion), and proving as upon money had and received, was to enable a proof of debt that would not otherwise be permitted.188 The settled approach to s 82(2) (and its former English189 counterpart) is to give a narrow interpretation to its exclusionary aspect. Thus, various claims with respect to wrongs, some at least of which are restitutionary and which might, if framed otherwise, be seen as claims in damages for tort, have been held to be outside the scope of s 82(2). These include claims in respect of secret profits for breach of fiduciary duty;190 for the profits made by infringing

a patent;191 for damages in respect of fraudulent misrepresentation inducing a contract;192 and for statutory contribution or indemnity against a joint tortfeasor.193 [1533] Overcoming certain statutory bars. Restitutionary claims have been permitted, as alternatives to claims pleaded in tort, where the consequence has been to overcome a shorter limitation period applicable to tort.194 Whether this is further demonstration that any action upon a ‘waiver of tort’ is not truly parasitic upon the tort;195 whether the cases turn on their statutory context; or whether they are wrongly decided are [page 651] issues that are addressed when we deal with limitation of actions.196 But modern Australian law tends to set its face against formal evasions of statutory policies, even at the suit of plaintiffs who generally are free to frame claims in such a way as to maximise their recovery. In principle, the reason behind a statutory bar to one form of proceeding should be examined before it is held that it may be escaped by resort to another. This generally is how the modern law proceeds in analogous circumstances.197 And there is judicial support for a similar approach to attempts to ‘waive’ tortious or contractual claims that are barred by statute for lapse of time or other reasons.198 Nevertheless, one cannot ignore entirely the critical legal event which gives rise to the claim pressed by the plaintiff in the attempt to escape a bar such as the statute of limitations.199 By fixing attention on the plaintiff’s claim for restitution, a claim which seeks the disgorgement of the defendant’s profits derived from the wrong, it may be hard for the defendant to invoke the form or substance of a statutory bar. While the claim may be triggered by the wrong done to the plaintiff, the enlivening legal event giving rise to the claim in restitution is the profit accruing. Two defendants may commit identical wrongs to the same plaintiff, and yet one only may profit thereby. To adapt the facts of

Sutton Motors Pty Ltd v Campbell,200 two different models of cars belonging to the plaintiff might be converted by the same defendant and sold, any action based on the conversion itself being statute-barred. If the sale of one car brought a windfall to the defendant, whereas the other car was sold at the same value as it had when converted, why should the plaintiff not be allowed to recover at least the profit earned through the sale of the first car at the increased value, claiming (that part of) those proceeds as money had and received? The plaintiff’s claim relating to the second car should remain statute-barred even if the plaintiff seeks to treat the later sale as the critical event giving rise to the claim. Ultimately the policy of the statute must be examined and must prevail if its disclosed purpose strikes at the heart of any alternative restitutionary claim. A system of law that seeks to prevent ‘unjust’ enrichment would fail if it did not tailor its non-statutory remedies to meet the disclosed policy of a clearly analogous statute.201 The duty of a court is ‘to give effect to … a clause of an Act of Parliament, with reference not to the form of the action, but to the substance of the thing done’.202 More generally, the High Court has emphasised that the principles of unjust enrichment [page 652] ordinarily require that regard be paid to matters of substance rather than technical form.203 [1534] Other advantages. The victim of at least some torts will be able to pursue a restitutionary claim, for example relating to the proceeds of converted goods, notwithstanding that damages for conversion might be nominal, or not available. In Bavins Junr & Sims v London & South Western Bank Ltd204 a written order to pay money, which was not a cheque, was stolen and collected by the defendant bank on behalf of a customer. The English Court of Appeal reserved the question whether, in an action of conversion, the plaintiffs were

entitled to recover more than nominal damages. However, the plaintiffs succeeded in recovering the amount received by the defendant as money had and received. A defence analogous to change of position failed, because the defendant had done no more than credit its customer with the proceeds of the collected money order: no payment over or other transaction amounting to a settlement of account had occurred by the time the plaintiff sued.205 A bare cause of action for tort is not assignable.206 However, the right to pursue a restitutionary claim is capable of assignment if the assignee has a genuine commercial interest in the subject matter of the assignment207 and it would not, in our view, offend the policy behind the barring of assignment of actions in tort to allow the assignee to sue in such claims.208 [1535] No exemplary damages. Although the wrongdoer who is stripped of a benefit by the imposition of a restitutionary remedy may see the remedy as punitive or deterrent, that is not its primary purpose.209 Restitutionary damages, assessed by reference to the defendant’s benefit, exclude ex hypothesi an added punitive element. The debate within the court and the decision in Harris v Digital Pulse Pty Ltd210 show that a claim for exemplary damages in a matter that has traditionally attracted only an equitable restitutionary remedy is controversial. Restitutionary remedies involve the recoupment of the value of the money or other benefit received by the defendant, albeit calculated generously in favour of the plaintiff and carrying interest.211 By contrast, a judge or jury’s capacity to award exemplary damages is not so closely confined.212 [page 653] [1536] No double recovery. One object of election (between remedies) is to prevent double recovery. Since plaintiffs as well as defendants must not be ‘unjustly enriched’, restitution is concerned to avoid double recovery. This is not a principle which is peculiar to

restitution, for equity has long exercised jurisdiction to prevent double satisfaction.213 In Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd214 an agent of the Housing Society was bribed to arrange for the briber to purchase land at a low price and then immediately to resell it to the Housing Society at a profit. The bribe was $122,000 and the profit on resale $443,000. The Housing Society sued the agent both for the loss suffered and for the amount of the bribe. The Federal Court of Malaysia gave judgment for both sums cumulatively. The Privy Council confirmed that the agent and the briber were separately liable (in restitution) for the bribe, and also jointly liable (in tort) for deceit. However the judgment against the dishonest agent was reduced to $443,000, the measure of damages in deceit. The Housing Society was deemed to have been put to election, and to have chosen the greater measure available. In cases where claims may legitimately be combined, one may need to be set off against the other, or at least taken into account. Thus, a plaintiff cannot recover both equitable compensation and an account of profits for breach of fiduciary duty.215 The idea is a general one, not limited to cases where a dependent restitutionary claim is at issue.216 However, a principal who rescinds a transaction tainted by a bribe does not have to give credit for the bribe even where the bribe had already been recovered from the agent.217 1.

Birks, Introduction, p 313.

2.

Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363 at 374; Bryson v Bryant (1992) 29 NSWLR 188 at 222; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 73 per Mason CJ. See [1503].

3. 4.

5.

Peter Birks, ‘Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law and Equity’ [1987] LMCLQ 421; P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, 1992, p 55. See, eg Beatson, especially pp 235–43. Contrast, eg I M Jackman, ‘Restitution for Wrongs’ [1989] CLJ 302; Mr Justice W M C Gummow, ‘Unjust Enrichment, Restitution and Proprietary Remedies’ in Finn, Essays, p 47.

6. 7.

See, eg [1629], [1637], [1702], [1718]. See generally Chapter 16. Some torts are also crimes.

8.

See generally Chapter 17. Some breaches of fiduciary duty and infringements of intellectual property rights are also torts and/or crimes.

9.

See generally Chapter 18.

10. See, eg Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298. 11. See Broom’s Legal Maxims, ed R H Kersley, 10th ed, pp 191ff; Bennion, Statutory Interpretation, 6th ed, s 349. See also Attorney-General for Hong Kong v Reid [1994] 1 AC 324 at 336; Sinanian v EKS Carpentry Pty Ltd (1997) 15 NSWCCR 132. 12. The parties’ agreement may have infringed a statutory rule, and be ineffective on that basis. See Cheall v Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180 at 188–9. 13. [1990] 1 AC 109 at 286. 14. See further [1902]. 15. See [249], [1727]–[1734]. 16. See also [238], [246]. 17. See [1624]. 18. See [1710]–[1714]. 19. See [237]. 20. See [1508], [1720], [1722]. 21. See [250]. See generally Keith Mason, ‘Deconstructing Constructive Trusts in Australia’ (2010) 4 J Eq 98. 22. See [1508]. 23. Cf the debate between Lord Nicholls and Lord Walker in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 as to whether an entitlement to compound interest should be located at common law or in equity on this basis. 24. See Chapter 19. 25. See [1903]. 26. See, eg [1125]. 27. Chapter 19 is the exception. 28. See generally Chapter 13. 29. See generally [1431]–[1439]. 30. See generally [2324]–[2335]. 31. See generally Chapters 16 and 26. 32. See [1717]. 33. From this perspective, ‘damages’ includes equitable compensation which may, like common law damages, sometimes be assessed on a restitutionary basis. 34. (2001) 110 FCR 157; [2001] FCA 1040 at [160]. 35. See [1509]. 36. See generally Bellgrove v Eldridge (1954) 90 CLR 613 at 616–17; Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at 191; Wenham v Ella (1972) 127 CLR 454 at 466; Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 145 CLR 625 at 637; Johnson v Perez (1988) 166 CLR 351 at 355, 367, 371; MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 664; Commonwealth of Australia v Amann Aviation Pty Ltd (1991)

174 CLR 64 at 116; Manser v Spry (1994) 181 CLR 428 at 434–5; 124 ALR 539 at 543. 37. See Johnson v Agnew [1980] AC 367 at 400; William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016 at 1037. Cf Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 245 (equitable compensation is restitution for the value of a loss suffered). See further [1723]–[1726], [1836]. 38. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 39. See also [213], [214], [215]. 40. See Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365 per Parke B (approved Koufos v C Czarnikow Ltd [1969] 1 AC 350 at 414, 420); Wenham v Ella (1972) 127 CLR 454 at 460, 471; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80, 98, 117, 134, 148, 161. 41. See L Fuller and W R Perdue, ‘The Reliance Interest in Contract Damages’ (1936, 1937) 46 Yale LJ 52 and 373. See further [1810]. 42. (1991) 174 CLR 64. 43. Cf Clark v Macourt (2013) 253 CLR 1. See further [1812]. 44. Cf [1821]. 45. See Harvey McGregor, McGregor on Damages, 19th ed, Sweet and Maxwell, 2014, Chapter 14. 46. Both are subjected to a penetrating analysis in P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, p 55. Relief under statute may include ‘damages’. See [1720]–[1721], [1835], [1837]. ‘Compensation’ is the correct expression for the personal monetary remedy available for the breach of purely equitable wrongs. See [1511], [1722]. 47. See [106]. 48. See the Restatement, Third. 49. See also I M Jackman, ‘Restitution for Wrongs’ (1989) 48 CLJ 302; Lionel Smith, ‘The Province of the Law of Restitution’ (1992) 71 Can Bar Rev 672 esp at 683–4, 696; Sarah Worthington, ‘Reconsidering Disgorgement for Wrongs’ (1999) 62 M L R 218. 50. See Lionel Smith, ‘The Province of the Law of Restitution’ (1992) 71 Can Bar Rev 672 esp at 683–4. 51. James Edelman, ‘Gain-Based Remedies for Wrongdoing’ (2000) 74 ALJ 231; James Edelman, ‘Non-compensatory Damages for Breach of Contract and Torts’ (2002) 76 ALJ 328. See also Edelman & Bant, pp 43–8. 52. For examples of remedies of this nature, see [1625], [1626], [1629], [1713]. 53. See [1509]. 54. See [1710]–[1716]. 55. See [1639]. 56. See [1617], [1639], [1710]–[1714]. It will be seen that Australian law is currently hostile to an account of profits as an available remedy for a common law tort. We are critical of this apparently categorical denial (see [1639]). 57. See Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 114, 123. See also Swiss Bank Corp v State Bank of New South Wales (1993) 33 NSWLR 63 at 66–7. Cf

[1711]. The position is qualified in relation to breach of fiduciary duty; see Warman International Ltd v Dwyer (1995) 182 CLR 544 at 556–9; 128 ALR 201 at 208–10. 58. [2001] 1 AC 268 at 284, emphasis in original. 59. See Meagher, Gummow & Lehane, §§26-050-26-055; Sam Doyle and David Wright, ‘Restitutionary Damages: The Unnecessary Remedy?’ (2001) 25 MULR 1. 60. [2008] 1 AC 561; [2007] UKHL 34 at [32] per Lord Hope, [180] per Lord Walker, [230] per Lord Mance. 61. See Restatement, Third, §§40, Comment b; 51. See also I M Jackman, ‘Restitution for Wrongs’ (1989) 48 CLJ 302 esp at 308. 62. See also [1525], [1529], [1535]. A further refinement is the distinction (in tort) between exemplary damages and aggravated damages awarded as compensation; see, eg Lamb v Cotogno (1987) 164 CLR 1 at 8; Myer Stores Ltd v Soo [1991] 2 VR 597 at 602, 609, 633. 63. See Carter on Contract, §41-020. Exemplary damages are also not awarded for contravention of the statutory prohibitions on misleading or deceptive conduct. See Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500; Snyman v Cooper (1989) 91 ALR 209 at 234. 64. Lamb v Cotogno (1987) 164 CLR 1; 74 ALR 188. 65. Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584; Egan v State Transport Authority (1982) 31 SASR 481 at 531–2. 66. XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448; 57 ALR 639. 67. Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157. 68. Gray v Motor Accident Commission (1998) 196 CLR 1; 158 ALR 485. Statute has, however, severely curtailed this situation in the various jurisdictions. 69. Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 185. 70. See, eg Defamation Act 2005 (NSW), s 37. 71. Haines v Bendall (1991) 172 CLR 60 at 63 per Mason CJ, Dawson, Toohey and Gaudron JJ. 72. See further [1525], [1711], [1728]. 73. Hospitality Group Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 at [181] per Emmett J. 74. The Chancery Amendment Act 1858 (UK). See generally McDermott, Equitable Damages. There is evidence of Chancery awarding damages in relation to common law obligations prior to Lord Cairns’ Act. 75. The words in the text are taken from the Supreme Court Act 1970 (NSW), s 68. For the provisions in other jurisdictions see [1720]. 76. Or the provision has been repealed: Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851; Conroy v Lowndes [1958] Qd R 375; Johnson v Agnew [1980] AC 367 at 400. 77. See Meagher, Gummow and Lehane, Chapter 23. See further [1720], [1724]. 78. See further [1719]–[1726], [1835], [1836]. 79. See, eg [1720]. 80. See P M McDermott, ‘Jurisdiction of the Court of Chancery to Award Damages’ (1992)

108 LQR 652. 81. See further [1720], [1836]. 82. Re Dawson (deceased) [1966] 2 NSWR 211; (1966) 84 WN (NSW) 399. See generally [1722]–[1723]. For an early Australian decision, see Robinson v Abbott (1893) 20 VLR 346. 83. See [1725]–[1726]. If an account of profits serves generally to strip profits from a defaulting fiduciary, then it is anomalous to circumscribe equitable power to award compensation in categorical terms. 84. See [1510]. 85. See [1708], [1713], [1721]. 86. For the provisions see [1047], [1315]. 87. See further [1837]. 88. See [1514]. 89. See [1515]. 90. See [132]. 91. See generally on unjust factors Chapter 2. 92. See generally [1632]–[1634], [1636]. Cf [1167] (whether breach of contract the unjust factor in claim for reasonable remuneration). It is not suggested that the categories of improper pressure are confined to pressure amounting to a crime, tort or other wrong. See Chapter 5. 93. See [168], [503], [1403]. 94. See generally Chapter 5. 95. See further on alternative claims [1515], [1536], [1621], [1738]–[1739], [1819]. 96. See [1618]–[1622]. 97. See Birks, Introduction, pp 313ff. 98. See, eg [1120]. 99. See also [212]. 100. Cf Birks, Introduction, pp 314–15. 101. See [1514]. 102. See [219], [1403], [1514]. 103. See [1515]. 104. See further [1810]–[1812], [1818] (compensation assessed by reference to restitution interest). 105. See [1516]–[1517]. See also [220]. 106. A fuller discussion of waiver of tort is at [1618]–[1622]. 107. Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25. See further [1738]–[1739]. 108. See generally Chapter 23. 109. [1941] AC 1. See also Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304 and further [2304], [2313].

110. See [1939] 2 KB 43. 111. See [2313]. 112. See [2313]. 113. See [1521]. 114. See United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 28 per Lord Atkin. 115. See [1714], [1718]. 116. In some situations it will at least be arguable that an independent unjust enrichment claim is available. Cf Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374 at 380. 117. See, eg [1638], [1705], [1841]–[1842]. 118. See eg [1705]. 119. See also on tracing [303], [444]–[447]. 120. See generally Chapter 25. 121. See [1513]–[1518]. 122. Cf Birks, Future, pp 23–4. For proprietary remedies see [242]–[257], [1727]–[1733]. 123. Jackson, pp 76–80. 124. Thurston v Mills (1812) 16 East 254 at 274; 104 ER 1085 at 1092; Swain v Morland (1819) 1 Br & B 370; 129 ER 766. 125. See, eg Longchamp v Kenny (1779) 1 Doug 138; 99 ER 91. 126. Jackson, p 77. 127. Lightly v Clouson (1808) 1 Taunt 112; 127 ER 774; Foster v Stewart (1814) 3 M & S 191; 105 ER 582. The modern counterpart is the tort of inducing a breach of contract, and United States authority permits recovery of profits made from this tort: Federal Sugar Refining Co v United States Sugar Equalization Board 268 F 575 (DC, NY, 1920). See also Restatement, Third, §44. See further [1639] where we point out that in the recent decision in Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 Emmett J would have followed this American line, but he was in the minority. 128. See also [1524]. 129. See Beatson, pp 226–30. 130. United Australia Ltd v Barclays Bank Ltd [1941] AC 1; Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374 at 382, 383. Cf O’Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 258–9 (reversed on other grounds (1937) 56 CLR 464). Generally as to double satisfaction see [1536]. In Chapter 16 we explain why we have abandoned waiver of tort as a useful tool. 131. That is, category (6) in our list in [1519]. 132. (1987) 11 ACLR 737. 133. Birks, Introduction, pp 315–16. See also Verschures Creameries Ltd v Hull & Netherlands SS Co Ltd [1921] 2 KB 608. 134. Cf [1166]–[1168] (quantum meruit against party in breach). 135. Cf Restatement, Third, §44. 136. (1883) 24 Ch D 439 (see [1620]).

137. See [1617]. 138. See, eg Lindon v Hooper (1776) 1 Cowp 414; 98 ER 1160. See generally S Hedley, ‘The Myth of “Waiver of Tort”’ (1984) 100 LQR 653. 139. [2001] 1 AC 268 at 284–5. 140. [2008] 1 AC 561 at 604–5; [2007] UKHL 34 at [110]–[111]. 141. See Birks, Introduction, pp 328ff. 142. See P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, pp 94–5. 143. See Hart v E P Dutton 93 NYS 2d 81, affirmed 277 App Div 939, 98 NYS 2d 773 (1949), a case which is criticised by Goff and Jones, The Law of Restitution, 7th ed, 2007, §36-006. The Restatement, Third (at §44) distinguishes it on the basis of difficulties of calculation of the measure of recovery. See further [1638]. 144. See, eg Maddaugh and McCamus, The Law of Restitution, p 514. 145. (1883) 24 Ch D 439 at 449, 460. 146. (1776) 1 Cowp 371; 98 ER 1136. 147. (1776) 1 Cowp 371 at 376; 98 ER 1136 at 1139. 148. See Chapter 19. 149. Cf Birks, Introduction, pp 332–3. 150. I M Jackman, ‘Restitution for Wrongs’ [1989] CLJ 302. See also Jackman, Chapter 7. 151. See [1989] CLJ 302 at 302. 152. Birks, Introduction, p 318. 153. See [1989] CLJ 302 at 318–21. 154. [2001] 1 AC 268. The status of this decision in Australia is controversial (see [1831]). 155. See generally Chapter 18. 156. Burrows, p 662. 157. Cf Burrows, p 472 (restitutionary damages a more finely tuned remedy than exemplary damages). 158. See Emmett J (dissenting) in Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 at 181. Exemplary damages are certainly not confined to proprietary torts. See [1510] and further [1535]. 159. See generally Chapters 17 and 18. 160. See Fleming, Chapter 10. 161. See [1533]. 162. See Restatement, Third, §44. 163. See [1515], [1536], [1737]–[1738], [2309], [2311]. See also [1410], [1411]. 164. See [1502]. 165. See further [1815], [1816], [1833]. 166. See Chapter 2. 167. If, however, the contract is the basis of a fiduciary relationship, gain-based remedies will be more generally available (see Chapter 17). See also [1824] (rules on penalty clauses). 168. See further Chapter 16.

169. Cf Tony Weir, An Introduction to Tort Law, 2nd ed, (UP, 2006), p ix (‘Tort is what is in the tort books, and the only thing holding it together is their binding.’) 170. Concerns about remoteness play little part in torts such as deceit and intentional wrong doing. These policies may carry through into restitution. 171. Cf Armory v Delamirie (1722) 1 Str 505; 93 ER 664. Quaere Rosenfeldt v Olson (1986) 25 DLR (4th) 472. See Jones, pp 69–70. 172. See A Freiberg, ‘Confiscating the Literary Proceeds of Crime’ [1992] Crim LR 96. See, eg Criminal Assets Confiscation Act 2005 (SA), ss 110–118. 173. Cf [1626], [1629], [1639] (contrast between actual profit and reasonable fee for use). 174. Birks, Introduction, p 351. 175. Compare the relevance of the fiduciary’s dishonesty in connection with ‘just allowances’ for the value of labour and skill contributed (see [1717]) or the financial contribution made by the fiduciary against whom a constructive trust is imposed (see [1733]). 176. See [1508]. 177. Cf [1837] (statutory discretion). 178. See P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, pp 77ff. 179. See [1618]–[1620]. 180. See further [1532]–[1536], [1619] and Beatson, pp 210–11. 181. Contrast [1509] (situations in which punitive damages are recoverable). 182. See [1508], [1509]. 183. See also Australian Consumer Law, s 236. 184. (1958) 102 CLR 108. 185. (1958) 102 CLR 108 at 146. See also per Menzies J at 136. These passages are discussed by Mason CJ in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 74. 186. Which also governs proof of debt in the winding up of an insolvent company: Corporations Act 2001 (Cth), s 553E. 187. But not where they have been liquidated by agreement or the entry of judgment before the commencement of winding up (Re Islington Metal & Plating Works Ltd [1984] 1 WLR 14; [1983] 3 All ER 218) or, possibly, before a winding up order is made (Re Autolook Pty Ltd; O’Brien v Bills (1983) 2 ACLC 30). 188. Parker v Norton (1796) 6 TR 695; 101 ER 777. 189. English law now includes tort damages; see Insolvency Act 1985 (UK), s 211. 190. Emma Silver Mining Co v Grant (1880) 17 Ch D 122. See also Tarea Management (North Shore) Pty Ltd v Glass (1991) 28 FCR 93 at 95; Wickstead v Browne (1992) 30 NSWLR 1; Auto Group Ltd v England [2008] NSWSC 402 at [23] (‘equitable obligations of restitution where moneys are fraudulently obtained by fiduciaries are treated in equity as debts, and as liquidated debts, and are not … demands in the nature of unliquidated damages’ per Bryson AJ). 191. Watson v Holliday (1882) 20 Ch D 780 (affirmed (1883) 52 LJ Ch 543). 192. Tilley v Bowman [1910] 1 KB 745; Re H B Harvey Pty Ltd (1972) ACLC 27,386. 193. Re W A Brown & Sons Ltd (1964) 81 WN (NSW) (Pt 1) 402.

194. Chesworth v Farrer [1967] 1 QB 407; Dentists Supply Co v Cornelius 119 NYS 2d 570 (affirmed 116 NE 2d 238 (1953)). As to limitation of actions and restitution generally, see Chapter 27. 195. Beatson, pp 217–18 and further [2734]. For an explanation of waiver of tort see [1517], [1519] and further [1618]–[1622]. 196. See generally [2727]–[2734]. 197. See, eg Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 261–3; Miller v CSR Timber Products Pty Ltd (1993) 29 NSWLR 611 at 619–20; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7. See also [1020]–[1022], [2610] and Beatson, pp 234–5. 198. Beaman v ARTS Ltd [1948] 2 All ER 89 at 92–3 (on appeal [1949] 1 KB 550); Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366. Cf Chesworth v Farrer [1967] 1 QB 407 and see [2728]. 199. See generally [2727]–[2734]. Cf also Deutsch Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558. 200. (1956) 56 SR (NSW) 304. 201. See Birks, Introduction, pp 347–51. See also Chapter 26 (Illegality). 202. Waterhouse v Keen (1825) 4 B & C 200 at 211; 107 ER 1033 at 1038 per Bayley J. 203. Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 376; Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 114, 123. As to the development of the common law by reference to the gravitational pull of statutory analogy, see Seidler v Schallhofer [1982] 2 NSWLR 80; Lamb v Cotogno (1987) 164 CLR 1; B v Medical Superintendent of Macquarie Hospital (1987) 10 NSWLR 440 at 449–50. See also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7. 204. [1900] 1 QB 270. 205. See also [441], and further [2410]. 206. Poulton v The Commonwealth (1953) 89 CLR 540 at 602. 207. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7. 208. Cf [2922] (common counts as debts). 209. Cf Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 114, 123. See, however, [1711] (deterrent function), Chapter 19 (Wrongful Killing). 210. (2003) 56 NSWLR 298. 211. The constructive trust may be the only exception to such an approach. See [1727]–[1732]. As to interest see Chapter 28. 212. For situations where punitive damages are awarded under Australian common law see [1510]. See also [1529] (uncertainty in quantification). 213. See Heavener v Loomes (1924) 34 CLR 306 at 322; D’Angola v Rio Pioneer Gravel [1979] 1 NSWLR 495 at 499; Registrar-General (NSW) v Behn (1981) 148 CLR 562 at 569; Midland Montague Australia Ltd v Harkness (1994) 35 NSWLR 150; 124 ALR 407. 214. [1979] AC 374. See also Arab Monetary Fund v Hashim [1993] 1 Lloyds Rep 543; Ramzan v Brookwide Ltd [2012] 1 All ER 903; Health Services Union NSW v McMillan [2014] NSWSC 1868.

215. McKenzie v McDonald [1927] VLR 134; Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201. 216. See, eg Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 (see [1410]). 217. Attorney General for Nova Scotia v Christian (1974) 49 DLR (3d) 742; Logicrose Ltd v Southend United FC Ltd [1988] 1 WLR 1256.

[page 655]

Chapter Sixteen

Tort 1.

General ….

[1601]

(a) Introduction ….

[1601]

(b) Commonly Encountered Torts ….

[1606]

(c) Remedies …. 2. 3. 4. 5.

[1611] From Waiver of Tort to Restitution for Wrongs …. [1618] Gain-Based Remedies for Wrongful Taking or Use of Land or Goods …. [1623] Claims Involving Money …. [1630] What are the Limits of Restitution for Tortious Wrongs? …. [1636]

1. General (a) Introduction [1601] Objects. This chapter has as its principal object the examination of claims for gain-based remedies against tortfeasors. To a lesser extent the chapter discusses independent claims in unjust enrichment where a tortious wrong is the unjust factor.1 Claims for restitutionary damages (variously labelled) for tortious wrongs are central to the whole topic of restitution for wrongs. Unfortunately, the rational development of the law in this area has been hindered by emphasis on the idea of waiver of tort. This was briefly referred to earlier.2 Historically, the concept is crucial but, doctrinally, it is misleading. We explain this below.

We also point to signs of recent willingness to draw analogies from other categories of wrong and consider the availability of an account of profits in relation to some of the wrongs addressed in this chapter.3 [1602] Exceptions to the compensation principle. There is a body of case law, dealing mainly with wrongs to proprietary interests, where recompense deprives the wrongdoer of the benefit unjustly derived from the wrong rather than merely compensating the victim for the loss suffered. Insofar as the cases are framed as claims for traditional ‘restitutionary’ remedies such as money payable for use and occupation, the deprivation of the defendant’s ill-gotten gains seems entirely unexceptional. But when there is an award of restitutionary damages (or even an account of profits) for a tort, the cases are exceptional because they depart from seemingly unqualified [page 656] statements that the whole object of an award of damages is compensatory.4 This truth cannot (without resort to fiction) be disguised by asserting that nothing is happening beyond the ‘rules of compensatory damages [being] sensibly and flexibly applied’.5 There are many torts, protecting a huge range of interests and policies, going beyond compensating the person wronged. Private remedies may also serve concurrent goals, by deterring would-be tortfeasors, directly through exemplary or punitive damages, or indirectly through the encouragement that an award to one victim may give to others to sue in respect of similar wrongs. Subject to statute,6 exemplary damages are available in Australia in relation to a wide range of torts.7 Torts law has long recognised that compensatory damages can be an inadequate remedy: injunctions and orders for specific restitution may be appropriate. [1603] Concern with enrichment. Since we maintain that, in principle, restitution is not restricted to particular torts,8 but can be

applied to any tortious wrong in a proper situation, we do not feel constrained to confine ourselves to a list of restitution-yielding torts. (In saying this, we are not suggesting that the case law yet recognises this universal approach.) Our concern is to investigate situations in which restitutionary damages or some other remedy designed to strip an unjust enrichment may be recovered, and to extrapolate the applicable principles. Restitutionary damages are assessed by reference to the saving achieved or benefit obtained by the defendant as a consequence of the wrong, rather than by reference to the loss or damage that the plaintiff may establish. Of course, in some situations there is no difference between the two. However, the crucial point is that the basis for assessment is reversal of any (unjust) enrichment flowing from the wrong, not just compensation. [1604] Crimes. Many of the torts considered in this chapter are also crimes. Obvious examples are theft and other wrongs involving deception.9 The conclusion that the tort is also a crime generally adds nothing to the analysis. [1605] Statute. Many torts that are criminal conduct, and some classes of purely tortious conduct, are regulated to a greater or lesser extent by [page 657] statute. The principles explained in this chapter are subject to qualification or extension in specific statutory provisions. We refer to some of these at appropriate places in the chapter.10 Contraventions of the Australian Consumer Law have proved to be very significant in the Australian law of civil obligations.11

(b) Commonly Encountered Torts [1606]

Introduction. We dispute the view that there is a closed list

of ‘proprietary’ torts which may be the subject of a legitimate claim for restitutionary damages. Nevertheless, we shall discuss briefly the torts which are most commonly encountered in the course of this chapter. The emphasis (and major perspective) is on torts which protect interests in property.12 [1607] Trespass. The action in trespass to goods offers a remedy in respect of a wrong to possession. Thus, if B takes goods out of A’s possession without A’s permission or lawful justification, B commits the tort of trespass. Since a claim to damages for trespass is a claim in relation to a wrong done to a person’s lawful possession of property, it looks to be restricted in its operation to plaintiffs who were in possession of the goods at the time of the alleged trespass. However, a right to possession constitutes a sufficient title to maintain the claim. Therefore, if X bails goods to A, and B uses the goods without permission either from X or A, B commits the tort of trespass, and both X and A may sue B for damages.13 As the High Court explained in Penfolds Wines Pty Ltd v Elliott,14 the essential characteristic of the tort of trespass is the wrongful taking. Accordingly, in that case, where a bailee voluntarily transferred possession to the defendant, the defendant did not commit the tort of trespass, even though the plaintiff — the owner of the goods — did not authorise the transfer of possession. The basis for this is that the ability of a person out of possession, such as a bailor, to sue in trespass is a derivative right. Thus, in our earlier example, X’s right to sue B is derived from the wrong to A’s possession. The position in Penfolds Wines was different. Since A consented to B’s possession of the goods, there was no trespass vis-a-vis A, and X could not sue in trespass.15 Claims in trespass may also be made for the unauthorised entry to land.16 The tort lies in relation to an intentional invasion on, above or below the surface and regardless of the defendant’s motive or whether the plaintiff suffers harm or not. The tort of trespass to the person needs little introduction in this work.17 Of the various forms of trespass to the person the most

common is battery, which is committed by intentionally bringing about a harmful or offensive [page 658] contact with the person of another. Another species is the action for false imprisonment. Although neither of these torts against the person involve proprietary interests, our view is that they are not, on that account, incapable of being restitution-yielding wrongs.18 [1608] Conversion. The tort of conversion19 lies against persons who deal with tangible goods20 in ways inconsistent with or repugnant to the rights of those with a prior right to possession of the goods.21 Any act repugnant to possession or the right to possession, if done wrongfully, constitutes conversion. Clear examples of conversion are the wrongful sale or destruction of the goods. The action may be maintained by a person out of possession, provided that the plaintiff had an immediate right to possession of goods. Thus, any ‘dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel’ amounts to conversion.22 The general rule is that because an employee only obtains the custody of goods, their possession rests with the employer. Accordingly, where the goods are taken from the employee, the employer may maintain an action in conversion against the wrongdoer.23 An owner who has parted with possession of goods to a bailee under a bailment arrangement may maintain an action in conversion against the wrongdoer. According to the decision in Penfolds Wines Pty Ltd v Elliott,24 this extends to cases where the bailee transfers the possession of goods to a third person for a purpose repugnant to the bailment. In such a case, both the bailee and the third party may be guilty of conversion. Since a right to possession is a sufficient basis for an action in conversion, a bailee, or even a finder, may maintain the action against the defendant.25

[1609] Detinue. The gist of the action in detinue is the wrongful detention of goods. Like conversion, it is available against a person who has wrongfully taken goods from the possession of their owner. It is, moreover, available both to an owner of goods and to a bailee.26 Unlike the action in conversion, however, it relies on detention rather than wrongful dealing. A mere wrongful dealing is not enough to establish a claim in detinue. It lies against a person who has come by the goods (innocently or otherwise) but refuses to give them up to the true owner or person entitled to possession. The defendant, [page 659] if unsuccessful, may have the option of delivering up the goods to the plaintiff, or paying the plaintiff damages.27 Since a right to possession is a sufficient basis for an action in detinue founded on a lawful demand, an owner out of possession may maintain the action, for example, against a bailee who refuses to return goods on expiry of the bailment.28 Indeed, on this basis even a finder may maintain the action against a wrongdoer, following the making of a valid demand.29 [1610] Other torts. In discussing the ‘proprietary torts’30 which involve wrongs to property and possessory interests we have not exhausted the field of restitution-yielding wrongs. Our view, explained further elsewhere,31 is that every tort is potentially capable, in a proper situation, of carrying damages assessed according to the restitutionary measure. Readers should refer to the standard texts to ascertain the elements of the various causes of action.

(c) Remedies [1611] Personal remedies. Although we concentrate on torts which protect proprietary interests (including possessory rights and interests), it needs emphasis that these usually give rise only to personal remedies.

A claim for damages or account of profits is not a claim for specific restitution of the property in question. However, a claim for specific restitution may in some situations be available,32 as may a claim to impose a remedial constructive trust.33 We should mention one impact of a technical rule in relation to damages claims. In some cases the person who makes a personal claim in relation to goods is not in fact the owner. The plaintiff might, for example, be a bailee who has been wrongfully dispossessed by the defendant. In a claim by the plaintiff (bailee) it is generally not open to the defendant to defend the claim by pleading that the plaintiff was not the owner of the goods. This inability to plead the jus tertii, as it is termed, extends to an attempt to limit the plaintiff’s damages in accordance with the extent of the plaintiff’s ownership.34 Thus, in the classic decision of the English Court of Appeal in The Winkfield,35 a bailee recovered damages equal to the value of the goods, even though it was not the owner, and notwithstanding that it had a ‘good answer to an action by the bailor for damages for the loss of the thing bailed’.36 Of course, the decision does not sit well with the general principle that damages are merely compensation for loss, and the case has sometimes [page 660] been criticised.37 Nevertheless, it undoubtedly expresses Australian law,38 and indirectly supports the criticism of the exclusive compensation rule which this chapter develops. [1612] Specific restitution and remedial constructive trust. From early times, courts of equity have exercised a jurisdiction to order the delivery up of heirlooms and other chattels where damages for detinue or conversion would be inadequate.39 A common situation of inadequacy of damages was where the defendant who wrongly withheld the plaintiff’s goods was insolvent.40 A judgment in detinue is enforceable by way of writ or warrant of delivery. At common law the defendant had the option of either paying the value of the goods or

returning them. The court may now give judgment for the payment of the assessed value of the chattels, or give the defendant the option of returning them or paying their assessed value. The third alternative is for the return of the goods without an option to pay their assessed value.41 We have addressed elsewhere the general principles relating to the remedial constructive trust.42 The Australian law is quite different from that in England on this topic.43 [1613] Varieties of gain-based personal remedies. In the previous chapter we refer to the current debate about the types of gainbased personal remedies for wrongs and their proper nomenclature.44 This debate is at its most strident where the availability of relief is undisputed, that is, the categories of claim addressed here. Long before the advent of restitution the common law courts awarded varieties of gain-based remedies, while generally asserting a universal principle that tort damages are compensatory.45 [1614] Mesne profits. For hundreds of years the common law has awarded a specific category of damages based on the value of the gain or saving wrongfully made by the defendant. ‘Mesne profits’ are damages for trespass representing the value of the loss of use of the plaintiff’s land consequent upon a wrongful withholding of possession.46 The usual situation is where a lease has been validly terminated and the landlord has elected to treat the lessee as a trespasser, by re-entering physically or the commencement of [page 661] proceedings for possession.47 Mesne profits are not available where a lease is extant, governing the parties’ relations by contract.48 Within its limited sphere of operation, mesne profits has the virtue of honesty in flagging its gain-based intent, but it is misleading in suggesting that its role is to strip the defendant’s actual gains. The

measure of damages is the market rental of the interest in land wrongfully occupied, not the profits gained by the defendant.49 The availability of an account of actual profits is controversial and we address it elsewhere.50 In Ministry of Defence v Ashman,51 Hoffmann LJ said that a claim for mesne profit for trespass can be described as ‘a claim for restitution. Nowadays I do not see why we should not call a spade a spade’. [1615] Action for use and occupation. An action for use and occupation52 was available to strip the value saved or derived from another category of wrongful use of land. The action averred a promise to pay for occupation, but that promise was at times fictitious. In that situation the remedy was quasi-contractual and should now be seen as restitutionary. The fictitious promise to pay could be implied if nothing more appeared than mere occupation and enjoyment of another person’s land.53 The action would be defeated if an express contract covered the field, including an express agreement not to pay for occupation,54 or if the circumstances of the defendant’s entry into occupation negatived any possibility of an express or implied agreement with the plaintiff. Because of the implied contract fiction, this was the case if the defendant’s entry was trespassory.55 If the entry was or became trespassory, the proper remedy was mesne profits.56 However, claims for use and occupation and mesne profits could be combined in a single action, taking care not to overlap the time period appropriate for the respective counts.57 [page 662] [1616] Non-compensatory ‘damages’ and account of profits. As indicated below,58 what are now seen as gain-based or restitutionary awards have been made since the nineteenth century in cases involving wrongful use of land. Older authorities used the simple language of damages and, at times, a fictional assertion that such damages were compensatory. But it is now clear that judges, in these exceptional

categories of infringement to proprietary interest, were offering gainbased personal monetary remedies that represented the value to the defendant of what was wrongfully usurped as distinct from the value to the plaintiff of anything lost. The earliest cases involve damages for trespass by unauthorised use of subterranean mining passages. Although suffering no actual loss, the mine owner recovered damages representing a reasonable rental for the use of the passages (called ‘wayleave damages’).59 The benefit derived from the tort was the saving of expense that would have been incurred had the defendant bargained for the right that was tortiously taken. These decisions became the springboard for a more general class of cases awarding damages for the unauthorised use of land even though the owner suffered no actual damage flowing from the trespass.60 The restitutionary nature of these awards was usually cloaked in language that described the damages as compensatory, when this really involved a stretching of that concept given that the plaintiff suffered no damage and the plaintiff would not have expected to gain rental income had trespass not occurred. The availability of an account of profits in relation to tort claims that do not also involve breach of fiduciary duty is controversial. It was denied in categorical terms by the majority decision of the Full Court of the Federal Court of Australia in Hospitality Group Pty Ltd v Australian Rugby Union Ltd.61 The reasoning of the majority apparently overlooks Phillips v Homfray.62 We address account of profits and tort claims below.63 [1617] Phillips v Homfray. On a proper analysis, Phillips v 64 Homfray supported the development of gain-based awards of damages for trespass in the wayleave situation. The case illustrates how the same event may apparently give rise to both ‘tortious’ and ‘quasicontractual’ claims, each aiming to prevent the defendant enjoying an unjust benefit that may bear no relationship to the plaintiff’s loss. Homfray and his partners conducted a coal-mining business on land adjoining the plaintiffs’ farm. Coal wrongfully taken from the plaintiffs’ land was brought to the surface by being carried along unauthorised

‘roads or passages’ (called ‘wayleaves’) made under the plaintiffs’ land. In the first stage of the action, in 1871, the plaintiffs obtained a declaration that the defendant had trespassed, and an order for the taking of an account to determine the damages payable as compensation for this tort. (There was also an account [page 663] taken of the amount of coal extracted from the plaintiffs’ land and its market value at the mouth of the pit.)65 The Vice-Chancellor’s jurisdiction to grant such ‘common law’ relief derived from Lord Cairns’ Act.66 The award was obviously intended to provide compensation greater than the loss which the plaintiffs, who were farmers, actually incurred. As regards the wrongful user claim, it was to be measured by what a bill in equity would establish as the reasonable price that the defendants should pay for the wayleave they surreptitiously enjoyed.67 But before final judgment was obtained, one of the defendant trespassers died. By what was then the rule, the tortious cause of action was held to have died with him. In consequence, further proceedings on the decree for an account relating to wayleaves were ordered to be stayed by the Court of Appeal in 1883 (overruling Pearson J). There was a strong dissent by Baggallay LJ. The majority of the Court of Appeal ruled that the limited exception to the actio personalis rule68 that applied where property or its proceeds had been wrongly appropriated by a deceased person and added to the estate, did not extend to the type of benefit wrongfully taken by the wayleave trespassers in that case.69 As Justice Gummow and Mr Swadling have convincingly demonstrated,70 the disagreement between the judges in the 1883 proceedings related essentially to the content of the exception to the actio personalis rule as it operated at law. Despite the complication caused by the death of one of the defendants, the case from start to finish involved the remedy of an account of profits in cases in tort involving the use of the plaintiff’s property.71 The noncompensatory measure of damages was clearly recognised by Pearson J

in Phillips v Homfray (No 2), who described the remedy ordered in 1871 as ‘really and truly paying back to the Plaintiffs part of the profit which the Defendants themselves received from using the wayleave instead of raising their coal by a more expensive and difficult way’.72 The same could be said for the account ordered in relation to the coal itself. Modern writers on the law of restitution have, however, focused on the discussion obiter by Cotton and Bowen LJJ in 1883 to the effect that alternative quasi-contractual remedies (available, as it was then seen, upon the ‘waiver of tort’) were not available. The common count for use and occupation was seen to be unavailable for two reasons. First, the defendants were trespassers, [page 664] and the law had long held that the action for use and occupation could not be brought for trespass, because the inability to infer consent to a trespass precluded the implication of the promise then perceived as essential to a quasi-contractual claim.73 Second, there was no benefit flowing from the trespass ‘capable of being measured and recovered’.74 Money had and received did not lie because there were no funds in the hands of the executor which belonged to the plaintiffs. As Justice Gummow and Mr Swadling have demonstrated,75 modern writers on the law of restitution may have placed too much weight upon this discussion, leading them to call for the overruling of Phillips v Homfray as a vital step in straightening out the whole field of restitution for wrongs.76 The discussion was obiter because the action was not one for money had and received. But it remains highly ironical that in 1883 two judges of the English Court of Appeal (Bowen and Cotton LJJ) should have had such doubts about purely quasi-contractual remedies in this area, in the very case that was a landmark in establishing the rights of a land proprietor (Phillips held by copyhold tenure) to tortious damages according to the restitutionary ‘user principle’.77 Several older English cases (relating to quantum

meruit, not money had and received) demonstrate that the need to prove a receipt as an essential step in every quasi-contractual claim was misconceived.78 The point which we seek to make at this stage is that the formalistic and procedural tergiversations of the Phillips v Homfray saga are so alien to modern Australian jurisprudence that they should not be reflected in our analysis of the modern law of restitution.79 Some of the reasoning80 reflects a now-discarded contractual approach to quasi-contract, as well as a pre-United Australia Ltd v Barclays Bank Ltd81 fixation with inconsistent elections. Since the law clearly recognises a restitutionary measure of damages in some cases, there is simply no point in dwelling upon alternative and possibly less extensive remedies in ‘purely’ restitutionary claims such as claims derived from the counts for money had and received or use and occupation.82 [page 665] It can confidently be asserted that Bowen LJ’s statements83 that the plaintiff must demonstrate that the defendant reaped a positive, as distinct from a negative, benefit no longer represent the law of restitution, if they ever did.84

2. From Waiver of Tort to Restitution for Wrongs [1618] Introduction. The count for money had and received has long been available to strip a defendant of benefits derived from tortious interferences with property rights.85 Instead of seeking damages the plaintiff could assert a claim to the wrongfully acquired benefit through the fiction of ‘waiving the tort’ and proceeding on the basis of a fictitious promise to pay the benefits reaped.

[1619] History.86 Earliest waiver of tort cases involved the usurpation of an office (and its appurtenant fees) to which the plaintiff was entitled. Later cases extended the remedy to wrongs done to goods87 and land.88 Insofar as this remedy provided resort to the proceeds of something wrongfully taken, this form of action provided a type of common law tracing.89 A leading early case is Lamine v Dorrell,90 where the legitimate administrator of a deceased estate sued an executor de son tort who had intermeddled. The defendant had disposed of debentures belonging to the estate. Through the common money count the plaintiff was able to recover the proceeds of sale of the debentures that had been received by the defendant. ‘Waiver of tort’ was also available in relation to purely monetary abstractions. Thus, it was allowed against a defendant who had levied an improper or excessive penalty,91 or who had wrongfully distrained the plaintiff’s goods and sold them.92 The remedy extended to abstractions by deceit.93 [page 666] Not all waiver of tort cases involved the abuse of proprietary rights or even money had and received. According to two early decisions, an employer whose servant was ‘seduced’ away by another could, on the analogy of waiving the tort of conversion of goods, sue the wrongdoer for the reasonable value of the lost services (quantum meruit).94 In the early nineteenth century the defendant’s wrong would have been seen as a ‘tortious’ taking of that which belonged to another. Nowadays the matter would be seen as a wrongful interference in contractual relations. Procedural advantages explain many of the early cases.95 The common counts were simpler to plead and more expeditious to try. The plaintiff could concentrate upon his or her property rights as distinct from the mode of interference with them. And, while actions in tort did not survive the death of either party, actions in assumpsit did.96 But the primary advantage was the capacity to lay claim to the

defendant’s profit (actual or putative, in the case of expense saved) stemming from the abuse of the plaintiff’s rights over an office of profit, goods and land, and occasionally for wrongful interference in purely contractual relations. [1620] Waiver of tort a dangerous fiction. Unfortunately, the waiver of tort fiction had the capacity to mislead those who took the pleaded promise seriously. The dangers were exposed and the fiction banished in United Australia Ltd v Barclays Bank Ltd.97 As Lord Atkin pointed out:98 The cheat or blackmailer does not promise to repay the person he has wronged the money which he has unlawfully taken: nor does the thief promise to pay the owner of the goods stolen the money he has gained from selling the goods.

In our view, the expression ‘waiver of tort’ should be expunged from the legal vocabulary for several reasons. First, the concept is misleading in that the tort (or other wrong) is in fact relied upon, not waived: only the compensatory remedy is waived. Second, the concept is historically inaccurate, as we shall endeavour briefly to demonstrate later in this paragraph. The nub of the point is that the common principles discussed under the rubric range far beyond tort: yet reference to waiver of tort has in the past tended to fence tort cases off from this wider common. Third, it is clear that proof of a tort is neither a sufficient nor a necessary basis for the traditional restitutionary remedies. Even amongst ‘waivable’ torts there will be many situations where the only remedy is compensatory damages. Many of the advantages of seeking the quasi-contractual remedy, rather than damages in tort, were procedural, and no longer apply. One reason why the law adopted the myth of ‘waiver of tort’ was uneasiness about the repugnancy between suing in relation to a wrong while pleading a promise (assumpsit) of payment.99 The fiction of the implied contract was at its most indefensible in these cases, hence the additional fiction of the plaintiff’s [page 667]

waiver. Sometimes the contract fiction was too strong for the waiver fiction,100 but the outcome was equally unsatisfactory. The expression ‘waiver of tort’ implied that the quasi-contractual remedy was necessarily parasitic upon the tort. But early cases suggested otherwise. For example, money obtained by deceit was recoverable by the common money count for money had and received long before the action in damages was recognised.101 In Brocklebank Ltd v R102 the English Court of Appeal spoke of waiver of tort as applicable to the action to recover money demanded colore officii (not itself a tort), against the Crown (not then suable for tort).103 Despite this, there are numerous statements by eminent judges and writers that proof that a tort has been committed is a ‘sine qua non’ of the restitutionary remedy called ‘waiver of tort’.104 We consider such a proposition to be false, except in the circular sense that the tortious wrongs in respect of which the restitutionary remedies lie are necessarily torts. [1621] Election between remedies as essential feature. Discussion of the idea of waiver of tort assumes that the plaintiff is faced with alternative claims.105 These are claims in tort (for damages) and claims in restitution (for an unjust enrichment). Professor Keener ventured the following general description:106 If any one in the commission of a tort enriches himself by taking or using the property of another, the latter may in some cases, instead of suing in tort to recover damages for the injury done, sue in assumpsit to recover the value of that which has been tortiously taken or used. The remedies in tort and assumpsit not being concurrent, a plaintiff is compelled to elect which remedy he will pursue; and if he elect to sue in assumpsit, he is said to waive the tort.

In United Australia Ltd v Barclays Bank Ltd107 Viscount Simon LC quoted § 525 of the Restatement, Restitution: A person upon whom a tort has been committed and who brings an action for the benefits received by the tortfeasor is sometimes said to ‘waive the tort’. The election to bring an action of assumpsit is not, however, a waiver of tort but is the choice of one of two alternative remedies.

[page 668]

As the decision in the United Australia case illustrates,108 waiver is a species of election between remedies.109 Once the claim in restitution has been brought to judgment, the tort is no longer available as a basis for a claim. However, until that time, the plaintiff enjoys the general advantages implied by the principles regulating election. Although waiver is frequently applied to alternative claims of the type under consideration in this chapter,110 it is not limited to such claims. In this regard it would be preferable to omit the reference to waiver, and to ask, simply, whether the plaintiff has made an election between remedies. In United Australia, Lord Romer said:111 What was waived by the judgment was not the tort, but the right to recover damages for the tort. As was said by Lord Ellenborough … ‘in bringing an action for money had and received, instead of trover, the plaintiff does no more than waive any complaint, with a view to damages, of the tortious act by which the goods were converted into money, and takes the neat proceeds of a sale as the value of the goods.’ The plaintiff in no way affirms the tortious act so as to treat it as having been a rightful one.

[1622] Unjust enrichment and restitutionary remedies. ‘Waiver of tort’ has always been concerned with a wider class of wrongs than will be found discussed in any textbook on tort. Nowadays the categories of wrongs for which a restitutionary response may be appropriate clearly include infringements of intellectual property rights, purely equitable wrongs, criminal acts, and certain breaches of contract. To go beyond tort and survey the general law of restitution for wrongs allows appropriate analogies to be drawn. Getting away from the tortiousness of the wrongdoing will therefore help avoid the ‘temptation to treat this area of law as an eccentric survivor of a more formal age’.112 This approach has the added advantage of enabling proper focus to be addressed to the remedial choices calling to be made. Does the plaintiff want a gain-based remedy in a situation where a compensatory remedy is unavailable or deficient? Does the plaintiff want to strip the wrongdoer of profits he or she has actually made from the wrong? Is there a need to consider a proprietary remedy?113

3. Gain-Based Remedies for Wrongful Taking or Use of Land or Goods [1623] Introduction. Inappropriate distinctions drawn from the different forms of action started to break down by the late nineteenth century. The twentieth century saw cross-fertilisation between the cases involving land and goods. With the organising skills of leading English restitution scholars [page 669] further analogies came to be drawn from the previously ‘separate’ fields of intellectual property law and ‘equity’. In this section, we concentrate on the developments involving gainbased awards at common law in response to tortious interference with tangible property interests. [1624] Wrongful taking of minerals. A person who wrongfully removes minerals may be required to pay, as ‘damages’, the price of the mineral at the pit’s mouth, less the cost of severing and raising.114 It is no answer that the plaintiff might not have been interested in mining. In Bilambil-Terranora v Tweed Shire Council115 Mahoney JA said: The result of the adoption of this method of arriving at damages for loss of minerals may result, in a sense, in a plaintiff recovering more than it might otherwise have received in respect of the minerals. If the tort had not been committed, the likelihood may be that it would never have mined the minerals or received anything from them at all. But such a result is not unprecedented. Similar results may ensue where, eg, there is the waiver of a tort and the adoption of the advantageous act of the wrongdoer. Whether the law of unjust enrichment forms part of Australian law as such, the influences which inform it are not without effect in our law.

This approach achieves the same result as that arrived at in the heyday of ‘waiver of tort’. In Powell v Rees116 a person who wrongfully entered another’s land and removed minerals which were subsequently sold was sued (on a waiver of tort) for the proceeds of sale.

[1625] Wrongful use or occupation of land. By the late nineteenth century the common law had developed several causes of action through which a gain-based award could be made for the reasonable value of an interest in land taken without authority of the owner, even though the owner had no wish to grant that interest and suffered no actual damage from the trespass.117 The separate actions for mesne profits, money payable for use and occupation and the remedy of (gain-based) damages were originally seen as operating in separate spheres, and the restitutionary effect of the awards was often suppressed in deference to the apparent mandate that tort damages are exclusively compensatory. Courts will generally enjoin the slightest trespass to land, whether or not the damage suffered by the plaintiff is commensurate with the loss flowing to the defendant from the restraint.118 In one sense this sanctions the plaintiff’s right to bargain for a fee to permit the trespass in question, a right which can have regard to the defendant’s anticipated profit and not just the plaintiff’s actual loss. Even where an injunction is not sought or granted, ‘restitutionary damages’ may nevertheless be appropriate. [page 670] From this premise, and developing the principles in the nineteenth century wayleave cases, the courts now recognise generally that a trespassing defendant will be required to pay as ‘damages’ the reasonable value of the interest taken or borrowed without authority from the plaintiff, notwithstanding that the plaintiff was not impeded or prevented from using the land. No longer is any distinction drawn between benefit gained and expense spared as Bowen LJ had suggested in Phillips v Homfray.119 Categories include unauthorised tipping of refuse,120 depasturing of livestock121 and trespass of air space during building works.122 Wrongful interference with lesser interests, such as easements, is also included.123 The mesne profits/use and occupation cases illustrate that gain-based awards may also flow from unauthorised

occupation to the exclusion of the plaintiff. The non-compensatory nature of this category of relief has been recognised in recent years.124 Restitutionary damages have been awarded for other wrongs to interests in land, such as breach of a restrictive covenant,125 and nuisance.126 There is a review of this branch of the law by the English Court of Appeal in Stoke-on-Trent City Council v W & J Wass Ltd,127 although we doubt whether the conclusion in the case is correct.128 [1626] Measure of recovery for wrongful user of land. In each case (that is, ‘use and occupation’ and ‘mesne profits’) the quantum recoverable was and remains a reasonable sum for the use and occupation of the premises. This ‘user principle’ was summed up by Nicholls LJ in Stoke-on-Trent City Council v W & J Wass Ltd:129 … a person who has wrongfully used another’s property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the other’s property.

[page 671] The ordinary measure is the market rental of the interest in land wrongfully occupied.130 This demonstrates that (unless one resorts to the fiction of the plaintiff’s loss of opportunity to strike a bargain) the measure of damages is restitutionary, not purely compensatory. In Yakamia Dairy Pty Ltd v Wood131 it was held that current rates for agistment fees were the proper measure of damages where the defendant wrongfully depastured cattle upon land belonging to the plaintiff. In claims for ‘use and occupation’ and for ‘mesne profits’, the plaintiff seeking to recover for the wrongful use of land need not prove that the land is ordinarily leased, or that the plaintiff was actually deprived of the use appropriated by the defendant.132 The measure is the value of the property to the trespasser, the market rent which the trespasser should have paid for occupation.133 A modern Australian case that illustrates these principles, and takes

them a step further (where there is a deliberate trespass the value of which is peculiar to the trespasser) is LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd.134 The defendant wished to build a commercial property directly adjacent to the boundary of the plaintiff’s residential property. To do so it erected scaffolding which extended about 16 metres along the boundary, over the plaintiff’s land, at about 1.5 metres into the air space above the land. Prior to starting building, Chia sought LJP’s permission to erect the scaffolding, and was advised that it would only be forthcoming on terms that included payment of a lump sum of $30,255 plus $570 for each week the scaffolding was in place. The defendant chose to embark on the work without permission or payment. The scaffolding remained there for 12 weeks, until the defendant was required to remove it pursuant to a mandatory injunction. Restitutionary damages for the trespass were awarded by Hodgson J in the sum originally claimed by the plaintiff, on the basis of a finding that the defendant would in fact have paid that amount had it refrained from trespassing. This figure was preferred to that which reflected the general market value of what was used because of the higher peculiar value for the trespasser. Hodgson J indicated that he would have awarded exemplary damages in the like sum had it not been for the award of restitutionary damages.135 [page 672] Recent English decisions have emphasised the restitutionary nature of the claim for mesne profits, and the fact that the plaintiff (if electing not to sue for compensatory damages) need not prove that the premises would have been let if vacant. This is similar to the emerging law relating to wrongful user of chattels.136 But the decisions have also stressed that the amount to be calculated in restitution is to be the value of the land to the particular trespasser. This is uncontroversial, but the manner in which that value was ascertained in the exceptional factual context of the recent cases is less so. In Ministry of Defence v Ashman,137 the trespasser was a serviceman’s

wife who remained in the (subsidised) Royal Air Force married quarters after her husband left her and the children. Having nowhere else to go, she stayed on after receipt of a notice to vacate, until alternative (subsidised) local authority accommodation became available. The Ministry elected to claim restitution in lieu of damages, seeking thereby to avoid having the market rental calculated according to the subsidised rate at which it was let to service personnel. It was allowed to recover without having to prove loss. But its claim to have mesne profits calculated on a market basis was rejected by the English Court of Appeal, although on differing and debatable grounds. Lloyd LJ indicated that mesne profits should be assessed having regard to the fact that the premises (if vacant) would have been let to another serviceman at the (subsidised) quartering charge rate. But Hoffmann and Kennedy LJJ indicated that the special circumstances of Mrs Ashman were such that mesne profits should be equivalent to the value (saved) of subsidised alternative accommodation from the local authority. By applying Professor Birks’s concept of ‘subjective devaluation’,138 the majority held that the value of the benefit derived from the trespass by Mrs Ashman was less than the market value of the premises in the special circumstances of the case. In Hoffmann LJ’s words, ‘a benefit may not be worth as much to the particular defendant as to someone else’. This is unexceptionable. Whether that benefit was correctly valued is more debatable. Mrs Ashman was held entitled to ‘subjectively devalue’ the benefit derived from her wrong by demonstrating that her means were such that she had no option but to go (eventually) to the local authority housing with its subsidised rental. This strikes us as a difficult basis on which to value the air force premises. After all, Mrs Ashman freely accepted the benefit which she took by trespassing.139 It is true that Mrs Ashman remained in possession ‘involuntarily in the sense that she could not, in practice, move out of the premises’ until alternative subsidised accommodation became available.140 But, harsh though this is, such involuntariness could scarcely be laid at the door of the plaintiff: it could not negate the

very wrong (trespass) which led to recovery of mesne profits in the first place.141 [page 673] The later Privy Council decision of Inverugie Investments Ltd v Hackett142 adopted a more conventional approach in emphasising that mesne profits are to be calculated objectively, without regard to any actual profit the defendant may have derived from the wrongful user. For reasons developed below,143 we consider that the plaintiff should, in a proper case, be able to invoke equity’s auxiliary jurisdiction to strip the defendant of the actual profits derived from an unauthorised trespass of land. This proposition does not, however, represent the current Australian law144 and it is best addressed after assessing the impact of the fairly recent recognition of the analogies between the cases involving land and goods as well as the interface with fiduciary and contractual relationships.145 For the moment, it may be observed that in 1896 the English Court of Appeal denied the proposition that actual profits may be recovered at common law in the wrongful land user situation.146 Even by this time, there were elements of half-truth in such statements in light of (a) the wrongful taking cases involving minerals147 or goods148 and (b) the unaddressed question about the response of equity. [1627] Sale or consumption of goods. The usual measure of damages for conversion of goods is their value at the time of the tort. And if goods are wrongfully taken, and then sold or consumed, it is no answer to a claim for their market value that the plaintiff was not in the business of selling the goods. The same applies to minerals, which are realty before removal.149 In lieu of damages assessed according to the value of the goods at the time of the tort, the wrongdoer who sold them could be sued for the proceeds of sale by the person whose proprietary or possessory rights were invaded, measured according to the plaintiff’s loss.150 By

analogous reasoning the proceeds of converted cheques may be recovered, subject to usual restitutionary defences.151 This claim is advantageous to a plaintiff if the market value is difficult to prove or less than the defendant’s sale price. It has been questioned whether the restitutionary measure of the (increased) value in the hands of the defendant at time of action is available in the absence of an actual or presumptive sale.152 American law generally dispenses with the requirement of showing that the goods have been exchanged for money because, so long [page 674] as the entire doctrine is based on a fiction, there is no recourse to draw any distinction between unjust enrichment through the proceeds of sale of goods and through the (increased value of) the goods themselves.153 [1628] Wrongful use or detention of goods. Mere use that does not damage, dispose of or consume goods raises separate issues. Unauthorised use of another’s goods may constitute a trespass, but it will not necessarily sound in substantial damages or injunctive relief.154 And whether mere use without loss is a conversion that can lead to damages equal to the full market value of the chattels must also be doubted.155 The more productive cause of action in relation to wrongful use is a claim for damages associated with the action in detinue. Detinue is constituted by the defendant withholding possession of a chattel adversely to the rights of the owner, or person entitled to possession, despite demand for redelivery.156 It is available where there is a continuing wrongful detention of the plaintiff’s goods. Having established the claim, the plaintiff may have judgment for the value of the goods as assessed and damages for their detention; or judgment for the return of the goods or recovery of their value as assessed and damages for their detention; or judgment for the return of the goods and damages for their detention.157 Damages for wrongful detention of

goods are recoverable when the goods are returned prior to judgment, as well as where they have not been returned.158 [1629] Measure of recovery for wrongful use or detention of goods. After initial hesitation, courts have come to recognise that similar principles apply in relation to the tortious interference with property rights in goods as apply to land. The assessment of damages for wrongful use or detention of land or goods according to the value to the trespasser and not the loss to the owner is, in truth, restitutionary. The earliest cases involved plaintiffs whose business was the hiring out of goods of the type wrongfully detained, and there were sometimes suggestions that this was critical to the right to substantial damages.159 In this context, the defendant’s gain was seen to be equivalent to the plaintiff’s loss, with the result that the award could be characterised as compensatory. Nevertheless, there was recognition that one function of the award was to prevent the defendant benefiting by the wrong and the courts were prepared to analogise from the mesne profits and wayleave cases. [page 675] In Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd160 the owner of income-earning goods had been wilfully denied their possession. The defendant refused to return the goods (portable switchboards) so that it could offer a cinema for sale as a going concern. The plaintiff’s damages were the full market rate of hire for the whole period of detention. Somervell LJ illustrated the connection with the principles discussed elsewhere in this chapter when he said that:161 [The defendants] cannot, as wrongdoers, have the use of the chattels for less than a fair price for their hire. Otherwise they would be benefiting by their own wrong.

What is, however, unclear from the judgments is the reason why the plaintiff in Strand Electric did not have to prove that it would have been able to use the goods itself, or to hire them to anyone else. Denning LJ

alone was prepared to take the idea of preventing the wrongdoer benefiting from its own wrong to its logical conclusion, applying fully the analogy of the cases involved with wrongful user of land.162 He would not, however, have awarded such damages against a defendant who had ‘merely detained’ the goods without using them for its own purposes (described as the ‘warehouseman’ situation).163 Somervell LJ and Romer LJJ agreed, but reserved the position of detinue and use of goods that were not profit-earning or held by the plaintiff for profit (for example, a private motor car). Australian and New Zealand courts initially reflected the caution of the majority. In McKenna & Armistead Pty Ltd v Excavations Pty Ltd164 the Full Court of the Supreme Court of New South Wales was concerned with the measure of damages for a breach of bailment. The vendor of earth-moving equipment sold it to a purchaser, but failed to deliver on the agreed date. After that date the vendor continued to use the equipment. A first instance award of damages for detention measured by a reasonable hiring rate (citing Strand Electric) was overturned on appeal. In lieu, the Full Court ordered compensatory damages restricted to proven deterioration and expense caused by the delay. Strand Electric was distinguished, as dealing with a claim by ‘the owner of income-producing goods, [who] had been wrongfully denied their possession’.165 Although this states an appropriately cautious interpretation of Strand Electric, what was ultimately critical in McKenna was that the defendant’s holding of the goods was not trespassory. [page 676] In Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd Denning LJ went further than his colleagues when he recognised that:166 The claim for a hiring charge is not based on the loss to the plaintiff, but on the fact that the defendant has used the goods for his own purposes. It is an action against him because he has had the benefit of the goods. It resembles, therefore, an action for restitution rather than an action of tort.

Judicial reluctance to acknowledge restitutionary principles in this area has been criticised by many scholars.167 The restriction cannot be justified in principle, save by closing one’s eyes to the analogy of the action for mesne profits and making an appeal to a universal rule of compensatory damages in tort. As long ago as 1776 Lord Mansfield stated that an action for use and hire lay against a person who took, rode and returned another’s horse.168 In Reading v Attorney-General,169 Sergeant Reading’s argument that the Crown had no right to recover money earned by him as money had and received, because the Crown suffered no actual loss, was rejected. American law has discarded this unnecessary shackle, as Somervell LJ noted in Strand Electric.170 Recently, courts have taken cautious steps towards the broader principles adumbrated by Denning LJ in Strand Electric.171 In Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd,172 Giles J provided a masterly review of the law in this area (albeit in proceedings involving profit-earning goods). He upheld the submission that the plaintiff did not have to prove more than its ordinary hiring rate at the relevant time. Citing Strand Electric, he also ruled that it was not necessary to discount the plaintiff’s claim for the full rate of hire by contingencies affecting the hiring business. Damages for detention were independent of the plaintiff’s loss.173 Giles J cited the principles of unjust enrichment and applied analogous cases, involving patent infringement, misuse of confidential information and breach of restrictive covenant.174 In 1998, after reviewing the cases, Cohen J in Lamru Pty Ltd v Kation Pty Ltd was able to conclude that the same principles apply in relation to [page 677] land and goods and that damages are clearly capable of being assessed on restitutionary, not compensatory, grounds.175 We respectfully agree. The cases involving interference with rights to property in land and goods justify the conclusion that absence of loss is no bar to the

plaintiff’s right to recover a reasonable letting or hiring charge, regardless of whether the plaintiff would have been interested in granting any interest to the defendant had the plaintiff been asked.

4. Claims Involving Money [1630] Introduction. Many early cases involving money obtained from the plaintiff by the defendant’s improper compulsion were treated under the rubric of waiver of tort.176 Some involved the recovery of money paid to avoid a distress, although until Maskell v Horner177 there were doubts about the availability of this remedy in the case of an excessive as distinct from a wrongful distress.178 Other early cases involved the common money count for money had and received where a fictitious implied promise to repay money was used in circumstances tantamount to the common law’s equivalent of a declaration of trust.179 [1631] Money obtained by compulsion. Most but not all of the cases involved a wrong for which there was an alternative compensatory remedy in ‘tort’ (for example, trespass, trover and replevin) coupled with the abstraction of money by the defendant from the plaintiff. It was therefore possible, albeit rather loosely, to treat the action for money had and received to recover the money as waiving the related tort. But there were cases that involved a breach of duty but no compensable tort (for example, Brocklebank Ltd v R),180 where the court nevertheless spoke in terms of waiver of tort as a remedy to recover money paid in consequence of a demand colore officii.181 In any event the presence of a tort is now seen as an unnecessary aspect of a plaintiff’s right to recover improperly demanded money.182 Today such claims require proof of improper pressure (which may or may not involve tort), and are grouped under the rubrics of duress, undue influence and statutory remedies under trade practices and similar legislation.183 The link which most of the older extortion cases had with waiver of

tort is of historical interest, but otherwise confusing in the search for the true principles relating to restitution for wrongs that involve something more than a payment of money by the plaintiff to the defendant on a [page 678] ‘consideration’ vitiated by mistake, compulsion and the like.184 The cases nevertheless illustrate the longevity of the common law’s concern to offer practical remedies to strip wrongdoers of their gains made at the expense of others. [1632] Money obtained by theft. Money that is stolen may be recovered, in a restitutionary claim, from the thief or any person to whom it is paid without (full) valuable consideration. In Black v S Freedman & Co,185 money stolen by a husband and gifted to his wife was recoverable from the wife by the victim. Indeed, the wife was said to hold the money on trust for the victim. Even if the wife had paid the money into a bank account, the victim could have traced a claim into that account.186 The precise ground of restitution against the third party is controversial and we have already addressed the topic in an earlier chapter where we also discuss the leading modern English decision of Lipkin Gorman v Karpnale Ltd,187 a case in which the defendant was not itself a tortfeasor although it received money from someone who was. It is important to note that in Lipkin Gorman the plaintiffs did not seek as against the Club relief by way of constructive trust.188 Rather they brought a personal claim at common law derived from the action for money had and received.189 While that claim had, as one element, proof of the plaintiff’s original property in the stolen money, tracing and following190 enabled that proprietary interest to be identified at the time of the defendant’s receipt. [1633]

Money obtained by deceit. It is well established that a

person who obtains money by deceit is liable to repay it, liability stemming alternatively from the action for damages for deceit and the common money count for money had and received.191 Many cases have involved the deceit of a servant or agent. For example, in Refuge Assurance Co Ltd v Kettlewell192 the holder of a policy of insurance, being minded to give up paying the premiums, was persuaded to continue by a fraudulently false representation made by the insurance company’s agent that if she paid the premiums for a certain time she would receive a free policy. The representation was made without the authority or knowledge of the company, and the company refused to grant a free policy, but retained the premiums. The policy holder was held entitled to recover from the company the premiums she had paid upon the faith of the representation. [page 679] In Refuge the company sought to hold onto the unjustly obtained premiums. In other cases, the dishonest agent may have used the unknowing principal as the means of extracting money from the victim. In such cases the knowledge or intervention of the principal in relation to the moneys put through the principal’s account (before being withdrawn by the dishonest agent) is critical. In James v Oxley193 a clerk to a firm of solicitors fraudulently misrepresented to clients that he required the clients’ cheque for the purpose of handing it over to a supposed mortgagor, upon the security of whose mortgage the plaintiffs supposed they were investing the money. The cheque was payable to the firm and was paid into the firm’s trust account by the clerk. One of the defendants (the partners of the firm) became aware that the money had been paid in, but he accepted a statement by the clerk that another person had asked that a cheque for £425 should be exchanged for two cheques of the firm. The defendant drew the two cheques and gave them to the clerk, who cashed them and misappropriated the proceeds. The firm was held liable in an action for money had and received. The later High Court decision of National Commercial Banking Corp

of Australia Ltd v Batty194 explains how significant it was that the defendants (through their partner) knew that they had money belonging to someone else, and that one of the defendants dealt with the money in such a way that it was misappropriated. Batty’s case involved a dishonest agent of a partnership (in fact one of the partners) who through fraudulent misrepresentation misappropriated cheques payable to a third party, deposited them in the firm’s account, withdrew the proceeds and applied them to his own use. Although the cheques were deposited in the firm’s account before their proceeds were withdrawn by the dishonest partner, it was critical (in distinguishing James v Oxley) that the innocent partner never knew nor ought to have known that the proceeds of the cheques had passed through that account. Speaking of the action for money had and received, Gibbs CJ said:195 Whether the action is based on an implied promise to pay, or on a principle designed to prevent unjust enrichment, the emphasis on justice and equity in both old and modern authority on this subject supports the view that the action will not lie unless the defendant in justice and equity ought to pay the money to the plaintiff. Where, because of the action of a servant or agent acting outside the scope of his authority, or for that matter because of the action of a complete stranger, money has been paid into the account of the defendant, who has technically received it, although he is quite unaware of that fact, and the money is then misappropriated, still without the knowledge or intervention of the defendant, there seems to be no reason in justice or equity why the defendant should be answerable for the money simply because theoretically he had the means of knowing that the money was in the account.

[page 680] What if the defendant obtains a benefit additional to the money handed over?196 The defendant’s deceit need not relate to procuring money. A defendant who, by fraud or misrepresentation, induced the plaintiff to sell goods to an insolvent third party who resold the goods to the defendant was held liable to pay for the goods (notwithstanding the intervening express contract) ‘because no man must take advantage of his own fraud’.197 Likewise with a defendant who dishonestly induced

the plaintiff to perform a service for the defendant, without intending to pay for it.198 It is difficult to see why, in the case of a fraudulently induced payment of money, the benefit should necessarily be pegged to the money handed over plus interest on that sum. Yet the position is rendered doubtful by a controversial English case. In Halifax Building Society v Thomas199 the English Court of Appeal refused a restitutionary remedy to a creditor that had granted a mortgage because of the defendant mortgagor’s fraudulent misrepresentation. The mortgagee recovered full satisfaction of the mortgage debt by exercising its power of sale. There was a surplus but the mortgagee was unsuccessful in a restitutionary claim to the effect that the defendant had been unjustly enriched in consequence of his fraud. There are statements in the judgment of Peter Gibson LJ (with whom Simon Brown LJ and Glidewell LJ agreed) supporting the view that no restitutionary remedy lay because it was a step too far for English law to hold that a non-fiduciary wrongdoer could be required to account for a profit not based on the use of property of the wronged plaintiff.200 There was no discussion of any of the older deceit cases,201 albeit that they were arguably distinguishable on the basis of the matter stated at the start of this paragraph. Goff and Jones suggest202 that the Court of Appeal ‘arguably reached the wrong conclusion’ and that, in any event, the decision really turns upon principles of election in that the mortgagee affirmed the contract when it exercised remedies based upon it.203 Peter Gibson LJ conceded that, if the mortgagee had sought to set aside the mortgage for fraud rather than affirming it, it might then have claimed in equity that it remained the owner of the moneys advanced and traced those moneys into the flat and the sale proceeds, and that it might have made a common law claim for money had and received.204 [page 681] [1634] Misdirected funds generally. A person with legal property in money can bring a personal action for money had and received

against a third party who had received it otherwise than in good faith and for valuable consideration.205 The real difficulty lies in identifying what the defendant received with what was stolen from the plaintiff, given the principles about the currency of money. In Lipkin Gorman v Karpnale Ltd206 the defendant’s concession removed this difficulty. When recovery is available, the plaintiff’s action is not founded upon the defendant’s tort, although some interference with the plaintiff’s property by the third party who passed the money to the defendant appears to be a necessary ingredient of the claim.207 In Lord Goff’s words, the claim is ‘founded simply on the fact that, as Lord Mansfield said, the third party cannot in conscience retain the money or, as we say nowadays, for the third party to retain the money would result in his unjust enrichment at the expense of the owner of the money’.208 The dictum of Lord Mansfield there referred to was in Clarke v Shee,209 where the plaintiff’s money was stolen by his servant and then gambled away by the thief when he bought lottery tickets from the defendant. The plaintiff recovered from the defendant because a gambling debt was not good consideration and was indeed illegal under statute. [1635] Defence of inability to give counter-restitution. A claim for money obtained as consideration for a fraudulently induced contract does not lie if the right to rescind the underlying contract for fraud no longer exists because restitution of the property is impossible. ‘If you are fraudulently induced to buy a cake, you may return it and get back the price; but you cannot both eat your cake and return your cake.’210 These cases involve restitutionary claims based on the tort of deceit, where there is a defence of inability to make counterrestitution.211 Sometimes the concept of unjust enrichment operates to modify the remedy afforded to a plaintiff seeking specific restitution.212 The plaintiff may be required to make fair and just allowance for improvements offered by a defendant who has added value to the chattel.213 In Greenwood v Bennett214 Lord Denning MR derived this

principle from the law of restitution, in order to prevent the plaintiff in the case from unjustly enriching himself at the defendant’s expense. [page 682]

5. What are the Limits of Restitution for Tortious Wrongs? [1636] Introduction. In this final section we consider whether there are any torts that do not offer gain-based remedies and the circumstances in which the actual profits derived by the wrongdoer are recoverable. Each inquiry proceeds, in part, from one’s understanding of the principles extrapolated from the existing case law as well as the capacity of the general law to develop. The question of accounting for actual profits (sometimes described as disgorgement)215 also involves examining the willingness of modern equity to come to the aid of an arguably deficient common law. Naturally, care is needed lest one slips into the error of assuming that the presently drawn lines are themselves unjust. [1637] Drawing the threads together. The modern lawyer hopes to escape the reproach of being ruled by the forms of action from their graves. Restitution in one form or another (damages according to the restitutionary measure, more traditional remedies derived from the common money counts, perhaps even an account of profits) appears to be available with respect to many torts in appropriate circumstances. The willingness of the law to offer remedies according to restitutionary principles for at least the torts involving the wrongful use of land or goods is sustained by an intuitive response to what is perceived as the defendant’s attempt to benefit from a wrong. The fact that an exception is made to the compensatory principle in tort damages possibly also reflects a perceived need for a strong response to an abuse of property rights that, if not protected in this way, might put

the security of all property and titles at risk.216 Even traditional quasicontract offered a variety of remedies that vindicated property interests, whatever else they did.217 It would be wrong in principle to reach any conclusion on the two topics of the range of tortious wrongs and the availability of account of profits without at least recognising the developments across the law addressed in all of the chapters in this Part dealing with restitution for wrongs. As we have already demonstrated,218 it is now commonplace for reasoning and remedies governing one branch to be extended by analogy to others, with or without the added impetus of modern restitution academic scholarship.219 Lord Nicholls, who has been at the vanguard of judicial recognition of the unity of the topic of restitution for wrongs, recently drew the threads together in a passage in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Her Majesty’s Commissioners of Inland Revenue:220 [page 683] I mentioned above that in cases of personal restitution the value of the use of money is prima facie the reasonable cost of borrowing the money in question. I should elaborate a little on this, noting first that a comparable objective measure is well established in the analogous case of valuing the benefit derived from unauthorised use of the claimant’s land or goods. In modern terminology these are instances of restitution for wrongdoing as distinct from restitution for unjust enrichment. The Earl of Halsbury’s chair and Lord Shaw’s horse are famous hypothetical examples of the application of the ‘user’ principle: see The Mediana [1900] AC 113, 117 and Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, 119. If the unauthorised use causes injury, damages will be recoverable. If the unauthorised use does not cause damage the defendant must still recompense the plaintiff for the benefit he unjustly received. This distinction was drawn explicitly in cases such as Whitwham v Westminster Brymbo Coal and Coke Co [1896] 2 Ch 538 and Penarth Dock Engineering Co Ltd v Pounds [1963] 1 Lloyd’s Rep 359. In Attorney-General v Blake [2001] 1 AC 268, 278, I summarised the ordinary measure of the benefit in this type of case as the price a reasonable person would pay for the right of user.

[1638] Are any torts excluded? Even during the heyday of waiver of tort gain-based awards were made in claims based on torts not

involving use of or interference in tangible property rights.221 In this section we consider whether there are, in principle, any torts which under the general law do not yield gain-based awards in proper cases. The case law to date in which a restitutionary personal remedy is available recognises (in addition to torts directly involving proprietary interests) the torts of intimidation,222 nuisance,223 deceit,224 and inducement to breach contract.225 In United Australia Ltd v Barclays Bank Ltd226 Viscount Simon LC said that the process of waiver of tort could not apply to defamation or assault. He did not explain why and his remarks were obiter. Certainly, these torts do not involve anything equivalent to the taking of property and there would be few instances where a plaintiff could prove the inadequacy of compensatory damages. In each such case, exemplary damages are available under the general law.227 As Fleming points out,228 ‘where the defendant has made a profit from his wrong exceeding the plaintiff’s injury, exemplary damages serve the cause of preventing unjust enrichment’. It is difficult to see why, in principle, restitutionary damages should be withheld in a suitable case. If a professional hitman is paid a specific sum to bash the plaintiff would it not be just to allow this to be stripped by treating it as part of the plaintiff’s damages? The strongest argument against this [page 684] conclusion is that exemplary damages achieve equivalent justice and that, in areas where exemplary damages have been curtailed by statute, the law of restitution should respect the statutory policy. In Attorney-General v Blake229 Lord Nicholls remarked that ‘it is not clear why it should be any more permissible to expropriate personal rights than it is permissible to expropriate property rights’. We agree. [1639]

Claiming defendant’s actual profits. As long ago as 1776

Lord Mansfield brushed off a claim that the death of the defendant to an action in trover prevented the plaintiff pursuing the sale proceeds in the hands of the executor through the action for money had and received. ‘It is merely a distinction whether the relief shall be in this form or that.’230 Yet the common law stopped short of stripping a defendant of actual profits derived from tortious wrongdoing save in cases where those profits could be recovered as damages on the basis that they were seen as the measure of the plaintiff’s loss.231 In these cases, the fiction of waiver of tort allowed the proceeds of conversion of minerals or goods to be recovered.232 To date English and Australian cases have limited recovery in relation to trespass to land to a reasonable charge for the user.233 Perhaps this is because profits were not earned by the defendant, or because the greater measure may never have been sought, as it has in the intellectual property cases discussed in Chapter 17.234 Or perhaps this is as far as Australian courts are prepared to go to prevent defendants profiting from wrongful use of land.235 Beyond these cases, the plaintiff had to approach equity and claim an account of profits. The availability of this remedy, at the election of the plaintiff, is entirely uncontroversial in the spheres of breach of fiduciary duty and interference with intellectual property rights.236 Yet, in the former category there is nothing about the equitable nature of the primary wrong that suggests that equity is powerless to grant this remedy in its auxiliary jurisdiction, and there is nothing equitable (in either the technical or lay sense) about the latter category of wrongs. An account of profits may be awarded for the tort of [page 685] passing off.237 The extension of the property cases to the realm of contract, in Attorney-General v Blake238 tends to reinforce this conclusion. In Hospitality Group Pty Ltd v Australian Rugby Union Ltd239 a Full Court of the Federal Court of Australia held (by majority) that an

account of profits was unavailable in a (purely) tortious claim. The conclusion and analysis are unsatisfactory for the reasons we offer below, but (unless overturned by the High Court) this decision represents the Australian law in light of the rule of precedent concerning intermediate courts of appeal announced by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd.240 Hospitality Group Pty Ltd v Australian Rugby Union Ltd involved the tort of inducing breach of contract. Hill and Finkelstein JJ held241 that contract damages in Australia are limited to compensatory damages and that this is also the general position for claims in tort. The limited availability of restitutionary damages was acknowledged, but their Honours appear to restrict such damages to cases involving the misuse of property. They concluded:242 However described, it is not possible to slot an account of profits into the general framework of remedies that are available in tort, when the account is not awarded to compensate the plaintiff for his actual or presumed loss. That is to say, under presently accepted principles, an injured plaintiff cannot claim a windfall to prevent a wrongdoer profiting from his wrong, except in those cases where exemplary damages are available and it is proper that illicit profits are taken into account in assessing the quantum of the award, as happened in McMillan v Singh (1984) 17 HLR 120 at 125 and John v MGN Ltd [1997] QB 585 at 619.

This, with respect, is largely reasoning by assertion. The contrary view of Emmett J is clearly to be preferred. First, because there is no general preclusion of restitutionary damages in tort matters, as we have been at pains to demonstrate in this chapter. Second, because there is long-standing authority supporting an account of profits by way of an exceptional remedy in tort in Phillips v Homfray (No 1).243 Third, an account of profits has always been a remedy available for the tort of passing off. Fourth, because the remedy is a more finely tuned response than an award of exemplary damages.244 American law supports the availability of an account of profits.245 [page 686] To the extent that Re Simms246 suggests a contrary result it should

not be followed in Australia. The reasoning of the English Court of Appeal is riddled with the implied contractual analysis of quasi-contract which, for once, was too strong to allow a finding of ‘waiver of tort’. In any event, there was a finding that the wrongdoer’s own exertions earned the profits claimed. There is no sense, in financial or other terms, in drawing a distinction between profits made and expenses saved at least in cases where the defendant has ‘wronged’ the plaintiff by some positive act.247 Since exemplary damages can have regard to the profits made by a wilful tortfeasor, it would be odd that the more finely tuned remedy of damages calculated by reference to profits, or an account of profits simpliciter should not also be available. The defendant who realises a profit from the wrong248 or who saves a necessary expense249 are each incontrovertibly enriched. Two English cases involving the Ministry of Defence have stressed that the benefit received by the defendant is the measure of the response.250 In an unusual factual situation, the courts there awarded mesne profits in a sum less than any market rental.251 However, the logic of their reasoning must concede the availability of restitution at higher than market rental value as against a defendant who earns more by virtue of the trespass.252 The decree originally made in Phillips v Homfray253 shows that an account of profits is effectively an available remedy for a trespass. It is, we think, nevertheless doubtful whether Australian equity would grant an account of profits in relation to a non-wilful trespass. Exemplary damages would almost certainly be withheld in that situation, with the result that the gravitational pull of the general compensation principle in tort would remain. Wilfulness appears to be required under the American cases.254 This is also a critical factor in the intellectual property cases.255 A remedial constructive trust256 can provide an alternative conceptual gateway to this more stringent type of gain-based award257 but access to this remedy in ‘common law’ matters appears to require proof of unconscientious conduct.258

[page 687] One must agree with Lord Nicholls in Attorney-General v Blake who said:259 Considered as a matter of principle, it is difficult to see why equity required the wrongdoer to account for all his profits in these cases, whereas the common law’s response was to require a wrongdoer merely to pay a reasonable fee for use of another’s land or goods. In all these cases rights of property were infringed. This difference in remedial response appears to have arisen simply as an accident of history. In some instances the common law itself afforded a wronged party a choice of remedies. A notable example is the wrong of conversion. A person whose goods were wrongfully converted by another had a choice of two remedies against the wrongdoer. He could recover damages, in respect of the loss he had sustained by the conversion. Or he could recover the proceeds of the conversion obtained by the defendant: see United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 34, per Lord Romer. Historically, the latter alternative was achieved by recourse to an element of legal fiction, whereby the innocent party ‘waived the tort’. The innocent party could suppose that the wrongful sale had been made with his consent and bring an action for money ‘had and received to his use’: see Lamine v Dorrell (1701) 2 Ld Raym 1216, 1217. Holt CJ observed that these actions had ‘crept in by degrees’. 1. 2.

For the distinction see [219], [1514]. See generally on unjust factors Chapter 1. See [220], [1517].

3. 4.

See [1636]–[1639]. See, eg Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39; Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191; Hospitality Group Pty Ltd v Rugby Union Ltd (2001) 110 FCR 157 at 197; [2001] FCA 1040 at [161].

5.

Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2012] NSWCA 342 at [174] (Allsop P, Macfarlan JA agreeing). We prefer the stance of Giles JA at [194]– [199]. Harvey McGregor, McGregor on Damages, 19th ed, Sweet and Maxwell, 2014, Chapter 14 now recognises that restitutionary damages form a legitimate exception to the general rule that damages for torts are purely compensatory. See also the texts noted by Allsop P at [173]. Many statutes now exclude exemplary damages for non-intentional torts. For example, Civil Liability Act 2002 (NSW), s 21. In 2005 most Australian jurisdictions also barred exemplary damages in defamation.

6.

7.

8.

See [1510]. In Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157 at 197 [162]; [2001] FCA 1040 Emmett J said (at [181]) that an account of profits could serve as an appropriate deterrent and punishment. Since it would operate as a more finely tuned remedy than exemplary damages it is unfortunate that his view about the availability of an account of profits did not prevail in that case (see [1639]). Cf [1523]–[1526].

9.

See [1631]–[1633].

10. See, eg [1612]. 11. See generally [214], [226], [504], [1047], [1315], [1837]. 12. We leave out replevin as having no contemporary significance. 13. See generally Fleming, Chapter 4. Further as to the inability to plead the jus tertii see [1611]. 14. (1946) 74 CLR 204. 15. See further Palmer, Bailment, pp 207–8. 16. See further [1623]–[1625]. 17. See generally Fleming, Chapter 2. 18. See further [1522]–[1526], [1638]. 19. Sometimes still termed ‘trover’: Bassin v Standen (1945) 46 SR (NSW) 16 at 19. 20. Conversion does not lie for interference with choses in action other than cheques, bonds and the like: see OBG Ltd v Allan [2008] 1 AC 1; Telecom Vanuatu v Optus [2008] NSWSC 1209. 21. See the recent review in Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2012] NSWCA 342. See also Sarah Green and John Randall, The Tort of Conversion, Hart Publishing, 2009. 22. See Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 229 per Dixon J. 23. See, eg the analysis in Willey v Synan (1937) 57 CLR 200. 24. (1946) 74 CLR 204. 25. See Armory v Delamirie (1722) 1 Str 505; 93 ER 664. For a more recent example see Parker v British Airways Board [1982] QB 1004. 26. See Singh v Ali [1960] AC 167 at 176 (absolute or special property sufficient). 27. See [1628]. 28. See John F Goulding Pty Ltd v The Victorian Railways Commissioners (1932) 48 CLR 157; Thomas Brown & Sons Ltd v Fazal Deen (1962) 108 CLR 391. 29. See, eg Hannah v Peel [1945] 1 KB 509. 30. Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 at 1416 per Nourse LJ. 31. See [1526], [1638]. 32. See [1612]. 33. See [249], [1612]. 34. See generally Palmer, Bailment, pp 265ff, 354ff. There is more scope for such a defence where the plaintiff was not in possession at the time of the wrong. 35. [1902] P 42. 36. See [1902] P 42 at 54 per Collins MR. 37. See Maynegrain Pty Ltd v Compafina Bank [1982] 2 NSWLR 141 at 155–7 (reversed on other grounds (1984) 58 ALJR 389). 38. See Palmer, Bailment, pp 313–14. The defence of the jus tertii was abolished in the United Kingdom by the Torts (Interference with Goods) Act 1977 (UK).

39. See generally Meagher, Gummow and Lehane, Chapter 22. 40. Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581; Doulton Potteries Pty Ltd v Bronotte [1971] 1 NSWLR 591. 41. General & Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 1 WLR 644; Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175. See Cairns, Australian Civil Procedure, 7th ed, 2007, p 583. The discretion to order specific delivery may be affected by whether the defendant has increased the value of the goods by the expenditure of labour or money: Barnes v Nash [1922] NZLR 303 at 307 per Salmond J. 42. See esp [244]–[252]. 43. Cf Halifax Building Society v Thomas [1996] Ch 217 at 229 (Peter Gibson LJ). 44. See [1505]. See also Chapter 2. 45. See [1614]–[1617]. 46. Esperance Cattle Co Pty Ltd v Granite Hill Pty Ltd (2014) 47 WAR 318; [2014] WASC 279 at [452]–[453]. 47. Lynch v Port Jackson Trading Corp Pty Ltd [1950] VLR 153; Canas Property Co Ltd v KL Television Services Ltd [1970] 2 QB 433; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 39. 48. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 39–40; 57 ALR 607 at 625–6 per Brennan J. For the general principle of subsidiarity, see [215]. 49. Biviano v Natoli (1998) 43 NSWLR 695 at 704; Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 at 439 (and authorities cited in each case); Esperance Cattle Co Pty Ltd v Granite Hill Pty Ltd (2014) 47 WAR 318; [2014] WASC 279 at [454]. The actual rent is only a prima facie measure: Lee v Blakeney (1887) 8 NSWLR (L) 141. 50. See [1639]. 51. [1993] 2 EGLR 102 at 105. See further Elizabeth Cooke, ‘Trespass, Mesne Profits and Restitution’ (1994) 110 LQR 420. 52. There was no indebitatus assumpsit count for the use and occupation of land: see William Swadling, ‘Phillips v Homfray (1883)’ in Mitchell and Mitchell, Landmark Cases in the Law of Restitution, pp 179–80. 53. Australian Provincial Assurance Ltd v Rogers (1943) 43 SR (NSW) 202; Zegir v Woop [1955] VLR 394. 54. Sanders v Cooper [1974] WAR 129. 55. That is the reason why use and occupation did not lie in Phillips v Homfray: The Minister v Mathieson (1903) 3 SR (NSW) 298, applying Tew v Jones (1844) 13 M & W 12; 153 ER 5. See also Inverugie Investments Ltd v Hackett [1995] 1 WLR 713. 56. See [1614]. 57. Anderson v Bowles (1951) 84 CLR 310 at 319. 58. See [1616]–[1617], [1623]–[1626]. 59. Jagon v Vivian (1871) LR 6 Ch App 742; Phillips v Homfray (1871) LR Ch App 770. See also Quality Excelsior Coal Co v Reeves 177 SW 2d 728, 732; 29 Ark 713 (1944). 60. See Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538 and other cases cited at [1625].

61. (2001) 110 FCR 157. 62. (1871) LR 6 Ch App 770 (see [1617]). 63. See [1639]. 64. (1871) LR 6 Ch App 770; (1883) 24 Ch D 439; (1890) 44 Ch D 694; [1892] 1 Ch 465. 65. See also [1627]. 66. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 67. (1871) 6 Ch App 770 at 780–1. 68. Actio personalis moritur cum persona, the rule that a personal claim perished on the death of a party. 69. (1883) 24 Ch D 439, applied in Mount Gambier Co-operative Milling Society Ltd v Williams [1921] SASR 185. 70. Mr Justice W M C Gummow, ‘Unjust Enrichment, Restitution and Proprietary Remedies’ in Finn, Essays, pp 60–7; William Swadling, ‘Phillips v Homfray (1883)’ in Mitchell and Mitchell, Landmark Cases in the Law of Restitution. See also Peter Birks, ‘Restitution for Wrongs’ in Schrage, Unjust Enrichment: The Comparative Legal History of the Law of Restitution, 2nd ed, pp 188–90. 71. An account of profits derived from taking minerals was ordered regardless that the form and cause of action were trespass. The Vice-Chancellor’s decision was affirmed by Lord Hatherley LC in the Court of Appeal and was never doubted in the later stages of the litigious saga: see Phillips v Homfray (1871) LR 6 Ch App 770. See also Finlay v Chirney (1888) 20 QBD 494 at 504. 72. (1883) 24 Ch D 439 at 446. 73. See [1615]. 74. Phillips v Homfray (No 2) (1883) 24 Ch D 439 at 462–3 (Bowen LJ, delivering the judgment of himself and Cotton LJ). 75. Mr Justice W M C Gummow, ‘Unjust Enrichment, Restitution and Proprietary Remedies’ in Finn, Essays, pp 60–7; William Swadling, ‘Phillips v Homfray (1883)’ in Mitchell and Mitchell, Landmark Cases in the Law of Restitution. 76. Cf Burrows, pp 654–6. 77. The expression is used by Nicholls LJ in Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 at 1416; [1988] 3 All ER 394 at 402. 78. See, eg Lightly v Clouston (1808) 1 Taunt 112; 127 ER 774 and Beatson, pp 226–7. 79. Cf Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111; 116 ALR 385 at 387. 80. See, eg (1883) 24 Ch D 439 at 461–2. 81. [1941] AC 1. 82. Possible reasons for pursuing the latter claims in modern times, even in cases where the outcome is less favourable for a plaintiff, are discussed at [1530]–[1534]. See also Chapter 27 (limitation of actions). 83. Phillips v Homfray (No 2) (1883) 24 Ch D 439 at 454–5, 462–3. The remarks should in any event be read in the context of an obiter discussion about the action for money had and received and the need to prove an actual receipt under that form of action.

84. In context, the remarks were strictly confined to the actio personalis point. As indicated, none of the discussion in 1883 cast doubt on the 1871 decision in the same litigation in which no distinction between positive and negative benefits was drawn in the case of the surviving defendants. 85. See [117] and Chapter 3. 86. The history is traced in Stoljar, pp 100–6. See also Peter Birks, ‘Restitution for Wrongs’ in Schrage, Unjust Enrichment: The Comparative Legal History of the Law of Restitution, 2nd ed, pp 181–6; Peter Hastie, ‘Restitution and Remedy in Intellectual Property Law’ (1996) 14 Aust Bar Rev 6 at 21–2. 87. Oughton v Seppings (1830) 1 B & Ad 241; 109 ER 776; Neate v Harding (1851) 6 Ex 349; 155 ER 577. 88. Powell v Rees (1837) 7 A & E 426; 112 ER 530 (coal tortiously removed from plaintiff’s land and sold). 89. Indeed, Pollock CB cited Taylor v Plumer (1815) 3 M & S 562; 105 ER 721 in Neate v Harding (1851) 6 Ex 349 at 350; 155 ER 577 at 578. See further Chapter 3 (Want of Title: Misdirected Funds and Tracing) as to tracing as a process in obtaining both personal and proprietary remedies at common law and in equity. 90. (1706) 2 Ld Raym 1216; 92 ER 303. 91. Feltham v Terry (1793) Lofft 207; 98 ER 613. 92. Graham v Tate (1813) 1 M & S 609; 105 ER 228. 93. See below [1620], [1633]. 94. Lightly v Clouston (1808) 1 Taunt 112; 127 ER 774; Foster v Stewart (1814) 4 M & S 191; 105 ER 582. See also Phillips v Homfray (1883) 24 Ch D 439 at 462. 95. See generally Stoljar, The Law of Quasi-Contract, 2nd ed, 1989, pp 99–106. 96. Lamine v Dorell (1706) 2 Ld Raym 1216; 92 ER 303. 97. [1941] AC 1 (discussed [1517]). 98. [1941] AC 1 at 27. 99. See, eg Lamine v Dorrell (1706) 2 Ld Raym 1216; 92 ER 303. 100. See, eg Re Simms [1934] Ch 1, a case we believe would not be followed in Australia today (see [1639]). See also Halifax Building Society v Thomas [1996] Ch 217 at 227 (doubting Re Simms). 101. Astley v Reynolds (1731) 2 Strange 915; 93 ER 939; Pasley v Freeman (1789) 3 TR 51; 100 ER 450; Jackson, pp 73–5. See also Hill v Perrott (1810) 3 Taunt 274; 128 ER 109; Abbotts v Barry (1820) 2 Brod & B 369; 129 ER 1009. 102. [1925] 1 KB 52. 103. Many other examples of how ‘waiver of tort’ was a legal claim truly independent of a tortious cause of action are given by Beatson, pp 211–24. See also S Hedley, ‘The Myth of “Waiver of Tort”’ (1984) 100 LQR 653. 104. Goff and Jones, §36-001. (It is not clear if the learned authors endorsed this statement.) See eg, Turner v Cameron’s Coalbrook Steam Coal Co (1850) 5 Ex 932; 155 ER 407; Commercial Banking Co of Sydney v Mann [1961] AC 1 at 8; Chesworth v Farrer [1967] 1 QB 407 at 417.

105. See [1515]. 106. A Treatise on the Law of Quasi-Contracts, p 159. 107. [1941] AC 1 at 18. 108. See [1515]–[1517]. 109. As to election generally, see Chapter 23. 110. See, eg Roberts v Rodney District Council [2001] 2 NZLR 402. 111. [1941] AC 1 at 34–5. See also Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304 at 311. 112. Beatson, p 235. For a general survey, see Law Commission, Aggravated, Exemplary and Restitutionary Damages, Law Com No 247, 1997. 113. As to personal and proprietary remedies see [233]–[257]. 114. Powell v Rees (1837) 3 Taunt 274; 128 ER 109 (waiver of tort analysis); Bilambil-Teranora Pty Ltd v Tweed Shire Council [1980] 1 NSWLR 465. 115. [1980] 1 NSWLR 465 at 494–5. 116. (1837) 3 Taunt 274; 128 ER 109. 117. See [1613]–[1616]. 118. Kelsen v Imperial Tobacco Co [1957] 2 KB 334; Patel v W H Smith (Eziot) Ltd [1987] 1 WLR 853; Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464; Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR 311. 119. (1883) 24 Ch D 439 at 454–5, 462–3 (see [1617]). 120. Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538. 121. Gilchrist v Logan [1927] St R Qd 185; Yakamia Dairy Pty Ltd v Wood [1976] WAR 57. 122. LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 (discussed [1626]). 123. Carr-Saunders v Dick McNeil Associates Ltd [1986] 2 All ER 888. 124. Ministry of Defence v Ashman [1993] 2 EGLR 102 at 105; Inverugie Investments Ltd v Hackett [1995] 1 WLR 713; [1995] 3 All ER 841. See generally I M Jackman, ‘Restitution for Wrongs’ (1989) 48 CLJ 302. See also [1508]. 125. Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798. Cf Jaggard v Sawyer [1995] 1 WLR 269. 126. Carr-Saunders v Dick McNeill Associates Ltd [1986] 1 WLR 922; [1986] 2 All ER 888. 127. [1988] 1 WLR 1406; [1988] 3 All ER 394. 128. The decision is criticised by Professor Birks for the court’s failure to survey the total field of common law and equity, and to note that the award of profits-based remedies is not unusual: see P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, p 55. See also Burrows, pp 656–7. Cf Smith Kline & French Laboratories Ltd v Long [1989] 1 WLR 1 at 10; [1988] 3 All ER 887 at 893–4. 129. [1988] 1 WLR 1406 at 1416; [1988] 3 All ER 394 at 402. See also Inverugie Investments Ltd v Hackett [1995] 1 WLR 713 at 718; Waugh v Attorney-General [2006] 2 NZLR 812; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Her Majesty’s Commissioners of Inland Revenue [2008] 1 AC 561 at [116] (passage quoted at [1637]).

Biviano v Natoli (1998) 43 NSWLR 695 at 704. But the rental value is only a prima facie 130. measure: see Lee v Blakeney (1887) 8 NSWR (L) 141. 131. [1976] WAR 57. See also Gilchrist v Logan [1927] St R Qd 185. 132. Phillips v Homfray (1871) 6 Ch App 770; Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538; Swordheath Properties Ltd v Tabet [1979] 1 WLR 285; Penarth Dock Engineering Co Ltd v Pounds [1963] 1 Lloyd’s Rep 359; Ministry of Defence v Ashman [1993] 2 EGLR 102; Ministry of Defence v Thompson [1993] 2 EGLR 107; Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Her Majesty’s Commissioners of Inland Revenue [2008] 1 AC 561 [116] (passage quoted at [1637]). The earlier cases are discussed by Samuels JA in Bilambil-Terranora Pty Ltd v Tweed Shire Council [1980] 1 NSWLR 465 at 485–6. 133. Lamru Pty Ltd v Kation Pty Ltd (1988) 44 NSWLR 432 at 441 (see also at 439, explaining that this included a premium which the defendant would have been willing to pay because of the additional value of the property to the defendant as a result of saving moving costs); Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420 at [198]; Hampton v BHP Billiton Minerals Pty Ltd (No 2) [2012] WASC 285; Legune Land Pty Ltd v Northern Territory Land Corporation [2012] NTSC 99. 134. (1990) 24 NSWLR 499. See also Knowles v Henderson (No 2) (1992) 2 NZ Conv C 95178. 135. Cf also Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 at [181] per Emmett J, dissenting. 136. See [1629]. 137. [1993] 2 EGLR 102 (discussed E Cooke, ‘Trespass, Mesne Profits and Restitution’ (1994) 110 LQR 420). See also Ministry of Defence v Thompson [1993] 2 EGLR 107. 138. See, generally Birks, Introduction, pp 109ff. See also Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [48], [119], [184]; Benedetti v Sawiris [2014] AC 938; [2013] UKSC 50. 139. Cf Birks, Introduction, p 228. As to free acceptance, see [158]. 140. Ministry of Defence v Thompson [1993] 2 EGLR 107 per Hoffmann LJ. 141. See generally E Cooke, ‘Trespass, Mesne Profits and Restitution’ (1994) 110 LQR 420. 142. [1995] 1 WLR 713, discussed 112 LQR 39 (Watts). 143. See [1639]. 144. See [1639]. 145. See [1629]. 146. Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538 at 542 per Lopes LJ and 543 per Rigby LJ. 147. See [1624]. 148. See [1627]. 149. See [1624]. 150. Oughton v Seppings (1830) 1 B & Ad 241; 109 ER 776; Rodgers v Maw (1846) 15 M & W 444; 153 ER 924; United Australia Ltd v Barclays Bank Ltd [1941] AC 1; Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304; Chesworth v Farrar [1967] 1 QB 407. See also Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64 at 68 (noting that

the implied contract theory still lingered). Cf also Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 (discussed [310]). 151. See Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 440–1, where payment over (cf [2410]) was recognised as a defence extending outside the usual mistake situation. 152. See Jackson, pp 78–80. 153. Keeton, Dobbs, Keeton and Owen, Prosser and Keeton on Torts, 5th ed, 1984, pp 673–4; Dan B Dobbs, The Law of Torts, West, 2000, p 151. 154. Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204. 155. Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 231 per Dixon J. Cf Craig v Marshall (1935) 35 SR (NSW) 323. 156. See [1609]. 157. General & Finance Facilities Ltd v Crooks Cars (Romford) Ltd [1963] 1 WLR 644; Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175; Wade Sawmill Pty Ltd v Colenden Pty Ltd (2007) Aust Torts Rep ¶81-927; [2007] QCA 455. 158. Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175 at 178. 159. See, eg Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246 at 252 (Somervell LJ) and 257 (Romer LJ). 160. [1952] 2 QB 246. See also Hillesden Securities Ltd v Ryjack Ltd [1983] 1 WLR 959; Stokeon-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 at 1411–12; [1988] 3 All ER 394 at 398–9. See the discussion by Ewan McKendrick, ‘Restitution and the Misuse of Chattels: the Need for a Principled Approach’ in Palmer and McKendrick, Interests in Goods, Chapter 35, p 897. 161. [1952] 2 QB 246 at 249–50. 162. See the passage at [1952] 2 QB 246 at 254–5 quoted below. 163. [1952] 2 QB 246 at 254. See also Somervell LJ at 250. This was applied in Gaba Formwork Contractors Pty Ltd v Turner Corp Pty Ltd (1991) 32 NSWLR 175 at 182–3. 164. [1957] SR (NSW) 515. See also Egan v State Transport Authority (1982) 31 SASR 481 and Mrs Eaton’s Car Sales Ltd v Thomason [1973] 2 NZLR 686. 165. [1957] SR (NSW) 515 at 519. 166. [1952] 2 QB 246 at 254–5. 167. In addition to the standard restitution texts, see J Glover, ‘Restitutionary Principles in Tort: Wrongful Use of Property and the Everyday Measure of Damages’ (1992) 18 Monash L Rev 169 and Ewan McKendrick, ‘Restitution and the Misuse of Chattels: the Need for a Principled Approach’ in Palmer and McKendrick, Interests in Goods, Chapter 35, p 897. 168. Hambley v Trott (1776) 1 Cowp 371; 98 ER 1136. See also The Mediana [1900] AC 113 at 117; Watson Laidlaw & Co Ltd v Pott, Cassels & Williamson (1914) 31 RPC 104 at 119. 169. [1951] AC 507 (discussed [1714]). 170. [1952] 2 QB 246 at 252. 171. Bilambil-Terranora Pty Ltd v Tweed Shire Council [1980] 1 NSWLR 465 at 485–6 per Samuels JA (dissenting); Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32

NSWLR 175. See also Inverugie Investments Ltd v Hackett [1995] 1 WLR 713 at 717–18. 172. (1991) 32 NSWLR 175. Followed in Wade Sawmill Pty Ltd v Colenden Pty Ltd (2007) Aust Torts Rep ¶81-927; [2007] QCA 455; Bunnings Group Ltd v CHEP Ltd (2011) 82 NSWLR 420. 173. (1991) 32 NSWLR 175 at 188. See also Athanasopoulos v Moseley (2001) 52 NSWLR 262. 174. (1991) 32 NSWLR 175 at 188. See also Attorney-General v Blake [2001] 1 AC 268 at 278–80 and Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [116] (passage quoted at [1637]) where Lord Nicholls pointed to the links between cases involving trespass to land, wrongful detention of goods and patent infringement; and recognised that these cases are really exceptions to the general rule concerning compensatory damages in tort. 175. Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 at 439–40. 176. See, eg Neate v Harding (1851) 6 Ex 349; 155 ER 577. 177. [1915] 3 KB 106. 178. See Jackson, p 71. See J & S Holdings Pty Ltd v NRMA Insurance Ltd (1982) 61 FLR 108 at 129–130; 41 ALR 539 at 557. 179. See [123]. 180. [1925] 1 KB 52. 181. See generally [529]. 182. Birks, Introduction, pp 314–15. See also [509]. 183. See Chapter 5. 184. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383; 109 ALR 57 at 79; Birks, Introduction, pp 318–19. 185. (1910) 12 CLR 105. See also Chowne v Baylis (1862) 31 LJ Ch 757; Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 426 at 432; Nelson v Larholt [1948] 1 KB 339; Jack Clark (Rainham) Ltd v Clark [1946] 2 All ER 683; Puma Australia Pty Ltd v Sportsman’s Australia Pty Ltd (No 2) [1994] 2 Qd R 159 at 163–4. See further Chapter 3. 186. Banque Belge pour l’Etranger v Hambrouck [1921] 1 KB 321; Taylor v Plumer (1815) 3 M & S 562; 105 ER 721. 187. [1991] 2 AC 548 (discussed [309]). 188. Cf [1727]–[1732]. 189. See Martin v Pont [1993] 3 NZLR 25. 190. See [303]. 191. For the older cases, see [1620]. 192. [1909] AC 243. See also Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374. 193. (1939) 61 CLR 433. 194. (1986) 160 CLR 251; 65 ALR 385. See also Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at [57]. 195. (1986) 160 CLR 251 at 268; 65 ALR 385 at 395–6 (see [307]). Several restitution cases were cited, commencing with Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676. See also

[311]. 196. We leave aside the mere opportunity to use the money that is normally addressed by an award of interest. As to interest, see Chapter 28. See also [1639] (claiming defendant’s actual profits). 197. Hill v Perrott (1810) 3 Taunt 274 at 275; 128 ER 109 per curiam. See also Abbotts v Barry (1820) 2 B & B 369; 129 ER 1009. 198. Rumsey v Nerly (1863) 14 CB (NS) 641; 143 ER 596. 199. [1996] Ch 217. 200. [1996] Ch 217 at 226 (per Peter Gibson LJ). The fiduciary cases were distinguished and the court declined to follow the United States case of Federal Sugar Refining Co v United States Sugar Equalization Board (1920) 268 F 575. Cf Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCA 1040 at [172] where Emmett J (dissenting) would have followed this case. 201. Despite Hill v Perrott (1810) 3 Taunt 274; 128 ER 109 and Abbotts v Barry (1820) 2 Brod & B 369; 129 ER 1009 having been cited in argument. 202. Goff and Jones, §36-017. 203. See esp [1996] Ch 217 at 227 D–F (per Peter Gibson LJ). See also Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd [1996] AC 514. 204. [1996] Ch 217 at 226. See also Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 (discussed [309]). 205. See Clarke v Shee (1774) 1 Cowp 197; 98 ER 1041; Nelson v Larholt [1948] 1 KB 339. See generally Chapter 3. 206. [1991] 2 AC 548. 207. See the discussion in B Fitzgerald, ‘Tracing at Law, the Exchange Product Theory and Ignorance as an Unjust Factor in the Law of Unjust Enrichment’ (1994) 13 U Tas L Rev 116. 208. Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 572. 209. (1774) 1 Cowp 197; 98 ER 1041. 210. Clarke v Dickson (1858) E B & E 148 at 152; 120 ER 463 at 465 per Crompton J (arguendo). See also Spence v Crawford [1939] 3 All ER 271 at 288–9; Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650. See also [215]. 211. See generally [2324]–[2335]. 212. Cf Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 263–4; 69 ALR 577 at 609– 10 per Deane J. 213. Greenwood v Bennett [1973] QB 195; McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303; Wade Sawmill Pty Ltd v Colenden Pty Ltd (2007) Aust Torts Rep ¶81-927; [2007] QCA 455. See also [1733]. 214. [1973] QB 195 at 202. See further [451]. 215. See generally [1508]. 216. See generally I M Jackman, ‘Restitution for Wrongs’ (1989) 48 CLJ 302; J Glover, ‘Restitutionary Principles in Tort: Wrongful Use of Property and the Everyday Measure of Damages’ (1992) 18 Monash L Rev 169; Beatson, p 232.

217. See [304]–[311], [1614], [1615]. 218. See [1629]. 219. See, eg [1523], 1629]. See also Andrew Burrows, ‘Remedial Coherence and Punitive Damages in Equity’ in Degeling and Edelman, Equity in Commercial Law. 220. [2008] 1 AC 561; [2007] UKHL 34 at [116]. 221. See [1619]–[1620]. 222. Astley v Reynolds (1731) 2 Str 915; 93 ER 939. 223. Carr-Saunders v Dick McNeill Associates Ltd [1986] 1 WLR 922; [1986] 2 All ER 888. Cf Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 (criticised by Burrows at pp 656–7, 662 and Virgo at pp 472–3). 224. See [1633]. 225. See [1520]. 226. [1941] AC 1 at 13. 227. In 2005 they were prohibited in most Australian jurisdictions for defamation. 228. Fleming, p 285. 229. [2001] 1 AC 268 at 283. 230. Hambley v Trott (1776) 1 Cowp 371 at 373; 98 ER 1136 at 1137. See also [310], [1628] as to the capacity of the action for money had and received to strip actual profits. 231. As with the taking of minerals (see [1624]). See also Trustee of the Property of FC Jones & Sons (a firm) v Jones [1997] Ch 159 (discussed [310]). 232. See Attorney-General v Blake [2001] 1 AC 268 at 280 (Lord Nicholls). 233. Which, if Ministry of Defence v Ashman [1993] 2 EGLR 102 and Ministry of Defence v Thompson [1993] 2 EGLR 107 (discussed [1623]) are good law, are damages capable of ‘subjective devaluation’. 234. See [1710]–[1718]. 235. See Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157 at [162]; [2001] FCA 1040. See also Whitwham v Westminster Brymbo Coal & Coke Co [1896] 2 Ch 538 at 542 per Lopes LJ and 543 per Rigby LJ. Cf Edwards v Lee’s Administrators 96 SW 3d 1028 (Ky, 1936) where a wilful trespasser was required to account for actual profits. See also Olwell v Nye & Nissen Co 173 P 2d 652 (Wa, 1946) where the defendant was ‘consciously tortious in acquiring the benefit’. The Restatement, Third generally supports the position that an account of profits lies where the wrongdoing is conscious: see §§40, Comment b; 44. 236. See Chapter 17. 237. See, eg Wang v Anying Group Pty Ltd [2011] FCA 1199. 238. [2001] 1 AC 268 esp at 283, where Lord Nicholls said that ‘it is not clear why it should be any more permissible to expropriate personal rights than it is permissible to expropriate property rights’. 239. (2001) 110 FCR 157; [2001] FCA 1040. Special leave to appeal was sought in relation to points other than the one we are concerned with and it was refused by the High Court. 240. (2007) 230 CLR 89; 236 ALR 209; [2007] HCA 22 at [135]. 241. (2001) 110 FCR 157; [2001] FCA 1040 at [155]–[162]. Cf Esperance Cattle Co Pty Ltd v

Granite Hill Pty Ltd (2014) 47 WAR 318; [2014] WASC 279 at [461]–[467]. 242. (2001) 110 FCR 157; [2001] FCA 1040 at [162]. 243. (1871) LR 6 Ch App 770 (see [1617]). 244. See (2001) 110 FCR 157; [2001] FCA 1040 at [180] per Emmett J. 245. See Edwards v Lee’s Administrators 96 SW 3d 1028 (Ky, 1936) where a wilful trespasser was required to account for actual profits. See also Olwell v Nye & Nissen Co 173 P 2d 652 (Wa, 1946) where the defendant was ‘consciously tortious in acquiring the benefit’. See also Restatement, Third, §§40, Comment b; 44. 246. [1934] Ch 1. Cf Rinbar Pty Ltd (in liq) v Nichevich (1987) 11 ACLR 737. 247. Cane, Tort Law and Economic Interests, pp 315–16. See also E Coote, ‘Trespass, Mesne Profits and Restitution’ (1994) 110 LQR 420. 248. See, eg Lamine v Dorrell (1706) 2 Ld Raym 1216; 92 ER 303. 249. See, eg Phillips v Homfray (1871) LR 6 Ch App 770; (1883) 24 Ch D 439; (1890) 44 Ch D 694; [1892] 1 Ch 465; Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140. 250. See Ministry of Defence v Ashman [1993] 2 EGLR 102 and Ministry of Defence v Thompson [1993] 2 EGLR 107. 251. See [1626]. 252. See, generally E Cooke, ‘Trespass, Mesne Profits and Restitution’ (1994) 110 LQR 420. 253. (1871) LR 6 Ch App 770. See [1620]. 254. See Beck v Northern Natural Gas Co 170 F 3d 1018 (10th Cir, 1999) (discussed 116 LQR 542 (Edelman)). 255. See Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34–5. 256. See [249]. 257. Cf Hospital Products Pty Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 124–5; 55 ALR 417 at 474–5 per Deane J. 258. See [249], [250], [256]. 259. [2001] 1 AC 268 at 280.

[page 689]

Chapter Seventeen

Breach of Fiduciary Duty, Breach of Confidence and Infringement of Intellectual Property Rights 1. 2. 3. 4. 5. 6.

General …. [1701] Account of Profits …. [1710] Damages and Compensation in Equity, Intellectual Property and Corporations Act Claims …. [1719] Proprietary Remedies …. [1727] Restitution in Favour of Party in Breach of Duty …. [1735] Alternative Claims, Election and Prevention of Double Recovery …. [1738]

1. General [1701] Objects. This chapter contains an analysis of restitutionary principles operating in areas which overlap in some respects. In focusing on breach of fiduciary duty, breach of confidence and infringement of intellectual property rights we cover very large areas of law. Moreover, they are areas which, traditionally, have been the province of specialist texts. We are not concerned to state the law on the three topics. Instead, our restitutionary perspective is to focus on those remedies which seek (among other things) to reverse the defendant’s unjust enrichment flowing from the three categories of

wrongs. The cases also provide examples of claims which are analogous to those available in respect of other wrongs, such as those which apply where a tort has been committed. [1702] Cross-fertilisation. Somewhat belatedly, writers and judges are seeing restitution for wrongs as a single field, in which the concept of unjust enrichment explains a range of remedies directed at requiring defendants to disgorge benefits unjustly derived from their wrongs. The ‘wrong’ may be proscribed at common law, in equity, or by statute, or by two or all of these legal ‘systems’.1 And the remedies may be personal or proprietary.2 In the [page 690] Supreme Court of New South Wales, Giles J demonstrated the common principles, based on unjust enrichment, which lie behind the remedies available for patent infringement, misuse of confidential information, and breach of proprietary rights to land and goods.3 [1703] Fiduciary obligations. Fiduciary obligations may arise in many situations.4 Certain bright line categories of fiduciary relationship can be noted: trustee and beneficiary, director and company, promoter and company, solicitor and client, agent and principal, partner and fellow partner. The list is not intended to be exhaustive. Indeed, a fiduciary relationship may arise ad hoc, ‘whenever the plaintiff entrusts the defendant with a job to be performed’.5 In between the extremes, there exist relationships (such as parties negotiating a commercial transaction, or advisers) which may or may not be ‘fiduciary’, at least in some respects, depending on the closeness of reliance of mutual good faith.6 For all categories the conceptual approach is the same. As Dixon J expressed it in Birtchnell v Equity Trustees, Executors & Agency Co Ltd,7 one must define ‘the subject matter over which the fiduciary obligations extend’ in order to determine the subject matter of the mutual

confidence, following which ‘it ought not to be difficult to apply the clear and inflexible doctrines which determine the accountability of fiduciaries for gains obtained in dealings with third parties’. The stern intent of the law in this field is expressed in Cardozo J’s oft-quoted statement in Meinhard v Salmon:8 Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honour the most sensitive is then the standard of behaviour. As to this there has developed a tradition that is unbending.

Categorical statements in Breen v Williams,9 Pilmer v Duke Group Ltd10 and other cases,11 to the effect that fiduciary duties are proscriptive but never prescriptive, have been challenged or distinguished in recent years by [page 691] scholars and intermediate appellate courts.12 The context has mainly been the application of the principles of Barnes v Addy13 liability of third parties who ‘knowingly receive’ or ‘knowingly assist’ breaches by trustees, directors and other fiduciaries.14 [1704] Remedies. The range of conduct capable of amounting to a breach of the fiduciary relationship is protean. It extends beyond the private sector to include claims based on the public fiduciary status of officials.15 The fiduciary who abuses the relationship may be exposed on multiple fronts. The remedies may be in contract or tort. And the criminal law has also played a significant role in the public sphere.16 But it has been primarily through the equitable remedies of injunction, account of profits and constructive trust that fiduciaries’ inappropriate conduct in both the public and private sphere has been proscribed. The personal and proprietary remedies provided by equity remain flexible.17 [1705] The liabilities of fiduciaries and third parties to account for improper gains. In Chan v Zacharia,18 Deane J summarised the

fiduciary’s liability to account for gains flowing from breaches of the main overlapping proscriptive duties as follows:19 Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it.

[page 692] The fiduciary who is offered the opportunity to advance his or her own interest or to benefit a third party20 without the free and informed consent of the beneficiary or the authority of law21 must let the opportunity pass. Failure to do so will result in the imposition of an appropriate remedy requiring disgorgement of the benefit taken (unless the principal opts for compensatory relief). So draconian is equity’s rule, that it is irrelevant that the fiduciary acted honestly, although the presence of dishonesty may be critical to the exercise of the jurisdiction to impose a full blown constructive trust or grant the defendant a ‘just allowance’ for work and skill contributed.22 Directors, trustees and other fiduciaries fall under additional, positive, duties of good faith that do not fit neatly under a ‘proscriptive’ label.23 We shall not enter this vast debate in this work.24 But we do record that third parties may also fall under equitable obligations to account or compensate, as well as to afford proprietary relief in appropriate cases. The main rubric under which liability derives is Barnes v Addy whose two ‘arms’ speak of third persons becoming liable if they ‘receive and become chargeable with some part of the trust property’ or ‘assist in a dishonest and fraudulent design on the part of the trustees’.25 Liability under either arm extends beyond those who deal with trustees and there are many instances of remedies going against those who ‘knowingly receive’ from or ‘knowingly assist’

company directors in breaches of fiduciary duties arising in the corporate sphere.26 According to Finn, Stone and Perram JJ in Grimaldi v Chameleon Mining NL:27 [In] knowing receipt cases, the recipient can (at the option of the plaintiff) be required to pay compensation for loss arising from the misapplication of the trust property, or to account for gains made from it. These liabilities do not depend upon the third party retaining any part of the property received (or its traceable proceeds) in his or her hands although, if such property is retained, it must28 be accounted for specifically.

[page 693] In Farah Constructions Pty Ltd v Say-Dee Pty Ltd29 the High Court’s firm statement that Barnes v Addy liability lies in the realm of ‘equitable duties’, not ‘unjust enrichment’, raised something of a false dichotomy30 but its message was clear: where Barnes v Addy liability is concerned (even for ‘knowing receipt’), the onus of proving the requisite knowledge lies on the plaintiff. Accordingly, Barnes v Addy liability to account or compensate is located in the realm of restitution for wrongs, hence its discussion in this chapter, not Chapter 3 as in the second edition of this work. It would, however, be wrong to think that Barnes v Addy exhausts the range of possible restitutionary relief against third parties who derive benefit from the equitable or other wrongdoing of persons subject to fiduciary obligations.31 Title-based claims are also available in many situations (see Chapter 3). [1706] Summary of ‘relevant’ remedies. The range of remedies available against a defaulting fiduciary include account of profits;32 Lord Cairns’ Act33 damages, equitable compensation;34 and the common law remedy derived from money had and received in some situations;35 imposition of ‘constructive trust’;36 injunction; and appointment of a receiver. Apart from the last remedy, all of these may serve to reverse the defaulting fiduciary’s unjust enrichment, although they may serve other functions as well.37 To the extent that they are

concerned with unjust enrichment, or reflect principles applicable to this Part as a whole, those remedies are discussed in further detail below. [1707] Duty of confidence. The juridical nature of proceedings for breach of confidence is the subject of vigorous debate in academic and judicial circles. Where no contractual or statutory basis exists, Australian law treats the jurisdiction to grant relief against actual or threatened abuse [page 694] of a confidence, as equitable, with confidential information having some of the characteristics of equitable property.38 The circumstances in which the duty arises, its scope, and the remedies for breach are discussed in the standard equity texts and several specialist works.39 Our interest is with those remedies for breach of confidence which show equity’s concern to reverse unjust enrichment. As with breach of fiduciary obligations, the key remedies are account of profits, Lord Cairns’ Act40 damages or compensation (according to the restitutionary measure), and the imposition of a constructive trust. [1708] Intellectual property rights. Infringement of intellectual property rights may be visited with a number of remedies. Provision is made in each of the intellectual property statutes, allowing for the discretionary remedy of an account of profits against the infringer, in lieu of damages.41 In so doing, the statutes reflect the general law.42 An account of profits may also be ordered in cases of passing off.43 And the court may order delivery-up of infringing copies and materials made in breach of intellectual property rights.44 Each of these remedies operates to reverse or nullify the defendant’s unjust enrichment in consequence of the infringement, although they may serve other purposes as well.

[1709] Alternative claims, election and prevention of double recovery. The general principles relating to litigating alternative claims, election and prevention of double satisfaction45 apply in these areas also. Their particular application is discussed below.46 [page 695]

2. Account of Profits [1710] Introduction. The armoury of equitable and statutory remedies for the three ‘wrongs’ dealt with in this chapter — breach of fiduciary obligations, breach of confidence and infringement of intellectual property rights — includes an account of profits.47 This is a personal remedy,48 nonetheless so because the language of (remedial) constructive trust is sometimes used in this context.49 Its availability in relation to infringements of common law (eg passing off) and statutory (legal) entitlements in intellectual property advances the cause of those who, like us, argue in favour of this remedy being available in proper cases for common law wrongs, such as torts and breach of contract.50 Capital as well as trading profits may have to be disgorged if shown to result from the relevant breach.51 The High Court has stressed that the purpose of an account is to prevent unjust enrichment.52 This does not mean that a significant part of the law of equity or of intellectual property is excised to become part of the law of restitution.53 But it makes it appropriate for a restitution lawyer to examine the case law about this remedy in particular, all the more so because judges and writers have commenced to apply principles derived from these cases to other categories of restitution for wrongs.54 [1711] Restitutionary, protective and deterrent functions. Although the High Court has stressed that the purpose of an account is to prevent unjust enrichment, and not to punish the wrongdoer,55 this does not (we believe) prevent an account being awarded in the knowledge of its protective or deterrent effect, or even with the intent

of achieving it concurrently with reversing an unjust enrichment. Many cases happily proclaim such intent.56 [page 696] Equity has long been concerned to deter and punish disloyalty by forcing the disgorgement of profits, as the seminal constructive trust decision of Keach v Sandford57 makes plain. In Attorney-General v Observer Ltd,58 Lord Keith saw the power to award an account of profits as the application of: …. the principle that no one should be permitted to gain from his own wrongdoing. Its [ie an account of profits] availability may also, in general serve a useful purpose in lessening the temptation for recipients of confidential information to misuse it for financial gain.

Cases such as Boardman v Phipps59 and Regal (Hastings) Ltd v Gulliver60 show that the fiduciary principle is not solely concerned with returning an enrichment gained at the plaintiff’s expense. It is also concerned to deter others from contemplating the possibility of profiting from their position of trust. One aspect of this is the principle that the defendant wrongdoer bears the onus of disentangling proper and improper gains and of establishing costs and set offs.61 Perhaps dicta of the High Court involve a rejection of this view, but we doubt it. It is one thing to say that the purpose is not to punish, it is another to say that it is not to deter, by the use of remedies such as the imposition of an account of profits or a constructive trust.62 [1712] Plaintiff’s loss irrelevant. The fiduciary who allows the duty of loyalty to conflict with self-interest will be required to disgorge any enrichment thereby gained. Such enrichment is unjust, in the stern eye of equity, simply because the duties are proscriptive and the fiduciary did not obtain the free and informed consent of the beneficiary or the authority of law. It is not a defence that the beneficiary of the fiduciary relationship did not suffer any loss.63 Indeed, it is normally64 no answer for the fiduciary to show that the beneficiary could not have entered into the transaction whereby the

fiduciary profited,65 either in a legal sense (such as absence of power as in Boardman v Phipps)66 or in a practical sense (such as shortage of funds (as in Regal (Hastings) Ltd v Gulliver).67 [page 697] [1713] Breaches of confidence and of intellectual property rights. Reference has already been made to the jurisdiction to award an account of profits, in lieu of damages, for infringement of copyright, patent, registered design, trade mark, passing off.68 By analogy, this remedy is also available for breach of confidence.69 To obtain an account of profits, the plaintiff must show that the defendant at least knew of the plaintiff’s rights during the period for which the account is sought.70 The alternative remedy of an account of profits will more readily be awarded against the deliberate infringer whose profit is attributable to the wrong. However, it is not essential that there should be deliberate wrongdoing on the part of the original confidant or a third party (for example, a newspaper) whose use of the confidential information involved a breach of confidence before an account of profits can be ordered. In Attorney-General v Observer Ltd,71 the ultimate failure of the Crown in its attempt to enjoin the distributor of Peter Wright’s Spycatcher in the United Kingdom did not prevent (indeed it assisted) the English courts awarding an account of profits against the newspapers which had profited thereby.72 The rationale was that the particular order served not to compensate the Crown but to operate as a deterrent.73 [1714] Illustrations. These principles are illustrated in two cases, spanning the private and public spheres. In Boardman v Phipps,74 a trust estate included a minority holding in a private company which fell on lean times. The trustees declined to attempt to acquire a controlling interest in the company in order to improve its performance. The solicitor to the trust and one of the beneficiaries, with the knowledge and approval of the trustees, purchased the controlling interest for

themselves from outside shareholders. They utilised information about the shareholders acquired by the solicitor in the course of acting for the trust. The company’s position was improved and the shares bought by the solicitor and the purchasing beneficiary were ultimately sold at a profit. A complaining beneficiary was held to be entitled to a share of the profits on the resale on the grounds that the solicitor and the purchasing beneficiary were assisted in the original purchase by the information derived from the trust.75 [page 698] In Reading v Attorney-General,76 a sergeant in the English army smuggled illicit goods into Cairo. He was able to do this by wearing his full uniform while driving a truck carrying the goods through the checkpoint. His proceedings to recover from the Crown the ill-gotten gains that had been seized by the military authorities failed in the House of Lords. It was irrelevant that the Crown itself could not have made the profits. The Crown’s right of recovery had a dual nature. It existed at common law (as money had and received) and as an ‘equitable debt’ (through the fiduciary’s equitable duty to account for secret profits).77 [1715] Discretion, defences and good faith. In its survey in Warman International Ltd v Dwyer,78 the High Court said that:79 Although an account of profits, like other equitable remedies, is said to be discretionary, it is granted or withheld according to settled principles. It will be defeated by equitable defences such as estoppel, laches, acquiescence and delay. And notwithstanding what was decided in Regal (Hastings) Ltd v Gulliver80 and Boardman v Phipps,81 it may be that:82 the liability to account for a personal benefit or gain obtained or received by use or by reason of fiduciary position, opportunity or knowledge will not arise in circumstances where it would be unconscientious to assert it or in which, for example, there is no possible conflict between personal interest and fiduciary duty and it is plainly in the interests of the person to whom the fiduciary duty is owed that the fiduciary obtain for himself rights or benefits.

The conduct of the plaintiff may be such as to make it inequitable to

order an account. Thus a plaintiff may not stand by and permit the defendant to make profits and then claim entitlement to those profits.83 It is necessary to keep steadily in mind the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts. But the basic principle remains that a principal who so elects is entitled to an account of profits, subject to considerations of the kind already mentioned. The court in Warman also rejected earlier statements that suggested that the honesty of the defendant might in itself be a basis for refusing to order an account of profits.84 These factors may, however, be taken into account [page 699] in the computation of profits (including interest),85 ‘just allowances’ and the decision whether or not to impose a constructive trust.86 This narrow approach to discretion brings the remedy of account into line with the sometimes concurrent claim at common law, for money had and received,87 where there is no discretion to refuse relief although ‘equitable principles’ may be engaged.88 Section 122(1A)(c) of the Patents Act 1990 (Cth), and s 75 of the Designs Act 2003 (Cth) address expressly the position of the defendant’s innocence and its effect upon the ordering of an account of profits.89 [1716] Methods of calculation. The profit may be calculated on various bases, depending on the circumstances.90 But account of profits differs from the usual measure of damages or compensation because the plaintiff need not prove loss. In fraudulent passing off, the profit for which the defendant is accountable is the actual profit made in selling. In the case of an infringement of patent or trade mark, the profit is so much of the profit made by the defendant which is attributable to the mark or patent.91 The account is limited to the profits made by the

defendant during the period when the defendant knew of the plaintiff’s rights.92 Difficulties in identifying assets and in proving costs are laid at the door of the wrongdoing fiduciary, especially if the wrongdoing has made proof difficult.93 [1717] ‘Just allowances’ for work and skill. An honest but defaulting defendant who has allowed a fiduciary duty and interest to conflict, or abused a confidence, or infringed an intellectual property right, may be granted a ‘just allowance’ for work and skill,94 although, in English law at least, the [page 700] circumstances must be exceptional.95 Lord Denning MR explained the rationale in Phipps v Boardman:96 This species of action is an action for restitution …. The gist of it is that the defendant has unjustly enriched himself, and it is against conscience that he should be allowed to keep the money. The claim for a repayment cannot, however, be allowed to extend further than the justice of the case demands. If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. It depends on the circumstances.

[1718] Overlapping remedies. We have already drawn attention to the availability, in the bribe cases, of concurrent remedies at common law and in equity.97 It is well established that both the common law action derived from the count for money had and received and the equitable remedy of account of profits lie against the fiduciary who makes a secret profit.98 The availability of the former in this situation shows that it is wrong to assert that, in restitution, the defendant’s enrichment must always be at the plaintiff’s expense in the sense of a subtraction from the plaintiff’s wealth.99 The close analogy between the fiduciary’s liability to account and restitution as a remedial response to tort is also illustrated by Mahesan v Malaysia Government Officers’ Co-operative

Housing Society Ltd.100 An agent of the Housing Society was bribed to arrange for the briber to purchase land at a low price and then immediately to resell it to the Housing Society at a profit. The bribe was $122,000 and the profit on resale $443,000. The Housing Society sued the agent both for the loss suffered and for the amount of the bribe. The Federal Court of Malaysia gave judgment for both sums cumulatively. The Privy Council confirmed that the agent and the briber were separately liable (in restitution) for the bribe, and also jointly liable (in tort) for deceit. However the judgment against the dishonest agent was reduced to $443,000, the measure of damages in deceit. The Housing Society was deemed to have been put to election between remedies,101 and to have chosen the more generous basis. In discussing the grounds of the dishonest agent’s liability, Lord Diplock demonstrated the parallel and overlapping bases of the agent’s liability in equity and at common law. In equity the agent, as a fiduciary, was required to account for the secret profit represented by the bribe.102 Indeed, the proprietary remedy of constructive trust will also be available as against the dishonest agent.103 At common law the bribe was recoverable as money had and received, but not on any basis of a ‘waived’ tort.104 On this approach it is therefore an example of a direct restitutionary [page 701] claim, and one where the defendant’s enrichment was not at the expense of the plaintiff. Mahesan also shows that restitutionary claims may lie where the defendant’s receipt constitutes the breach of an equitable obligation, even where the same conduct is also a breach of contract.105

3. Damages and Compensation in Equity, Intellectual Property and

Corporations Act Claims [1719] Introduction. Equity’s jurisdiction to make personal monetary awards, apart from an account of profits, derives from three sources: Lord Cairns’ Act,106 specific statutes (including those relating to intellectual property), and its inherent jurisdiction. The statutory jurisdictions are not confined to equitable wrongs, but include damages for breach of contract and other legal wrongs such as the infringement of copyright, patents, designs and trade marks. By contrast, equity’s inherent jurisdiction to award ‘compensation’ is confined to equitable wrongs, most notably breaches of trust and other fiduciary obligations, breach of confidence and in contexts where equitable estoppel has generated rights that cannot be enforced as contracts.107 There is, however, evidence that the Court of Chancery was prepared on occasions to award damages for breaches of common law duties, when exercising its concurrent jurisdiction.108 [1720] Lord Cairns’ Act ‘damages’. Where the court has power to grant an injunction against the breach of any covenant, contract or agreement; or against the commission or continuance of any wrongful act; or to order the specific performance of any covenant, contract or agreement; the court may award ‘damages’ to the party injured either in addition to or in substitution for the injunction or specific performance. This power was initially conferred on the Chancery Court by Lord Cairns’ Act,109 which has counterparts in specific legislation in most Australian jurisdictions.110 Even where there is no statutory provision,111 it is clear that, since the Judicature Act reform in the various jurisdictions, courts enjoy the ability to award damages in [page 702] addition to or in substitution for the remedies of injunction and specific performance.112 This statutory jurisdiction authorises damages awards

in situations even where no common law damages are available, for example for threatened or apprehended injury to a legal right.113 Quite apart from the fusion of law and equity, and Lord Cairns’ Act,114 courts of equity have also exercised jurisdiction to award damages for breach of contract or other legal wrongs, albeit that this only occurred on isolated occasions.115 [1721] Intellectual property and corporations legislation. Each of the intellectual property statutes confers or recognises the jurisdiction to award damages against the infringer.116 Where damages are awarded for infringement of monopoly rights such as patents, the court endeavours to ascertain the price which the monopolist could reasonably have charged for permission to do the infringing act.117 Compensatory damages may thus be calculated with reference to expected profits.118 Damages are, however, only available for the period of the defendant’s persistence after notice of a plaintiff’s rights.119 The Corporations Act also confers statutory rights to damages or an account of profits in relation to the improper use by officers and employees of corporations of information acquired by virtue of their position, and misuse of ‘insider information’.120 [1722] Inherent jurisdiction to award ‘compensation’. A plaintiff complaining of a breach of confidence or breach of a fiduciary or other equitable obligation may recover compensation under equity’s inherent jurisdiction.121 This may be available in addition to, or in lieu of, remedies such as injunction and delivery-up.122 The equitable remedy of compensation gives rise to an ‘equitable debt or liability in the nature of a debt. It [is] a writ for the restitution of the actual money or thing, or value of the thing, of which the cheated party had been cheated’.123 [page 703] [1723]

Equitable compensation compared with common law

damages. Apart from being confined, ex hypothesi, to equitable wrongs, the equitable remedy of compensation differs from common law damages in certain respects.124 Equitable compensation may have regard to the defendant’s profit,125 although, as we have seen,126 the common law is also becoming more receptive to damages according to the restitutionary measure. Equitable compensation is concerned not only to compensate the plaintiff, but also to enforce the relevant equitable principles.127 Accordingly, courts use the language of making restitution128 and also recognise that the remedy contains an element of deterrence.129 The causation principles applied when equitable compensation is awarded are controversial.130 An award of damages is unconditional, whereas equitable compensation may be granted conditionally,131 or withheld because of delay, laches, acquiescence, failure to do equity, or unclean hands.132 The principles relating to equitable compensation also appear to be more flexible than those relating to common law damages. For one thing, compensation is assessed against a fiduciary by reference to the value of assets at the date of proceedings, and not at the date of deprivation in the event that there is an adverse movement in values or exchange rates.133 The equitable obligation to make restitution through equitable compensation is not confined by the concepts of foreseeability and remoteness.134 There may be lingering limitations upon the powers of courts to award interest, or compound interest, in relation to common law claims.135 It is, however, increasingly likely that equitable compensation will give the same result as common law damages, all the more so as the principles of [page 704] (common law) damages are themselves becoming more flexible, and there are occasions when tortious and fiduciary obligations overlap.136 Although equity has adopted a generous approach to the award of interest,137 recent Canadian and New Zealand cases suggesting that a

punitive element may be added in an award of equitable compensation have been criticised.138 Nevertheless, the distinction between an avowed ‘deterrent’ function and a proscribed ‘punitive’ one is somewhat semantic. [1724] Labels. There is a heated, but rather sterile, debate about the correctness of labelling as ‘damages’ the compensation that may flow from breach of an exclusively equitable obligation.139 The debate about whether or not there are equitable ‘torts’140 cannot rise above a semantic dispute until one asks about context. If one starts with the view that torts only arise at common law, then the debate is a closed one. There is certainly a stream of authority contemplating an award of ‘damages’ for equitable wrongs.141 These judicial references to ‘damages’ are ambiguous as to whether they reveal a ‘fusion-fallacy’, or are a reference to damages under the beneficent interpretation of Lord Cairns’ Act142 to which Lord Goff referred in Attorney-General v Observer Ltd,143 or simply place the inappropriate label of ‘damages’ upon equitable ‘compensation’.144 Harris v Digital Pulse Pty Ltd145 saw the New South Wales Court of Appeal decide (by majority) to reject exemplary damages for a breach of an employee’s duty of fidelity. The approach of the whole court was, however, refreshing in its willingness to debate whether a contractual or tortious analogy was closer, rather than regarding the issue as determined a priori by the equitable derivation of the duty concerned. [page 705] [1725] Compensation as ‘restitution’. Some authorities have spoken of the object of equitable compensation being an obligation to effect ‘restitution’.146 These echo James and Baggallay LJJ, who described the remedy as giving rise to an ‘equitable debt or liability in the nature of a debt. It [is] a writ for the restitution of the actual money or thing, or value of the thing, of which the cheated party had been cheated’.147 Being an equitable debt, the liability attracts the provision

in the Corporations Act relating to a director’s duty to prevent insolvent trading,148 as well as equitable principles relating to interest.149 It is more doubtful whether these references to ‘restitution’ mean that equitable compensation is necessarily to be awarded according to the restitutionary measure. There seems to be no difference between ‘equitable compensation’ according to a restitutionary measure and an account of profits, but equity has traditionally awarded the latter remedy.150 Since, however, the statutory jurisdiction to award ‘damages’ extends (at least in Victoria) to equitable wrongs,151 the prospect of equity allowing a restitutionary measure of statutory damages is not faced with the same theoretical question. Of course, there are those, like the late Professor Birks152 who view these concerns as a hearkening back to old formalism. This approach may draw support from American cases which, conversely, contemplate an account of profits for the tort of trespass.153 Ranged against these modernists concerned with rationality and coherence, are the equity purists who would wish to see distinctive nomenclature to avoid unconscious slippage into fusion-fallacy.154 [1726] Measure of damages or compensation in equity. There are strong statements that equitable compensation is designed to put a plaintiff ‘in as good a position pecuniarily as before the injury’.155 Unlike an account of profits, equitable compensation is said in some authorities to be concerned only with the plaintiff’s loss.156 But this limitation may be doubted in the light of (1) equity’s readiness to strip unjust enrichment; (2) the cases referred to later in this paragraph; and (3) the trend towards acceptance of a restitutionary measure of common law damages in appropriate cases that we have noted in the previous chapter.157 Whoever is right in what we have [page 706] referred to as the ‘labelling’ controversy,158 the cases emphasise the

flexibility of the measure of the award of compensation for breach of confidence or of fiduciary duty.159 The flexibility is enhanced by the fact that an account of profits is available as an alternative (discretionary) remedy. In Seager v Copydex (No 1)160 confidential information was passed during commercial negotiations that never came to fruition. The defendant later used the information, unconsciously making use of the plaintiff’s contribution. In its discretion the English Court of Appeal refused to order an account of profits, but ordered ‘reasonable compensation’. Later commentators have divided over whether this was intended to be an award of damages in lieu of an injunction, under Lord Cairns’ Act,161 or an award of non-statutory damages, representing either a ‘fusionfallacy,’ or an example of wrongly-named equitable compensation. Whatever the label, the measure of compensation in Seager v Copydex (No 1) required explanation, and this came before the English Court of Appeal in Seager v Copydex (No 2).162 Speaking for the court, Lord Denning MR held that the measure of ‘damages’ depended on the nature of the confidential information. He specified three categories. The first, involving ‘no particularly inventive step’, was obtainable by employing any competent consultant. Its value was the fee which such a consultant would charge. The second, a higher measure, was the price which a willing buyer would pay for the information. Examples of the type of information within this category were commercially valuable trade secrets not sufficiently novel to be patentable. The third category, which was ‘very special indeed’, involved effectively patentable information. For it the measure of ‘damages’ would be the equivalent of a capitalised royalty. This analogy with common law damages for misappropriated property has been criticised, because Lord Denning did not suggest that the plaintiff had the option of specific delivery.163 According to Professor Birks, ‘the plaintiff was in effect allowed compensation but denied restitution’.164 Against this criticism, it has been observed that the plaintiff’s original inventive idea was no longer secret at the time of trial.165 In Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales166 the defendant improperly sent a copy of the plaintiff’s

confidential questionnaire to a third person. Bowen CJ in Eq held that the plaintiff was entitled to an award of damages assessed on [page 707] the basis of fair remuneration to the plaintiff for permission to the defendant to use its questionnaire. The measure is said to be that sum which puts the innocent party in the same position ‘as he would have been if he had not sustained the wrong’.167 But the range of choices as to how this measure is calculated includes damages for the value of what is taken, calculated on the basis of a hypothetical sale,168 and loss of profits resulting from the wrongful use of the plaintiff’s information.169 The analogy with the wrongful user cases170 is therefore obvious. Where a defendant has obtained a ‘headstart’ or ‘springboard’ from the abuse of confidence, the award of compensation or damages may seek to impose a compensatory handicap.171 In principle, equity should exclude compensation for losses that are too remote from the fiduciary’s breach, but the precise basis for doing so is contentious.172 An award of compensation usually carries interest.173 There is no objection in principle to a ‘restitutionary’ measure of equitable compensation, especially against a defendant who commits a deliberate breach of another’s confidence or of a fiduciary relationship. ‘With some influence from equity, where the circumstances require the common law has departed from the basic principle of compensatory damages.’174 It is hard to see why equity should not return the compliment.175

4. Proprietary Remedies [1727] ‘Constructive trust’. In Muschinski v Dodds,176 Deane J defined a constructive trust as:

…. a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.

Since 1985, when these words were written, Australian law has settled upon the ‘remedial’ aspect of the ‘institution’ thereby falling in line with the United States position in preference to what still prevails in England.177 Leaving aside instances where the term ‘constructive trust’ is used to flag the [page 708] springboard for a personal remedy of account of profits or compensation,178 the ‘full-blown’ constructive trust is very much a remedy of last resort.179 It may be withheld if a personal remedy or a lesser proprietary one in the nature of a charge will do adequate justice.180 Whenever a proprietary remedy is awarded there are significant advantages on the successful claimant. These include: (1) dispensation from confinement to recovery of the value of the plaintiff’s loss;181 (2) priority over unsecured creditors;182 (3) relief from the difficulties of valuation involved in calculating damages, compensation or account of profits;183 and (4) the imposition on the defendant of the onus of proof as to entitlement to and calculation of ‘just allowances’.184 [1728] Restitutionary, deterrent and protective functions. Restitutionary proprietary remedies have been awarded to strip a defaulting fiduciary of investments traceable to the proceeds of bribes185 or other serious breaches of fiduciary duty.186 More than any other remedy, the ‘constructive trust’ strips the defendant of any enrichment flowing (unjustly) from the wrong. Its role as a restitutionary remedy for an unjust enrichment is clear and well recognised.187 In Pettkus v Becker,188 Dickson J said that ‘the principle

of unjust enrichment lies at the heart of the constructive trust’. Speaking [page 709] for the Privy Council in Re Goldcorp Exchange Ltd,189 Lord Mustill referred to ‘a remedial constructive trust, or to use another name a restitutionary proprietary interest’. Nevertheless, the reversal of unjust enrichment is not the sole purpose or function of the remedy.190 In Stephenson Nominees Pty Ltd v Official Receiver,191 Gummow J stressed that care is called for against over-emphasising the role of the constructive trust in the area of breach of fiduciary obligation or of confidence:192 Whilst the constructive trust may readily, in many cases, be seen as a restitutionary remedy for an unjust enrichment at the expense of the plaintiff, this by no means always will be the case. The constructive trust may be imposed as a cautionary or deterrent remedy even where there has been no unjust enrichment at the expense of the plaintiff. In such situations the constructive trust operates not to restore but to enforce observance of the fiduciary duty not to prefer personal interest to duty to the plaintiff. [E]ven if it be established that in Australian law …. there is a general doctrine of unjust enrichment, it by no means will follow that the constructive trust with its proprietary character will always or necessarily be the appropriate remedy. It would, for example, be quite wrong to assume that in the United States the law of restitution is concerned principally with proprietary remedies in the nature of a constructive trust.

[1729] Remedial minimalism. Equitable remedies are discretionary. They will generally be withheld unless the need for them is demonstrated, and where there is a remedial choice, the court favours the less intrusive remedy.193 A remedial constructive trust will only be imposed where it is necessary to do so to achieve a just remedy and to prevent the wrongdoer from retaining an unconscionable benefit.194 [1730] Breach of confidence. In an appropriate case, a constructive trust may be imposed on a person who deliberately exploits another’s confidential information. In Franklin v Giddins195 the defendant stole budwood cuttings from the plaintiffs’ orchard where the plaintiffs had

developed a unique and valuable strain of nectarines. This enabled the defendant and his wife (who had learnt of the source of the budwood) to produce nectarines in competition with the plaintiff. Having proved that the defendants were profiting from the trade secret stolen by one of them, the plaintiffs obtained an order that the defendants deliver up for destruction the productive budwood in the defendants’ orchard. [page 710] [1731] Breach of fiduciary obligation. If there is a sufficient connection between the defaulting fiduciary’s obligation and the property acquired from the breach, a constructive trust may be imposed by way of remedy, especially but not exclusively in cases of dishonesty196 or ‘knowing receipt’.197 With the recent conclusive disapproval of the Privy Council of the much-debated Lister & Co v Stubbs198 one can confidently assert that a proprietary remedy is available as against the fiduciary who receives a bribe.199 A calculated breach by a fiduciary with a view to appropriating some benefit or advantage belonging to the plaintiff may attract the remedy of constructive trust.200 However, the plaintiff must move quickly, and not stand by, permitting the defendant to take the risk of losses before claiming the fruits of success.201 [1732] Intellectual property: delivery up. Equity has a wellestablished power to order the delivery up of infringing materials in intellectual property cases. It extends to all categories of rights.202 The remedy is discretionary and usually gives the infringer the choice between delivery up and destruction. This reflects the notion that the infringing copy is not the property of the plaintiff,203 and to that extent the remedy falls short of the operation of a constructive trust. A different position is adopted as regards infringing copies made in breach of copyright, because s 116 of the Copyright Act 1968 (Cth) is predicated upon a notional property of the plaintiff in the articles of the defendant.204 Those remedies (even the more limited form of delivery-

up) serve the purpose of reversing the defendant’s unjust enrichment, and for that reason are mentioned in this context. [1733] Allowances in favour of defendant. The fiduciary who contributes his or her own property to the venture will be permitted to share the asset rateably in accordance with the respective contributions, at least where no dishonesty is involved.205 But, beyond this, the court will usually go no further than making an allowance for skill, expertise and other expenses.206 [page 711] [1734] Equitable lien. Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity ‘as part of a scheme of equitable adjustment of mutual rights and obligations’.207 The lien secures the discharge of an actual or potential indebtedness, but it is not confined to contract. It may operate in aid of a purely equitable relationship between the parties. For example, the claim to contribution by one co-owner upon the other to recoup expenditure which benefits their joint property may be supported by an equitable lien upon the undivided share of the other co-owner.208 Though called a lien, it is, in truth, a form of equitable charge over the subject property.209 The established examples of equitable lien (such as the vendor’s lien and the purchaser’s lien) are between parties in a contractual or quasi-contractual relationship. The remedy is not available as a simple side-step around the established limits of tracing in equity.210

5. Restitution in Favour of Party in Breach of Duty [1735] No general requirement of counter-restitution. While a wrongdoer may be stripped of the unjust enrichment derived from the

wrong, it does not follow that there may not be appropriate restitution the other way. We refer to this as counter-restitution. Furthermore, equitable remedies, including account of profits, may be withheld unless the plaintiff ‘does equity’ which may take the form of some proper allowance in the defendant’s favour.211 An account of profits, unlike a constructive trust, seeks to determine the profit gained, thereby conceding that offsets for money outlaid are to be taken into account. Different methods of calculating profits have already been referred to above.212 [1736] Allowances to fiduciaries. An order for an account of profits may concede a ‘just allowance’ to reflect the value of the work and skill contributed.213 The concession is discretionary, and almost invariably [page 712] withheld against the dishonest fiduciary or breaker of confidence.214 A similar principle may operate when equity sets aside a contract, but does so on terms. In O’Sullivan v Management Agency and Music Ltd,215 a songwriter placed such dependence in his manager (and the companies that the latter controlled) that there was an ad hoc relationship of undue influence. The contract between the parties was set aside, but subject to an allowance of ‘reasonable remuneration’ for the defendants’ work in promoting O’Sullivan and his music. These and consequential orders were necessary to do what was ‘practically just as between the parties’ in setting aside the contracts.216 [1737] Proprietary relief. In some cases the defendant’s right to counter-restitution may be secured. In LAC Minerals Ltd v International Corona Resources Ltd,217 the defendant, against whom a constructive trust was imposed for breaches of confidence and of fiduciary obligation, was held entitled to an equitable lien to secure its right to recover the moneys it spent in acquiring and developing a property. An

equitable lien may also secure a fiduciary’s restitutionary right to proper expenses or indemnity.218 Another illustration is provided by cases where the claim to contribution by one co-owner upon the other to recoup expenditure which benefits their joint property will be supported by an equitable lien or charge upon the undivided share of the other co-owner.219 Of course, these two examples do not involve defaulting fiduciaries, but they illustrate the scope of the remedy, even against an ‘innocent’ party.

6. Alternative Claims, Election and Prevention of Double Recovery [1738] Introduction. In Chapter 15 we discussed the principles relating to a plaintiff’s right to make alternative claims, and the duty to elect between inconsistent remedies at the time of judgment.220 Those principles recognise the passing of the forms of action, while ensuring that victims of wrong do not obtain double recovery through the flexibility of modern pleading rules. These principles apply to the categories of wrong addressed in this chapter. Their general application in equity is discussed authoritatively in McLelland CJ’s judgment in Midland Montague Australia Ltd v Harness.221 [page 713] [1739] Alternative claims. A plaintiff may claim against an infringer of intellectual property rights, or one who breaches a confidence or a fiduciary obligation, damages/compensation or an account of profits in the alternative, but must elect prior to judgment.222 Naturally a plaintiff cannot recover both equitable compensation and an account of profits.223 As to double satisfaction generally, see Midland Montague Australia Ltd v Harness.224 1.

See generally, Andrew Burrows, ‘Remedial Coherence and Punitive Damages in Equity’ in

Degeling and Edelman, Equity in Commercial Law. We would endorse Professor Burrow’s conclusion (at p 402) that ‘the lifeblood of judicial lawmaking is reasoning by analogy: the development of principle by treating like cases alike. There is no good reason to restrict the flow of that lifeblood by restricting analogical development to the separate limbs of equity and common law as if they do not belong to the same body of general law’. 2. 3.

See generally Chapter 2. Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175 at 188. See also Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374 (see [1718]); Attorney-General v Observer Ltd [1990] 1 AC 109 at 286 (passage quoted [1502]); Attorney-General v Blake [2001] 1 AC 268; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561. See generally Chapter 15.

4.

For general discussions, see T G Youdan (ed), Equity, Fiduciaries and Trusts; Meagher, Gummow and Lehane, Chapter 5; Finn, Equity and Commercial Relationships; The Hon Mr Justice McPherson, ‘Fiduciaries: Who Are They?’ (1998) 72 ALJ 288. Reading v R [1949] 2 KB 232 at 236 per Asquith LJ; Tito v Waddell (No 2) [1977] Ch 106 at 229.

5. 6.

7.

Cf Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; 55 ALR 417; United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; 60 ALR 741; Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371; 65 ALR 193; Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R 1. See further [1827] (fiduciary contractual relationship). (1929) 42 CLR 384 at 408.

8. 9.

164 NE 545 at 546 (NYCA, 1928). (1996) 186 CLR 71 at 95, 113, 137–8.

10. (2001) 207 CLR 165 at [74], [127]. 11. See also [1705]. 12. See the review in Meagher, Gummow and Lehane, [5-380]–[5-440] discussing Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2012) 270 FLR 1 and much academic literature. 13. (1874) LR 9 Ch App 244 at 251–2. 14. See further [1705]. 15. Reading v Attorney-General [1951] AC 507 (see further [1714]) rested on analogues of employment law and private sector fiduciary law. See also Attorney-General v Blake [2001] 1 AC 268. The law in the United States is much more firmly based in public fiduciary concepts: see United States v Carter 217 US 286 (1910); Driscoll v Burlington-Bristol Bridge Co 86 A 2d 210 at 222–3 (1952); Agnew v State 446 A 2d 425 (1982); Graf v Frame 352 SE 2d 31 (SCA, W Va, 1986). 16. See P D Finn, ‘Official Misconduct’ [1978] 2 Crim LJ 307. 17. Chan v Zacharia (1984) 154 CLR 178 at 204–5; 53 ALR 417 at 437–8 (Deane J); Blackman v Thompson (1993) Unreported, SC(NSW) (CA), 16 December. See also International Corona Resources Ltd v LAC Minerals Ltd (1987) 44 DLR (4th) 592 at 647–9 (on appeal sub nom LAC Minerals v International Corona Resources Ltd (1989) 61 DLR (4th) 14); Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (1987) 16 FCR 410 at 421; 75 ALR 271 at 282.

18. (1984) 154 CLR 178; 53 ALR 417. 19. (1984) 154 CLR 178 at 199. For a slightly fuller statement, see P D Finn, ‘The Fiduciary Principle’ in T G Youdan (ed), Equity, Fiduciaries and Trusts, p 27. See also Re Drexel Burnham Lambert UK Pension Plan [1995] 1 WLR 32; Arklow Investments Ltd v Maclean [2000] 1 WLR 594 at 599–600; Pilmer v Duke Group Pty Ltd (in liq) (2001) 207 CLR 165 at 198; 180 ALR 249 at [74]; Streeter v Western Areas Exploration Pty Ltd (2011) 278 ALR 291; [2011] WASCA 17 at [64]ff, [364]ff. 20. See, eg Re Century Homes Pty Ltd (in liq) (1984) 73 FLR 462. 21. For example, a court award of commission to an executor. 22. United States Surgical Corp v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 237–8 (on appeal sub nom Hospital Products Pty Ltd v United States Surgical Corp (1984) 156 CLR 41). See further [247]–[249], [1715], [1717], [1732]. 23. See, eg Richard Brady Franks Ltd v Price (1937) 58 CLR 112 at 142–3; Linter Group Ltd (in liq) v Goldberg (1992) 7 ACSR 580 at 619–23; Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2012) 270 FLR 1 at [900]–[901], [1962], [2719]–[2733], See also Corporations Act, s 181. See further [1703]. 24. See generally Meagher, Gummow and Lehane, §§5-380–5-440. 25. (1874) LR 9 Ch App 244 at 252 per Lord Selborne LC. See generally Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. There is a huge case law about the type of knowledge required to establish third party liability under each arm. 26. Including breaches of directors ‘prescriptive’ obligations, according to Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2012) 270 FLR 1; [2012] WASCA 157. See also Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [174], [181]. [254]. 27. (2012) 200 FCR 296; [2012] FCAFC 6 at [253]. See also Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2012) 270 FLR 1; [2012] WASCA 157 at [2172]. As to proprietary remedies and equitable wrongs, see below [1727]–[1734]. 28. Later passages in Grimaldi show that the ‘must’ is not invariable in that equitable proprietary relief is invariably subject to discretionary and other qualifications: see Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [567], [668] and generally [503]–[539]. In Grimaldi, the court declined to grant relief by way of a full blown constructive trust as regards the relevant mining tenements derived by way of a bribe, preferring to order an account of profits, subject to allowances: see [672]–[681], [727], [740]. See also [247]–[249] of this work. 29. (2007) 230 CLR 89 at [151]. 30. See further [139]. 31. See generally Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [161]. As to bribes paid by third parties, see Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [193], [246]. Those who acquire legal title to trust property strictly so called, take their title subject to the interest of the beneficiary unless they are purchasers in good faith for value without notice (including constructive notice): see Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [251]. As to the third party who is the corporate creature, vehicle or alter ego of the wrongdoing fiduciary or an agent to whom the guilty knowledge of the wrongdoer is imputed, see

Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286; Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (2011) 86 ACSR 277; [2011] VSCA 392 at [48]; Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [243]–[244], [556]. 32. Discussed [1710]–[1718]. 33. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 34. Discussed [1720], [1722]–[1726]. 35. Such as the agent who receives a bribe. See [1718]. 36. Discussed [1727]–[1730]. 37. See [1728]. 38. Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 437–8; 56 ALR 193 at 207–9 per Deane J; Breen v Williams (1996) 186 CLR 71; 138 ALR 259; Meagher, Gummow and Lehane, §§42-130–42-155; L Tsaknis, ‘The Jurisdictional Basis, Elements and Remedies in the Action for Breach of Confidence’ (1993) Bond LR 18. 39. See, eg Meagher, Gummow and Lehane, Chapter 41; Gurry, Breach of Confidence, 2nd ed, OUP, Oxford, 2012; J Kearney, The Action for Breach of Confidence in Australia, 1985; Dean, Law of Trade Secrets and Personal Secrets, 2nd ed. 40. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 41. Copyright Act 1968 (Cth), s 115(2); Designs Act 2003 (Cth), s 75(1)(b); Olympic Insignia Protection Act 1987 (Cth), s 45; Patents Act 1990 (Cth), s 122(1); Plant Breeder’s Rights Act 1994 (Cth), s 56(3); Trade Marks Act 1995 (Cth), s 126(b). As to the discretionary nature of the remedy see LED Builders Pty Ltd v Masterton Homes (NSW) Pty Ltd (1994) 54 FCR 196; Robert J Zupanovich Pty Ltd v B & N Neale Nominees Pty Ltd (1985) 59 FRC 49; 138 ALR 107; Facton Ltd v Rifai Fashions Pty Ltd (2012) 287 ALR 199; [2012] FCAFC 9 at [18]. 42. See Peter Hastie, ‘Restitution and Remedy in Intellectual Property Law’ (1996) 14 Aust Bar Rev 6 at 9–12. 43. See, eg Slazenger & Sons v Spalding & Brothers [1910] 1 Ch 257; 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 320. This shows the fallacy of asserting that an account of profits can never be awarded with respect to a ‘common law’ tort. Cf Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157; [2001] FCFCA 1040 (discussed [1639]). 44. Discussed [1731]. 45. See [1515], [1536]. 46. See [1737]–[1738]. 47. See the general discussion in Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [513]–[546]. As to joint and several liability to account, see [536], [556]–[558]. 48. Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 395; 5 ALR 231 at 249; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 566–8; 128 ALR 201 at 215–16; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 693–4; Maguire v Makaronis (1997) 188 CLR 449 at 468. See also P Birks, ‘Personal Restitution in Equity’ [1988] LMCLQ 128.

49. Giumelli v Giumelli (1999) 196 CLR 101 at 112; 161 ALR 473 at 475. See further [250], [1727]. 50. See [1639] and Chapter 18. 51. Apand Pty Ltd v Kettle Chip Co Pty Ltd (1999) 88 FCR 568 at 584; V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; [2013] FCAFC 16 at [58]. 52. Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101; 116 ALR 385. See also VFlow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; [2013] FCAFC 16 at [57]. 53. Cf P B H Birks, ‘Civil Wrongs: A New World’, in Butterworth Lectures 1990–91, p 55. 54. See [1702]. 55. Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 114, 123. See also Robert J Zupanovich Pty Ltd v B & N Neale Nominees Pty Ltd (1985) 59 FCR 49 at 68; 138 ALR 107 at 126; Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474. 56. See, eg Bray v Ford [1896] AC 44 at 51–2; Paul A Davies (Australia) Pty Ltd (in liq) v Davies [1983] 1 NSWLR 440 at 444; Green v Bestobell Industries Pty Ltd (No 2) [1984] WAR 32 at 38; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557–8; 128 ALR 201 at 209, 211–12; Imageview Management Pty Ltd v Jack [2009] 2 All ER 666. See generally P Watts, ‘Accounting for Profits Fiduciaries Required to Disgorge in New Zealand’ [1992] LMCLQ 439 at 440–1. 57. (1726) Cas temp King 61; 15 ER 223. 58. [1990] 1 AC 109 at 262. See also Snepp v United States 444 US 507 (1980). 59. [1967] 2 AC 46 (see [1714]). 60. [1967] 2 AC 134n. 61. See [1716], [1733]. 62. See Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558; 128 ALR 201 at 209 where the High Court also stressed that it is no defence that the fiduciary acted honestly and reasonably. See also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 esp at 406– 10. 63. Furs Ltd v Tomkies (1936) 54 CLR 583 at 592; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 562; 128 ALR 201 at 212. See also Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291; [2011] WASCA 17 at [409]–[444] (‘corporate opportunity’ line of cases discussed). 64. See, however, Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558; 128 ALR 201 at 209. Cf 182 CLR 544 at 559; 128 ALR 201 at 210 (quoted [1715]), 182 CLR 544 at 562; 128 ALR 201 at 212. 65. See Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 409; [2003] NSWCA 10 at [414]. 66. [1967] 2 AC 46. 67. [1967] 2 AC 134n. See also Blackman v Thompson (1993) Unreported, SC(NSW) (CA), 16 December. 68. See [1708]. See generally Duncan Miller, ‘Restitutionary and Exemplary Damages for Copyright Infringement’ (1996) 14 Aust Bar Rev 143. 69. See, eg Peter Pan Manufacturing Corp v Corsets Silhouette Ltd [1964] 1 WLR 96; AB

Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 515; Attorney-General v Observer Ltd [1990] 1 AC 109. 70. Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34–5; 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 320; Peter Hastie, ‘Restitution and Remedy in Intellectual Property Law’ (1996) 14 Aust Bar Rev 6 at 6. 71. [1990] 1 AC 109. 72. See [1990] 1 AC 109 especially at 161–2, 174 (Scott J), 262 (Lord Keith), 286, 288, 292 (Lord Goff). See also Attorney-General v Blake [2001] 1 AC 268 (discussed [1831]). 73. See also Phipps v Boardman [1965] Ch 992 at 1031 per Pearson LJ (‘[i]In an ordinary case, where the agent has simply made a secret profit, the rule is so to speak, good for discipline: there is a penal element calculated to deter agents from behaving in that way’). Cf Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 111, 114, 123. 74. [1967] 2 AC 46. 75. But see [1715]. 76. [1951] AC 507. Cf Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559; 128 ALR 201 at 210 (see [1715]). 77. Reading v R [1949] 2 KB 232 at 237; Reading v Attorney-General [1951] AC 507 at 515, 518. 78. (1995) 182 CLR 544; 128 ALR 201. See also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 369–71 (Heydon JA). 79. (1995) 182 CLR at 559, per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ. See also Re Drexel Burnham Lambert UK Pension Plan [1995] 1 WLR 32. As to the discretionary remedy of account of profits see Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25; Seager v Copydex Ltd [1967] 1 WLR 923; [1967] 2 All ER 415; Peter Pan Manufacturing Corp v Corsets Silhouette Ltd [1964] 1 WLR 96; AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 515; LED Builders Pty Ltd v Masterton Homes (NSW) Pty Ltd (1994) 54 FCR 196. 80. [1967] 2 AC 134. 81. [1967] 2 AC 46. 82. Chan v Zacharia (1984) 154 CLR 178 at 204–5; 53 ALR 417 at 437–8 per Deane J. 83. Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291; [2011] WASCA 17. 84. (1995) 182 CLR 544 at 558; 128 ALR 201 at 209. 85. As to interest, see generally Chapter 28. 86. See Warman International Ltd v Dwyer (1995) 182 CLR 544 at 558–65; 128 ALR 201 at 210–14. See also [1717], [1730], [1732], [1735]. 87. As in Reading v Attorney-General [1951] AC 507 (see [1714]). 88. See [123]. 89. Cf Copyright Act 1968 (Cth), s 115(3). 90. See Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101; Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201; Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474.

91. See, generally Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25; Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101. 92. Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34–5; 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 320; Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474. 93. Brady v Stapleton (1952) 88 CLR 322 at 326; Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110; Apand Pty Ltd v The Kettle Chip Company Pty Ltd (No 2) (1999) 88 FCR 568; 162 ALR 505. See also [1733]. 94. Boardman v Phipps [1967] 2 AC 46; Redwood Music Ltd v Chappell & Co Ltd [1982] RPC 109; Paul A Davies (Australia) Pty Ltd (in liq) v Davies [1983] 1 NSWLR 440; Green v Bestobell Industries Pty Ltd (No 2) [1984] WAR 32; Cook v Evatt (No 2) [1992] 1 NZLR 676 (discussed by Watts, ‘Accounting for Profits Fiduciaries Required to Disgorge in New Zealand’ [1992] LMCLQ 439); Bailey v Namol Pty Ltd (1994) 53 FCR 102 at 112; 125 ALR 228 at 238; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 562; 128 ALR 201 at 212; Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 371–84 (Heydon JA); Imageview Management Pty Ltd v Jack [2009] 2 All ER 666; V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; [2013] FCAFC 16 at [61]. 95. Cf Guinness Plc v Saunders [1990] 2 AC 663. See [1028]. But see the critical discussion in Jones, pp 60–7. 96. [1965] 1 Ch 992 at 1020 (on appeal see Boardman v Phipps [1967] 2 AC 46), quoted with approval in Green v Bestobell Industries Pty Ltd (No 2) [1984] WAR 32 at 37. 97. See [1714]–[1715]. 98. Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 Ch D 339 at 367; Reading v AttorneyGeneral [1951] AC 507; Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd [1996] 1 AC 514. 99. But there will be some cases involving fiduciaries in which this is the position. 100. [1979] AC 374. 101. In the light of United Australia Ltd v Barclays Bank Ltd [1941] AC 1 (see [1517]). See further [1738]. 102. For example, Islamic Republic of Iran Shipping Lines v Denby [1987] 1 Lloyd’s Rep 367. 103. See [1727]. 104. See Beatson, pp 222–3. 105. M Jackman, ‘Restitution for Wrongs’ [1989] CLJ 302 at 318–21 argues that it is only when breach of contract has a dual character, also involving infringement of proprietary rights or fiduciary obligations, that it may yield the restitutionary measure of damages. See also [1525] and further Chapter 18. 106. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. See generally McDermott, Equitable Damages. 107. See Wei Wen, ‘Contractual Damages and Post-Sidhu Proprietary Estoppel’ (2015) 5 Prop L Rev 32. 108. See [1722]. 109. Chancery Amendment Act 1858 (UK) (21 & 22 Vic c 27). 110. See ACT: Supreme Court Act 1933, s 34; NSW: Supreme Court Act 1970, s 68; Qld: Civil

Proceedings Act 2011, s 19; SA: Supreme Court Act 1935, s 30; Tas: Supreme Court Civil Procedure Act 1932, s 11(13); Vic: Supreme Court Act 1986, s 38 (as to its extended scope, encompassing equitable wrongs, see Giller v Procopets (2008) 24 VR 1); WA: Supreme Court Act 1935, s 25(10). As to the Northern Territory, see Brooks v Wyatt (1944) 99 NTR 12 at 28. See also Corporations Act, s 1317H. The words are from the NSW provision. See also [1511], [1836]. 111. Or the provision has been repealed: Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851; Conroy v Lowndes [1958] Qd R 375; Johnson v Agnew [1980] AC 367 at 400. 112. See Meagher, Gummow and Lehane, Chapter 24. 113. Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 85; Barbagallo v J & F Catelan Pty Ltd [1986] 1 Qd R 245. 114. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 115. Horsley v Ramsay (1889) 10 NSWLR (Eq) 41 at 46–7; Minter v Geraghty (1981) 38 ALR 68 at 80. See, generally P M McDermott, ‘Jurisdiction of the Court of Chancery to Award Damages’ (1992) 108 LQR 652. 116. Copyright Act 1968 (Cth), s 115(2); Patents Act 1990 (Cth), s 122(1); Designs Act 2003 (Cth), s 75(1)(b); Trade Marks Act 1995 (Cth), ss 126–127. 117. Watson Laidlaw & Co Ltd v Pott Cassels and Williamson (1914) 31 RPC 104; WEA Records Pty Ltd v Stereo FM Pty Ltd (1983) 48 ALR 91 at 111; Copyright Agency Ltd v Department of Education (1985) 59 ALR 172 at 181–3; Polygram Pty Ltd v Golden Editions Pty Ltd (1997) 148 ALR 4; Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420 at [176]. Compare the approach in calculating damages against the trespasser of land: see [1626]. 118. See Bailey v Namol Pty Ltd (1994) 53 FCR 102 at 112; 125 ALR 228 at 237. 119. 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 320. 120. Corporations Act, s 1317H. See Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [630]–[631]; V-Flow Pty Ltd v Holyoake (Vic) Pty Ltd (2013) 296 ALR 418; [2013] FCAFC 16: as to the capacity to include profits. 121. Nocton v Lord Ashburton [1914] AC 932. 122. As to electing between damages and account of profits, see [1738]. 123. Ex parte Adamson (1878) 8 Ch D 807 at 819 per James and Baggallay LJJ. In that case the equitable wrong was misappropriation of partnership property. See also Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 16 FCR 410 at 421; 75 ALR 271 at 282; Wickstead v Browne (1992) 30 NSWLR 1; Target Holdings Ltd v Redferns [1996] 1 AC 421 at 434; [1532]. 124. See generally Meagher, Gummow & Lehane, Chapter 23; Wei Wen, ‘Contractual Damages and Post-Sidhu Proprietary Estoppel’ (2015) 5 Prop L Rev 32; Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at 224–6; 180 ALR 249 at 292–4 per Kirby J; Nicholls v Michael Wilson & Partners [2012] NSWCA 383 at [170] ff. The issue of ‘how different’ is a controversial one that is affected by attitudes to the fusion of law and equity. 125. See Bailey v Namol Pty Ltd (1994) 53 FCR 102; 125 ALR 228. 126. Chapter 16. 127. See [1725].

128. Re Dawson [1966] 2 NSWR 211 at 216 per Street J; Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; 276 ALR 646; [2011] FCAFC 24 at [105]. 129. WM Gummow, ‘Compensation for Breach of Fiduciary Duty’ in T G Youdan (ed), Equity, Fiduciaries and Trusts (1989) at p 79; Nicholls v Michael Wilson & Partners [2012] NSWCA 383 at [171]. 130. See Meagher, Gummow and Lehane, §§23-175–23-225. Cf Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102. 131. Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561 at 573–4. 132. J Stuckey-Clarke, ‘“Damages” for Breaches of Purely Equitable Rights: The Breach of Confidence Example’ in Finn, Essays on Damages, pp 74–5. 133. Re Dawson (deceased) [1966] 2 NSWR 211; (1966) 84 WN (NSW) 399 (applied in Bartlett v Barclays Bank Trust Co Ltd (No 1 and 2) [1980] Ch 515 at 543); Guerin v R (1984) 13 DLR (4th) 321 (SCC). See also Jaffray v Marshall [1993] 1 WLR 1285. 134. Commonwealth Bank of Australia v Smith (1991) 102 ALR 453 at 479–80; O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262; Nicholls v Michael Wilson & Partners [2012] NSWCA 383 at [170]ff. See also Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 243. 135. See Chapter 28. 136. United States Surgical Corp v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 at 816 (on appeal sub nom Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41); Catt v Marac Australia Ltd (1986) 9 NSWLR 639: Hill v Rose [1990] VR 129; Smith Kline & French Laboratories Ltd v Secretary, Department of Community Services & Health (1990) 22 FCR 73 at 83; Tavistock Pty Ltd v Saulsman (1991) 9 ACLC 450; Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 426–7. 137. See Chapter 28. 138. Bailey v Namol Pty Ltd (1994) 53 FCR 102 at 112–13; 125 ALR 228 at 238. See also Lee Aitken, ‘Developments in Equitable Compensation: Opportunity or Danger?’ (1993) 67 ALJ 596 especially at 599. See also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 where the New South Wales Court of Appeal rejected an award of exemplary damages against an employee who breached his contractual and equitable duties of good faith. Spigelman CJ reserved the position with regard to fiduciary obligations that did not arise out of a contract (see at 307–12). 139. See also [1504]. 140. Cf Attorney-General v Guardian Newspapers Ltd [1987] 3 All ER 316 at 327–8; [1987] 1 WLR 1248 at 1264 (on appeal sub nom Attorney-General v Observer Ltd [1990] 1 AC 109). 141. Seager v Copydex (No 2) [1969] 1 WLR 809; [1969] 2 All ER 718; Dowson & Mason Ltd v Potter [1986] 1 WLR 1419; [1986] 2 All ER 418; Talbot v General Television Corp Pty Ltd [1980] VR 224; Aquaculture Corp v New Zealand Mussel Co Ltd [1990] 3 NZLR 299; Attorney-General v Observer Ltd [1990] 1 AC 109 at 286; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 676. 142. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 143. [1990] 1 AC 109 at 286 (see [1502]).

144. Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 241. 145. (2003) 56 NSWLR 298. 146. Re Dawson (deceased) [1966] 2 NSWR 211 at 216; (1966) 84 WN (NSW) 399 at 406; Hill v Rose [1990] VLR 129 at 144; Target Holdings Ltd v Redferns [1996] 1 AC 421 at 434; O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 277; Nicholls v Michael Wilson & Partners [2012] NSWCA 383 at [174]. 147. Ex parte Adamson (1878) 8 Ch D 807 at 819. 148. Wickstead v Browne (1992) 30 NSWLR 1. The case involved s 556 of the Companies Code. See now Corporations Act, ss 588G, 588J. 149. See Chapter 28. 150. As to account of profits, see [1710]–[1718]. See also [1508], [1639]. 151. See [1720]. 152. See, eg P B H Birks, ‘Civil Wrongs: A New World’, in Butterworth Lectures 1990–91, p 55. 153. See [1639]. An account has also been a remedy for the tort of passing off. 154. See Meagher, Gummow and Lehane, [23-010]. 155. Nocton v Ashburton [1914] AC 932 at 952; Re Dawson (deceased) [1966] 2 NSWR 211 at 215–6; (1966) 84 WN (NSW) 399 at 404. See also Stewart v Layton (1992) 111 ALR 687. 156. Catt v Marac Australia Ltd (1986) 9 NSWLR 639; Yore Contractors Pty Ltd v Holcon Pty Ltd (1990) 2 ACSR 663 at 669, 670. 157. And see Hill v Rose [1990] VR 129 at 143. See also [2813]. 158. See [1724]. 159. See, eg Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 426–7; 197 ALR 617 at 630; Blackman v Thompson (1993) Unreported, SC(NSW) (CA), 16 December. 160. [1967] 2 All ER 415; [1967] 1 WLR 923. 161. English v Dedham Vale Properties Ltd [1978] 1 WLR 93 at 111; [1978] 1 All ER 382 at 399. For the Australian provisions see [1720]. 162. [1969] 2 All ER 718; [1969] 1 WLR 809. 163. See J Stuckey-Clarke, ‘“Damages” for Breaches of Purely Equitable Rights: The Breach of Confidence Example’ in Finn, Essays on Damages, p 80; Meagher, Gummow and Lehane, [42-140]. As to specific restitution see [1612]. 164. Birks, Introduction, p 345. 165. J Stuckey-Clarke, ‘“Damages” for Breaches of Purely Equitable Rights: The Breach of Confidence Example’ in Finn, Essays on Damages, p 80. 166. (1975) 5 ALR 527. See also WEA Records Pty Ltd v Stereo FM Pty Ltd (1983) 48 ALR 91 at 111; Bailey v Namol Pty Ltd (1994) 53 FCR 102; 125 ALR 228. Cf as to wrongful use [1625]–[1626], [1628]. 167. General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819 at 824; [1975] 2 All ER 173 at 177 per Lord Wilberforce. 168. See, eg Mordecai v Mordecai (1988) 12 NSWLR 58.

169. See, eg Dowson & Mason Ltd v Potter [1986] 1 WLR 1419; [1986] 2 All ER 418. 170. See the discussion in [1621]–[1623], [1628]. 171. United States Surgical Corp v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 228–33 (on appeal sub nom Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41). 172. See Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129. Cf [1528]. 173. As to interest see Chapter 28, especially [2813]–[2814]. 174. Gaba Formwork Contractors Pty Ltd v Turner Corp Ltd (1991) 32 NSWLR 175 at 188 per Giles J. 175. See also Hill v Rose [1990] VR 129 at 143. But see Catt v Marac Australia Ltd (1986) 9 NSWLR 639; Yore Contractors Pty Ltd v Holcon Pty Ltd (1990) 2 ACSR 663 at 669, 670. 176. (1985) 160 CLR 583 at 614; 62 ALR 429 at 450–1. 177. See [249]; Keith Mason, ‘R3RUE, the Taxonomy of the Constructive Trust and the Fusion of Law and Equity’ in Elise Bant and Michael Bryan (eds), Principles of Proprietary Remedies, Lawbook Co, 2013, Chapter 6. 178. See Giumelli v Giumelli (1999) 196 CLR 101 at 112; Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [667]. 179. Even then, it usually operates as the basis of a vesting order and obligations to account as if the defendant were a trustee. Prior to the defendant being put on notice of a proprietary claim, the defendant may not have the full range of investment duties of an express trustee (see Giumelli at [5]). 180. See Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 585; Giumelli v Giumelli (1999) 196 CLR 101 at 113–4, 125, 127–8; John Alexander’s Clubs Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at [118] (‘ordinarily the remedy of constructive trust would have been selected from a range of possible remedies’). See generally Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [503]–[511]. As to equitable charge or lien, see [1734]. See further [249]. 181. See Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110. This advantage is shared by account of profits and damages/compensation according to the restitutionary measure. 182. See [257]. 183. Sometimes the very difficulty of valuation is a factor favouring the constructive trust: see, eg LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14 at 48–9. 184. See, eg Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488. 185. Attorney-General (Hong Kong) v Reid [1994] AC 324; FHR European Ventures LLP v Cedar Capital Partners LLC [2014] 3 WLR 535. See the discussion in Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [188]–[193], [246], [569]–[583]. 186. Cook v Deeks [1916] 1 AC 554; Chan v Zacharia (1984) 154 CLR 178 at 198–9; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488; Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198; Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286; Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (2011) 86 ACSR 277; [2011] VSCA 392 at [48]. 187. The prime exponent of this view is Waters, The Constructive Trust. 188. (1980) 117 DLR (3d) 257 at 273. See also Brissette Estate v Westbury Life Insurance Co

(1992) 96 DLR (4th) 609 at 614. See also Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 251–2. 189. [1995] 1 AC 74 at 99. 190. See Elias, Explaining Constructive Trusts. Compare also [1711] as to account of profits. 191. (1987) 16 FCR 536; 76 ALR 485. 192. (1987) 16 FCR 536 at 553; 76 ALR 485 at 503, citations omitted. Gummow J was in dissent, but not on this point. 193. See generally [248], [1727]. 194. Baumgartner v Baumgartner (1987) 164 CLR 137 at 148; 76 ALR 75 at 83–4; Bulun Bulun v R & T Textiles Pty Ltd (1998) 86 FCR 244; 157 ALR 193 (fiduciary obligation); Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (2011) 86 ACSR 277; [2011] VSCA 392 at [48]. See generally [247]–[257]. An equitable lien may often suffice (see [1734]). 195. [1978] Qd R 72. See also LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14; Polwood Pty Ltd v Foxworth Pty Ltd (2008) 165 FCR 527; 244 ALR 626 at [88] (proprietary relief withheld on the facts (see [89]). 196. Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488; United States Surgical Corp v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 233–43 (on appeal sub nom Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41); Baumgartner v Baumgartner (1987) 164 CLR 137 at 152–4, 76 ALR 75 at 86–8; Bryson v Bryant (1992) 29 NSWLR 188; Carson v Wood (1994) 34 NSWLR 9. 197. See Grimaldi v Chameleon Mining NL (2012) 200 FCR 296; [2012] FCAFC 6 at [256], [510]–[511], [567]. 198. (1890) 45 Ch D 1. 199. See [1728]. 200. Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 248. 201. Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559; 128 ALR 201 at 210; 69 ALJR 362 at 368. 202. See Meagher, Gummow and Lehane, §2710. 203. Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 52. 204. See W H Brine & Co v Whitton (1981) 37 ALR 190. 205. Scott v Scott (1963) 109 CLR 649; United States Surgical Corp v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 238–43 (on appeal sub nom Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41); Bailey v Namol Pty Ltd (1994) 53 FCR 102 at 112; 125 ALR 228 at 238; Lym International Pty Ltd v Chen [2009] NSWSC 167. As to the contribution of expenditure and services, see [1717], [1736]–[1738]. The onus of establishing that an allowance is called for lies on the defendant: Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at [335]–[336]. 206. Where a significant portion of an increase in profits has been generated by the skill, efforts, property or resources of the fiduciary, and the risks and capital contributed by the fiduciary, this will be a strong reason for preferring an account of profits over a

constructive trust: see Warman International Ltd v Dwyer (1995) 182 CLR 544 at 560; 128 ALR 201 at 211. In an appropriate case a fully-blown constructive trust can be awarded subject to an allowance: V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; [2013] FCAFC 16 at [61]–[62], [69]. 207. Davies v Littlejohn (1923) 34 CLR 174 at 185 per Isaacs J. The words were used in relation to the doctrine of vendor’s lien, but they were said to be of general application by Gibbs CJ in Hewett v Court (1983) 149 CLR 639 at 645; 46 ALR 87 at 90–1. See generally D W M Waters, ‘The Equitable Lien’ (1988) 18 UWALR 22; Justice Campbell, ‘Some Historical and Policy Aspects of the Law of Equitable Liens’ (2008) 83 ALJ 97. 208. Calverley v Green (1984) 155 CLR 242 at 263; Muschinski v Dodds (1985) 160 CLR 583 at 598; ACN 062 895 774 Pty Ltd v Tyndall [2007] NSWCA 64. See [645]. See further as to equitable liens, Lord Napier and Ettrick v Hunter [1993] AC 713 (discussed by W M C Gummow (1993) 109 LQR 159). 209. Hewett v Court (1983) 149 CLR 639 at 663 per Deane J. Accordingly, the court will manage the way in which the newly secured creditor exercises his or her rights. 210. See Bishopsgate Investment Management Ltd v Homan [1995] Ch 211. 211. See Maguire v Makaronis (1997) 188 CLR 449; 144 ALR 729. See also [1717], [1732], [1735]. 212. See [1716]. 213. See also [1717], [1732]. 214. See [1717]. 215. [1985] QB 428. 216. [1985] QB at 466 per Fox LJ. 217. (1989) 61 DLR (4th) 14 (SC Canada). 218. Shirlaw v Taylor (1991) 31 FCR 222 at 228; 102 ALR 551 at 557. As to equitable liens, see [249], [1734]. 219. See Calverley v Green (1984) 155 CLR 242 at 263; 56 ALR 483 at 497; Muschinski v Dodds (1985) 160 CLR 583 at 598; 62 ALR 429 at 438–9; Shirlaw v Taylor (1991) 31 FCR 222 at 228; 102 ALR 551 at 558. 220. See [1515], [1516]. 221. (1994) 35 NSWLR 150; 124 ALR 407. 222. Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25; 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 320–3; Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd [1996] 1 AC 514. 223. McKenzie v McDonald [1927] VLR 134 (Dixon AJ); Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201; Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 416; [2003] NSWCA 10 at [446]). 224. (1994) 35 NSWLR 150; 124 ALR 407. See also Franklins Self Serve Pty Ltd v Wyber (1999) 48 NSWLR 249 at 254.

[page 715]

Chapter Eighteen

Breach of Contract 1.

General ….

[1801]

(a) Introduction ….

[1801]

(b) Criteria and Objectives of Contract Damages …. [1808]

2.

3.

4.

(c) Contract Damages and the Enforcement of Contracts …. [1814] Benefit Equal to Loss …. [1817] (a) General ….

[1817]

(b) Money Retained and Expense Saved ….

[1819]

(c) Profit Lost and Benefit Not Received …. Terms of the Contract ….

[1822] [1824]

(a) General ….

[1824]

(b) Benefit Obtained in Breach of Contract Term …. [1826] Benefit Without Loss …. [1830] (a) General ….

[1830]

(b) Character of the Breach ….

[1833]

(c) Basis for the Award ….

[1836]

(d) Nature of the Wrong ….

[1839]

1. General (a) Introduction [1801] Objects. This chapter considers the circumstances in which restitutionary damages may be awarded for a breach of contract. When expressed in terms of whether the plaintiff may recover as damages for breach of contract a profit obtained by the defendant in consequence of its breach of contract, this is a narrow inquiry. And, when framed, as in most academic discussions, to include an assumption that the profit does not correspond to a loss to the plaintiff, it is very narrow indeed. Since in some cases benefits obtained by a defendant may be recovered on the basis that they correspond to a loss suffered, the objects of the chapter necessarily include evaluation of the principles regulating the recovery of compensation. Some reference must also be made to the so called principle of ‘waiver of tort’,1 since in some cases a claim for damages in tort or under statute may be available on breach of contract. A contract may be made between parties who also stand in a fiduciary relation, and we must therefore also touch upon equitable compensation, as well as relief granted in the context of fiduciary relations.2 [page 716] [1802] Issues. Discussion of damages assessment focuses on three principal bases, which correspond to the interests which plaintiffs may seek to have protected in a damages award.3 These are: ‘expectation’ damages, ‘reliance’ damages and ‘restitution’ damages. Expectation damages are commonly understood to refer to damages assessed by reference to the plaintiff’s performance expectations, whereas reliance damages are assessed by reference to expenditure incurred (and lost) as a result of reliance on the contract, and restitution damages are assessed by reference to benefits obtained by the defendant as a result of the defendant’s breach.4

Because we are concerned to investigate the scope of the idea that persons should not be permitted to take advantage of their own wrongs,5 and because the recovery of restitutionary damages in contract is exceptional, it is necessary in the contract context to take a somewhat broader perspective on damages than was taken in relation to the wrongs already considered. In any event, the issue ‘When are restitutionary damages available?’, makes more sense when framed in the context of general principles regulating the recovery of contract damages. Thus, a number of factors may need to be considered, in addition to the objects which inform the assessment of damages. First, it is necessary to identify situations in which the defendant’s benefit is legitimately regarded as a loss to the plaintiff. Second, given that contract is a consensual relation, analysis of the terms of the contract is always required. Third, we need to take account of various other factors, or special situations, which may justify a restitutionary award. These include the jurisdictional basis for the award, and the nature of the breach of contract itself. [1803] Terminology. Where a claim is made to have damages assessed in protection of the restitution interest, the expression ‘restitutionary damages’ refers to assessment by reference to a benefit obtained. That benefit may be one obtained directly from the plaintiff, one obtained indirectly (for example, by the saving of a performance expense), or one obtained from a third party. Clearly, in many cases damages equal to the amount of a benefit obtained in breach of contract will in fact represent a loss suffered by the plaintiff. However, particularly in cases where the benefit was obtained from a third party, this will not always be the case. [page 717] It will serve to highlight the important question referred to above6 if we restrict the expression ‘restitutionary damages’ to damages assessed

on a purely restitutionary basis, that is, where the benefit does not represent a loss to the plaintiff. There is then a contrast with ‘compensatory’ damages, that is, damages assessed purely by reference to the plaintiff’s loss. [1804] Relevance of unjust enrichment.7 The mere fact that the defendant has obtained a benefit in breaching a contract does not mean that the benefit was obtained at the plaintiff’s expense, because the benefit may have involved no subtraction from the plaintiff’s wealth. Since a general requirement of unjust enrichment is that the defendant obtained the benefit in question at the plaintiff’s expense,8 the unjust enrichment concept does not in terms authorise a claim to recover an enrichment not obtained from the plaintiff. Where restitutionary damages are sought, the relevant enrichment is not at the plaintiff’s expense in the sense that the enrichment of the defendant was by reason of a subtraction from the plaintiff.9 The ‘at the expense of’ element in the unjust enrichment concept is here used in the sense of ‘by reason of a wrong to’. An order for restitution is not an order for compensation.10 Moreover, when a claim is made for restitutionary damages, the claim is not for restitution. It is a claim for damages. However, this does not mean that unjust enrichment is irrelevant. To begin with, there are exceptional cases where the commission of a wrong is regarded as a sufficient basis for the direct recovery of a benefit obtained from a third party. The ability of a plaintiff to recover the amount of bribe paid to the plaintiff’s agent11 is a restitutionary claim distinct from damages for fraud. There are also situations in which alternative claims12 may be made for damages and restitution, because the benefit obtained by the defendant is alternatively recoverable as restitution for an unjust enrichment or as damages for breach of contract. Examples include cases where the damages which the plaintiff seeks to recover are equal in amount to restitution recoverable on the basis of total failure of the agreed return, and cases where it is appropriate to assess damages on a reasonable remuneration basis.13 These references to unjust enrichment as discussed elsewhere in this

book must be distinguished from cases in which we might intuitively suggest that the defendant is unjustly enriched. When used intuitively, the expression states a personal view on the unfairness of a particular result. This intuition [page 718] is not a legal conclusion. So much follows from the fact that the unjust enrichment concept is not an excuse for a discretionary award.14 The same can, in our view, be said about references to unjust enrichment made for the purpose of emphasising the general policy of damages awards to prevent unfair enrichment. In Commonwealth of Australia v Amann Aviation Pty Ltd15 Deane J suggested that it is desirable to keep in mind the importance of the doctrine of restitution or unjust enrichment as the ‘rational basis of significant parts of the common law in determining the content of particular rules in some of the persistently grey areas of the law of damages’. He did not develop this suggestion, and it is not clear that he had restitutionary damages in mind. If he did not, the suggestion is either an appeal to an intuitive notion of unjust enrichment much vaguer than we have seen in evidence in the case law or a statement of one aspect of the policy of damages awards in general. [1805] Contract inherently effective. Every breach of contract gives rise to the right to claim damages. We are concerned in this chapter with claims that damages for breach of contract ought to be assessed in a particular way. Where restitutionary damages are at issue, the contract is inherently effective, and the context is different from the ineffective contracts area. Since the plaintiff is not making an independent claim in restitution for an unjust enrichment, but is rather making a claim which is dependent on the commission of a wrong,16 discharge of the contract is not required.17 Therefore, unlike the position where a claim is made for restitution, a claim for restitutionary damages does not assume that the contract was, or has become, an ineffective one. Indeed, in many cases damages

cannot be recovered where a contract is ineffective.18 A claim for contract damages will be available in all cases where the reason for ineffectiveness is discharge for breach.19 But only if the plaintiff seeks to pursue an alternative claim for restitution is the plaintiff required to prove that the contract was ineffective.20 [1806] General principle. The courts have not sought to generalise from the principle of waiver of tort a general right to treat a breach of contract as a wrong capable of being ‘waived’ and justifying an award of restitutionary damages. Instead, the courts have applied a general principle that damages for breach of contract are assessed by reference to the plaintiff’s loss or damage, rather than the defendant’s gain.21 There is, therefore, no general [page 719] support for the line of approach suggesting that a breach of contract justifies an award of restitutionary damages.22 However, since the matter awaits decision by the High Court,23 it is important, in this chapter, to present the arguments in favour of a different approach. There are also cases which are difficult to reconcile with the general principle, to which we draw attention and seek to explain.24 [1807] Qualifications to the general principle. This chapter is mainly concerned with qualifications to the general principle that contract damages are assessed by reference to loss or damage suffered. There are at least three situations in which damages may be assessed by reference to the defendant’s gain: (1) where this is authorised by an express term of the contract; (2) where the defendant’s gain represents the plaintiff’s loss; and (3) where the defendant’s conduct, in obtaining the benefit, amounts to the breach of a duty to act in the interests of the plaintiff. In these cases, compensatory damages are recovered. If we also take

account of the possibility that an award may be made under statute, and that a breach of contract may be associated with the commission of a tort or a wrongful dealing with property, we may add a fourth category: (4) restitutionary damages for breach of contract may be awarded where they represent the appropriate method for assessing damages under statute, or the breach concurrently represents tortious conduct or an unauthorised dealing with the plaintiff’s property for which restitutionary damages are available. Finally, given developments in England which are discussed later,25 it is relevant to add: (5) restitutionary damages for breach of contract which do not represent the plaintiff’s loss may be awarded in exceptional circumstances. Before turning to these categories, we should first examine certain aspects of general principles governing the assessment of contract damages at common law.

(b) Criteria and Objectives of Contract Damages [1808] Introduction. Except in two cases, discharge of a contract is not a pre-condition to a claim for damages. One case is where the plaintiff claims damages for anticipatory breach.26 The other is where recovery is claimed on a loss of bargain basis, that is, damages are sought for the value of the bargain [page 720] lost by reason of its premature discharge.27 In all other cases, the mere fact of breach by a defendant entitles the plaintiff to claim damages.28

A nominal sum is therefore recoverable as of right, even if no loss or damage is suffered. Whether a defendant is liable to pay more than a nominal sum is governed mainly by the principles governing causation and remoteness of damage. Since every legal principle concerned to provide the plaintiff with a remedy has an objective, these principles give effect to an objective expressed, broadly, in terms of compensating the plaintiff, rather than penalising the defendant. This objective then informs the task of measuring the defendant’s liability.29 Unless the contract expresses the extent and measure of responsibility, the extent of a defendant’s responsibility is in general governed, subject to matters such as contributory negligence and mitigation, by the loss or damage criterion stated below.30 Loss or damage then falls to be assessed in accordance with the various bases which exist for determining the appropriate measure. [1809] General criterion of loss or damage. The general criterion of loss or damage suffered by the plaintiff, rather than for benefit obtained by the defendant, reflects what is said to be a central tenet of the law of damages, namely, that the plaintiff is entitled to be compensated.31 This is not merely concerned to prevent the inflation of damages which might be made for the purpose of penalising the defendant, it is also designed to ensure that the integrity of the parties’ bargain is respected. The objective of damages is therefore to compensate the plaintiff, and a plaintiff is not entitled to be placed in a better position than if the contract had been performed.32 There is also an important evidential function: the plaintiff must produce evidence of its own loss or damage. In a case where no such evidence is forthcoming, the plaintiff will generally recover a purely nominal sum,33 even if the defendant has made a benefit as a result of the breach. The basis for this approach is simply that the remedy of contractual damages is assumed to have no objective to fulfil unless the plaintiff suffered some quantifiable loss or damage. Therefore where damages are assessed at common law, in tort or contract, the general object is to compensate the plaintiff: to place the

plaintiff in the position which would have been occupied had the wrong not occurred.34 In the case of contract damages, this is usually expressed by saying that the plaintiff is entitled, so far as money can do it, to be placed in the same [page 721] situation, with respect to damages, as if the contract had been performed.35 This criterion necessarily embraces one case in which the plaintiff seeks to recover a benefit obtained by the defendant as a consequence of breach, namely, a benefit which would have accrued to the plaintiff if the defendant had performed the contract. However, the criterion does not in terms include a case of restitutionary damages, since the benefit which the plaintiff claims to recover from the defendant is not one which would have accrued to the plaintiff through performance of the contract. Applied to contract damages, an award of restitutionary damages would not have the effect of (notionally) placing the plaintiff in a position which it would have occupied had the breach not occurred. Instead, the effect would be to place the defendant in the position which it would have occupied had it not breached the contract. This contradicts the normal basis upon which damages are awarded in contract, and decisions such as Surrey County Council v Bredero Homes Ltd36 stand for the proposition that, in so far as the claim is analysed as a purely contractual one, no exceptions exist. Although rigid adherence to a compensation principle makes this stance unchallengeable, it is not at all clear that rigid adherence is required and we have seen that the courts have sometimes been prepared to depart from the norm.37 [1810] Bases for assessing damages. A court assessing contract damages will start from the presumption that it is the plaintiff’s actual (or presumed) loss or damage which matters, and that this is to be determined by reference to the plaintiff’s performance expectations. Where a contract has been terminated by the plaintiff in reliance on the defendant’s repudiation, it is recognised as a general principle that loss

of bargain damages is the appropriate measure.38 In particular contexts, such as sale of goods, the general presumption is expressed in specific terms, such as the difference between the market price (of goods of the kind which the defendant promised to deliver) and the contract price. Since a criterion expressed in terms of the value of a bargain is manifestly an expectation criterion, there is in these cases a presumption against recovery on any other basis.39 Expectation damages tend to be the norm in contract. However, in some circumstances it will be more appropriate to assess damages by reference to the plaintiff’s reliance interest or restitution interest.40 Consideration of the basis on which the plaintiff is entitled to have an award assessed is particularly useful, in ensuring that justice is done by neither undercompensating the plaintiff nor making the defendant pay the same loss twice over. The three bases usually referred to41 are not, however, mutually exclusive: there may be elements of expectation, reliance and restitutionary recovery in any award. There is no objection to compensating the plaintiff on more than one [page 722] basis for assessment, so long as there is no double recovery.42 Of course, the fact that various bases exist for assessing damages does not of itself contradict the general principle that the relevant criterion is the plaintiff’s loss or damage. Thus, and whatever may be the position elsewhere, in Australian contract law these are regarded as alternative ways of assessing compensation. Reliance expenditure may be an appropriate subject of an award for damages in contract. However, at least where this is the principal basis for assessment, there must be some justification for such an award, for example, that assessment on an expectation basis is too difficult.43 Thus, the ability to assess on a reliance basis has not been interpreted as affording a plaintiff the right to have damages assessed on that basis in order to escape from a bad bargain, and a plaintiff cannot claim to

have damages assessed by reference to wasted expenditure simply because the bargain was an unprofitable one.44 Where a claim for damages seeks to protect the plaintiff’s restitution interest by recovery of a benefit obtained, it is generally uncontroversial unless it relates to a benefit which does not represent a loss to the plaintiff. Thus, although recovery of a benefit in the hands of the defendant may be justified by reference to the compensation principle, the ability to recover damages in protection of a restitution interest has not been interpreted as affording a plaintiff the right to have damages assessed on that basis when the benefit does not represent a loss to the plaintiff.45 Therefore, in a case where a benefit obtained does not in fact represent a loss to the plaintiff, a court applying the loss or damage criterion will presume that restitutionary damages are not available. [1811] Combined claims. It is reasonably common for damages to have combined bases. There may, for example, be a reliance and a restitutionary component, as where the plaintiff recovers both wasted expenditure and money paid to the defendant.46 There may also be combined restitutionary and expectation components, as where a plaintiff recovers lost profits and compensation for benefits conferred in partially performing a contract.47 There may even be both expectation and reliance components, that is, where profit and wasted expenditure are both recovered. It is, of course, true that many such combined claims have been presented as controversial.48 However, the guiding principle is a simple one. Bases for assessment may be combined so long as they do not allow the plaintiff to recover the same sum twice, and so long as the combined claims are [page 723] consistent with one another. For example, a plaintiff cannot recover gross profit as well as the total reliance expenditure incurred when

performing a contract, for the obvious reason that the making of a profit assumes that necessary expenditure has been made.49 [1812] No right of election between bases for assessment. In Commonwealth of Australia v Amann Aviation Pty Ltd 50 the High Court treated the criterion51 that a plaintiff is entitled (so far as money can do it) to be placed in the same situation, with respect to damages, as if the contract had been performed, as applicable to each of the three bases for assessing damages. One reason for adopting this approach was, apparently, to reject the view52 that a plaintiff may elect in favour of one basis for assessment rather than another. Therefore, although in particular cases (including Amann itself) a plaintiff may be compensated by reference to the reliance or restitution interest, this is not to be justified by reference to a plaintiff’s right of election. It necessarily follows, as indeed the general approach to reliance damages implies, that a plaintiff cannot assert a right to have damages assessed in a particular way. This does not solve the problem of when restitutionary damages should be awarded. However, it clearly suggests that there must be an objective for such an award. [1813] Objectives other than compensation. Since the recovery of restitutionary damages cannot be supported by the objective of compensating the plaintiff, we must find some other objective. The common law has rejected punitive assessment, that is, pursuit of the objective of penalising the defendant.53 Although it is legitimate to recite — as a possible qualification — the objective of not allowing persons to take advantage of their own wrongs,54 this is not in itself a legal principle. Accordingly, some additional justification must be present. The refusal of the courts to award restitutionary damages may then be seen as a general conclusion that no justification for such damages has yet been found. [page 724]

Once we have regard to the factual situations which have been held to justify an award of restitutionary damages, we begin to see other objectives. For example, the protection of property rights and the enforcement of fiduciary obligations can be put forward as alternatives to the compensation objective.55 Some commentators who have argued in favour of restitutionary damages in the contract context suggest another objective, namely, the prevention of unjust enrichment.56

(c) Contract Damages and the Enforcement of Contracts [1814] Introduction. Although we do not doubt that the prevention of unjust enrichment is a legitimate objective, obvious difficulties immediately arise when this is put forward as a sufficient basis for the recovery of restitutionary damages. In Australia it is not supported by the case law. As the law currently stands, although a causal connection between the wrong and the defendant’s enrichment is a necessary basis for a restitutionary award, it is not correct to say that it is a sufficient basis. Accordingly, attempts have been made to support the objective by positing the presence of a factor — in addition to the wrong itself — which makes legitimate an award to prevent unjust enrichment. One such factor is the character of the defendant’s breach.57 Another is any legitimate interest the plaintiff has in preventing the defendant’s profitmaking activity.58 The difficulty of supporting unjust enrichment has led other commentators to suggest a broader conception of the compensation concept by reference to, for example, a negotiating position which was (notionally) lost. Another suggestion, to some extent occupying a middle ground, relies on the availability of specific relief. In order to appreciate the value of these suggestions some consideration must be given to the relation between contract damages and the enforcement of contracts. [1815]

Efficient breach.59 Holmes once said that, except in cases

where specific relief — by way of specific performance or injunction — is [page 725] available, a promisor is ‘free to break his contract if he chooses’.60 Of course, in any such case the promisor must pay damages. But the general rule of compensation would seem to provide a good incentive to a party to breach a contract, since in cases where a benefit obtained does not represent a loss sustained by the plaintiff, the benefit is not recoverable. To this extent the general requirement of compensation in respect of loss or damage appears to encourage the commission of a wrong. Putting loss of reputation in the market to one side, the defendant may well regard the breach as an efficient one, since the benefit to be gained from its commission exceeds the sum which will be exacted (as compensation) to represent a financial loss to the defendant. It has been said that because the law should assist the movement of resources to their highest value user, the approach to damages assessment is also efficient from an economic analysis perspective.61 This is because if a damages award were to require a party to disgorge benefits obtained, there would be no incentive to breach the contract in order to enter into the more profitable transaction. The efficient breach theory of damages is superficially justified by the approach to promises which Holmes appears to support in the statement quoted above. This presents promissory obligations in terms of a choice between performance in specie and substitutionary performance by way of damages. However, it has never been supported as a matter of contract theory, and indeed was described by Windeyer J in Coulls v Bagot’s Executor and Trustee Co Ltd62 as a ‘faulty analysis of legal obligations’. It also lies ill with the morality of contract law.63 Entry into a contract generates an expectation that each party will perform, and creates both a moral and a legal obligation to do so.64 It is hardly consistent with the importance which society attaches to the institution of contract to

conceive of a promise as no more than an expression of willingness to perform provided that non-performance does not become a more profitable exercise. Although largely a matter of intuition, one suspects that most members of society would prefer to have damages assessed on a restitutionary basis than to see a defendant walk away with ‘illgotten gains’, even if the defendant’s conduct can be supported by economic theory.65 [page 726] [1816] Relevance of specific relief. In recent years, academic discussion of remedies in contract has moved away from the efficient breach theory. Thus, it has been argued that specific performance is more efficient than damages, and ought therefore to be more generally available.66 Although it would be wrong to say that the courts in Australia have sought to give effect to either approach on the basis of economic theory, it is clear that there is now a greater willingness than in the past to order specific relief.67 Thus, in a well-known dictum, Windeyer J said in Coulls v Bagot’s Executor and Trustee Co Ltd68 that there is no reason today for ‘limiting by particular categories, rather than by general principle, the cases in which orders for specific performance will be made’. In most of the cases under consideration in this chapter, an order for specific performance would not be available. However, there are cases in which an application for specific performance (or an injunction) might have been made. Moreover, the argument from the specific relief perspective is not limited to cases where an application might have been made. The argument is that even in cases where specific relief is out of the question, the damages award should achieve the same effect.69 Restitutionary damages would then become appropriate in a wider range of cases, including many cases in which the defendant would not have obtained the benefit had the contract been performed.70 However, since the courts have not embraced the idea that specific relief should notionally be awarded by way of compensation, we limit ourselves to a

consideration of cases in which a contrast has been suggested between common law damages for breach of contract and damages awarded in lieu of specific performance or injunction.71

2. Benefit Equal to Loss (a) General [1817] Introduction. Where a benefit obtained represents a benefit lost, an award of damages will secure to the plaintiff the benefit which the defendant obtained. In some, indeed, many, cases a damages award will have this effect. Although these may be rationalised in terms of the protection of a restitution interest, the damages are not restitutionary damages. Rather, the damages are compensatory damages. The only difficulty lies in the proper [page 727] characterisation of loss. There is a temptation to expand the conception of loss to include, for example, lost bargaining opportunities. For the purposes of this analysis, we put to one side cases where the parties have agreed a method for calculating damages, and cases where the defendant was required by the contract to act in the plaintiff’s interest, although in these cases the damages in question may be legitimately regarded as a loss to the plaintiff.72 [1818] Work done. Clearly, the performance of a service or the doing of work are appropriate subjects for compensation in contract. Where the plaintiff has performed work for the defendant, a refusal to award damages might leave the defendant in a position where a valuable benefit is obtained without payment. The assessment of damages on a reasonable remuneration basis, although not unknown, is unusual.73 For example, in cases of discharge the normal measure of

damages is the contract price less the cost to the plaintiff of doing the work.74 Obvious examples are cases where a builder is excluded from a site prior to completion of the work, or where an employee is unlawfully dismissed after partial performance of an employment contract.75 But in these cases the award is clearly one for compensation. The requirements applied in the context of a restitutionary claim, such as benefit and acceptance, are largely irrelevant to the award. The plaintiff may succeed, whether or not an alternative claim in restitution is available, unless the defendant proves that the plaintiff would not have been recouped by full performance of the contract. When expressed in terms of the market value of the services rendered, the rationale is the protection of the plaintiff’s restitution interest. However, the presumption in favour of a loss of bargain measure in cases of discharge is one reason why plaintiffs sometimes seek restitution in the usual sense of reasonable remuneration.76

(b) Money Retained and Expense Saved [1819] Money retained. We have seen that, in some situations, restitution and damages are simply alternative ways of claiming the same relief, and the mere fact that a plaintiff is entitled, by reason of the principle of unjust enrichment, to obtain restitution does not prevent the plaintiff relying on [page 728] a breach or repudiation of the defendant as a basis for a damages claim.77 For example, assume that A and B are in a contractual relation under which A is obliged to pay in advance for B’s performance. If A makes the payment, but B breaches by not performing the contract, B may seek to profit from that breach by keeping the money paid by A. It is clear that A may recover damages assessed by reference to the

amount of the payment, where it represents the plaintiff’s loss. Thus, in McRae v Commonwealth Disposals Commission78 the plaintiff’s recovery of damages for breach (in protection of its reliance interest) included the price of goods which the defendant in breach of contract failed to deliver. Since restitution is not in issue, the amount of the damages claim is not determined by the restitutionary concept of total failure of the agreed return.79 Thus, the ability to claim damages equal to money retained must also hold true whether or not the plaintiff is entitled to claim restitution on the basis of a total failure. For example, in Commonwealth of Australia v Amann Aviation Pty Ltd,80 damages for repudiation were assessed to include the amount of a security deposit paid by the plaintiff, without regard to whether the security was recoverable on the basis of a total failure of the agreed return. Similarly, in any case where a defendant has withheld part of the performance for which the plaintiff paid in advance, damages may be recovered. Thus, if B has been paid in advance, A may recover as compensation an amount equal to the difference between what A promised to provide and what A has actually provided. This may be assessed by reference to the proportion which the advance payment bears to the performance not received, and B may be required to pay as damages a portion of the payment obtained.81 In these cases — and there are of course countless illustrations — the object of the award is to place the plaintiff in the position which would have been obtained had the breach not occurred. Account must therefore be taken of the value of any benefit obtained by the plaintiff. For example, in Beale v Taylor82 the seller delivered an amalgamation of two cars in purported performance of a contract for a white Herald convertible. The buyer proved a breach of the implied term requiring the goods to correspond with their description and recovered damages equal to the price paid, but subject to a deduction for the scrap value of the car. Since the compensation principle is applied, it adds little to say that the damages are assessed in protection of the plaintiff’s restitution interest. And, in our view, it may be quite misleading to make reference

to restitutionary damages or the concept of unjust enrichment. Nevertheless, in Commonwealth of Australia v Amann Aviation Pty Ltd83 Deane J suggested that:84 There are circumstances in which the doctrine of restitution or unjust enrichment overlays the ordinary general rule as to the assessment of

[page 729] damages and gives rise to a direct right of action to recover from the other party money paid under the contract to that other party for a consideration which has failed completely. Even in a case where the consideration has not failed completely, it would seem that that doctrine will found a direct action for the excess of money paid by the innocent party to the other party over the value of any consideration actually received if the circumstances are such that it would be unconscionable conduct on the part of the guilty party to retain the excess.

Unless this statement can be taken to indicate — controversially — that restitution for unjust enrichment should be available against a defendant in breach where failure of the agreed return is merely partial,85 it is an unnecessary complication to orthodox analysis. It seems to us quite wrong to conceive of proof of unconscionable conduct as a necessary element of a claim in respect of a loss recoverable as damages. Where contract damages are in issue, unconscionable conduct, when framed as a basis for restitution, is irrelevant. [1820] Expense saved. The saving of an expense may count as a benefit, recoverable as a loss by the plaintiff. Consider, for example, the case of a builder required to use materials of a particular description or quality, or obliged to dig foundations to a certain depth. If the builder breaches the obligation in question — by using materials of a different kind or quality, or by not digging the foundations to the required depth — the builder may profit from the wrong. The different or inferior materials may be cheaper, and it will be cheaper for the builder to dig to a lesser depth than that required by the contract. It is clear that, generally, the plaintiff may recover the benefit. However, the cases have not been argued by reference to a concept of restitutionary damages.

Rather, the issue has been framed in terms of whether the loss to the plaintiff is more properly measured by reference to the cost of rectification than by reference to a diminution of value. In cases where the latter method is chosen, and there is in fact no diminution, or the amount of diminution is less than the expense saved by the defendant, the defendant in effect profits from the wrong. There are many contexts in which diminution in value will generally be the more appropriate method of assessment,86 and there is a presumption to this effect under the sale of goods legislation.87 On the other hand, in the context of building contracts Australian courts have generally preferred the rectification method of assessment.88 This approach — itself based on [page 730] the rationale that the loss to the plaintiff is more appropriately measured by reference to the cost of doing the work in accordance with the contract — serves the same function as restitutionary damages. Where the cost of doing the work in accordance with the contract is the appropriate measure, Australian courts have not been impressed by arguments that the intention of the plaintiff is a relevant consideration. For example, even if it seems unlikely that the plaintiff will in fact use the award to reinstate property, such an award may be made. In the leading case, Bellgrove v Eldridge,89 the High Court also made it clear that the reasonableness of the rectification is to be preferred to an uncertain concept of ‘economic waste’.90 In the real world of dispute negotiations this is an exceptionally important perspective. If the defendant knows that a court is likely to award an amount equal to the cost of cure, the defendant will be much more willing to share the benefit of any expense saved.91 In England the relevance of the plaintiff’s intention has been described as uncertain,92 although, by emphasising that the cost of reinstatement will not be awarded if reinstatement would be

unreasonable, the decision in Ruxley Electronics and Constructions Ltd v Forsyth93 looks to bring English law into line with the Australian approach. This undermines Megarry V-C’s decision in Tito v Waddell (No 2).94 His view95 that the plaintiff’s intention to reinstate the property is an important consideration provided one reason for rejecting an argument in favour of damages assessed by reference to a saving in expense. The defendants, who were granted licences to mine phosphate on land owned by the plaintiffs, agreed to replant the land after the mining. In breach of contract they failed to do so. Megarry VC refused to award damages based on the cost of reinstating the land, thus enabling the defendants to save the enormous cost involved in replanting. Although a case can be made for the view that the measure was the cost of replanting, the facts would probably come within the reasonableness qualification referred to in Bellgrove v Eldridge.96 [page 731] [1821] Lost opportunity to bargain. One suggested basis for broadening the criterion of loss or damage, applicable where the defendant’s breach gives rise to a saving in expense (or increase in profit), is assessment by reference to a lost opportunity to bargain.97 Although we have some sympathy for such arguments, they suffer from four problems.98 First, the analysis may be fictional.99 Second, the analysis is perhaps limited to cases in which specific relief would be available.100 Third, the proper general approach to damages assessment is to be guided by actual rather than hypothetical facts.101 Fourth, the arguments tend to distract attention from the crucial issue, namely, whether the circumstances are such that a compensatory measure should be rejected in favour of a restitutionary measure.102 In the absence of fraud, a dealing with property or proof that the defendant engaged in conduct prohibited by statute,103 the argument is unlikely to succeed as the law currently stands.104 For example, it is obvious that, in a case like Tito v Waddell (No 2),105 the defendants could have bought themselves out of the contractual obligation to

replant. However, Megarry V-C appears to have regarded the point as irrelevant unless the defendants’ promise could be enforced by an order for reinstatement. This argument is circular, and influenced by the irrelevant consideration that the plaintiffs [page 732] would not have spent a damages award in reinstating the land.106 Megarry V-C distinguished Wrotham Park Estate Co Ltd v Parkside Homes Ltd.107 In that case a conveyance of land made in 1935 contained a promise to observe a restrictive covenant not to develop a part of the land. The covenant was breached by the defendant, a subsequent purchaser. Although this did not in fact cause the plaintiff any quantifiable loss, Brightman J nevertheless awarded substantial damages. These were based on a hypothetical fair price for the relaxation of the covenant. Notwithstanding that the plaintiff would not have agreed to such a bargain, he awarded five per cent of the profit which the defendant made.108 The decision has been said to stand ‘very much on its own’109 and also described as an illustration of assessment on a basis other than the deprivation of a particular type of benefit.110 Although this may indeed suggest a restitutionary basis for the award, it appears that the rationale is either a wrongful dealing with property111 or simply a proper application of the rules governing the award of damages in lieu of an injunction.112 Nevertheless, a majority of the House of Lords in Attorney General v Blake113 while approving the reasoning in Wrotham Park, and appearing to lend some support to the loss of bargaining opportunity analysis,114 acknowledged it as an example of how damages are not confined to financial loss and where ‘in a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer for the breach’.115 Decisions of the English Court of Appeal have taken the view that the House of Lords in Blake’s case viewed Wrotham Park as an example of compensatory damages.116 The measure was applied in Experience Hendrix LLC v

PPX Enterprises Inc.117 Here, in breach of a settlement agreement the defendant [page 733] made a profit by improperly licensing the use of certain master recordings of Jimi Hendrix. The court ordered that the defendant pay the sum that might reasonably be demanded by the claimant to permit the licensing.118 Mance LJ (with whom Hooper J and Peter Gibson LJ agreed) accepted that this might involve some artificiality if no such permission would ever have been granted, nevertheless, this approach had ‘the merit directing the court’s attention to the commercial value of the right infringed and of enabling it to assess the sum payable by reference to the fees that might in other contexts be demanded and paid between willing parties’.119 Although the authorities do not provide any clear guidance,120 it is arguable that the Australian Consumer Law produces the same result. Under s 4, where a representation is made with respect to any future matter (including doing or refusing to do any act), the representation is to be taken as misleading if the representor did not have reasonable grounds for making the representation. Moreover, s 4 provides that ‘unless it adduces evidence to the contrary’, the representor is taken ‘not to have had reasonable grounds for making the representation’. Accordingly, if (as some authorities acknowledge)121 a contractual promise is also to be regarded as a ‘representation with respect to any future matter’, the making of the representation is misleading unless the representor is able to adduce evidence to the contrary. If that evidence cannot be adduced, the representee is entitled to damages for any loss or damage suffered as a consequence of (reliance on) the representation. Since the misleading conduct occurred at the time of entry into the contract, it would not be unreasonable to say that an appropriate measure of that loss or damage is a lost bargaining position.

(c) Profit Lost and Benefit Not Received [1822] Profit lost in fact or supposition. There are many situations in which damages for breach of contract are equal to a profit obtained in fact or supposition. For example, if A agrees to sell goods to B, but fails to deliver, B may claim damages equal to the difference between the contract price [page 734] and the market price.122 If we assume that the market price of the goods rose between the date of the contract and the date of breach, A may in fact have profited from the wrong. It is beyond doubt that B may obtain the amount of the profit. To place B in the position which would have been attained if the contract had been performed, B may recover the difference between the market price and the contract price at the date of A’s breach. It seems significant that the award will be made whether or not the benefit has actually been obtained by A, or in fact been lost by B.123 If the compensation rule is as rigid as the cases suggest, the buyer ought to be restricted to actual loss, and it ought therefore to be open to A to prove that B would not have gone into the market to purchase substitute goods. The explanation for B’s recovery is not that it was a benefit actually obtained by A. Rather, it is by the operation of a presumed measure of compensation, to protect B’s expectation interest. Thus, generally, B will be limited to this difference, and any additional benefit actually obtained by A will be regarded as collateral and therefore ignored.124 [1823] Contract to confer benefit. A quite different type of case is where the defendant simply fails to confer a promised benefit. There are a number of situations, some analogous to the saving of an expense, but always uncontroversial when consistent with the compensation

principle. The simplest case is a promise to pay money. Contracts to confer other types of benefit are more complex.125 If A and B are in a contractual relation under which A is obliged to pay money to B, the money may be claimed as a contract debt if it has been earned. However, if it never fell due, for example because the contract was discharged for breach before the payment was payable, the money must be recovered as damages. Where the only executory element in the contract is the defendant’s obligation to pay, damages may be recovered, but there must be a discount to take account of premature recovery. In other words, the plaintiff may recover the expense which the defendant saved by non-performance, but the sum must be discounted to its present value.126 In cases where the plaintiff was subject to unperformed obligations, the saving to the plaintiff must also be brought into account. In these cases, the measure is simply a loss of bargain one, and analysis in terms of the actual amount of the benefit is in effect subsumed under conventional measures, as in the sale of goods example given earlier.127 However, there may be situations in which the loss of bargain measure is not to be treated as applicable, where the plaintiff is able to recover the promised performance as a claim for damages. In such cases, assessment by reference to the benefit will be controversial if the sum is in excess of the value [page 735] of the bargain. For example, in Damon Compania Naviera SA v HapagLloyd International SA (The Blankenstein)128 the English Court of Appeal held that although a deposit under contract for the sale of a ship was not recoverable as a liquidated sum — because it had not fallen due for payment — it could be recovered as damages. A majority of the court reasoned that because the purchaser could not be in a better position by reason of not having paid a deposit than if the deposit had been paid and forfeited, the seller was entitled to compensation equal to the amount of the deposit. Although the amount of the deposit was

treated as a loss, it is difficult to see how this was so, given that the award in fact exceeded the value of the bargain. Accordingly, if the case was correctly decided (which we doubt), the only rationale is as a restitutionary award made on the basis that although the money was never received it was a benefit which the purchaser was somehow deemed to have obtained (and sought to retain) as a consequence of its own breach of contract. However, the better view is that the amount of the deposit was neither a sum lost by the seller nor a benefit obtained. The argument, that the purchaser could not be treated as occupying a better position than if the deposit had been paid (and forfeited), was not tenable when it was the seller who decided to discharge the contract before the deposit fell due. This circumstance also meant that the money could not be regarded as a benefit retained in breach of contract. We therefore prefer the dissenting judgment of Robert Goff LJ.129

3. Terms of the Contract (a) General [1824] Introduction. The principle of freedom of contract allows parties to agree in advance the quantum of damages to be payable on breach. This is no more than an obvious illustration of the need to consider (and construe) the terms of the contract in order to determine the extent of a defendant’s liability for breach of contract. It is, however, a relatively unimportant illustration. An agreed damages clause drafted in terms of a restitutionary measure would be very difficult to support as liquidated damages, since the criteria for determining whether a sum is a penalty rely heavily on the compensation principle.130 However, it is arguable that the distinction between liquidated damages and penalties does not apply to an agreement that damages are to be assessed on a restitutionary basis in the event of breach, since there is no quantification.131 Moreover, the distinction will not apply to a contract in which the contract price is expressed as alternative sums.132

[page 736] Thus, the contract in Surrey County Council v Bredero Homes Ltd,133 instead of imposing an obligation to build the designated number of houses, might have obliged the defendant to pay a contract price determined by reference to the number of houses actually built. The plaintiffs’ failure to insist on this form of payment is an additional reason for agreeing with the court’s decision not to award the defendant’s profit as damages. More relevant are contract terms which, consistently with the compensation principle, justify a conclusion that a benefit obtained on breach belongs to the plaintiff. Thus, the terms of a contract may include a promise to obtain the benefit for the plaintiff. Alternatively, they may require the defendant to act in the interests of the plaintiff. In such cases an award of compensation to the plaintiff may justifiably include the benefit obtained by the defendant. [1825] Terms may be express or implied. It is elementary that, where a plaintiff asserts that a particular result depends on the operation of the terms of the contract, reliance may be placed on express and implied terms. Indeed, when account is taken of the impact of fiduciary relations on contracts,134 the obligation of the defendant may be expressed simply in terms of a duty to act in a particular way. However, certain features of contract law militate against frequent reliance on implied terms. First, there is the influence of the compensation principle itself. Since the law says that damages should generally be assessed on a compensation basis, there is no general — implied in law — term135 to the effect that when a defendant obtains a benefit in breach of contract the defendant must pay the amount of that benefit to the plaintiff as damages for breach of contract. Thus, if the plaintiff’s argument is seen as no more than an appeal for restitutionary damages, the presumption will certainly be that no such term should be implied. Second, in the current state of the law, an argument presented in

terms of the breach of an implied obligation to act in the plaintiff’s interest would at best be problematic. Such an obligation is not an essential feature of contracts, where the perspective of classical theory is an ‘adversarial’ one.136 The argument may therefore be interpreted as an attempt to create a fiduciary relationship out of an ordinary contract. The emphasis on compensation is to some extent reinforced by the tendency of the law to draw a sharp distinction between contractual and fiduciary obligations whilst recognising that a fiduciary obligation may overlap with a contractual obligation. In contract, the parties are assumed to be concerned with their individual — profit-based — objectives, and are not concerned to look after each other’s interests. Under classical contract theory, the search is for an obligation, not a relationship. This may be lost and not applied where a movement in favour of a general good faith obligation is apparent.137 [page 737]

(b) Benefit Obtained in Breach of Contract Term [1826] Introduction. Although this entire chapter is about the recovery of benefits obtained in breach of contract, it is important to draw a distinction between cases where the benefit flows from the breach of a (general or specific) performance obligation and cases where the benefit is obtained in breaching a term which, directly or indirectly, prohibits the defendant from obtaining that benefit on the defendant’s own account. The distinction is between, on the one hand, a breach of contract which happens to provide the defendant with a benefit (or the opportunity to make a profit) and, on other hand, the breach of an obligation by which the defendant promised to obtain the benefit for the plaintiff, or at least promised to act in the plaintiff’s interests. The effect of the distinction is that damages assessed by reference to the defendant’s gain will not be awarded where the

defendant neither promised to obtain the benefit for the plaintiff nor undertook liability for profits made in breach of contract. This is an area where analysis in terms of fiduciary duty has dominated. In equity’s protection of beneficiaries under fiduciary relations, prominence is given to the obligation of fiduciaries to act in the beneficiary’s interest, and not to place themselves in positions where interest and duty conflict.138 We should, therefore, first explain the perspective which we take on the relevance of fiduciary duties to contracts. [1827] Fiduciary duties. The distinctive feature of a fiduciary obligation is the way in which it is designed to set a standard which will guard against both actual and possible abuses of position.139 There is not simply a desire to redress a wrong, there is also a desire to pre-empt or deter the wrong.140 Accordingly, in addition to a profit rule, under which fiduciaries must account for profits made in connection with their fiduciary position, there is also a conflict rule, the idea that fiduciaries must not place themselves in positions where duty and interest may conflict.141 It is the desire to uphold standards which provides the main justification for the view that compensation is an inappropriate perspective. Thus, the profit rule is not a mere corollary of the conflict rule: it may extend to benefits obtained from any ‘opportunity or knowledge’ derived in consequence of the occupation of the fiduciary position.142 The fiduciary will be liable unless there was informed consent by the beneficiary: the benefit need not have been dishonestly obtained. It follows from this approach that the law on fiduciaries provides considerable scope for the recovery of benefits obtained on the commission of a wrong.143 However, this is not the place to examine what amounts to a fiduciary relation, or whether the obligation to account is better [page 738]

characterised as a secondary liability (based on a wrong), than a primary obligation.144 Clearly not every breach of contract is a breach of fiduciary duty. Superficially, however, since most contracting parties do not (also) occupy fiduciary positions, the best that we can say is that where a fiduciary relation is a contractual one, the fiduciary can be held liable for a benefit obtained in breach of the (contractual) fiduciary relation, so that restitutionary damages (or an account of profits) may be obtained.145 There is a marked contrast with the position where there is a ‘mere’ breach of contract for which restitutionary damages are not awarded. However, in our view it is the duty to act in the plaintiff’s interests which matters, not the fact there is a fiduciary relation between the parties. The more relevant question is therefore when this duty will be found. Our inquiry is both more specific and more general than categories of fiduciary relations. It is more specific because we are only concerned with fiduciary duties between contracting parties. From this perspective we see no difficulty in acknowledging that a fiduciary relation may arise in various ways in the contract context. Three aspects of this are as follows. First, the relation may arise because the contract creates a relationship which comes within one of the established classes of fiduciary relationship.146 Second, the fiduciary relation may arise during the negotiation of a contract, and therefore impact on both the negotiation process and the parties’ subsequent conduct.147 Third, an ad hoc fiduciary relation may arise from the circumstances of the case, as where one person occupies a position of dominance.148 Our inquiry is more general because we are concerned with situations where, in the context of the consensual arrangement called contract, one party has agreed to act in the interests of the other, or not to act in a way which is inimical to that other party’s interests. We prefer to approach the matter in this way, rather than to consider when a fiduciary relationship will be found in a commercial context.149 [1828] Contract to obtain the benefit. We begin with an obvious case in which a court would be justified in ordering the payment of

damages equal to the amount of a benefit obtained on breach. This is where the defendant breached a term of the contract to the effect that by performing the contract the defendant would secure for the plaintiff the benefit which [page 739] has in fact been obtained by the defendant. In other words, although the plaintiff has purchased a promise to obtain the benefit, the defendant has taken that benefit for itself.150 Even though there is (or may be) no fiduciary relation, the terms of the contract may create a duty to obtain a benefit for the plaintiff. Where the relation between the defendant and plaintiff is that of principal and agent, in relation to a specific subject matter, the contract of the agent may be to obtain the benefit for the principal. Where the agent obtains the benefit for itself there is a breach of the agency contract, and the value of the benefit obtained is the appropriate measure of relief.151 The fact that agents are also fiduciaries is far from crucial.152 Nor is it relevant whether the plaintiff could have obtained the benefit on his or her own account. Nor do we see it as important to ask whether the nature of the claim is one for damages, or to recover a liquidated sum held by the defendant as trustee for the plaintiff. What is crucial is that the factual situation is one in which there is a duty to act on behalf of the plaintiff, and that the appropriate measure of the defendant’s responsibility is the benefit obtained.153 There is also a converse case. This is where the plaintiff’s performance under its contract with the defendant activates a promise by the defendant to transfer all or part of a benefit which the defendant is to obtain from a third party. In such cases, retention of the benefit is a breach of a contract term, compensation for which may be measured by reference to the amount of the benefit. Because the defendant’s promise merely represents the agreed return for the plaintiff’s performance, this analysis may apply even though the benefit is not in fact received by the defendant. For example, in Alpha Trading Ltd v

Dunnshaw-Patten Ltd154 the defendant agreed to pay the plaintiff commission from the proceeds of a contract for the sale of goods with a purchaser introduced by the plaintiff. Once the plaintiff introduced a purchaser who entered into a contract with the defendant, it was held to be an implied term that the defendant would not breach the contract of sale with the purchaser so as to deprive the plaintiff of its commission. Therefore, damages equal to the commission which would have been payable had the sale gone through were awarded to the plaintiff for breach by the defendant when the reason the sale did not go through was the defendant’s failure to perform the contract of sale. The rationale is that, had the sale contract been performed, the price contained an element representing a benefit which the defendant agreed to transfer to the plaintiff. The defendant could not be in a better position by not performing the contract of sale. [1829] Duty to act in plaintiff’s interest. A contract may expressly or impliedly require the defendant to act in the interests of the plaintiff, or at least create a duty not to act in a way which is inimical to the plaintiff’s interests. These are not usual features of contracts. Even if the contract [page 740] contains an express or implied good faith obligation, the content of a good faith duty may extend no further than an obligation to have regard to the other party’s interests.155 The content of the duty may extend to conduct which is contrary to the plaintiff’s interests, but it is a further step — and one which is seldom taken solely by implication — to conclude that there is a positive duty to act in the plaintiff’s interest.156 Alternatively, the express and implied terms of a contract may create a specific fiduciary relation on the basis of which the duty will be imposed. An obligation to compensate for breaches of a duty no doubt serves to discourage breach, but the imposition of a duty leading to the recovery of the defendant’s profit is a much greater disincentive.

Where there is in fact an obligation to act in the plaintiff’s interests, there may be debate as to the proper characterisation of the defendant’s liability. Some might say that there is a vast gulf between the position of an (ordinary) contracting party and one subject to fiduciary obligations. For example, in Thornley v Tilley157 the defendant was a broker engaged by the plaintiff to purchase shares on his behalf. The contract provided that the defendant would ‘carry’ the shares at eight per cent. The shares were later purchased, and the plaintiff was charged the price of the shares and eight per cent interest, but credited with dividends paid. The defendant said that the contract term entitled him to deal on his own account, keep the profits, and at the same time charge interest. This argument was rejected by the High Court, as being an erroneous construction of the contract inconsistent with the fiduciary relation which undoubtedly existed. Accordingly, having breached the contract (and misused his fiduciary obligation to the plaintiff) the defendant was required to account for the profits made. Although it is quite correct to say that once a contracting party is found to occupy a fiduciary relation there is a duty to act in the other’s interests, it is in a contractual context quite wrong to place the (fiduciary) relation before the duty.158 The relation is no more than a convenient way of establishing that the duty exists. However, there is no call to impose a duty which has in fact been agreed. The more general question is whether (and when) the duty may arise without the relation. It is, for example, very common for joint venture contracts to contain terms expressing a duty to be ‘just and faithful’ in performing the contract (and in dealings with the other participants) and to act in the interests of the objectives of the joint venture. Such terms may be enforced, whether or not the joint venture is also a partnership, or creates [page 741] a fiduciary relation.159 Clearly, in such cases, restitutionary damages may be recovered, in respect of benefits obtained in breach of contract.

4. Benefit Without Loss (a) General [1830] Introduction. The illustrations given above160 are mainly cases where the defendant’s gain is, or is assumed to be, equal to (or a component of) the plaintiff’s loss. There are, of course, many other examples. But, in order to find a genuine case of restitutionary damages for breach of contract, the benefit to the defendant must be one which does not amount to a loss suffered by the plaintiff. In considering whether restitutionary damages may be sought in respect of a ‘mere’ breach of contract, where there is no loss to the plaintiff, we must not lose sight of the fact that at present Australian law clearly does not allow for this. The question, however, is whether this should change. We should, therefore, consider the particular factors which have been suggested as legitimate bases for departing from the compensation principle and awarding purely restitutionary damages. It is assumed that the benefit is not recoverable as a loss, so that (in whole or in part) the restitutionary damages cannot be compensatory. In other words, what circumstances will displace the general rule governing assessment of damages for breach of contract — that damages are assessed by reference to the loss or damage suffered by the plaintiff, rather than the defendant’s financial gain following breach? [1831] The position in England. Before discussing the Australian position, it is necessary to outline developments in England. The decision of the House of Lords in Attorney General v Blake161 has recognised, in exceptional circumstances that restitutionary damages may be awarded where the plaintiff suffers no loss. To understand the decision, it is necessary [page 742] to first discuss the decisions in Surrey County Council v Bredero Homes

Ltd162 and Wrotham Park Estate Co Ltd v Parkside Homes Ltd.163 In Surrey County Council v Bredero Homes Ltd,164 the rule that restitutionary damages are not available in respect of a defendant’s breach of contract causing the plaintiff no loss was affirmed by the English Court of Appeal. The plaintiffs were two local councils who sold land to the defendant. The object of the purchase was the development of the land. The defendant intended to build houses and to sell them at a profit. Obviously the amount of profit was dependent on the number of houses built. The plaintiffs granted planning permission for the building of 72 houses, and the contract contained a covenant requiring the defendant to develop the land in accordance with this permission. However, following the sale, the defendant applied for a different permission, under which five additional houses could be built on the land. The second plaintiff reminded the defendant of the covenant, but, as it was bound to do, granted permission. The plaintiffs then sought to recover as damages the amount of the profit obtained from the sale of the additional houses, or at least a sum equal to the amount which would have been a fair price for the relaxation of the covenant. The court rejected the argument, and affirmed that, where a plaintiff has suffered no quantifiable loss or damage, only nominal damages can be awarded. Wrotham Park Estate Co Ltd v Parkside Homes Ltd165 is the contrasting case to Bredero. Unlike the position in Bredero, this was a claim for damages in lieu of an injunction; the claim in Bredero was merely for damages for breach of contract. In Wrotham Park, the defendant, in breach of covenant, built houses on land formerly owned by the plaintiff. It later sold these houses. The plaintiff sought a mandatory injunction to demolish the houses. The injunction was refused and in place of it, Brightman J, adopting the (admittedly unrealistic) assumption that the plaintiff could be induced to relax the covenant, ordered damages of a sum that could ‘reasonably have been demanded by the plaintiffs …. as a quid pro quo for relaxing the covenant’.166 Despite then ordering, by way of damages, a sum representing five per cent of the defendant’s anticipated profit (that is, a

gain-based award) it has been said that Brightman J was of the view that he was ordering compensatory damages.167 [page 743] Turning then to Attorney General v Blake,168 Blake, a former member of the intelligence service, breached his contract of employment by divulging official information in a book. The Crown, although suffering no financial loss, relied on the breach of contract to seek an order requiring Blake to account for profits earned from the book. The Crown was successful.169 The leading speech was delivered by Lord Nicholls (with whom Lords Goff, Browne-Wilkinson and Steyn agreed).170 He made a number of important comments. First, he investigated those cases where there is an invasion of a property right such as trespass or wrongful detention of goods without financial loss to the owner and where, at common law, damages are assessed by reference to ‘the price a reasonable person would pay for the right of user’. He recognised the legitimacy of such awards but also recognised that they did not strictly conform with a compensatory measure of damages assessed by reference to the plaintiff’s loss.171 He also recognised that in this area equity had gone further and required a defendant to account for profits gained. He thought the difference of approaches was an accident of history.172 Second, he turned to damages under Lord Cairns’ Act. In drawing a comparison with damages for invasion of property rights he said, ‘in the same way as damages at common law for violations of a property right may be measured by reference to the benefits wrongfully obtained by a defendant, so under Lord Cairns’ Act damages may include damages [page 744] measured by reference to the benefits likely to be obtained in future by the defendant’.173 He went on to say that the measure awarded ‘is often

analysed as damages for loss of a bargaining opportunity or, which comes to the same, the price payable for the compulsory acquisition of a right’.174 He thought this analysis was correct. Third, under the heading ‘Breach of Contract’ he considered the decisions in Bredero and Wrotham Park. He saw Wrotham Park as a case where the judge applied by way of analogy those cases dealing with the invasion of property rights. He thought the judge was right in doing this. He saw no reason why a violation of contractual rights should attract a lesser remedy than a violation of property rights.175 Moreover, he preferred the reasoning in Wrotham Park to that of Bredero. He went on to say that Wrotham Park showed that in ‘a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained’.176 This statement on its face would suggest that although he supported the measure of damages in Wrotham Park he saw the case as being an example of a gain-based award rather than a compensatory award. Despite this, Lord Hobhouse in Blake’s case177 and two decisions of the English Court of Appeal in Experience Hendrix LLC v PPX Enterprises Inc178 and WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc179 have held that he was endorsing the view that damages assessed on the Wrotham Park basis are compensatory.180 The basis of this view is that Lord Nicholls discussed the case under the heading ‘breach of contract’, seeing the case as ‘guiding authority on compensation for breach of a contractual obligation’.181 Moreover, he approved of the reasoning in Wrotham Park where Brightman J used, by way of analogy, those cases that dealt with an invasion of property rights. In the section of Lord Nicholls’s speech dealing with that category of case, he had set out the general principle of compensation governing the assessment of damages for wrongdoing and added:182 But the common law, pragmatic as ever, has long recognised that there are many commonplace situations where a strict application of this principle would not do justice between the parties. Then compensation for the wrong done to the plaintiff is measured by a different yardstick.

[page 745] This reference to ‘compensation’ is thought to be the basis for the rest of his comments on this topic. The difficulty with interpreting this reference to ‘compensation’ in his speech as attracting the technical meaning of that word is that, as already noted, he went to on state the difficulty of fitting these awards within the compensatory principle. Here he was clearly using the word ‘compensation’ in its technical sense. Moreover, after the above statement he went on to say:183 A trespasser who enters another’s land may cause the landowner no financial loss. In such a case damages are measured by the benefit received by the trespasser, namely, by his use of the land. The same principle is applied where the wrong consists of use of another’s land for depositing waste, or by using a path across the land or using passages in an underground mine. In this type of case the damages recoverable will be, in short, the price a reasonable person would pay for the right of user.

Finally, in Blake’s case, the issue was whether the law should now go further and recognise that an account of profits may be ordered as a remedy for a breach of contract; Lord Nicholls preferred the title ‘account of profits’ to ‘restitutionary damages’.184 That is, the Crown was not seeking contractual damages assessed on the basis of a reasonable price for permission to publish. In the result he saw no reason in principle for denying such awards but considered that such an award would be appropriate only in exceptional circumstances.185 He said:186 When, exceptionally, a just response to a breach of contract so requires, the court should be able to grant the discretionary remedy of requiring a defendant to account to the plaintiff for the benefits he has received from his breach of contract. In the same way as a plaintiff’s interest in performance of a contract may render it just and equitable for the court to make an order for specific performance or grant an injunction, so the plaintiff’s interest in performance may make it just and equitable that the defendant should retain no benefit from his breach of contract. The state of the authorities encourages me to reach this conclusion, rather than the reverse. The law recognises that damages are not always a sufficient remedy for breach of contract. This is the foundation of the court’s jurisdiction to grant the remedies of specific performance and injunction. Even when awarding damages, the law does not adhere slavishly to the concept of compensation for financially measurable loss. When the circumstances require, damages are measured by reference to the benefit obtained by the wrongdoer. This applies to interference with property rights. Recently, the like approach has been adopted to breach of contract. Further, in certain circumstances an

account of profits is ordered in preference to an award of damages. Sometimes the injured party is given the choice: either compensatory damages or an account of the wrongdoer’s profits. Breach of confidence is an instance of this. If confidential information is wrongfully divulged in breach of a non-disclosure agreement, it would be nothing short

[page 746] of sophistry to say that an account of profits may be ordered in respect of the equitable wrong but not in respect of the breach of contract which governs the relationship between the parties. With the established authorities going thus far, I consider it would be only a modest step for the law to recognise openly that, exceptionally, an account of profits may be the most appropriate remedy for breach of contract.

He did not think it was possible to define when such circumstances would arise but as a general guide it was relevant to ask whether the ‘plaintiff had a legitimate interest in preventing the defendant’s profitmaking activity’.187 In the present case he thought that the Crown had such a legitimate interest’. He said:188 The Crown had and has a legitimate interest in preventing Blake profiting from the disclosure of official information, whether classified or not, while a member of the service and thereafter. Neither he, nor any other member of the service, should have a financial incentive to break his undertaking. It is of paramount importance that members of the service should have complete confidence in all their dealings with each other, and that those recruited as informers should have the like confidence. Undermining the willingness of prospective informers to co-operate with the services when engaged on secret and dangerous operations, would jeopardise the effectiveness of the service. An absolute rule against disclosure, visible to all, makes good sense. In considering what would be a just response to a breach of Blake’s undertaking the court has to take these considerations into account. The undertaking, if not a fiduciary obligation, was closely akin to a fiduciary obligation, where an account of profits is a standard remedy in the event of breach. Had the information which Blake has now disclosed still been confidential, an account of profits would have been ordered, almost as a matter of course. In the special circumstances of the intelligence services, the same conclusion should follow even though the information is no longer confidential.

There is no doubt the law should develop a remedy of account of profits arising from a breach of contract if sufficient policy arguments exist to warrant such a remedy.189 However, equity has always distinguished between account of profits and damages and it would be misleading and indefensible in terms of principle for the law of contract

to develop that remedy and give it the title of ‘damages’.190 Nevertheless, recently, in WWF—World Wide Fund for Nature v World Wrestling Federation Entertainment Inc191 Chadwick LJ suggested that all these methods of assessing damages are concerned with compensation and labels such as ‘gain-based’ remedies are unhelpful. He said:192 When the court makes an award of damages on the Wrotham Park basis it does so because it is satisfied that that is a just response to circumstances in

[page 747] which the compensation which is the claimant’s due cannot be measured (or cannot be measured solely) by reference to identifiable financial loss. Lord Nicholls’s analysis in Blake’s case demonstrates that there are exceptional cases in which the just response to circumstances in which the compensation which is the claimant’s due cannot be measured by reference to identifiable financial loss is an order which deprives the wrongdoer of all the fruits of his wrong. The circumstances in which an award of damages on the Wrotham Park basis may be an appropriate response, and those in which the appropriate response is an account of profits, may differ in degree. But the underlying feature, in both cases, is that the court recognises the need to compensate the claimant in circumstances where he cannot demonstrate identifiable financial loss. To label an award of damages on the Wrotham Park basis as a ‘compensatory’ remedy and an order for an account of profits as a ‘gains-based’ remedy does not assist an understanding of the principles on which the court acts. The two remedies should, I think, each be seen as a flexible response to the need to compensate the claimant for the wrong which has been done to him.

[1832] Relevant considerations. The various suggestions193 which have been made, as criteria which legitimise an award made to prevent unjust enrichment, may be dealt with under three main headings: (1) the character of the breach; (2) the basis for the award; and (3) the nature of the wrong.

(b) Character of the Breach [1833] Introduction. The defendant’s breach can be described as a ‘mere’ breach of contract, for which restitutionary damages are

presumed not to be available, in all cases in which the defendant was not required by the contract to act in the plaintiff’s interest; where the benefit in question does not represent a loss to the plaintiff; where there is no proprietary interest; no fiduciary relationship; and no statutory jurisdiction. It has, however, been suggested194 that the character of the breach is significant. The intentional nature of a defendant’s breach may imply that there is more than a ‘mere’ breach of contract, and provide a basis for a restitutionary award even in a case where the plaintiff has suffered no loss at all. The English Court of Appeal in Surrey County Council v Bredero Homes Ltd195 and in [page 748] Experience Hendrix LLC v PPX Enterprises Inc196 rejected this approach. While we respect this view as the current law, at least in England, it is important to indicate how far it is soundly based in principle and policy. [1834] Intentional breach of contract. Two reasons may be given to support the conventional wisdom that the character of a breach of contract is irrelevant in determining the defendant’s damages liability. The first is an argument that by focusing on the character of the defendant’s conduct we are introducing an irrelevant consideration. This relies on an assumption that contractual duties are strict in nature, so that breach may be established without reliance being placed on the character of a defendant’s conduct.197 Although true in many areas, there are in fact many contractual duties which merely require the exercise of best endeavours, reasonable care and so on. There are also cases where there is no liability in the absence of wilful conduct, for example because of the operation of an exclusion clause. In these cases reliance must necessarily be placed on the character of the defendant’s conduct in order to establish breach. However, it seems to us that this has little to do with damages assessment.

The second basis is more formidable. There are many cases which assert that a defendant’s liability is not to be increased on the basis that the breach was intentionally committed, or attended by malice. One consequence of this is that punitive damages are not awarded in contract.198 Another is that cases in which damages are assessed by reference to the plaintiff’s disappointment are relatively rare.199 Although there are sound policy reasons for not awarding punitive damages, these do not match exactly the policy considerations relevant to whether an award of restitutionary damages should be made. Indeterminancy in amount — a major policy reason against punitive awards — is relevant to restitutionary awards.200 However, it is to some extent controlled in that context, because restitutionary damages refer to a benefit obtained. The amount can be regarded as indeterminate only because there is no case law on matters such as causation and remoteness.201 On the other hand, the major policy reason in favour of restitutionary damages — to prevent defendants profiting from their wrongs — is not contradicted by the rules on punitive damages. It is sometimes said that a policy justification for not making restitutionary awards is that they would discourage economically beneficial conduct. However, this can be overstated. In any event, as we have explained,202 [page 749] this type of argument has not been embraced by the courts.203 Moreover, it is not consistent with the current movement of Australian law towards a general duty of good faith in performance. [1835] Relevance of the movement towards good faith.204 There are now a number of cases in Australian law that have recognised a duty to perform contractual obligations in good faith. On one view these cases merely represent a willingness of Australian courts to recognise that such a duty is not necessarily inherently uncertain and to imply it into a contract if, on the facts, it can be implied under the

established tests for the implication of a term. On another view the cases evidence a movement towards adopting a general duty of good faith in the performance of contracts.205 Where such a duty exists, whether arising on the facts of a case or as a general contractual duty, it is important to the discussion in this chapter in three respects. First, the argument in favour of a duty not to act in a way which is inimical to the interests of the plaintiff is assisted. Second, a good faith duty may be breached because the defendant has acted for an ulterior motive, or with an intention to injure the plaintiff.206 This weakens considerably the argument that the nature of a defendant’s conduct is irrelevant in contract matters. Third, it may be that the breach of an implied duty to act in good faith will itself sound in damages.207 The mere fact that damages may be awarded does not itself lead to the conclusion that restitutionary damages for breach of contract can be recovered. To begin with, the compensation principle may be applied.208 Moreover, if the law ultimately decides that the breach of duty sounds in damages, the quantification must reflect the wrong. Since the wrong may be established by reference to conduct by virtue of which the defendant obtained a benefit, the benefit may be classified as a loss, or the award may be of a restitutionary kind in order to promote the good faith duty.209 Although the presence of a duty of good faith involves some curtailment of a promisor’s ability to act solely in its own interests, care must be taken not to treat the mere presence of the duty as a limitation on the ability of the defendant to avail itself of business opportunities. In Hospital Products Ltd v United States Surgical Corp210 the High Court held that a good faith obligation — expressed in terms of best endeavours — although breached, did not justify an award to the plaintiff of the benefits obtained by the [page 750]

defendant in breaching the contract. It was, however, in this context that Deane J suggested211 that a liability to account might be imposed even though there is no breach of fiduciary duty. Although the suggestion was in terms of ‘equitable relief’, query whether, if the effect of the contract is to curtail conduct to the extent that breach gives rise to a liability to disgorge the benefit, the action should be characterised as one in contract.

(c) Basis for the Award [1836] Introduction. Most judicial discussions of the displacement of the compensation principle have occurred in the context of an analysis of the jurisdictional basis for the award. Thus, it has been considered whether damages are being sought in equity or under statute, rather than at common law. Although statutory qualification to the compensation principle cannot be doubted as a sufficient basis for an award assessed on a restitutionary basis (assuming this is permitted),212 it is difficult to accept a rationalisation expressed simply by reference to a contrast between common law damages and damages awarded under Lord Cairns’ Act.213 Damages may be awarded in addition to or in lieu of relief by way of specific performance or injunction. However, the major concern is with damages in lieu. Although the purpose and impact of Lord Cairns’ Act is a matter of debate,214 three specific points are important to the present discussion. First, the better view appears to be215 that Lord Cairns’ Act damages are available where a claim for specific relief fails (or would fail) on discretionary — rather than jurisdictional — grounds. This is significant because of the modern tendency to interpret relevant factors as going to discretion rather than jurisdiction. Indeed, inadequacy of common law damages appears to be the only major jurisdictional factor, and even this is not insisted on where an injunction is sought.216 Yet this has not led to any general consideration of alternative bases for damages awards. Second, damages in equity will often be available where common law damages could be awarded. Whatever the impact of the fusion of law

and equity, it is difficult to accept that in these situations an ability to obtain restitutionary damages depends on whether or not the plaintiff relies on general principles or the jurisdiction under Lord Cairns’ Act. Third, it is clear that there are situations in which Lord Cairns’ Act damages may be awarded even though common law damages are not available. [page 751] The principal situation, relevantly, is where the breach of contract is merely threatened or apprehended.217 [1837] Damages in lieu of specific performance or injunction. Unlike a claim for damages, which is generally a claim for substitutionary relief,218 orders for specific relief (specific performance or injunction) require performance in specie. Three particular (and related) reasons may be given to support a different approach to damages assessment under Lord Cairns’ Act219 than under the common law. First, the damages are awarded in lieu of specific relief. Thus, there is some support in the cases for the idea that damages have to be a ‘proper’220 or a ‘real’221 substitute. Second, at least in relation to specific performance it has, by definition, been concluded that damages (at common law) is an inadequate remedy, and it would seem paradoxical to say that the award must be assessed under common law principles.222 Third, at least in relation to a mandatory injunction, the award is also intended to cover future breaches of contract, that is, breaches which cannot be the subject of a common law award.223 Of course, even if it is true, the mere fact that assessment under Lord Cairns’ Act is different from assessment at common law does not of itself imply that restitutionary damages can be awarded. However, a greater willingness to award (ex post) a benefit or profit which has been obtained because of the defendant’s failure to perform would, like specific relief itself, be strongly coercive. Nevertheless, where damages are awarded in lieu of specific

performance it seems clear that there is little, if any, difference between assessment of damages at common law and assessment under Lord Cairns’ Act. The compensation principle applies. Thus, in Johnson v Agnew,224 it was apparently stated by the House of Lords as a general principle225 that where damages in lieu of specific performance are awarded following discharge of a contract there is no difference in assessment. The main concern was to establish that the same flexibility in the choice of the proper date for assessment under Lord Cairns’ Act exists under common law principles. However, in the course of this analysis, which appears to have been generally accepted in Australia,226 Lord Wilberforce, with whom the other members of the House of Lords agreed, criticised cases227 suggesting a general (unique) feature of damages [page 752] awarded under Lord Cairns’ Act in lieu of specific performance. In so far as the earlier cases suggested that it is because such damages have to be ‘truly’ substitutionary that the choice of date is affected, they were roundly rejected. This is an assertion of the applicability of the compensation principle,228 and a rejection of the main rationale for a restitutionary award in this context. Thus, although there is a certain logic in the argument that damages, when awarded as a substitute for specific relief, should provide to the plaintiff what specific relief would have provided,229 the object of damages in lieu of specific performance does not differ from the object of common law damages. In both cases this is to place the plaintiff in the position which it would have occupied had the contract been performed. In our view it must also follow that reliance on Lord Cairns’ Act in order to assess damages by reference to a hypothetical impact of specific performance takes the matter no further. Where damages are awarded in lieu of injunction the position may be different. Thus, in Wrotham Park Estate Co Ltd v Parkside Homes Ltd230 it was reasoned that, when assessing damages in lieu of an injunction, the court was authorised to take into account considerations broader

than the compensation principle, and to rely on the fact that the award was in lieu of a mandatory injunction. The decision in Wrotham Park was to some extent distinguished on this basis by Dillon LJ in Surrey County Council v Bredero Homes Ltd.231 In that case, since there was never any question of an injunction being granted to prevent planning permission being given, there was no need to consider whether damages in lieu of an injunction would have led to a different result. On the other hand, Steyn LJ did not see the (equitable) basis for the award as the justification for Wrotham Park. Rose LJ agreed with both Dillon LJ and Steyn LJ. He did not regard the basis for the award in Wrotham Park as the crucial factor, so much as the action of the plaintiffs, in objecting to the conduct and seeking a mandatory injunction. He therefore distinguished the case on the basis that in Bredero there was neither objection nor opportunity to object. Later in Jaggard v Sawyer232 the English Court of Appeal explained Wrotham Park on the basis of compensation for loss, and distanced itself from some of the reasoning in Bredero.233 More recently, as already noted,234 the English Court of Appeal has interpreted Lord Nicholls’s approval of Wrotham Park in Attorney General v Blake235 as being an approval of it on the basis that it was an example of a compensatory measure of damages. In Jaggard itself, it was held that where the defendant failed to observe a restrictive covenant attaching to a residential property, and placed itself in the position where it would regularly trespass on the plaintiff’s land, it was appropriate to award as damages in lieu of an injunction a sum which was a fair and proper price for release of the covenant. Since this was also said to represent the value of the rights infringed, the court regarded the award (as also in Wrotham Park) [page 753] as one for compensation rather than restitutionary damages.236 In Attorney General v Blake,237 the claim was for an account of profits, nevertheless, in the leading speech of Lord Nicholls, the reasoning in Wrotham Park was preferred to that of Bredero. Moreover, although

recognising Wrotham Park as a case where damages under Lord Cairns’ Act were granted, Lord Nicholls approved the drawing of an analogy between these cases and where there is an invasion of property rights and saw no good reason for distinguishing a claim where the invasion involves purely personal contractual rights. Thus, Wrotham Park may be reinterpreted as an action for damages for breach of contract. In WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc238 Chadwick LJ (in obiter) suggested that damages assessed on the Wrotham Park basis should be available for breaches of restrictive covenants even if no claim for an injunction is, or could be, made. He thought the decision in Blake compelled this conclusion. If the approach in Jaggard is correct there are three very important consequences. First, the rights of the plaintiff do not depend on whether the plaintiff should have complained at the time when the possibility of breach became apparent. Rather, the crucial question is simply whether at the time when the action is brought the court has jurisdiction to grant an injunction. If this is the case, damages may be awarded in lieu. But if there is no jurisdiction at the time of suit, the plaintiff will be restricted to the loss occasioned by the breach, assessed (as in Bredero) under common law principles. Second, the ability to obtain as damages in lieu of injunction an amount equivalent to the price of relaxing or releasing a restrictive covenant relates to cases where the injunction would be granted in relation to future conduct.239 In Jaggard the effect was to avoid the need for multiple actions in trespass. A substantial sum was awarded even though the damages for trespass, at least if assessed on a compensation basis, would probably have been nominal. Third, if there is a once and for all breach, common law damages must be awarded in cases where there is no jurisdiction to grant damages in lieu of an injunction. In Bredero, since no loss was suffered, only a nominal sum could be awarded. Moreover, where there is jurisdiction to grant damages in lieu, since there is no future conduct to which a damages award can apply, there can be no practical difference between common law damages and damages under Lord Cairns’ Act. Nevertheless, in valuing the covenant breached, account may be taken

of the ability to claim an injunction. Thus, in Wrotham Park the decision was to award compensation at a figure which in effect recognised the value of the right infringed. It would seem necessarily to follow that, even if the plaintiff might have sought an order requiring the defendant to comply with the contract, Lord Cairns’ Act will not secure (as restitutionary damages) for the plaintiff the profit which the defendant has in fact derived from the wrong, and which [page 754] the plaintiff would not have received had performance occurred.240 The rationale is always compensation, albeit in some cases assessed by reference to a promise the value of which is enhanced by the ability to apply for relief which the court, in its discretion, refuses to grant. [1838] Statutory basis to award benefits obtained as damages. Under the Australian Consumer Law damages may be claimed as of right if ‘loss or damage’241 is suffered by reason of a contravention of one of the statutory prohibitions on conduct referred to in the provision conferring the right.242 The principal example is the prohibition on misleading or deceptive conduct.243 In relation to that and other classes of prohibited conduct there is also a discretion to make orders including one for payment of the amount of the loss or damage suffered or likely to be suffered. The object is to ‘compensate’ the plaintiff in whole or in part for the loss or damage, or to prevent or reduce the loss or damage.244 In some cases there is, therefore, a right to recover the amount of the ‘loss or damage’, and in all cases an ability to apply for payment of the amount of the loss or damage. In relation to the former the relief is available to a person who has suffered ‘loss or damage’, and in relation to the latter the relief is available, subject to the discretion of the court, on application by a person who has suffered or is likely to suffer, ‘loss or damage’. The jurisdiction to award such damages frequently operates in the

contract context.245 Notwithstanding that the descriptions appear to invoke the compensation principle (by references to ‘loss or damage’), they are not necessarily controlled by that principle.246 Moreover, although ‘loss or damage’ is the ‘gist’247 of the action where the claim is made as of right, [page 755] the legislation draws a ‘clear distinction’248 between that loss or damage and the likelihood of loss or damage which may be addressed under the discretionary award.249 The court has jurisdiction to award lost profit where the plaintiff has been deprived of an opportunity to enter into a different profitable contract. However, this depends on proof that the contract would have been entered into rather than proof that the defendant took the benefit of that contract.250 In Munchies Management Pty Ltd v Belperio,251 Fisher, Gummow and Lee JJ, after referring to the ability of a plaintiff to recover as damages a position lost by the defendant’s misleading or deceptive conduct, left open the question whether this approach may also be extended to permit the recovery by a plaintiff of restitutionary damages equal to the profit made by the defendant in consequence of misleading or deceptive conduct.

(d) Nature of the Wrong [1839] Introduction. Although the mere fact that the defendant’s breach is intentional does not alter its character,252 it is clear that the precise nature of the defendant’s breach of duty may be an important factor. There are many cases where the justification for a restitutionary damages award lies not in the fact of breach of contract per se, but rather in the fact that the wrong amounts to (or is closely connected with) another wrong which does justify such an award. In these cases the fact of breach is circumstantial, and may be fortuitous. Leaving aside cases where the breach also amounts to the breach of a fiduciary

duty,253 brief reference may be made to tortious conduct and wrongful dealings with property. [1840] Breach amounting to tort. In many situations, claims in contract may co-exist with claims in tort. A claim for damages may be brought in tort or contract and, because the causes of action may differ, the methods of assessment may differ. The cause of action in tort may be relied upon for the purpose of claiming restitutionary damages.254 In some cases, as where the claim is associated with rescission for fraud,255 assessment under tortious principles may depend on rescission of the contract,256 so that no claim in contract is available. In other cases the defendant may have breached the [page 756] contract in circumstances amounting also to a tort. Some of the bribe cases, where restitutionary awards are made, are undoubtedly examples, since they involve fraudulent conduct.257 However, this is a narrow category, and the main examples of relevant (tortious) breaches of contract are in the context of wrongful dealings with property.258 [1841] Wrongful dealing with property.259 An analogy with socalled ‘waiver of tort’,260 may be presented where a breach of contract is associated with a wrongful dealing with property. In such a case restitutionary damages may be awarded. A reasonably common example of this is where a bailee purports to sell the bailor’s goods.261 Although this is undoubtedly a breach of the bailment contract, since the wrong has the same consequences if the bailment is noncontractual, the breach of contract is (again) largely circumstantial.262 For a more complex example, assume that a buyer purchases specific goods and that, although property passes immediately, delivery is postponed. Clearly, if the seller fails to deliver, the buyer may recover as damages the difference between the contract price and the market price at the date set for delivery.263 But even if this is a substantial sum,

the damages are simply compensation for non-delivery. However, since the goods belonged to the buyer, resale of the goods and a subsequent refusal to deliver on request will give rise to claims in conversion and detinue. No doubt, also, such conduct will amount to breach of contract, but the prima facie measure (in contract) is still the difference between the contract price and the market price. It is not the nature of the seller’s breach which displaces that measure, it is the buyer’s ability to sue for damages in tort. If resale occurs after the time appointed for delivery, and the price of the goods has increased or the seller has resold at a profit, the buyer may recover restitutionary damages based on the tort of conversion or detinue.264 We might alternatively regard the buyer as making a claim for restitutionary damages for breach of contract. Indeed, there is a temptation to generalise from the approach, and to apply the same analysis where a contract of sale relates to unascertained or future goods. However, in the [page 757] above example there is more than a ‘mere’ breach of contract, and the fact that the breach amounts to conversion of the buyer’s goods suggests that the proper rationalisation of the claim is one for damages for conversion. Thus, assume that a seller agrees to deliver 100 tonnes of wheat for $100 per tonne, but fails to deliver without the goods becoming ascertained. Proof by the buyer that the seller entered into contracts to sell wheat to a third party for, say, $150 per tonne, does not of itself establish a right to recover restitutionary damages equal to $50 per tonne. If the market price of wheat did in fact rise by that amount, the buyer may recover, since the sum is presumed to represent the buyer’s loss. However, if the market price has risen by only $10 per tonne that is the prima facie measure of the seller’s responsibility. In fact, the buyer is presumed to have gone into the market at the time of breach for the purpose of mitigating its loss. In technical terms, the difficulty for the buyer is that no property in

any wheat has passed. Therefore, proof that the seller has sold its entire stock for $150 per tonne does not avail the buyer, since the seller was entitled to perform the contract by purchasing the wheat from another source. Only if the contract provides for the sale of wheat out of the seller’s current stock can there be even a suggestion of restitutionary damages.265 Nevertheless, under Australian law266 the buyer will be unable to displace the prima facie measure by reference to this fact alone. If there is an available market, the market price governs recovery, and the fact that the seller has found a buyer willing to pay more than the market price is merely indicative of market imperfection. But the rationale is more than a purely technical one, since mitigation of loss plays a vital role in the context of goods freely available on the market. Indeed, if there is no market, and the buyer purchases goods approximating those referred to in the contract at $160 per tonne, the buyer may recover damages equal to $60 per tonne, a sum $10 per tonne in excess of that received by the seller, since the question is simply whether the buyer has acted reasonably.267 In Surrey County Council v Bredero Homes Ltd268 Steyn LJ was prepared to see Wrotham Park Estate Co Ltd v Parkside Homes Ltd269 as illustrating a new development, namely, restitutionary damages for breach of contract following an ‘invasion of property rights’, analogous to cases in which the defendant has profited from use of the plaintiff’s property.270 In Attorney General v Blake,271 Lord Nicholls hinted at being prepared to go a step further. In preferring the reasoning in Wrotham Park to that in Bredero, he [page 758] agreed with the analogy drawn by Brightman J in Wrotham Park between damages under Lord Cairns’ Act and damages for the invasion of property rights without financial loss being suffered by the plaintiff272 and added that ‘it is not easy to see why, as between the parties to a contract, a violation of a party’s contractual rights should attract a lesser degree of remedy than a violation of his property

rights’.273 Nevertheless, the suggestion that damages for breach of contract may be assessed on a restitutionary basis where there is an invasion of property rights is important and if ‘property’ is to be interpreted in a wide sense, the concept is not restricted by the need to prove a tortious wrong. Nevertheless, the right to receive performance of a contract, although qualifying as a property right for some purposes, cannot be regarded as a sufficient basis for restitutionary damages under current Australian law.274 1.

See further [1806], [1841].

2. 3.

See the fuller discussion in Chapter 17. See further [1808]–[1813]. For references to this classification in the contract context see, eg Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 12; 63 ALR 600; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 82, 134, 136, 154; 104 ALR 1.

4.

5.

There is some support for a distinction to be drawn between restitutionary damages and disgorgement damages, see the discussions by Edelman, Chapter 3; James Edelman, Restitutionary Damages and Disgorgement Damages for Breach of Contract’ [2000] RLR 129; Ewan McKendrick, ‘Breach of Contract, Restitution for Wrongs, and Punishment’, in Burrows and Peel (eds), Commercial Remedies: Current Issues and Problems, pp 98–101; Ralph Cunnington, ‘The Assessment of Gain-based Damages for Breach of Contract’ (2008) 71 MLR 559. Cf Burrows, pp 633–35 and see Duncan Sheehan, ‘Subtractive and Wrongful Enrichment: Identifying Gain in the Law of Restitution’ in Rickett (ed), Justifying Private Law Remedies, Chapter 13. See further Sempra Metals Ltd v IRC [2008] 1 AC 561 at 585, 586, 627, 649. See [1502].

6. 7.

See [1802]. See further Edelman, p 94.

8. 9.

See generally [159]–[163]. See [1503] and further [1805], [1806], [1810], [1814], [1843].

10. See [108], [209]. 11. See, eg Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374 at 383; Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd [1990] 1 Lloyd’s Rep 167 at 170; Arab Monetary Fund v Hashim [1993] 1 Lloyd’s Rep 543 at 565 and generally [1718],[1730] (bribe recoverable as money had and received). See also Attorney-General for Hong Kong v Reid [1994] 1 AC 324 at 331 (bribed fiduciary a constructive trustee). 12. See generally on alternative claims [113], [125], [160], [209], [1515]. See also [1410], [1411] (issue of double recovery). 13. See further [1818]. See also [1404], [1408] (circumstances where plaintiff prefers restitution to damages).

14. See [108], [135], [142], [166], [205], [221]. 15. (1991) 174 CLR 64 at 118. See further [1819]. 16. See generally on the distinction between independent and dependent claims [160], [161], [219]. 17. For the relevance of discharge see [1808], [1810] (loss of bargain damages). 18. The chief example is the inherently ineffective contract. However, there are exceptions even in that context. For illustrations see [1043]–[1047]. 19. A claim may also be available in some other contexts. See [1045]. Note also [1043], [1403], [1405] (damages for fraud). 20. See also [1410], [1411] (cumulative claims). 21. See, eg Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre) [1976] 1 Lloyd’s Rep 293 at 337–8; Tito v Waddell (No 2) [1977] Ch 106 at 332; Ravinder Rohini Pty Ltd v Krizaic (1991) 105 ALR 593 at 610; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 161; Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344 at 355, 360, 365; Beale, p 152; McGregor, §1-021; I M Jackman, ‘Restitution for Wrongs’ [1989] CLJ 302; Law Commission, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 132, 1993, §7.7. Cf J Beatson, ‘What Can Restitution do for You?’ (1989) 1 JCL 65 at 74–6 (reprinted as revised in Beatson, p 1). 22. Cf Peter Birks, ‘Restitution for Wrongs’ in Schrage, ed, Unjust Enrichment: The Comparative Legal History of the Law of Restitution, 2nd ed, p 179 (‘somewhat fragile orthodoxy’). 23. Cf Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 124–5; 55 ALR 417; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; 80 ALR 574 (see [1842], [1843]). 24. See [1821], [1829], [1837]. 25. See [1831]. 26. See Carter on Contract, §§41-400–41-430. 27. See Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; 77 ALR 205. 28. See, eg Bowen v Blair [1933] VR 398; Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849. 29. Cf McGregor, §2-001. 30. See [1809]. 31. See [1510]. 32. See, eg Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 128, 136, 155, 163; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 372; Clark v Macourt (2013) 253 CLR 1 at 6 per Hayne J, at 11 per Crennan and Bell JJ, at 19 per Gageler J, at 30 per Keane J; [2013] HCA 56 [7], [27], [60], and [106]; [2013] HCA 56 at [7], [27], [60] and [106]. 33. See Carter on Contract, §41-050. 34. See [1508]. See also [213]. 35. See [213], [1508].

36. [1993] 1 WLR 1361 (see [1831]). 37. See [1522]–[1526], and generally Chapters 16, 17. 38. The principle does not apply if termination is based simply on exercise of a contractual right of discharge. See generally J W Carter, ‘The Effect of Discharge of a Contract on the Assessment of Damages for Breach or Repudiation’ (1988) 1 JCL 113 and 249; B R Opeskin, ‘Damages for Breach of Contract Terminated Under Express Terms’ (1990) 106 LQR 293. 39. For the relation between expectation and benefit in this context see [1822]. 40. See [1817]–[1823]. 41. See [1802]. 42. See Beale, p 156; McGregor, §4-024ff. See further [1811]. See also [1410]. 43. See McRae v Commonwealth Disposals Commission (1951) 84 CLR 377. 44. See Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64. Cf L Albert & Son v Armstrong Rubber Co 178 F 2d 182 (CA, 2nd Cir, 1949). Compare the position where the claim is for restitution on the basis of total failure of the agreed return. See, eg [1120]. 45. See further [1821]. 46. See further [1819]. 47. See further [1819]. 48. See, eg Cullinane v British ‘Rema’ Manufacturing Co Ltd [1954] 1 QB 292; T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 37 ALJR 289; Wenham v Ella (1972) 127 CLR 454 at 463–4, 465–6, 473. Cf H K Lücke, ‘Two Types of Expectation Interest in Contract Damages’ (1989) 12 UNSWLJ 98. 49. See generally Carter, Peden and Tolhurst, §35.13. Cf Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 (see [1410]). 50. (1991) 174 CLR 64 at 84–5, 107–8, 136–7, 155, 162–3. See also T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 37 ALJR 289 at 292–4 and [1508]. 51. See [1508], [1809]. 52. Expressed in Anglia Television Ltd v Reed [1972] 1 QB 60 at 63–4. See also CCC Films (London) Ltd v Impact Quadrant Films Ltd [1985] QB 16 at 32. See further Gerald Ng, ‘The Onus of Proof in a Claim for Reliance Damages for Breach of Contract’ (2006) 22 JCL 139. 53. The line between exemplary damages and some restitutionary damages may be difficult to draw, see Borders (UK) Ltd v Commissioner of Police of the Metropolis [2005] EWCA Civ 197 at [26] and see David Campbell and James Devenney, ‘Damages at the Border of Legal Reasoning’ [2006] CLJ 208; Ralph Cunnington, ‘The Border Between Compensation, Restitution and Punishment’ (2006) 122 LQR 382. Exemplary damages are not available in Australian contract law, see Gray v Motor Accident Commission (1998) 196 CLR 1; Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298. 54. See [1502]. See also Ernest J Weinrib, ‘Restitutionary Damages as Corrective Justice’ (2000) 1 Theoretical Inquiries in Law 1; Ernest J Weinrib, ‘Punishment and Disgorgement as Contract Remedies’ (2003) 78 Chicago-Kent Law Review 55; Waddams, Dimensions of Private Law, p 123. Cf Attorney General v Blake [2001] 1 AC 268 at 278 per Lord

Nicholls. 55. See [1821], [1830]–[1841]. 56. See also the general analysis in [1507]–[1512], [1522]–[1526]. See also Attorney General v Blake [2001] 1 AC 268 discussed at [1831]. See further Stephen Waddams, ‘Gains Derived from Breach of Contract: Historical and Conceptual Perspectives’ in Saidov and Cunnington, Contract Damages: Domestic and International Perspectives, Chapter 8. 57. See [1833]–[1835]. 58. Attorney General v Blake [2001] 1 AC 268 discussed at [1831]. 59. See generally Richard O’Dair, ‘Restitutionary Damages for Breach of Contract and the Theory of Efficient Breach: Some Reflections’ (1993) 46(2) Current Legal Problems 113; L S Smith, ‘Disgorgement of the Profits of Breach of Contract: Property, Contract and “Efficient Breach”’ (1994) Canadian Business Law Jnl 121; Hanoch Dagan, ‘Restitutionary Damages for Breach of Contract: An Exercise in Private Law Theory’ (2000) 1 Theoretical Inquiries in Law 115; Edelman, pp 162ff; David Campbell and Donald Harris, ‘In Defence of Breach: A Critique of Restitution and the Performance Interest’ (2002) 22 LS 208; Peter Jaffey, ‘Efficiency, Disgorgement and Reliance in Contract: A Comment on Campbell and Harris’ (2002) 22 LS 570; Ernest J Weinrib, ‘Punishment and Disgorgement as Contract Remedies’ (2003) 78 Chicago-Kent Law Review 55; David Campbell and Philip Wylie, ‘Ain’t No Telling (Which Circumstances are Exceptional)’ [2003] CLJ 605 at 614–17. 60. See Holmes, The Common Law, p 236. See also Atiyah, Essays on Contract, pp 57ff. 61. See, eg T H Jackson, ‘“Anticipatory Repudiation” and the Temporal Element in Contract Law: An Economic Inquiry into Contract Damages in Cases of Prospective Nonperformance’ (1978) 31 Stanford LR 69; C J Goetz and R E Scott, ‘Enforcing Promises: An Examination of the Basis of Contract’ (1980) 89 Yale LJ 1261. Cf Beale, pp 159ff; William Bishop, ‘The Choice of Remedy for Breach of Contract’ (1985) 14 Journal of Legal Studies 299; Goff and Jones, §§20-026ff. 62. (1967) 119 CLR 460 at 504. Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286; [2009] HCA 8 at [13]. 63. See Peter Linzer, ‘On the Amorality of Contract Remedies Efficiency, Equity and the Second Restatement’ (1981) 81 Col L Rev 111. Cf David Howarth, ‘Against Lumley v Guy’ (2005) 68 MLR 195. See also Gareth Jones, ‘The Recovery of Benefits Gained from a Breach of Contract’ (1983) 99 LQR 443 at 453ff; Peter Birks, ‘Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law and Equity’ [1987] LMCLQ 421 at 440–2. See also Atiyah, Essays on Contract, pp 150ff. 64. Cf Rawls, A Theory of Justice, revised ed, p 305 (without mutual confidence nothing is accomplished by uttering words of promise). 65. Cf I R Macniel, ‘Efficient Breach of Contract: Circles in the Sky’ (1982) 68 Va L Rev 947 (emphasis on relational interest); J W Carter and Andrew Stewart, ‘Commerce and Conscience: The High Court’s Developing View of Contract’ (1993) 23 UWALR 49 66. See, eg Alan Schwartz, ‘The Case for Specific Performance’ (1979) 89 Yale LJ 271; T S Ulen, ‘The Efficiency of Specific Performance: Toward a Unified Theory of Contract Remedies’ (1984) 83 Michigan LR 341 at 348. 67. See also [1612] (specific restitution of goods), [1625], [1626] (injunction to restrain

trespass). 68. (1967) 119 CLR 460 at 503. See also McMahon v Ambrose [1987] VR 817 at 837. 69. But see Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344 at 365–6. See further Brian Coote, ‘Contract Damages, Ruxley and the Performance Interest’ [1997] CLJ 537. 70. Cf Law Commission, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 132, 1993, §7.22. Of course, in any case where the profit which the defendant has obtained would not have been made had the contract with the plaintiff been performed, an award of the profit as damages, by reference to the notional effect of an order for specific performance, is largely fictional. See [1836]. 71. See [1836], [1837]. Cf [1831]. at 68–9 (issue one of policy not economic theory). See also David Howarth, ‘Against Lumley v Guy’ [2005] MLR 195. 72. See [1824], [1829]. 73. See also [1410]. 74. See McGregor, §31-005. The claim in damages assumes that no contract debt has accrued. For recovery of damages calculated by reference to the amount of the debt see [1823], [1828]. 75. See, eg Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 451, 452, 461, 465, 476; Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97; J C Scott Constructions v Mermaid Waters Tavern Pty Ltd [1984] 2 Qd R 413 at 425. Cf Stephen v Camden & Philadelphia Soap Co 68 A 2d 69 (NJ, 1907); Chapple v Pagan (1909) 11 WAR 78 at 84. For the impact of price increases between the date of breach and the date of award see Perry v Sidney Phillips & Son [1982] 1 WLR 1297 at 1301. 76. Restitution is the preferred basis for relief where the contract is unprofitable. See [1408]. For criticism see [1430]. 77. See [1409]–[1411]. 78. (1951) 84 CLR 377. See also [1410], [1411]. 79. Cf [1410]. 80. (1991) 174 CLR 64. See also Perrin v Reynolds (1886) 12 VLR 440; Fehlberg v Stanton [1960] ALR 299 at 304. 81. Cf Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 (see [1410]). 82. [1967] 1 WLR 1193. 83. (1991) 174 CLR 64. 84. (1991) 174 CLR 64 at 117. Cf L Albert & Son v Armstrong Rubber Co 178 F 2d 182 at 190 (CA, 2nd Cir, 1949); Dwyer v Kaljo (1992) 27 NSWLR 728 at 744. 85. See [926]. 86. See, eg Charterhouse Credit Ltd v Tolly [1963] 2 QB 683, overruled on other grounds Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 (cost of repair not appropriate in contract of hire). See also Beale, pp 174–5. 87. ACT: Sale of Goods Act 1954, s 56(3); NSW: Sale of Goods Act 1923, s 54(3); NT: Sale of Goods Act 1972, s 54(3); Qld: Sale of Goods Act 1896, s 54(3); SA: Sale of Goods Act 1895, s 52(3); Tas: Sale of Goods Act 1896, s 57(3); Vic: Goods Act 1958, s 59(3); WA: Sale of Goods Act 1895, s 52(3).

88. See generally Bellgrove v Eldridge (1954) 90 CLR 613; Simpson Steel Structures v Spencer [1964] WAR 101; Director of War Service Homes v Harris [1968] Qd R 275; Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253. Note also cases on a lessee’s obligation to execute repairs to property, discussed Gareth Jones, ‘The Recovery of Benefits Gained from a Breach of Contract’ (1983) 99 LQR 443 at 447–8; J L R Davis, ‘Damages’ in Finn, Essays on Contract, pp 215ff. The issue is not limited to contract damages. For discussions in the context of claims in tort see Murphy v Brown (1985) 1 NSWLR 131 at 133; Parramatta City Council v Lutz (1988) 12 NSWLR 293 at 335; Pantalone v Alaouie (1989) 18 NSWLR 119. See further Stephen A Smith, ‘Substitutionary Damages’ in Rickett (ed), Justifying Private Law Remedies, Chapter 5. 89. (1954) 90 CLR 613 at 618–19. See also Carosella v Ginos and Gilbert Pty Ltd (1982) 57 ALJR 315. Cf Treitel, Remedies for Breach of Contract, pp 105–6. 90. See now Restatement (Second) Contracts, 348 Comment (c) (‘economic waste’ described as ‘misleading’). See also the famous decision in Peevyhouse v Garland Coal & Mining Co 382 P 2d 109 (Okla, 1963) where the plaintiff was refused damages assessed on a rectification basis because the cost of performance was disproportionate to the ‘economic benefit’ to the plaintiff. 91. Cf Beale, p 177. 92. See Dean v Ainley [1987] 1 WLR 1729 at 1735, 1737, 1738. Cf Watts v Morrow [1991] 1 WLR 1421 (see M P Furmston (1993) 6 JCL 64). 93. See Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344, especially at 124–6, 133–4, 137–8. See also Sealace Shipping Co Ltd v Oceanvoice Ltd (The Alecos M) [1990] 1 Lloyd’s Rep 82 at 85 (reversed [1991] 1 Lloyd’s Rep 120, on basis that cost of cure was not the relevant measure); Channel Island Ferries Ltd v Cenargo Navigation Ltd (The Rozel) [1994] 2 Lloyd’s Rep 161; Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68 at 75–6, 80. 94. [1977] Ch 106. Cf Radford v De Froberville [1978] 1 All ER 33. 95. See [1977] Ch 106 at 332. 96. One estimate was the replanting exercise would cost $50 million and take 100 years to accomplish. But the mere fact that reinstatement of property will render the asset more valuable is not conclusive. See Harbutt’s ‘Plasticine’ Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447 (overruled on another point Photo Production Ltd v Securicor Transport Ltd [1980] AC 827). For discussion see Ewan McKendrick, ‘Promises to Perform: How Valuable?’ (1992) 5 JCL 6 at 11–12. 97. See R J Sharpe and S M Waddams, ‘Damages for Lost Opportunity to Bargain’ (1982) 2 OJLS 290; S M Waddams, ‘Restitution as Part of Contract Law’ in Burrows, Essays, p 211. See also Craig Smith, ‘Recognising a Valuable Lost Opportunity to Bargain when a Contract is Breached’ (2005) 21 JCL 250; Mitchell McInnes, ‘Gain, Loss and the User Principle’ [2006] RLR 76. For a recent critique of this analysis see Craig Rotherham, ‘“Wrotham Park Damages” and Accounts of Profits: Compensation or Restitution’ [2008] LMCLQ 25. See also Graham Virgo, ‘Restitutionary Remedies for Wrongs: Causation and Remoteness’ in Rickett, Justifying Private Law Remedies, Chapter 12, pp 310–16; Ralph Cunnington, ‘The Assessment of Gain-based Damages for Breach of Contract’ (2008) 71 MLR 559; Andrew Burrows, ‘Are “Damages on the Wrotham Park Basis” Compensatory, Restitutionary or Neither?’ in Saidov and Cunnington, Contract Damages: Domestic and

International Perspectives, Chapter 7. See also Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] 2 EGLR 29; [2006] EWCA Civ 430 at [22] per Neuberger LJ. Cf Gondal v Dillon Newsagents Ltd (Court of Appeal, Civil Division, 29 July 1998) reported in [2001] RLR 221, noted, James Edelman, ‘The Compensation Straight-Jacket and the Lost Opportunity to Bargain Fiction’ [2001] RLR 104. 98. Since breach is not a basis for redistributing a contract risk allocation (see [1427], [1430]), there is no question of adjustment by reference to a lost negotiating position unless the promise was fraudulently made. 99. Query to what extent, like damages for loss of chance, the fiction lies in the assessment rather than the head of damages. 100. Cf WWF—Worldwide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445 at 473–4; [2007] Bus LR 1252 at 1280; [2007] EWCA Civ 286 at [54]. See also Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830. 101. See, eg TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 156. 102. Cf [1806] and see WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445 at 475; [2007] Bus LR 1252 at 1282; [2007] EWCA Civ 286 at [59]. See also [1826], [1838]. 103. See further [1838], [1840], [1841]. 104. Cf the position in England, WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445 at 473–4; [2007] Bus LR 1252 at 1280; [2007] EWCA Civ 286 para 54. See also Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 and see David Campbell and Philip Wylie, ‘Ain’t No Telling (Which Circumstances are Exceptional)’ [2003] CLJ 605. 105. [1977] Ch 106 (see [1820]). 106. See J L R Davis, ‘Damages’ in Finn, Essays on Contract, p 219. 107. [1974] 1 WLR 798. See also [1841]. 108. See Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370 at 2386–87; [2009] UKPC 45 at [49] (‘[b]oth parties are to be assumed to act reasonably. The fact that one or both parties would in practice have refused to make a deal is therefore to be ignored’; see also at 2387, [50] for the relevance of post-valuation events). 109. See Stoke on Trent Council v W & J Wass Ltd [1988] 1 WLR 1406 at 1414 per Nourse LJ, with whom Mann LJ agreed. 110. Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 and further [1836], [1837]. 111. See further [1629] and see Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342. 112. See Jaggard v Sawyer [1995] 1 WLR 269 and further [1836], [1837]. See also Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd [2011] 1 WLR 2370 at 2385; [2009] UKPC 45 at [46]. 113. [2001] 1 AC 268 at 283. See also Horsford v Bird [2006] UKPC 3. See further [1831]. 114. [2001] 1 AC 268 at 281 (note though that the loss of bargaining opportunity analysis was approved under the heading ‘Damages under Lord Cairns’s Act’ and Wrotham Park

(although involving a claim for damages in lieu of an injunction) was not discussed or cited by Lord Nicholls in that section of his speech but rather under the heading ‘Breach of Contract’ beginning at p 282 of his speech; however he did cite Jaggard v Sawyer [1995] 1 WLR 269, under the heading of ‘Damages under Lord Cairns’s Act’ as a ‘recent example’ which may suggest he was not eliminating older examples from this category). 115. [2001] 1 AC 268 at 283–4. See further [1806]. 116. See [1831]. See also Devenish Nutrition Ltd v Sanofi-Aventis SA [2007] EWHC 2394 (Ch) at [81], see also [84], [90], [94], [98]; [2008] Bus LR 600 at 626 see also at 626, 628, 630, 631; [2009] Ch 320 at 420, see also at 421, 423, 424, 425 (affirmed [2008] EWCA Civ 1086, [2009] Ch 390 but cf at [40]–[41], 445-46 per Arden LJ). 117. [2003] 1 All ER (Comm) 830. See also Amec Developments Ltd v Jury’s Hotel Management (UK) Ltd (2001) 82 P & Cr 22; Gafford v Graham (1999) 77 P & CR 73; Severn Trent Water Ltd v Barnes [2004] EWCA Civ 570; Lane v O’Brien [2004] EWHC (QB) 303; Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] EGLR 29; [2006] EWCA Civ 430; Field Common Ltd v Elmbridge Borough Council [2009] 1 P & CR 1; [2008] EWHC 2079 (Ch); Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch); CF Partners (UK) LLP v Barclays Bank PLC [2014] EWHC 3049 (noted, William Day, ‘An Application of Wrotham Park Damages’ (2015) 131 LQR 218). See further Peter Jaffey, ‘Disgorgement and “Licence Fee Damages” in Contract’ (2004) 20 JCL 57; James Edelman [2003] RLR 101. 118. Here that would involve PPX paying a proportion of advances it had received and an appropriate royalty on retail selling prices. The court did not think the case was exceptional and therefore did not order an account of profits on the basis of Attorney General v Blake. The mere fact the breach was deliberate was not of itself exceptional in a commercial context. 119. [2003] 1 All ER (Comm) 830 at 846. See also WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2006] EWHC 184 (Ch) (reversed on other grounds [2008] 1 WLR 445; [2007] Bus LR 1252; [2007] EWCA Civ 286) where Peter Smith J suggests a number of principles to be taken into account in determining the sum payable for the loss of opportunity to bargain. 120. See generally Brown v Jam Factory Pty Ltd (1981) 35 ALR 79; 53 FLR 340; Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679; Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23; Bill Acceptance Corp Ltd v GWA Ltd (1983) 78 FLR 171; Holt v Biroka Pty Ltd (1988) 13 NSWLR 629; Wheeler Grace and Pierucci Pty Ltd v Wright (1989) ATPR 40-940; Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217. 121. See Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 at 690 per McHugh JA. Cf Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217. 122. See ACT: Sale of Goods Act 1954, s 54; NSW: Sale of Goods Act 1923, s 53; NT: Sale of Goods Act 1972, s 53; Qld: Sale of Goods Act 1896, s 52; SA: Sale of Goods Act 1895, s 50; Tas: Sale of Goods Act 1896, s 55; Vic: Goods Act 1958, s 57; WA: Sale of Goods Act 1895, s 50. 123. Since A’s profit from the breach is a benefit obtained from a third party, it could not be said that the plaintiff has an alternative claim for restitution. 124. But cf [1841] (specific goods). 125. See further [1828].

126. See generally Carter on Contract, §§41-460–41-470. 127. See [1822]. 128. [1985] 1 WLR 435 (see J W Carter (1988) 104 LQR 207; M P Thompson [1985] Conv 286). 129. The decision is also difficult to reconcile with the approach taken to agreed damages clauses. See [1824]. See also [1145] (procedural advantage). 130. On the evidence of the chattel lease cases (see, eg O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170) it is not open to contracting parties to agree that the discharge of the defendant is a benefit which may be translated into a sum of money equal to the monetary value of a contractual performance. 131. Cf M P Furmston, ‘Contract Planning: Liquidated Damages, Deposits and the Foreseeability Rule’ (1991) 4 JCL 1. 132. Cf Export Credits Department v Universal Oil Products Co [1983] 1 WLR 399 (distinction not applicable to indemnity on ‘default’); Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 at 556–7 (obligation to re-sell property was restitutionary rather than penal). 133. [1993] 1 WLR 1361 (see [1806]). 134. See [1827]–[1829]. 135. See generally Carter on Contract, §11-120. 136. For a statement in these terms see Walford v Miles [1992] 2 AC 128 at 138 per Lord Ackner, with whom the other members of the House of Lords agreed. 137. See further [1835] (good faith). 138. See [1827]. 139. See generally Chapter 17. 140. Jones, p 60. 141. Cf P D Finn, ‘The Fiduciary Principle’ in Youdan, Equity, Fiduciaries and Trusts, p 1. These duties are proscriptive rather than prescriptive, see Blythe v Northwood (2005) 63 NSWLR 531 at 540. 142. See Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 107 per Mason J. See also Warman International Ltd v Dwyer (1995) 182 CLR 544 at 588; 128 ALR 201 at 209. 143. See, eg Hill v Rose [1990] VR 129 at 144, and generally [1710]–[1720]. 144. As a matter of substance there is a breach of duty, and in the contract context it would seem excessively technical to say that the beneficiary cannot recover the benefit obtained as damages for breach of contract. See [1509]. 145. See [1710]–[1726]. 146. See [1703]. 147. Cf United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; 60 ALR 741 (sale of property by joint venturer at a profit was the breach of fiduciary relation and gave rise to liability to account where the relation was in place prior to execution of the joint venture agreement).

148. See, eg O’Sullivan v Management Agency and Music Ltd [1985] QB 428; Commonwealth Bank of Australia v Smith (1991) 102 ALR 453 at 476–7 and generally [1736]. 149. See generally J R F Lehane, ‘Fiduciaries in a Commercial Context’ in Finn, Essays in Equity, p 95; Paul Finn, ‘Equity and Contract’ in Finn, Essays on Contract, p 104; R P Austin, ‘Fiduciary Accountability for Business Opportunities’ in Finn, Equity and Commercial Relationships, p 141; Paul Finn, ‘Contract and the Fiduciary Principle’ (1989) 12 UNSWLJ 76; Cope, Equitable Obligations: Duties, Defences and Remedies, Chapter 3. 150. For cases where there is merely a promise to confer the benefit see [1823]. 151. Cf Ross Systems v Linden Dari Delite Inc 35 NJ 329; 173 A 2d 258 (1961). 152. Of course, the existence of a fiduciary duty has important consequences, in terms of both the nature and form of liability. See generally Bowstead, §§6-032ff. 153. Cf Roy Goode, ‘Property and Unjust Enrichment’ in Burrows, Essays, p 230. 154. [1981] QB 290 (see J W Carter (1982) 45 MLR 220). See also State Trading Corp of India Ltd v M Golodetz Ltd [1989] 2 Lloyd’s Rep 277 (failure to open letter of credit). 155. See J W Carter and M P Furmston, ‘Good Faith and Fairness in the Negotiation of Contracts Part I’ (1994) 8 JCL 1 at 7; J W Carter and Elisabeth Peden, ‘Good Faith in Australian Contract Law’ (2003) 19 JCL 155. See also CGU Workers Compensation (NSW) Ltd v Garcia (2007) 69 NSWLR 680; [2007] NSWCA 193. 156. See, eg LS Sealy, ‘Commentary on “Good Faith and Fairness in Failed Contract Negotiations”’ (1995) 8 JCL 142 at 143–4. Compare Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 where a contractual duty of best efforts did not create a fiduciary relation. 157. (1925) 36 CLR 1. See also Reading v Attorney-General [1951] AC 507 (see [1714]); Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 (employee occupying fiduciary position liable to account on breach of contract). 158. Cf Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 97; 55 ALR 417 where Mason J was prepared to find a limited fiduciary duty, in relation to an area in which the defendant had to give priority to the interests of the plaintiff. 159. See generally United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1; 60 ALR 741; Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R 1; Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1. Cf Ravinder Rohini Pty Ltd v Krizaic (1991) 105 ALR 593. For discussion see, eg J R F Lehane, ‘Fiduciaries in a Commercial Context’ in Finn, Essays in Equity, p 95; Maree C Chetwin, ‘Joint Ventures — A Branch of Partnership Law?’ (1991) 16 University of Qld LJ 256. 160. See [1826]–[1829]. 161. [2001] 1 AC 268. The decision in Blake has been the subject of much comment, see, eg Ralph Cunningham, ‘Equitable Damages: A Model for Restitutionary Damages’ (2001) 17 JCL 212; Andrew Phang and Pey-Woan Lee, ‘Rationalising Restitutionary Damages in Contract Law — An Elusive or Illusory Quest?’ (2001) 17 JCL 240; Edelman, Ch 5; David Campbell and Donald Harris, ‘In Defence of Breach: A Critique of Restitution and the Performance Interest’ (2002) 22 LS 208; Peter Jaffey, ‘Efficiency, Disgorgement and Reliance in Contract: A Comment on Campbell and Harris’ (2002) 22 LS 570; Ewan McKendrick, ‘Breach of Contract, Restitution for Wrongs, and Punishment’, in Burrows and Peel, Commercial Remedies: Current Issues and Problems, Chapter 10; Justin Gleeson

and James Watson, ‘Account of Profits, Contracts and Equity’ (2005) 79 ALJ 676; Mitchell McInnes, ‘Account of Profits for Common Law Wrongs’ in Degeling and Edelman, Chapter 16; Craig Rotherham, ‘The Conceptual Structure of Restitution for Wrongs’ [2007] CLJ 172. 162. [1993] 1 WLR 1361. 163. [1974] 1 WLR 798. 164. [1993] 1 WLR 1361. See Peter Birks (1993) 109 LQR 518; Andrew Burrows [1993] LMCLQ 453; Richard O’Dair [1993] RLR 31; S A Smith, ‘Of Remedies and Restrictive Covenants’ (1994) 7 JCL 164. See further on the case [1824], [1837]. 165. [1974] 1 WLR 798. See also Bracewell v Appleby [1975] Ch 408. See further Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] 2 EGLR 29; [2006] EWCA Civ 430; Field Common Ltd v Elmbridge Borough Council [2009] 1 P & CR 1; [2008] EWHC 2079 (Ch); Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch); CF Partners (UK) LLP v Barclays Bank PLC [2014] EWHC 3049. 166. [1974] 1 WLR 798 at 815. 167. See WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445 at 460; [2007] Bus LR 1252 at 1267; [2007] EWCA Civ 286 at [29]. See also Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390 at 420, 421, 425 per Lewison J; [2008] Bus LR 600 at 626, 631; [2007] EWHC 2394 (Ch) at [81], [84], [98]; (affirmed [2008] EWCA Civ 1086; [2009] Ch 390). See also Lunn Poly Ltd v Liverpool & Lancashire Properties Ltd [2006] 2 EGLR 29; [2006] EWCA Civ 430. 168. [2001] 1 AC 268. See also Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830; WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2002] FSR 504 (affirmed [2002] FSR 530); AB Corporation v CD Company (The ‘Sine Nomine’) [2002] 1 Lloyd’s Rep 805; Esso Petroleum Co Ltd v Niad Ltd [2001] EWHC Ch 458. See further, CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704 at 747; Kuddus v Chief Constable of Leicestershire Constabulary [2002] 2 AC 122 at 157; Kuwait Airways Corp v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 at 1094. See as to the position in New Zealand, Attorney-General for England and Wales v R [2002] 2 NZLR 91 (affirmed [2004] 2 NZLR 577); WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445 at 460; [2007] Bus LR 1252 at 1267; [2007] EWCA Civ 286 at [29]; Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390; [2008] EWCA Civ 1086; Giedo Van der Garde BV v Force India Formula One Team [2010] EWHC 2373 (QB). 169. Although Blake has now been cited in a number of Australian decisions it has not yet been fully considered. See Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA 1040 at [155]–[162] per Hill and Finkelstein JJ and cf at [168]–[173] per Emmett J. See also Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd [2001] FCA 226 at [41]; Gull Petroleum (WA) Ltd v Tah Land Pty Ltd [2001] FCA 1531 at [95]; Dalecoast Pty Ltd v Guardian International Pty Ltd [2001] WASC 199 at [95] (overruled [2003] WASCA 142 at [102]–[107]); Mainland Holdings Ltd v Szady [2002] NSWSC 699 at [64]; Town & Country Property Management Services Pty Ltd v Kaltoum [2002] NSWSC 166 at [78]–[85]; Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2002] WASCA 206 at [54]; Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 at [129]; Biscayne Partners Pty Ltd v Valance Corp Pty Ltd [2003] NSWSC 874 at [229]– [236]; Lang Parade Pty Ltd v Peluso [2005] QSC at [35]; Short v Crawley [2005] NSWSC

928 at [24]; Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA at [44]; Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420 at 467; [2011] NSWCA 342 at [173], per Allsop P. 170. Lord Hobhouse dissented. 171. [2001] 1 AC 268 at 279. Cf at 298 per Lord Hobhouse. See also Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 at 840 per Mance LJ; WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445; [2007] Bus LR 1252; [2007] EWCA Civ 286. See further David Campbell and Philip Wylie, ‘Ain’t No Telling (Which Circumstances are Exceptional)’ [2003] CLJ 605. 172. [2001] 1 AC 268 at 280. 173. [2001] 1 AC 268 at 281. He cited as example, Bracewell v Appleby [1975] Ch 408 and Jaggard v Sawyer [1995] 1 WLR 269. 174. [2001] 1 AC 268 at 281, 283. 175. [2001] 1 AC 268 at 283. 176. [2001] 1 AC 268 at 283–4. 177. [2001] 1 AC 268 at 283–84. See also at 298 per Lord Hobhouse. 178. [2003] 1 All ER (Comm) 830 at 848 per Peter Gibson LJ. 179. [2008] 1 WLR 445 at 470; [2007] Bus LR 1252 at 1277; [2007] EWCA Civ 286 at [47]. 180. See also Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390 at 420; [2008] Bus LR 600 at 626; [2007] EWHC 2394 (Ch) at [81] (affirmed [2009] Ch 390 but cf at 444–45 per Arden LJ; [2008] EWCA Civ 1086 at [37]–[38] and see Field Common Ltd v Elmbridge Borough Council [2009] 1 P & CR 1; [2008] EWHC 2079 (Ch). See further Mitchell McInnes, ‘Gain, Loss and the User Principle’ [2006] RLR 76. Cf Craig Rotherham, ‘“Wrotham Park Damages” and Accounts of Profits: Compensation or Restitution’ [2008] LMCLQ 25. For an alternative analysis see David Pearce and Roger Halson, ‘Damages for Breach of Contract: Compensation, Restitution and Vindication’ (2008) 28 OJLS 73 at 91–3. 181. Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 at 848 per Peter Gibson LJ. 182. [2001] 1 AC 268 at 278. 183. [2001] 1 AC 268 at 278 (emphasis added). 184. Further difficulties in interpreting Lords Nicholls’s remarks as approving a compensatory measure of damages for cases like Wrotham Park are identified and discussed by Craig Rotherham, ‘“Wrotham Park Damages” and Accounts of Profits: Compensation or Restitution’ [2008] LMCLQ 25 at 36–40. 185. [2001] 1 AC 268 at 285. See also Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390 at 436, 442 per Arden LJ, at 477–8 per Longmore LJ; [2008] EWCA Civ 1086 at [4], [25], [148]. 186. [2001] 1 AC 268 at 284–5. 187. [2001] 1 AC 268 at 285. See also Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 at 843, which appears to add a requirement that the defendant profit directly from the breach. See further Esso Petroleum Co Ltd v Niad Ltd [2001] EWHC Ch 458.

188. [2001] 1 AC 268 at 287; see also at 292 per Lord Steyn. 189. Cf Mitchell McInnes, ‘Disgorgement for Breach of Contract: The Search for a Principled Relationship’ in Schrage, Unjust Enrichment and the Law of Contract, p 225. 190. Cf Edelman, Chapter 1. 191. [2008] 1 WLR 445; [2007] Bus LR 1252; [2007] EWCA Civ 286. For a critical analysis of this case, see Craig Rotherham, ‘“Wrotham Park Damages” and Accounts of Profits: Compensation or Restitution’ [2008] LMCLQ 25. 192. [2008] 1 WLR 445 at 475; [2007] Bus LR 1252 at 1282; [2007] EWCA Civ 286 at [59]. See also Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390 at 446 per Arden LJ; [2008] EWCA Civ 1086 at [40]–[41]. 193. See [1814], [1830]. See further Ralph Cunnington, ‘The Inadequacy of Damages as a Remedy for Breach of Contract’, in Charles Rickett (ed), Justifying Private Law Remedies, Chapter 6. 194. See, eg Gareth Jones, ‘The Recovery of Benefits Gained from a Breach of Contract’ (1983) 99 LQR 443 at 444–6; Peter Birks, ‘Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law and Equity’ [1987] LMCLQ 421; P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, 1992, pp 94ff; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 248. But cf Samuel Stoljar, ‘Restitutionary Relief for Breach of Contract’ (1989) 2 JCL 1. For a dictum supporting the approach see Hickey & Co Ltd v Roches Stores Dublin Ltd (No 1) [1993] RLR 196 at 208. Cf Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 124–5 (see [1835]). 195. [1993] 1 WLR 1361 (see [1806]). 196. [2003] 1 All ER (Comm) 830 at 845 per Mance LJ, at 848 per Peter Gibson LJ. As a sole criterion for an account of profits the House of Lords in Attorney General v Blake [2001] 1 AC 268 at 285 also rejected it. 197. This was the rationale behind the statement by Holmes, The Common Law, p 236 quoted in [1815]. 198. See [1510]. 199. See Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344; 111 ALR 289. See Elizabeth Macdonald, ‘Contractual Damages for Mental Distress’ (1994) 7 JCL 134. 200. Cf P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, 1992, pp 80–7. 201. See Graham Virgo, ‘Restitutionary Remedies for Wrongs: Causation and Remoteness’ in Rickett (ed), Justifying Private Law Remedies, Chapter 12. 202. See [1815]. 203. See P B H Birks, ‘Civil Wrongs: A New World’ in Butterworth Lectures 1990–91, 1992, pp 88–9, 93. Cf Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 at 1370. 204. See Peden, Good Faith in the Performance of Contracts. 205. See also [1042]. See further J W Carter and Elisabeth Peden, ‘Good Faith and Australian Contract Law’ (2003) 19 JCL 155. Cf CGU Workers Compensation (NSW) Ltd v Garcia (2007) 69 NSWLR 680 at 704–6; [2007] NSWCA 193 at [131]–[138].

206. See P D Finn, ‘The Fiduciary Principle’ in Youdan, Equity, Fiduciaries and Trusts, p 4. 207. Cf [1035], [1042]. 208. The idea that the basis for good faith liability might lie in tort rather than contract was rejected in Gimson v Victorian Workcover Authority [1995] 1 VR 209 and CGU Workers Compensation (NSW) Ltd v Garcia (2007) 69 NSWLR 680 at 704–6; [2007] NSWCA 193 at [127], [145]. 209. Perhaps by drawing an analogy with the breach of a fiduciary relation. See [1703]. 210. (1984) 156 CLR 41. 211. (1984) 156 CLR 41 at 124–5. See also Carson v Wood (1994) 34 NSWLR 9 at 17. See Peter Birks, ‘Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law and Equity’ [1987] LMCLQ 421 at 438–40; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 248. 212. See further [1837], [1838]. 213. This is the description commonly given to the Chancery Amendment Act 1858 (UK). For the relevant statutory provisions see [1720]. 214. See Meagher, Gummow and Lehane, Chapter 24. 215. See Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 678–9; Meagher, Gummow and Lehane, §24-035. 216. See Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992 at 1005 per Sachs LJ; Sanderson Motors (Sales) Pty Ltd v Yorkstar Motors Pty Ltd [1983] 1 NSWLR 513 at 516; Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd [1984] VR 947 at 955. 217. See Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851; Hasham v Zenab [1960] AC 316. Cf Oakacre Ltd v Claire Cleaners (Holdings) Ltd [1982] Ch 197 (writ issued prior to the performance date). 218. Cf Jaggard v Sawyer [1995] 1 WLR 269 at 276 per Sir Thomas Bingham MR, with whom Kennedy LJ agreed (‘retrospective compensation for past wrongs’). 219. Chancery Amendment Act 1858 (UK). For the Australian provisions see [1720]. 220. See Meagher, Gummow and Lehane, §24-075. 221. See Tito v Waddell (No 2) [1977] Ch 106 at 334 per Megarry V-C. 222. See Meagher, Gummow and Lehane, §24-075. 223. See Jaggard v Sawyer [1995] 1 WLR 269 at 278. The statement is not strictly true, as loss of bargain damages may cover future breaches. But cf McFerran v Heroux, 44 Nash 63; 269 P 2d 815 at 821 (1954), italics in original (claim for damages for anticipatory breach one based on a ‘present breach seeking recovery for future damages’). 224. [1980] AC 367. 225. [1980] AC 367 at 400 per Lord Wilberforce with whom the other members of the House of Lords agreed. See also William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016 at 1037. 226. See Meagher, Gummow and Lehane, §24-040, §24-180. 227. See, eg Wroth v Tyler [1974] Ch 30. Cf Madden v Kevereski [1983] 1 NSWLR 305.

228. Cf ASA Constructions Pty Ltd v Iwanov [1975] 1 NSWLR 512 at 519. 229. Cf S M Waddams, ‘Restitution as Part of Contract Law’ in Burrows, Essays, p 209. 230. [1974] 1 WLR 798 (see [1821]). Contrast Tito v Waddell (No 2) [1977] Ch 106 where Megarry V-C, although refusing specific performance on discretionary grounds, applied common law principles. 231. [1993] 1 WLR 1361 at 1366–7. He was perhaps inclined to view the case as wrongly decided. 232. [1995] 1 WLR 269. 233. [1995] 1 WLR 269 at 281, 291. 234. [1806]. 235. [2001] 1 AC 268. 236. See especially [1995] 1 WLR 269 at 281–2, 291–2. 237. [2001] 1 AC 268 at 283. See also Horsford v Bird [2006] UKPC 3. 238. [2008] 1 WLR 445 at 473–4; [2007] Bus LR 1252 at 1280; [2007] EWCA Civ 286 at [54]. 239. Cf Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 at 848 per Peter Gibson LJ. 240. In a case where the promise was to obtain the benefit for the plaintiff, there is a strong argument that the defendant’s gain represents the plaintiff’s loss. See [1828] (contract to obtain the benefit). 241. Competition and Consumer Act 2010 (Cth), Sch 2, Australian Consumer Law, s 236. For discussion of the equivalent provision appearing in the now repealed Trade Practices Act 1974 (Cth) see Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; 110 ALR 608. 242. For the provisions see [1047]. 243. For the provisions see [1315]. 244. For the provisions see [1047]. 245. A breach of contract may be indicative of misleading or deceptive conduct. See Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470; 114 ALR 355. Cf Holt v Biroka Pty Ltd (1988) 13 NSWLR 629 at 636–7; Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679; Holloway v Witham (1990) 21 NSWLR 70. But see McWilliams Wines Pty Ltd v L S Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723. See also [1821]. Reference can also be made to the intellectual property statutes. A breach of contract which also amounts to an infringement of an intellectual property right will justify an award of an account of profits or damages. See [1708], [1713]. 246. See Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 16 FCR 410 at 420–1; 75 ALR 271 at 280–2 (common law analogies do not necessarily offer sufficient guidance); Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 114 ALR 355 at 393–4 (‘loss or damage’ not confined to cases where damages are recoverable in contract or tort). For analogies with the approach to fiduciary duties see Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 713; Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 at 395; 102 ALR 453 at 479–80; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 38; 110 ALR 608 at 616. 247. See Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 16 FCR

410 at 418; 75 ALR 271 at 279 per Gummow J (approved Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 348; 120 ALR 16). But this does not mean that a tortious measure is always appropriate: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 506; 114 ALR 355 at 390. 248. See Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 348 per Mason CJ, Dawson, Toohey and Gaudron JJ; 120 ALR 16. Cf Holloway v Witham (1990) 21 NSWLR 70 at 75 (compensation recoverable under the Act to be viewed as damages flowing from conduct engaged in). 249. See generally Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514. 250. See Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 13; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 342–3, 349ff, 364. 251. (1988) 84 ALR 700 at 713. Cf Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 16 FCR 410 at 420–1; 75 ALR 271 at 282. 252. See [1833]–[1835]. 253. Cf Reading v Attorney-General [1951] AC 507 (see [1714]). And see generally Chapter 17. 254. The analysis in [1841] applies. 255. Rescission is not essential, since a claim may be made even if the contract is affirmed, but this will affect the method of assessment. See generally Alati v Kruger (1955) 94 CLR 216 at 222ff. Cf Civil Law (Wrongs) Act 2002 (ACT), s 175; Misrepresentation Act 1972 (SA), s 7(3) (damages in lieu of rescission). 256. Cf Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 432–3 (on rescission by finance company for fraud in transaction whereby cheques were issued, the collecting bank became liable in conversion). 257. See [1718]. Cf [1716] (fraudulent passing off). 258. See further [1841]. 259. See further Ernest J Weinrib, ‘Restitutionary Damages as Corrective Justice’ (2000) 1 Theoretical Inquiries in Law 1; Hanoch Dagan, ‘Restitutionary Damages for Breach of Contract: An Exercise in Private Law Theory’ (2000) 1 Theoretical Inquiries in Law 115. 260. See generally [113], [129], [162], [219], [1618]–[1622]. 261. See generally Chapter 16. Cf Martindale v Smith (1841) 1 QB 389; 113 ER 1181 (conversion by seller); L Albert & Son v Armstrong Rubber Co 178 F 2d 182 at 188 (CA, 2nd Cir, 1949) (liability in quasi-contract of buyer who rejects goods but retains possession and converts them). 262. Cf Gareth Jones, ‘The Recovery of Benefits Gained from a Breach of Contract’ (1983) 99 LQR 443 at 446ff. 263. If the price was prepaid, the buyer may recover an equivalent sum as damages. Alternatively, this sum may be recovered as restitution for an unjust enrichment. See [1408]. 264. Alternative factual analyses are available to the plaintiff-buyer, and the principle of United Australia Ltd v Barclays Bank Ltd [1941] AC 1 applies. For analysis see [1517], [1621], [1629]. In some cases the transaction may be adopted by the buyer as a dealing with the buyer’s property. See [1517], [1521]. Cf Re Andrabell Ltd [1984] 3 All ER 407 (buyer not obliged to account for proceeds of resale).

265. The contract would be of the form ‘100 tonnes of wheat from the seller’s current stock’, a contract which is sometimes described as relating to quasi-specific goods. 266. But see Daniel Friedmann’s note in (1988) 104 LQR 383 of a decision of the Israeli Supreme Court to the contrary, also discussed Jones, pp 86, 88–90. Cf Wellston Coal Co v Franklin Paper Co 48 NE 888 (Ohio, 1897) where, on a buyer’s claim for restitution, the seller was in effect held liable to pay the amount which the buyer would have had to pay in an action for damages for non-delivery. See also Law Commission, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 132, 1993, §7.16. 267. Benjamin, §17-023. Cf Johnson v Agnew [1980] AC 367 at 401 (impact of choice of date for assessment). 268. [1993] 1 WLR 1361 at 1369, 1370. 269. [1974] 1 WLR 798 (see [1821]). 270. Cf Tito v Waddell (No 2) [1977] Ch 106 (see [1820]); Law Commission, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 132, 1993, §7.20. 271. [2001] 1 AC 268. See also Horsford v Bird [2006] UKPC 3. 272. [2001] 1 AC 268 at 283. 273. [2001] 1 AC 268 at 283. See also WWF — World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2008] 1 WLR 445 at 473–4; [2007] Bus LR 1252 at 1280; [2007] EWCA Civ 286 para 54 discussed at [1806]. 274. See further Ernest J Weinrib, ‘Punishment and Disgorgement as Contract Remedies’ (2003) 78 Chicago-Kent Law Review 55 at 80; Waddams, Dimensions of Private Law, pp 118–19. Cf Peter Benson, ‘Disgorgement for Breach of Contract and Corrective Justice: An Analysis in Outline’ in Neyers, McInnes and Pitel, Understanding Unjust Enrichment, Chapter 12. See also Tolhurst, §614.

[page 759]

Chapter Nineteen

Wrongful Killing: The Forfeiture Rule 1. 2. 3.

4. 5.

General …. The Forfeiture Rule …. Evidentiary and Procedural Issues ….

[1901] [1904] [1915]

(a) General ….

[1915]

(b) Causation ….

[1918] [1920] [1931]

Benefits Liable to Be Forfeited …. Criticism and Reform ….

1. General [1901] Objects. In this chapter we examine the ‘forfeiture rule’ whereby a person responsible for the unlawful killing of another is deprived of rights to inherit or administer the victim’s estate. [1902] Introduction. It has been said that ‘no system of jurisprudence can with reason include amongst the rights which it enforces, rights directly resulting to the person asserting them from the crime of that person’.1 In Helton v Allen,2 Dixon, Evatt and McTiernan JJ referred3 to ‘the principle that by committing a crime no man could obtain a lawful benefit to himself’. The clearest example of this principle is the ‘forfeiture rule’ (called the ‘slayer rule’ in America), where a person who has murdered another is prevented from claiming as the beneficiary or next of kin of the deceased.

‘A man shall not slay his benefactor and thereby take his bounty.’4 But the law goes much further. The killer’s estate is also deprived of the accruing bounty. Family provision, insurance and pension rights may be blocked as well. And homicides other than murder may lead to forfeiture. In 1920 Harvey J exclaimed that the cases represent ‘an extraordinary instance of judge-made law invoking the doctrine of public policy in order to prevent what is felt in a particular case to be an outrage’.5 In Troja v Troja6 the majority [page 760] of the New South Wales Court of Appeal rejected the idea that the forfeiture rule was a creature of equity and its concern about unconscionability. As we pointed out earlier,7 what distinguishes homicide from other wrongs and crimes in this context is that the law is primarily concerned with ensuring that the wrongdoer forfeits any benefit that would accrue from the killing. Of course, the victim is dead and cannot receive that benefit. It might nevertheless be thought that the law would seek to pass the benefit from the wrongdoer to those standing directly behind the victim, or most directly harmed by the victim’s death. But this is not the effect of the cases. [1903] Policy-based preclusion of unjust enrichment. The Restatement of the Law Third, Restitution and Unjust Enrichment treats the slayer rule as within its proper scope.8 It is explained that:9 Unjust enrichment in such cases is usually obvious; their treatment in American law afforded early and influential examples of a liability that was readily explained in terms of the evolving doctrine of unjust enrichment and difficult to explain otherwise.

Nevertheless, it is clear that the forfeiture rule does not strip enrichment at the expense of the plaintiff invoking it. Of course, the same can be said of restitution for wrongs generally, where any duty to make restitution is secondary, not primary.10 But there is a further distinction here in that, unlike the other wrongs addressed in this Part,

the wrong is not done to the plaintiff but to the victim who was killed. Accordingly, there need to be ancillary rules to determine the devolution of the estate, insurance contract or pension entitlement once the forfeiture rule has done its primary work and deprived the wrongdoer of the property right that would normally ensue.11 The rule has been described as reflective of the wider principle of ‘public policy’ that a person shall not be allowed to benefit from his or her crime.12 This shows why the rule is not explicable by reference to the equitable notion of unconscionability. Equity’s limited role is to offer the remedy of constructive trust in circumstances where the legal title must be recognised but effect given nevertheless to the public policy. The punitive and restitutionary functions of this branch of the law are discussed further at the end of this chapter.13

2. The Forfeiture Rule [1904] History. The principle known as the ‘forfeiture rule’, excluding a killer from any benefit under the will or intestacy of the victim, developed [page 761] in the nineteenth century.14 The rule is another aspect of the maxim that a person shall not be permitted to profit from his or her own wrong, which was referred to earlier.15 One explanation for the comparatively late arrival of the rule is that prior to 1870 the doctrines of attainder, forfeiture, corruption of blood and escheat which prevailed in England solved the problem created by one person killing another benefiting under his or her will or otherwise, because given a conviction for murder or some other felony the property of the criminal was taken by the Crown, thus destroying the line of descent.16 1870 was the year of passing in England of the Act to Abolish Forfeitures for Treason and Felony 1870 (UK) a statute that was

replicated in the Australian colonies soon after.17 Statute has reintroduced forfeitures for particular crimes, such as evasion of customs duty and laws to protect fisheries.18 Nowadays, homicide is not a capital crime in Australia and conviction of a criminal offence does not as such affect a person’s capacity to hold and receive property.19 [1905] Killer’s motives irrelevant. The law in Australia and elsewhere has consistently rejected the argument that the forfeiture rule should be confined to those who killed with the motive of inheritance of the victim’s estate.20 In Re Tucker,21 Harvey J held it to be irrelevant that the killer was ignorant of the existence or provisions of the victim’s will. And the forfeiture rule has been applied to cases involving a failed mutual suicide.22 Despite this line of authority, in 1991 Rolfe J of the New South Wales Supreme Court held, in Permanent Trustee Co Ltd v Freedom from Hunger Campaign,23 that the rule did not apply if it is established that the killing was not intended to bring about a benefit from the estate of the deceased. This decision was rejected unanimously by the New South Wales Court of Appeal.24 In Mahoney JA’s words:25 … matters of proof aside, whether the benefit be sought or unintended, it would, I think, grievously affront the community sense of what is right to allow a murderer to take away from those who would otherwise receive it the estate of the person she has murdered.

[page 762] [1906] Strict operation of the rule. Until quite recently, the forfeiture rule was generally seen as applying automatically to any death resulting from unlawful homicide by a sane killer. It did not matter whether the killer’s motive was to accelerate a legacy or prevent alteration of a will, or if the killing had nothing to do with a desire to get hold of the estate. Accordingly, murder,26 manslaughter,27 and suicide or counselling suicide (when this was a crime)28 were seen to lead unquestionably to loss of property or contractual rights pursuant to the forfeiture rule.

The harshness of this approach is illustrated by Re Giles,29 where a woman killed her husband when she struck him with a single blow from a domestic chamber-pot. A plea of guilty to manslaughter on the ground of diminished responsibility was accepted by the Crown. Pennycuick VC held that since Mrs Giles stood convicted of the crime of homicide she was disqualified from inheriting. The question whether her actions deserved punishment or carried a degree of moral culpability (she had in fact been given a sentence of hospital detention) were held irrelevant on the basis that, otherwise, the court would be thrust into a ‘very noxious … sentimental speculation as to the motives and degree of moral guilt of a person who has been justly convicted’.30 Until at least 1985 Australian courts also followed this strict approach, regarding the liability to conviction for unlawful homicide as conclusive of the issue.31 The frequent reference to the wrong being a felony suggests that the courts saw a talismanic effect in categorising the killer’s action by its legal incident as a serious crime.32 [1907] Punitive function. This automatic and somewhat formalistic approach to the rule suggested that the courts saw the criminal conviction or the liability to conviction as a vital part of the principle underlying the rule. Indeed one writer has claimed that through the socalled rule of public policy the courts were, in effect:33 … seeking to recapture for the Crown the common law right to take property from a felon, or to prevent a felon from taking property as a result of a criminal act, by substituting the newly discovered rule of public policy for the earlier common law doctrines of attainder, forfeiture and corruption of blood and escheat.

[page 763] A punitive or prophylactic function of the forfeiture rule is illustrated by the early cases and remains part of its modern development. But the analogy to forfeiture and escheat breaks down in at least two respects, because the rule does not operate to the benefit of the Crown, and it does not deprive the criminal of rights which are not consequential upon the unlawful act.34

[1908] Insanity. It has always been recognised that if the killer is insane, according to the M’Naughten Rules or other appropriate test, then at common law35 there is no bar to recovery.36 Where there is no evidence about mental illness, it will be presumed that the killing was criminal.37 In one sense this is strange since it amounts to a presumption of felony, for example against a suicide who clearly killed someone in circumstances where the evidence did not permit the conclusion of insanity to be drawn. The harshness of requiring a judge to apply the M’Naughten Rules on insanity, without the jury’s luxury of ‘juggling’ them, was noted by Jacobs J in Clift v Clift38 as a possible source of injustice. [1909] Questioning the strict approach. More recently, courts have shown clear signs of a readiness to examine the moral culpability of the offender as distinct from the label of the offence. Most such indications predate or ignore any discussion of the rule’s application in terms of unjust enrichment, but the trend is capable of fitting, in embryonic form, into such a restitutionary analysis. The insanity exception was the first retreat from the rigid position because, despite the fact that the verdict used to be ‘guilty but insane’, it turned on the jury’s perception that it would be unjust to punish an insane person who lacked the necessary mental element to commit a criminal act.39 Further impetus came with ‘motor manslaughter’ cases where a person guilty of a felonious but unintentional homicide was permitted to recover indemnity under a third-party insurance contract.40 Recent English case law has been conflicting and confusing, some cases showing readiness to examine the facts of the particular crime before applying the rule, others refusing to go behind a manslaughter conviction, at least once it emerges that death followed as the result of an intentional [page 764] and unlawful act.41 A predominantly rigid approach led to the statutory

modification of the forfeiture rule in England in 1982.42 A series of cases commencing in 1985 suggested that the modern Australian law had adopted a more flexible approach to the types of wrongdoing that brought the rule into play. In Public Trustee v Evans,43 a woman was charged with the manslaughter of her husband. She had shot him ‘to prevent mayhem’ shortly after he had threatened to kill her and their children and had placed a loaded gun on the kitchen table. At the end of the Crown case, the jury was discharged from giving a verdict pursuant to a statutory power available if the trial judge is of the opinion that having regard to all the circumstances a nominal punishment would be sufficient. This discharge operated as an acquittal, although the formal outcome of the criminal proceedings was not conclusive, according to Young J sitting in a ‘Court of equity and good conscience’.44 He stressed that the forfeiture rule is essentially a judge-made rule of public policy whose application can reflect the modern age’s greater readiness to view certain types of killing with less punitive severity.45 It was held that there was no rule of public policy which disqualified the widow who had either acted in self defence or was so provoked by the husband’s actions that, even if found guilty of manslaughter, only a nominal punishment would be imposed. In Public Trustee v Fraser46 Kearney J, another judge of the Supreme Court of New South Wales, sought to explain what lay behind this more flexible approach. After citing the ‘analogy’ of the principles of unconscionable assertion or retention of the benefit of property and of unjust enrichment he stated that:47 … the conduct of a prospective beneficiary in relation to his testator may properly be considered under the rubric of unconscionability. It is in the light of such consideration that the application of the rule of public policy is to be determined. To adopt this approach is not to diminish the abhorrence of the slaying which is properly reflected in the sanctions of the criminal law, but rather to seek a principled basis for application of the rule of public policy in the different sphere of succession to property in the administration of a deceased estate.

He implied nevertheless that the rule applies prima facie in every case of unlawful homicide, because he held that a fairly heavy onus rested upon the person seeking to displace the operation of the rule by reference to the features of the crime or lack of moral culpability. On

the facts of Fraser, diminished responsibility due to paranoid schizophrenia was not sufficient [page 765] to escape the forfeiture rule where the homicide was a crime of deliberate violence perpetrated by a man who was sane according to the M’Naughten test.48 To like effect is the decision of Waddell CJ in Eq in Troja v Troja.49 There a wife forfeited the estate of her husband whom she shot during a state of ‘clinical depression characterised by a mood change, diminished interest or pleasure in all activities, psychomotor agitation, feelings of worthlessness, indecisiveness, and suicidal ideation’. She had been found guilty of manslaughter on the ground of diminished responsibility. Fraser and Evans were followed in Victoria in Re Keitley50 in preference to the more rigid English cases. There a wife pleaded guilty to manslaughter of her husband who had subjected her to ongoing domestic violence. The killing occurred at a time when she was gripped by fear and was experiencing a high level of emotional turmoil. In those circumstances Coldrey J held that the rule did not prevent a grant of probate in the wife’s favour. However, Re Keitley was not followed in Victoria by Gillard J in Estate of Soukup.51 [1910] Flexibility and discretion. Flexibility and judicial discretion were taken to extreme lengths in Permanent Trustee Co Ltd v Freedom from Hunger Campaign52 and Public Trustee v Hayles.53 In Permanent Trustee, Rolfe J held that the rule of public policy that a killer not obtain a testamentary benefit or a benefit on intestacy resulting from the victim’s death does not apply if it is established that the killing was not intended to bring about a benefit from the estate of the deceased. On these principles a husband who assisted his wife to suicide before suiciding himself did not forfeit his estate’s right to her property passing first to him. (The wife had left her estate to the husband.) The decision was clearly at odds with a long stream of authority that sees the civil law

in this area as having the function of reinforcing the criminal law, and which is disinclined to look behind (liability to) a felony conviction, at least where there was intent to kill or inflict grievous bodily harm. It is hardly surprising that an otherwise divided New South Wales Court of Appeal unanimously overruled Permanent Trustee in Troja v Troja.54 Equally controversial and doubtful is some of the reasoning in Public Trustee v Hayles.55 There the testator left his estate to his friend Knowlson, ‘provided however should my said friend predecease me then for my friend Dierdre Hayles absolutely’. Knowlson murdered the deceased. Hayles was Knowlson’s mother. Young J applied what he termed the ‘constructive trust method’,56 holding that equity could intervene and impose an appropriate trust upon the killer in order to avoid unconscionability. This discretionary power could, he held, be used to direct the estate in favour of those who [page 766] would otherwise take the estate in default of the killer. But it could also (he held) be used in other ways and for other purposes, including deeming the killer to have predeceased the victim.57 Thus, he was prepared to inquire how the testator would have wished his estate to be distributed in the event that he was murdered by a particular beneficiary. In the instant case, this type of inquiry led Young J to speculate whether the slain deceased would have wanted his estate to pass to his murderer’s mother, Dierdre Hayles.58 In the end, and subject to reserving a right in the mother to seek leave to reopen her case, he was able to effectively sidestep the mother by construing the will literally (and, we believe, correctly),59 holding that since Knowlson (the murderer) did not predecease the testator, the gift over did not take effect. If it could stand with the Court of Appeal decision in Troja v Troja,60 the more flexible approach might be applied to what many would describe as a ‘mercy killing’ followed by the suicide of the killer;61 or to a case which revealed that an intentional killer’s mind was disturbed

but not to a degree that would attract the defence of insanity according to the M’Naughten Rules.62 [1911] Factors favouring flexibility. The application of this more flexible approach to involuntary homicide such as manslaughter through gross negligence or the statutory crime of causing death by culpable driving is yet to be decided.63 Certainly a court could be more easily persuaded in such cases that the degree of criminality in a specific instance did not justify application of the rule. It is, however, possible that the rule will be entirely excluded in such cases. It has not been applied to deprive a grossly negligent driver who kills another and is convicted of manslaughter from taking the benefit of an indemnity under a compulsory insurance policy.64 In Hardy v Motor Insurers’ Bureau,65 Lord Denning MR described the rule as being ‘based on the broad rule of public policy that no person can claim indemnity or reparation for his own wilful and culpable crime’.66 On this approach Australian law might decide that where there is an involuntary homicide there is simply no need to consider the level of criminality of the particular offender. American law shows a readiness to distinguish between voluntary and involuntary manslaughter in the application of the rule and [page 767] even to allow a person who intends to kill A but who shoots B to claim under B’s estate.67 [1912] Orthodoxy reasserted. This attempt by equity to hijack the forfeiture rule and modify its rigours by applying notions of unconscionability has been resisted. In declining to follow Permanent Trustee Co Ltd v Freedom from Hunger Campaign,68 Waddell CJ in Eq said in Troja v Troja:69 … it seems to me that these early cases show that the public policy behind the rule is that, in the circumstances mentioned, the person responsible for the death should not benefit from his crime. It seems to me to be inconsistent with that policy to suggest that

whatever the motivation and however grave the crime the rule should not apply if the killer did not intend to bring about a benefit from the estate of his victim.

In Troja v Troja70 the New South Wales Court of Appeal addressed the validity of this line of flexible first instance decisions. A woman who was the sole beneficiary of her husband’s estate shot and killed him. She planned to kill her husband and did so deliberately, although she was emotionally upset and suffering a state of severe depression as the result of his unfair conduct towards her. She was convicted of manslaughter on the basis of diminished responsibility and sentenced to eight years’ penal servitude. The majority of the Court of Appeal (Mahoney and Meagher JJA) dismissed the wife’s appeal from the order of Waddell CJ in Eq which had rejected her claim to the estate.71 The Court of Appeal was unanimous in disapproving and overruling Permanent Trustee Co Ltd v Freedom from Hunger Campaign.72 The judges held that the operation of the forfeiture rule does not depend on the intention of the killer. But, as to the correctness of the line of authorities adopting a flexible approach to intentional manslaughter cases, the court divided. Kirby P (dissenting) upheld the correctness of the line on the basis that the infinite variety of manslaughter required the court to determine whether it would be unconscionable for the perpetrator of an unlawful homicide to derive benefits as a consequence of the felonious act. This, he held, would keep the law in line with the community’s ‘sense of outrage’ which did not universally call for forfeiture.73 [page 768] Meagher JA would have nothing of this.74 He held that the forfeiture rule was ‘absolute and inflexible’ and supported by long authority. The rule was formulated as providing that ‘where a person who would otherwise obtain a benefit by the death of another, has brought about that other’s death by violent means, he shall not be entitled to take that benefit’. The law applied to all felonious killings, and Meagher JA saw

‘something a trifle comic in the spectacle of equity judges sorting felonious killings into conscionable and unconscionable piles’. Mahoney JA, like Meagher JA, was clear that the facts gave rise to the application of the forfeiture rule, which he saw as a well-established common law principle. The equitable notion of unconscionability did not have a place. Although Mahoney JA did not address the correctness of the earlier manslaughter cases as expressly as Meagher JA, his judgment rejected any distinction between murder and manslaughter, at least in the case of a killing that occurred ‘deliberately and with forethought’.75 Troja v Troja has been followed in Victoria 76 and in Queensland.77 Technical distinctions between felonies and misdemeanours, and between murder and manslaughter, are not relevant to the operation of the modern forfeiture rule.78 However, the Restatement, Third proposition that the killing must be intentional79 remains to be authoritatively determined in this country.80 [1913] Benefits derived from killing another beneficiary. In Batey v Potts81 the forfeiture rule was applied to the homicide of a beneficiary that caused the acceleration of a gift by will in favour of the killer. In these circumstances, and subject to the application of the Forfeiture Act 1995 (NSW), the killer was deprived of the benefit for the period of the victim’s life expectancy. [1914] Statutory reform. In Troja v Troja82 at first instance, Waddell CJ in Eq added his voice to calls for legislation along the lines of the Forfeiture Act 1982 (UK). Such legislation at least would arm the court with power to grant a share of the estate to compensate an otherwise deserving party for the contribution he or she made to the assets included in it. If Australian [page 769] law were to accept the line of cases clearly disapproved by Meagher JA

in Troja v Troja,83 then to that extent there would not be the same need to enact here legislation along the lines of the Forfeiture Act 1982 (UK). There are, however, other factors favouring legislation, a call that has been answered in the Australian Capital Territory and New South Wales.84 It is interesting, however, that the way Kearney J approached the question of onus in Public Trustee v Fraser85 reflects those Acts, which give a statutory power to modify the effect of the forfeiture rule (except in cases of murder) where the justice of the case requires it.86

3. Evidentiary and Procedural Issues (a) General [1915] Conviction not required. It is not necessary that the killer shall have been brought to trial and convicted. Indeed the forfeiture rule can apply to the detriment of a killer and those claiming through that person even if the killer suicides immediately after the unlawful homicide,87 or is tried and acquitted in criminal proceedings.88 The civil court must be satisfied on the evidence before it 89 that an act of the requisite character took place. The civil onus applies, although its operation is affected by the gravity of the issue involved.90 [1916] Effect of criminal acquittal. An acquittal in the criminal trial creates no estoppel or barrier to proof in civil proceedings that an unlawful killing took place.91 Nor, it seems, does a manslaughter verdict in the criminal trial preclude argument at the civil trial that the verdict should have been murder.92 This shows that the rule is quite distinct from that which applied with respect to forfeiture or escheat under the old law. Such an outcome is acceptable because an acquittal establishes that there was not proof beyond reasonable doubt, while it does not establish that there was not proof on the balance of probabilities that a person committed the crime. [page 770]

Furthermore, an acquittal could really have been a ‘merciful verdict’ by a jury, whereas in a civil action judges must give the true decision according to law.93 [1917] Effect of conviction on civil proceedings. In Public Trustee v Fraser94 Kearney J held that a conviction creates no estoppel in the civil proceedings. Indeed, he rejected the tender of a certificate of conviction, thereby treating the verdict as not even prima facie evidence of guilt. Although he cited Helton v Allen,95 he appears to have overlooked the distinction drawn by the High Court between the effect of an acquittal and a conviction.96 The other authority cited by Kearney J was Hollington v F Hewthorn & Co Ltd.97 Hollington, however, has been frequently criticised in academic writings, and was doubted by the House of Lords in Hunter v Chief Constable of the West Midlands Police.98 It has not been followed in Tasmania,99 Western Australia100 or New Zealand101 in relation to a conviction. Evidence in the form of a certificate of conviction is available to prove an extant or non-pardoned conviction, according to the Uniform Evidence Act applicable in Federal proceedings and proceedings in the Australian Capital Territory, New South Wales and Tasmania.102 The same situation applies, with various qualifications, in the Northern Territory, Queensland, South Australia and Victoria.103 None of these provisions makes the evidence conclusive of guilt, but (save for Queensland), neither do they appear to preclude this outcome. In our view there is much to be said for the proposition that a conviction ought to operate as conclusive evidence that the crime found by the jury took place for the purpose of the rule here under discussion, lest the law itself be brought into public disrepute.104 [page 771]

(b) Causation [1918]

Killing must cause the benefit. The forfeiture rule will only

deprive a killer of those benefits which flow from the wrongful act. It ‘does not cross the line and take from him rights or interests which are not consequential upon’ the wrongful act.105 The principle is analogous to the application of the illegality principle in contract, where illegality only affects causes of action which depend for their enforcement upon the illegal contract.106 The operation of this causation principle in relation to homicides involving joint tenancy and the killing of a life tenant by a remainderman with a vested remainder is discussed below.107 An American authority permitted the common beneficiary of two persons who made mutual wills and who murdered the survivor to inherit on the basis that he took under the trusts of the first deceased’s will.108 There is a dictum in the Canadian Supreme Court that the rule does not apply if the will is made (or republished) in the interval between the wound and the death.109 Presumably this only applies if the testator knew the assailant and intended to provide for him or her regardless. [1919] Third parties. Third parties will only be barred by the operation of the forfeiture rule if they claim under or through the wrongdoer. As Fry LJ put it in Cleaver v Mutual Reserve Fund Life Association110 (referring to the murderer, Mrs Maybrick), ‘the rule of public policy should be applied so as to exclude from benefit the criminal and all claiming under her, but not so as to exclude alternative or independent rights’. In Cleaver the executors of the deceased victim were held entitled to claim the proceeds of a life insurance policy effected by the deceased on his own life in trust for his wife (Mrs Maybrick). She had been convicted of murdering him by poisoning and it was clear that neither she, nor her assignee, nor the administrator of her property could claim the proceeds of the policy.111 But the moneys were held payable to the deceased’s executors because they had a contractual right to sue on the policy. While the proceeds were held on trust for the deceased’s wife, s 11 of the Married Women’s Property Act 1882 (UK) provided in effect that when no object of the trust remained unperformed the money was to form part of the estate. The wife’s crime meant that public policy prevented the performance of the trust according to its terms, so, in the hands of the executors, the policy

proceeds were impressed with a resulting trust to apply then on behalf of the estate, but to the exclusion of the deceased’s wife.112 [page 772] Gray v Barr113 is an interesting case in this context because there the unlawful killing would, but for the application of the forfeiture rule, have ‘caused’ a benefit of a different kind than that usually encountered. The deceased was killed when a gun went off while the defendant was threatening unlawful violence with it. The court held that even if the death was caused by ‘accident’ within the literal terms of a ‘hearth and home’ policy, the defendant could not claim indemnity under that policy with respect to the damages payable to the deceased’s estate for negligence. It was held to be contrary to public policy to allow the defendant to recover indemnity for the consequences of his own unlawful act of threatening the deceased with a loaded gun. This decision was distinguished in S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd114 where the claimant was the corporate employer of a hotel manager who, by a deliberate and reckless act, shot and killed a customer. The victim’s widow obtained judgment against the employer and employee. The Court of Appeal of the Northern Territory held that the employee could not have recovered under any insurance policy in the light of the principles discussed in Gray v Barr. However, public policy did not preclude the employer’s claim which fell within the terms of its public liability insurance.

4. Benefits Liable to Be Forfeited [1920] Introduction. The ‘bounty’ which a person may be deprived of pursuant to the rule can take a number of forms. In addition, rules have been worked out to govern how the rights of parties other than the guilty party will be affected by the unlawful killing.

[1921] Right to administer estate of deceased. The guilty party and those claiming through that person will be refused a grant of probate or letters of administration, and if a grant has been made it will be revoked.115 Those persons are incompetent to act as trustees.116 [1922] Distribution of deceased’s estate. The general approach is that the estate will be administered as if the guilty party’s interest ‘did not exist’,117 or as if that interest had been ‘struck out’.118 But this expression does not necessarily mean that the estate is administered as if there had been a lapse.119 Rather, the position is that the ‘interest does not go through the killer as trustee: it goes past him’.120 [page 773] Thus, a donee who is one of a group or class named in the will is excluded from it, and the others take an augmented share.121 If there is no residuary gift or if the killer is the sole residuary beneficiary, the property will be treated as undisposed of by the will and will be distributed as on the intestacy of the testator.122 However, the killer will be disqualified from benefiting under that intestacy.123 For example, if the deceased left a spouse and a child and if the spouse murdered the deceased the estate will be distributed as if the spouse was not in existence and will pass wholly to the child.124 If the killer is a member of a class entitled to share all or part of the estate on intestacy the killer’s share will pass to the remaining members of that class.125 The disqualification extends to the personal representatives of the killer,126 and the issue of a living killer of intestate parents.127 [1923] Gifts over. Although a decision on the construction of one will can seldom be of direct assistance in construing another, we note a possible difference in approach concerning gifts over in favour of persons who are not the next of kin on intestacy.128 Assume that a will provides a gift in favour of X if X survives the testator, but otherwise to Y (not being the deceased’s next of kin). Also assume there is no

ultimate residuary gift. What is to happen to Y’s gift if X murders the deceased? Should the gift go to Y or to the next of kin? Some Australian cases reflect a readiness to construe the will according to what is perceived to be the deceased’s obvious though unexpressed intention. They hold that the gift over in favour of Y must a fortiori have been intended to take effect in the event that happened, even though the will literally does not provide for it. The estate is distributed on the basis of a lapse, treating the killer as having died immediately before the testator.129 These cases purport to apply the rule in Jones v Westcomb,130 that rule being that in certain cases when events activating a gift over do not happen, the gift over must have been intended to take effect as if the events had happened. It is, however, suggested that principle and the weight of authority support an alternative approach, although the words of a particular will may prevail. In our view Y should be denied the gift, because the event giving rise to the gift over has not literally occurred. The general principle is that the court [page 774] may not add to or vary a will to give effect to unexpressed intentions.131 X has survived the testator and on that basis the English case of Estate of Robertson132 would deny Y the gift, holding that it passes to the deceased’s next of kin. This complies with the principle that the forfeiture rule does not operate to alter the terms of a will by deeming events to have happened which did not in truth occur.133 This approach has been followed in cases in New South Wales, Victoria,134 Western Australia, New Zealand and Scotland.135 [1924] Benefits to the Crown. The possibility of the Crown benefiting automatically from the operation of the forfeiture rule through the principle of bona vacantia has been rejected. The windfall that the rule’s application brings to an ‘untainted’ beneficiary is not seen as conferring an unjust enrichment on that person.136 But if there

are no untainted persons claiming through the victim’s estate there is no reason why the Crown should not receive the benefit stripped from the killer as the ultimate beneficiary of the victim’s estate. [1925] Dual capacities. We have already dealt with the position of third parties who do not claim under or through the killer.137 But when a third party has a dual capacity, the working out of the causation principle requires close attention. For example, a husband may murder his wife and then suicide, dying intestate. The husband’s next of kin, claiming through his estate, would be barred by operation of the forfeiture rule. But they are saved by their additional, independent status of being the wife’s next of kin (in default of the husband).138 [1926] Contract. The right to enforce a contract may also be lost if it is asserted by someone seeking thereby to benefit from an unlawful homicide. This is illustrated by cases where an insured, and those claiming through an insured, will be debarred in certain circumstances from recovering under the policy if the event giving rise to the particular claim is a wilful and unlawful killing by the insured.139 When there was capital punishment, the execution of the wrongdoer was seen as a death caused by a felonious act (albeit that [page 775] the processes of the law followed the crime of the wrongdoer) with the result that recovery under a life insurance policy was barred by the rule.140 The crime which ‘caused’ the death was not itself necessarily homicide. This preclusion affects the wrongdoer and third parties claiming though the wrongdoer, such as legal personal representatives,141 trustees in bankruptcy,142 and assignees.143 The insurance cases are particularly interesting for three reasons. First, they are not confined to cases where the wrongful act is the crime of homicide. This confirms that the forfeiture rule is part of a wider

principle that prevents a wrongdoer or those standing in the shoes of a wrongdoer from gaining any advantage arising from the consequences of his or her own iniquity.144 Thus, in Haseldine v Hosken145 a solicitor was covered by a professional indemnity policy. During its currency he sustained loss through having entered into a champertous agreement which led to him being sued. Because the agreement was champertous, and therefore illegal, the solicitor’s claim under the policy was held to be not maintainable. Similarly, an arsonist cannot recover under a fire insurance policy.146 Second, the insurance cases show that the forfeiture rule bars indemnity, not by creating an implied exception to the clear words of the contract, but directly through precluding the guilty party and those claiming through the guilty party from enjoying the benefit of the contractual right.147 This distinction is significant because if the policy of insurance should come, by assignment or otherwise, into the hands of a person who is not affected by the disability, then such person can enforce the policy according to its terms.148 Third, it is in this area that there are the clearest signs of a lessening of the punitive rigour of the forfeiture rule. Questioning of the rigid application of the rule to all unlawful homicides occurred with the advent of the motor car. ‘Innocent’ people could now find themselves involved in charges of manslaughter and its statutory modifications. It was seen to be unjust for insurers to be able to renege on liability to indemnify drivers guilty of [page 776] motor manslaughter especially where insurance was compulsory.149 The next step was to question why the wrongdoer in such circumstances should automatically be debarred from claiming the benefit of life insurance taken out on the life of the loved one he or she had just killed through criminal negligence.150 [1927]

Joint tenancy. Where A murders B to get B’s estate the

forfeiture rule operates to prevent the wrongdoer acquiring property in which A had no interest before the death of the victim. But where A and B are joint tenants or A is a remainderman and B is a life tenant, A’s pre-existing interest in the property requires a more finely-tuned legal response. While both joint tenants are alive each has from the outset a ‘contingency of enhancement’ and a ‘contingency of extinguishment’. Either can, by certain unilateral acts, sever the joint tenancy and convert it into a tenancy in common, thereby giving up the ‘contingency of enhancement’ by becoming free of the ‘contingency of extinguishment’.151 But the law draws the line at murder being one such act. And, where one joint tenant unlawfully kills another, it ignores the property law fiction that regards each joint tenant as entitled to the entire estate from the time of its original acquisition. In contrast, the law views the killing as having converted the ‘contingency of advancement’ into a certainty, and responds by granting relief which deprives the killer of the benefit of the criminal act. The cases have measured that benefit as equal to the difference between what the killer would get if the estate passed as on a joint tenancy and what the killer would get if the joint tenancy were treated as severed by the victim’s death. This means that when A and B are joint tenants and A murders B, A will be stripped of the beneficial interest in one-half of the land. We are unaware of any case which has challenged this approach.152 Earlier cases treated the killing as directly effecting a severance of the joint tenancy, with one-half of the legal and beneficial title as tenant in common passing to the victim’s estate (excluding the killer) and the other half passing to the killer.153 But this does violence to established principles of property law.154 The better view, established firmly in Rasmanis v Jurewitsch155 by a strong New South Wales Court of Appeal,156 is that the legal title devolves as if the death were innocent. Murder is not added ‘to the approved methods [page 777]

by which one joint tenant may convert a joint tenancy into a different estate’.157 But equity imposes a constructive trust on the killer that strips the killer (in favour of the person who excluding the killer is entitled to the deceased’s estate) of the measure appropriate to the number of joint tenants. This means that the killer is registered as the sole proprietor of land under the Torrens system subject to an appropriate constructive trust declared by the court. If there are two joint tenants and one murders the other, the survivor holds the legal estate as to one-half upon trust for the estate of the deceased (the other half being held beneficially by the survivor).158 Apart from the conveyancing consequences, the different approaches of common law and equity have no practical effect in the case of a twosided joint tenancy. But, as Rasmanis v Jurewitsch159 demonstrates, it has a bearing where there are three joint tenants and one of them kills another. In that event the legal estate of the deceased joint tenant devolves on the two survivors. The wrongdoer must, however, be deprived of the one-sixth accruing on the death of the joint tenant as well as the chance of enlargement of the other one-sixth passing to the innocent joint tenant who could ultimately predecease the killer. This is achieved by wholly severing the one-third interest of the victim, this severance being the result of precluding the killer from benefiting by effecting the constructive trust. This one-third interest is held by the two surviving joint tenants in trust for the innocent survivor. As to the remaining two-thirds the joint tenancy will subsist as at law and in equity between the two survivors.160 The reason why the innocent survivor (and not the estate of the victim) should be the ultimate beneficiary of the interest taken away from the killer in a tripartite joint tenancy was stated by Street J in Rasmanis at first instance:161 A felony has been committed, and the felon must not be permitted to gain from it. The enhancement consequent upon the death of the victim will not be permitted by equity to be enjoyed by the felon. Public policy requires deprivation of the felon; it does not require compensation to the victim, nor does it require punishment of the felon … Forfeiture as a result of felony has been expressly abolished by statute (Crimes Act 1900 [NSW], s 465(1)), and the principle of public policy operates only to deny to the felon the enjoyment of any benefit which might otherwise flow from his felonious act; it does not cross the line and take from him rights or interests which are not consequential upon his felonious act. The object, then, is to find a suitable recipient for the enhancement of

which the felon is to be deprived. There is no reason in principle or in logic why the third joint tenant should be deprived of the enjoyment of such enhancement as would flow to him from the death of the victim. And as the object which equity seeks to achieve is the denial of enhancement to the felon, both principle and logic point, in my view, towards the third joint tenant receiving the enhancement which is required by public policy to be taken from the felon.

[page 778] [1928] Settlements. The holder of a vested remainder cannot, by murdering the life tenant, accelerate the enjoyment of that interest.162 If, however, the remainder is vested in interest before the killing it represents a second example of a situation where the killer has some existing interest in property before the crime. Since the law is not concerned to take from the criminal rights or interests which are not consequential on the unlawful act, the appropriate solution appears to be to deprive the killer of the enjoyment of the remainder for the period of the victim’s life expectancy.163 This was the outcome decided by Gzell J in Batey v Potts,164 subject to the application of the Forfeiture Act 1995 (NSW). [1929] Family provision and other statutory entitlements. In a New South Wales case,165 the murder of a third party amounted to ‘conduct disentitling’ the convicted person from claiming maintenance and support from the deceased. Such conduct aimed at the deceased must surely be at least as disentitling. The forfeiture rule has been held to bar automatically claims upon the court’s discretion against the victim’s estate under the family provision legislation.166 There is indeed no reason in principle why the forfeiture rule should not apply to bar recovery of any form of statutory entitlement, except where a clear indication appears that the rule should not apply. Thus, in R v Chief National Insurance Commissioner; Ex parte Connor167 the forfeiture rule led to the refusal of a claim for a widow’s pension to a woman who intentionally stabbed her husband to death. [1930]

Other effects. If the forfeiture rule can prevent the operation

of the survivorship rule in joint tenancy, and statutory rules for the distribution of intestate estates, there seems no reason in principle why the estate of the victim of a crime should be unable to capture the profits made from the crime.168 [page 779]

5. Criticism and Reform [1931] Introduction. There is considerable doubt as to the principle upon which the general rule rests and this doubt is reflected in the cases discussing its application.169 The forfeiture rule is not based on the general unworthiness of the person who would otherwise benefit, for the rule also strikes at those who claim through the killer. In any event, it is clear that the common law no longer denies anyone the capacity to take a gift under a will by reason of their personal unfitness.170 [1932] Formalism. The rule bears some of the hallmarks of the medieval doctrines of attainder and forfeiture that followed sentence of death for felony. However, criminal conviction as such has not led to a forfeiture of the right of inheritance since the abolition in the nineteenth century of the doctrine of forfeiture for felony and escheat for treason. For the rule to apply, a sufficiently direct relationship between the crime and the accruing benefit must be demonstrated.171 Another distinction between the rule and the doctrines of forfeiture and attainder is shown by the fact that a murderer and those claiming through a murderer will be disentitled even if no trial or conviction takes place.172 Indeed, even a person acquitted of murder may forfeit entitlement under the estate if the civil court holds, on the balance of probabilities, that an unlawful homicide was effected.173 [1933] Punitive and restitutionary functions. It would be wrong to say that the rule is based purely on notions of unjust enrichment, because the law has generally clung to the notion that liability to a

conviction for homicide is both necessary and sufficient to bring the general rule into operation.174 Thus, if the court is satisfied that a verdict of not guilty on the ground of insanity would have been entered no forfeiture will take place. Conversely, if the court is satisfied that a conviction for murder or wilful manslaughter would have been entered had a trial taken place, then the court has generally refused to consider questions of the degree of moral culpability of the killer. The authorities have rejected the relevance of the killer’s intention to gain financially, and regard its absence as relevant.175 It has been stated that the rule will apply even if the killer was ignorant of the existence or provisions of the will.176 If (as we believe) this is correct, it illustrates that the rule serves a punitive rather than a purely unjust enrichment (restitutionary) function. Little or no attention has been paid to examining the justness of the ultimate enrichment of the person who benefits from the application of the rule, often at the expense of other ‘innocent’ persons who lose because they [page 780] claim through the killer.177 The forfeiture rule seems to be wholly concerned with stopping the wrongdoer’s enrichment (and that of those claiming through the wrongdoer). In that regard it serves a primarily prophylactic or punitive function, reflecting the community’s presumed sense of outrage at the killer benefiting from the wrong.178 If the rule applies, the relevant portion of the estate will in broad terms pass to those next entitled in default of the killer who do not claim through the killer. Their presumed interest in self-enrichment ensures that there is usually someone prepared to invoke the jurisdiction to disturb the otherwise clear terms of a will or the statutory scheme of intestate distribution. Yet in one sense they are enriched at the expense of other classes of claimants whose interests the law presently disregards, namely ‘innocent’ persons claiming through the killer; the victim’s estate; and possibly society as a whole.

1.

Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 156 per Fry LJ. See also Sinanian v EKS Carpentry Pty Ltd (1997) 15 NSWCCR 132; Clunis v Camden & Islington Health Authority [1998] QB 978; Oldfield v Transamerica Life Insurance Co of Canada (2002) 210 DLR (4th) 1. See also Nili Cohen, ‘The Slayer Rule’ (2012) 92 BULR 793.

2. 3.

(1940) 63 CLR 691. (1940) 63 CLR 691 at 710. See also Hambley v Trott (1776) 1 Cowp 371 at 376; 98 ER 1136 at 1139; Beresford v Royal Insurance Co Ltd [1938] AC 586 at 598–9; St John Shipping Corp v Joseph Rank Ltd [1957] 1 QB 267 at 292.

4. 5.

In the Estate of Hall [1914] P 1 at 7 per Hamilton LJ. Re Tucker (1920) 21 SR (NSW) 175 at 181.

6. 7.

(1994) 33 NSWLR 269. See [1504].

8. 9.

Section 45. Restatement, Third, vol 2, p 90.

10. See [161]. 11. See [1922]–[1923]. 12. See Troja v Troja (1994) 33 NSWLR 269; Re Edwards [2014] VSC 392 at [87]–[97]. The rule has public and private aspects, not unlike the doctrine of attainder that it superseded: see [1904]. 13. See [1933]. 14. See Helton v Allen (1940) 63 CLR 691 at 709. Its first clear application in this context outside America occurred in Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147. See [1919]. 15. See [1502]. The cornerstone of the American law on the topic is Riggs v Palmer 115 NY 506 (1889). See Restatement, Third, §45. 16. Norman N Tarnow, ‘Unworthy Heirs: The Application of the Public Policy Rule in the Administration of Estates’ (1980) 58 Can Bar Rev 582. See Dugan v Mirror Newspapers Ltd (1978) 142 CLR 583 at 602ff. 17. See ACT: Crimes Act 1900, s 465(2) (now repealed); NSW: Crimes Act 1900, s 465(2) (now repealed); SA: Criminal Law Consolidation Act 1935, s 295(1); Tas: Criminal Code Act 1924, s 11(2); WA: Criminal Code, s 730. The common law distinction between felonies and misdemeanors no longer has any application in Australia: see Halsbury’s Laws of Australia, Vol 9, §130–13,000. 18. See Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270; 119 ALR 655. 19. Burns Philp Trustee Co Ltd v Viney [1981] 2 NSWLR 216. 20. See, eg Re Hall [1914] P 1; Re Tucker (1920) 21 SR (NSW) 175; Re Dellow’s Will Trusts [1964] 1 WLR 451; [1964] 1 All ER 177. 21. (1920) 21 SR (NSW) 175 at 180. 22. See Whitelaw v Wilson [1934] 3 DLR 554; Re Dellow’s Will Trusts [1964] 1 WLR 451 especially at 455; [1964] 1 All ER 771 especially at 775; Dunbar v Plant [1998] Ch 412 (discussed critically in [1998] 57 CLJ 31).

23. (1991) 25 NSWLR 140. 24. Troja v Troja (1994) 33 NSWLR 269. 25. (1994) 33 NSWLR 269 at 297. 26. Re Tucker (1920) 21 SR (NSW) 175; Re Barrowcliff [1927] SASR 147. 27. Re Hall [1914] P 1; Lundy v Lundy (1895) 24 SCR (Canada) 650; Re Giles [1972] 1 Ch 544. See generally K Mackie, ‘Manslaughter and Succession’ (1988) 62 ALJ 616. As to the possibility that non-intentional manslaughter may not be within the rule, see [1909], [1926]. 28. Beresford v Royal Insurance Co Ltd [1938] AC 586; Whitelaw v Wilson [1934] 3 DLR 554. 29. [1972] 1 Ch 544. See also Re Royse [1985] Ch 22; Jones v Roberts [1995] 2 FLR 422; Re Edwards [2014] VSC 392. 30. [1972] 1 Ch 544 at 552 per Pennycuick VC, quoting Hamilton LJ in Re Hall [1914] P 1 at 7. See also N N Tarnow, ‘Unworthy Heirs: The Application of the Public Policy Rule in the Administration of Estates’ (1980) 58 Can Bar Rev 582 at 585–6. 31. See Re Tucker (1920) 21 SR (NSW) 175; Re Barrowcliff [1927] SASR 147; Kemperle v Public Trustee (1985) Unreported, SC(NSW) (Powell J), 20 November. 32. See, eg Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 156 per Fry LJ; Rasmanis v Jurewitsch (1968) 88 WN (NSW) (Pt 1) 59; Troja v Troja (1994) 33 NSWLR 269 at 299 per Meagher JA. 33. A Reppy, ‘The Slayer’s Bounty History of Problem in Anglo-American Law’ (1942) 6 Anglo-American Legal History Series 1 at 15. 34. See further [1933]. 35. Under the Forfeiture Act 1995 (NSW) and the Forfeiture Act 1991 (ACT), the court may modify the common law rule thereby allowing an estate to be distributed as if the mentally disabled killer were guilty of murder: see Re Fitter [2005] NSWSC 1188; Hill v Hill [2013] NSWSC 524. 36. Re Plaister (1934) 34 SR (NSW) 547; Clift v Clift [1964–65] NSWR 1896; (1964) 82 WN (Pt 1) (NSW) 298; Kemperle v Public Trustee (1985) Unreported, SC(NSW) (Powell J), 20 November; Permanent Trustee Co Ltd v Gillett (2004) 145 A Crim R 220; Batey v Potts (2004) 61 NSWLR 274. 37. Re Pollock [1941] Ch 219; Re Johnson’s Estate [1950] 2 DLR 69. 38. [1964–65] NSWR 1896 at 1901–2; (1964) 82 WN (Pt 1) (NSW) 298 at 304. 39. J Toohey, ‘Killing the Goose that Lays Golden Eggs’ (1958) 32 ALJ 15. 40. Tinline v White Cross Insurance Association [1921] 3 KB 327; James v British General Insurance Co [1927] 2 KB 311. Cf Australian Aviation Underwriting Pty Ltd v Henry (1988) 12 NSWLR 121; Australian Associated Motor Insurers Ltd v Wright (1997) 70 SASR 110. See further [1926]. 41. Gray v Barr [1971] 2 QB 544; R v Chief National Insurance Commissioner; Ex parte Connor [1981] QB 758 (flexible approach); Re Giles [1972] Ch 544; Re Royse [1985] Ch 22; Re K [1986] Ch 180 (rigid approach); Dunbar v Plant [1998] Ch 412 (flexible approach favoured by majority, obiter). 42. Forfeiture Act 1982 (UK). 43. (1985) 2 NSWLR 188. This and the later cases supporting flexibility have been described

as judicial legislation establishing a discretion such as is found in the legislation introduced in the United Kingdom and the Australian Capital Territory (discussed [1914]): J Stuckey-Clarke, ‘The Forfeiture Rule’ (1993) 67 ALJ 923. 44. (1985) 2 NSWLR 188 at 192. 45. (1985) 2 NSWLR 188 at 192. 46. (1987) 9 NSWLR 433. 47. (1987) 9 NSWLR 433 at 443–4. See also Rasmanis v Jurewitsch (1968) 80 WN (NSW) (Pt 1) 59 at 62–3 per Street J. 48. See also Re Stone [1989] 1 Qd R 351. 49. (1993) Unreported, SC(NSW) (Waddell CJ in Eq), 15 February, discussed in (1993) 67 ALJ 386 and 925 (on appeal (1994) 33 NSWLR 269). See [1912] as to Troja in the Court of Appeal. 50. [1992] 1 VR 583. See also Miliankos v Miliankos (1994) Unreported, SC(Vic) (Nathan J), 24 March. 51. (1997) 97 A Crim R 103. The stricter approach of the New South Wales Court of Appeal in Troja v Troja (1994) 33 NSWLR 269 was applied. 52. (1991) 25 NSWLR 140. 53. (1993) 33 NSWLR 154. 54. (1994) 33 NSWLR 269 (see [1912]). 55. (1993) 33 NSWLR 154. 56. (1993) 33 NSWLR 154 at 171. 57. Young J cited C Rowland, ‘The Construction or Rectification of Wills to take Account of Unforeseen Circumstances Affecting their Operation’ (1993) 1 APLJ 87, 193. Cf Re DWS [2001] Ch 568. This use of the constructive trust goes far beyond the conveyancing device adopted by the New South Wales Court of Appeal in Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407 in the context of one of three or more joint tenants slaying another. See [1927]. 58. (1993) 33 NSWLR 154 at 165–7. 59. See [1923]. 60. (1994) 33 NSWLR 269. See [1912]. 61. Cf Re Dellow’s Will Trusts [1964] 1 WLR 451 especially at 455; [1964] 1 All ER 771 especially at 775. 62. Cf Clift v Clift (1964) 82 WN (Pt 1) (NSW) 298 especially at 305; [1964–65] NSWR 1896 especially at 1901–2. 63. See further [1926]. 64. See [1926] and T K Earnshaw and P J Pace, ‘Let the Hand Receiving It Be Ever So Chaste’ (1974) 37 MLR 481 at 494–6. 65. [1964] 2 QB 745. 66. [1964] 2 QB 745 at 760, emphasis added. The passage was approved in Gardner v Moore [1984] AC 548 at 559. 67. See Estate of Mahoney 220 A 2d 475 (Vt, 1966); Legette v Smith 85 SE 2d 576 (SC, 1955); Commercial Travellers v Witte 406 SW 2d 145 (Ky, 1966). We doubt whether Australian

law would follow this line of cases; see [1912]. See also Public Trustee v Evans (1985) 2 NSWLR 188 at 191; Miliankos v Miliankos (1994) Unreported, SC(Vic) (Nathan J), 24 March. 68. (1991) 25 NSWLR 140. 69. (1993) Unreported, SC(NSW) (Waddell CJ in Eq), 15 February at 34, discussed in (1993) 67 ALJ 386 and 925 (on appeal (1994) 33 NSWLR 269). See also Re Dellow’s Will Trusts [1964] 1 WLR 451; [1964] 1 All ER 771 and Bain v Morabito (1992) Unreported, SC(NSW) (Powell J), 14 August, noted (1993) 67 ALJ 925. 70. (1994) 33 NSWLR 269. 71. The possibility of the wife establishing an independent claim based on equitable proprietary rights vested before the killing, or an alternative claim under the Family Provision Act 1982 (NSW) was reserved; see (1994) 33 NSWLR 269 at 287–8, 298. The family provision claim was subsequently dismissed on the basis of the forfeiture rule by Master McLaughlin in Troja v Troja (1994) 35 NSWLR 182. See further [1929]. 72. (1991) 25 NSWLR 140 (discussed [1910]). 73. (1994) 33 NSWLR 269 at 282–6. 74. (1994) 33 NSWLR 269 at 299. 75. (1994) 33 NSWLR 269 at 298. 76. Estate of Soukop (1997) 97 A Crim R 103. See also Batey v Potts (2004) 61 NSWLR 274; Re Lentjes [1990] 3 NZLR 193; In Re Edwards [2014] VSC 392, McMillan J reviewed the cases and concluded (at [94]) that hardship and low moral culpability were not proper considerations in deciding whether the forfeiture rule applies and that the rule extends to all cases of voluntary manslaughter, including defensive homicide. As to the duty to follow decisions of intermediate appellate courts even beyond one’s own jurisdiction, see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [135]. 77. State of Queensland v Byers [2006] QSC 334; The Public Trustee of Queensland as a Corporation Sole v The Public Trustee of Queensland as manager of the Estate of Nielsen [2014] QSC 47. 78. Re Edwards [2014] VSC 392 at [83]. 79. Restatement, Third, § 45 (1). 80. See Re Edwards [2014] VSC 392 at [101]. See also [1919]. 81. (2004) 61 NSWLR 274. 82. (1993) Unreported, SC(NSW) (Waddell CJ in Eq), 15 February, discussed in (1993) 67 ALJ 386 and 925 (on appeal (1994) 33 NSWLR 269). 83. (1994) 33 NSWLR 269 at 299. 84. See Forfeiture Act 1991 (ACT); Forfeiture Act 1995 (NSW). Adoption of a Forfeiture Act in Tasmania has been recommended by the Law Reform Institute of Tasmania, The Forfeiture Rule, Final Report No 6, December 2004. 85. (1987) 9 NSWLR 433. 86. For cases applying the Act see Dunbar v Plant [1998] Ch 412; R v R (1997), Unreported, SC (NSW) (Hodgson CJ in Eq), 14 November, noted in (1998) 72 ALJ 357; LenaghanBritton v Taylor (1998) 100 A Crim R 565; Jans v Public Trustee [2002] NSWSC 628 (noted 76 ALJ 550); Straede v Eastwood [2003] NSWSC 280.

87. Re Plaister (1934) 34 SR (NSW) 547. 88. Helton v Allen (1940) 63 CLR 691. 89. But see [1917]. 90. Helton v Allen (1940) 63 CLR 691; Briginshaw v Briginshaw (1938) 60 CLR 336. See also s 140(2) of the Uniform Evidence Acts. 91. Helton v Allen (1940) 63 CLR 691 at 709–10; Rivers v Rivers (2002) 84 SASR 426; Permanent Trustee Co Ltd v Gillett (2004) 145 A Crim R 220; Public Trustee v Evans (1985) 2 NSWLR 188. See also R v Seery (1914) 19 CLR 15; Royal Commission Into Certain Crown Leaseholds [1956] St R Qd 239. 92. Troja v Troja (1994) 33 NSWLR 269 at 273–5 per Kirby P. See also Re Fitter [2005] NSWSC 1118. 93. Gray v Barr [1971] 2 QB 554 at 568. For arguments favouring a contrary approach to acquittals, see S Willbanks, ‘Does it Pay to Kill Your Mother? The Effect of a Criminal Acquittal in a Subsequent Civil Proceeding to Disqualify the Slayer’ (1983) 16 Conn L Rev 29. Contrast the public policy against going behind a conviction: Lai v Minister for Immigration (1991) 28 FCR 347. See [1917]. 94. (1987) 9 NSWLR 433. 95. (1940) 63 CLR 691. 96. (1940) 63 CLR 691 at 702–3, 710. See also Lai v Minister for Immigration (1991) 28 FCR 347; Minh v Minister for Immigration and Multicultural Affairs (1998) 86 FCR 304; Permanent Trustee Co Ltd v Gillett (2004) 145 A Crim R 220. 97. [1943] 1 KB 587. 98. [1982] AC 529 at 543. Hunter’s criticism of Hollington is endorsed in Minister for Ethnic Affairs v Gungor (1982) 42 ALR 209; 63 FLR 441 and Commissioner of Australian Federal Police v Butler (1989) 91 ALR 293. See generally Heydon, Cross on Evidence, 6th Aust ed, §§5180ff. 99. Nicholas v Bantick (1993) 3 Tas R 47 at 72. 100. Mickelberg v Director of Perth Mint [1986] WAR 365. 101. Jorgensen v News Media (Auckland) Ltd [1969] NZLR 961. 102. See Evidence Act 1995 (Cth), s 92(2). See also Evidence Act 1995 (NSW), s 92(2); Evidence Act 2001 (Tas), s 92(2); and Ex parte Mavromatic; Re Windsor (1956) 73 WN (NSW) 420; Batey v Potts (2004) 61 NSWLR 274. 103. See Heydon, Cross on Evidence, 6th Aust ed, §5225. 104. See Prothonotary of the Supreme Court of New South Wales v Pangallo (1993) 67 A Crim R 77 at 80 per Kirby P. See also Handley and Bower, Turner and Handley: The Doctrine of Res Judicata, 3rd ed, p 141. See also Re Estate of Luxton (2008) 96 SASR 218. 105. Rasmanis v Jurewitsch (1968) 88 WN (NSW) (Pt 1) 59 at 63 per Street J. See also Permanent Trustee Co Ltd v Gillett (2004) 145 A Crim R 220; Batey v Potts (2004) 61 NSWLR 274. 106. Smith v Jenkins (1970) 119 CLR 397 at 410ff; Gollan v Nugent (1988) 166 CLR 18 at 46. 107. See [1923], [1928]. 108. Blanks v Jiggetts 64 SE 2d 809 (Va, 1951).

109. Lundy v Lundy (1895) 24 SCR 650 at 653. 110. [1892] 1 QB 147 at 159. 111. The significance of the fact that the wife was not a party to the insurance contract was emphasised by the Supreme Court of Canada in Brissette Estate v Westbury Life Insurance Co (1992) 96 DLR (4th) 609. 112. For another case where an assignee (for value, after the killing) was defeated, see Re Cash (1911) 30 NZLR 577. Since third parties may have rights derived separately from the killer and the victim, the position of third parties and the rule is further examined at [1925]. 113. [1971] 2 QB 554. Cf Nelson v Nelson (1995) 184 CLR 538; 132 ALR 133; [1995] HCA 25; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215; 143 ALR 569; [1997] HCA 17. 114. (1986) 44 NTR 14; 21 A Crim R 204. See also Lombard Australia v NRMA Insurance Ltd (1968) 72 SR (NSW) 45. 115. In the Estate of Crippen [1911] P 108; Re G (1946) 62 TLR 279; Rose v Delaney (1929) Unreported, SC(NSW) (Davidson J) 26 February, see Note (1931) 5 ALJ 161. 116. Re Roche: Allen v Helton [1939] St R Qd 221 at 225. 117. Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 154 per Lord Esher MR. 118. Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 161 per Lopes LJ; Re Sigsworth [1935] Ch 89 at 93 per Clauson J. 119. See Davis v Worthington [1978] WAR 144; Re Lentjes [1990] 3 NZLR 193; Re DWS [2001] Ch 568. As to the effect on gifts over, see [1923]. 120. Re Roche; Allen v Helton [1939] St R Qd 221 at 225 per Philp J. 121. Re Peacock [1957] Ch 310. 122. Re Giles [1972] Ch 544. 123. Re Cash (1911) 30 NZLR 577; Re Tucker (1920) 21 SR (NSW) 175; Re Sangal [1921] VLR 355; Rivers v Rivers (2002) 84 SASR 426. 124. Re Tucker (1920) 21 SR (NSW) 175. 125. Public Trustee v Fraser (1987) 9 NSWLR 433; Re Peacock [1957] Ch 310. 126. Re Sigsworth [1935] Ch 89; Re Dreger (1976) 69 DLR (3d) 47. 127. Re DWS [2001] Ch 568. 128. See generally Ken Mackie, ‘The Forfeiture Rule: The Destination of Property Interests on Homicide’ [1997] Newc LR 30. 129. Re Barrowcliff [1927] SASR 147 at 151–2; Re Keid [1980] Qd R 610; Re Stone [1989] Qd R 351 at 355. See also Public Trustee v Hayles (1993) 33 NSWLR 154. This approach is favoured by C Rowland, ‘The Construction or Rectification of Wills to Take Account of Unforeseen Circumstances Affecting their Operation’ (1993) 1 APLJ 87, 193; and by Ken Mackie, op cit. 130. (1711) Prec Ch 314; 24 ER 149. The rule is discussed in detail in Re Edwards [2014] VSC 392. 131. Wing v Angrave (1860) 8 HLC 183; 11 ER 397; Mortensen v State of New South Wales

(1991) Unreported, SC(NSW) (CA), 12 December; Re Kyd; Hunter’s Executors 1992 SLT 1141 (Second Division); Re Jones (1997) Times Law Reports. English Court of Appeal, 17 April (noted (1997) 71 ALJ 598). 132. (1963) 107 Sol Jo 318. 133. See [1922]. 134. See Re Edwards [2014] VSC 392 where there is an extensive discussion of the various possibilities and principles by McMillan J. 135. Davis v Worthington [1978] WAR 144; Re Lentjes [1990] 3 NZLR 193; Re Kyd; Hunter’s Executors 1992 SLJ 1141; Ekert v Mereider (1993) 32 NSWLR 729; Egan v O’Brien [2006] NSWSC 1398. As to the effect of killing a beneficiary and thereby accelerating a gift by will in favour of the killer, see Batey v Potts (2004) 61 NSWLR 274. 136. Public Trustee v Fraser (1987) 9 NSWLR 433 at 444. See also Rasmanis v Jurewitsch (1968) 88 WN (NSW) (Pt 1) 59 at 63. Cf doubts in Re Callaway [1956] Ch 559 at 563. 137. See [1919]. 138. See Rasmanis v Jurewitsch (1968) 88 WN (Pt 1) (NSW) 59 at 63, the passage quoted in [1927] and T G Youdan, ‘Acquisition of Property by Killing’ (1973) 89 LQR 235 n 3. 139. Beresford v Royal Insurance Co Ltd [1938] AC 586; Deckert v Prudential Insurance Co [1943] 3 DLR 747. Cf S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 44 NTR 14; 21 A Crim R 204. Another example of the rule’s application in the contract sphere is Gray v Barr [1971] 2 QB 554. See [1919]. 140. Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 156–7 per Fry LJ, citing Amicable Insurance Society v Bolland (1830) 4 Bli (NS) 194; 5 ER 70. 141. Beresford v Royal Insurance Co Ltd [1938] AC 586. 142. Amicable Insurance Society v Bolland (1830) 4 Bli NS 194; 5 ER 70. 143. Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147; Re Cash (1911) 30 NZLR 577. But as to assignees for value before the killing, see [1919]. 144. Gardner v Moore [1984] AC 548 at 558–9. See [1902]. This wider application of the rule is also dealt with in Chapter 15. 145. [1933] 1 KB 822. 146. Riggs v Palmer 115 NY 506 at 511–12 (1889). 147. Fire and All Risks Insurance Co Ltd v Powell [1966] VR 513. This is illustrated by Gray v Barr [1971] 2 QB 554. See [1919]. See also Haseldine v Hosken [1933] 1 KB 822; Meah v McCreamer (No 2) [1986] 1 All ER 943; Davitt v Titcumb [1990] Ch 110; Brissette Estate v Westbury Life Insurance Co (1992) 96 DLR (4th) 609. 148. Hardy v Motor Insurers Bureau [1964] 2 QB 745; Gardner v Moore [1984] AC 548 at 559– 61. As assignee for value before the homicide would be able to sue on the policy, but not one who took as assignment (for value) from the killer: Re Cash (1911) 30 NZLR 577. Although the English cases may be based on a misconception of the scope of the ex turpi rule, the decisions are probably not affected. See [2604]. 149. Hardy v Motor Insurers’ Bureau [1964] 2 QB 745; Gardner v Moore [1984] AC 548; Dunbar v Plant [1998] Ch 412 at 432. Cf also Jackson v Harrison (1978) 138 CLR 438. 150. Hardy v Motor Insurers’ Bureau [1964] 2 QB 745; Gardner v Moore [1984] AC 548. 151. Rasmanis v Jurewitsch [1968] 2 NSWR 166 at 168; (1968) 88 WN (NSW) (Pt 1) 59 at 62

per Street J. 152. What if the facts showed that the killer’s life expectancy was minimal compared to that of the victim? There is much in favour of looking at the probabilities and, at least in extreme cases (for example, a 90-year-old killer and a healthy 20-year-old victim), stripping the old killer of the entirety of the estate except for a life interest: see Scott, Scott on Trusts, 4th ed, §493.2. Otherwise it could be said that the killer has really benefited from the wrong. It is not to the point that the killer could have resorted to severance rather than homicide. 153. Re Barrowcliff [1927] SASR 147; Kemp v Public Curator of Queensland [1969] Qd R 145. 154. Re Thorp and the Real Property Act [1962] NSWR 889; (1963) 80 WN (NSW) 61. 155. (1969) 70 SR (NSW) 407 (Wallace P, Jacobs and Mason JJA). 156. See also Re Stone [1989] 1 Qd R 351; Re Dreger (1976) 69 DLR (3d) 47; Schobelt v Barber (1967) 60 DLR (2d) 519; Re Pechar [1969] NZLR 574. 157. Schobelt v Barber (1967) 60 DLR (2d) 519 at 525 per Moorehouse J. 158. Re Thorp and the Real Property Act [1962] NSWR 889; (1963) 80 WN (NSW) 61; Ekert v Mereider (1993) 32 NSWLR 729. 159. (1969) 70 SR (NSW) 407 at 412. 160. (1969) 70 SR (NSW) 407 at 412. 161. (1968) 88 WN (Pt 1) (NSW) 59 at 63. 162. Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 157; Re Tucker (1920) 21 SR (NSW) 175 at 180. 163. See Re Callaway [1956] Ch 559 at 563 and T G Youdan, ‘Acquisition of Property by Killing’ (1973) 89 LQR 235 at 250–1 where this and other situations involving successive and defeasible interests are discussed. See also Scott, Scott on Trusts, 4th ed, §493.1. 164. (2004) 61 NSWLR 274. 165. Price v Roberts (1992) Unreported, SC(NSW) (CA), 23 September. 166. Re Royse [1985] Ch 22; Public Trustee v Evans (1985) 2 NSWLR 188 at 193; Kemperle v Public Trustee (1985) Unreported, SC(NSW) (Powell J), 20 November at 19; Troja v Troja (1994) 35 NSWLR 182. K Mackie, ‘Manslaughter and Succession’ (1988) 62 ALJ 616 at 623 queried whether ss 7 and 9 of the Family Provision Act 1982 (NSW) exclude the reasoning in Re Royse. Professor Dickey’s contrary opinion in A Dickey, ‘The Forfeiture Rule and the Right to an Order for Family Provision’ (1993) 67 ALJ 788 is more convincing, and is now supported by Troja v Troja (1994) 35 NSWLR 182. 167. [1981] 1 QB 758. See also Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 at 157; Re Sangal [1921] VLR 355. 168. Cf Rosenfeldt v Olson (1986) 25 DLR (4th) 472, which is cogently criticised in Jones, pp 69–70. 169. See the review by J Stuckey-Clarke, ‘The Forfeiture Rule’ (1993) 67 ALJ 923. 170. Re Tucker (1920) 21 SR (NSW) 175 at 178–9; Bowman v Secular Society [1917] AC 406. 171. Troja v Troja (1994) 33 NSWLR 269 at 297 per Mahoney JA. See also [1917]. 172. See, eg Re Plaister (1934) 34 SR (NSW) 547 (murderer subsequently suicided). 173. Helton v Allen (1940) 63 CLR 691. 174. See Troja v Troja (1994) 33 NSWLR 269.

175. Troja v Troja (1994) 33 NSWLR 269. 176. Re Tucker (1920) 21 SR (NSW) 175 at 180 per Harvey J. 177. See Re DWS [2001] Ch 568 (criticised (Kerridge) (2001) 117 LQR 371). Cf, however, Public Trustee v Hayles (1993) 33 NSWLR 154 (see [1910]). 178. Troja v Troja (1994) 33 NSWLR 269.

[page 781]

PART VII

Special Claims Involving The Executive

[page 783]

Chapter Twenty

Restitution against the Revenue 1. 2.

3. 4.

5.

Introduction …. Claims to Recover Imposts Based on Mistake, Improper Pressure, Contract or Statute ….

[2001]

(a) General ….

[2006]

(b) Mistake ….

[2008]

(c) Improper Pressure ….

[2010]

(d) Contract ….

[2012]

(e) Statutory entitlement to restitution ….

[2013] [2017]

The Woolwich Principle outside Australia …. Likelihood of Australia Adopting the Woolwich Principle ….

[2006]

[2020]

(a) Status of the Principle in Australia ….

[2020]

(b) Australian Constitutional Background ….

[2024]

(c) The Woolwich Principle in Australia? ….

[2031]

Reimposition of Tax, Legislated Bars on Relief and Defences …. [2035]

1. Introduction [2001] Objects. When the Crown enters into a transaction that attracts a claim for restitution, its rights and liabilities are determined according to the general principles discussed elsewhere in this work.

This chapter examines the narrower field of claims against the Executive and public authorities with respect to recovery of taxes and imposts that turn out not to have been due. We summarise the application of general principles in this particular area, exploring the extent to which they are extended or departed from in this context. In the past, taxpayers looked to the law concerning payments made as the result of improper pressure,1 and the law of mistaken payments which until recently looked disapprovingly at mistake of law.2 In Woolwich Equitable Building Society v Inland Revenue Commissioners3 the House of Lords determined that the wrongly taxed citizen’s right to restitution is independent of mistake or improper pressure. The mere invalidity of the original demand for tax establishes the restitutionary cause of action, subject to defences. We shall discuss whether Australian law will follow this lead. Legislation may also confer rights of restitution on taxpayers, often with the purpose of making recovery subject to the conditions of the statutory regime. [page 784] [2002] Woolwich principle. In Woolwich Equitable Building Society v Inland Revenue Commissioners4 the House of Lords decided (by majority) in favour of a general right of recovery against the Revenue flowing from the simple fact of payment having been made in response to an invalid demand. The decision creates a separate category of restitutionary claim that is confined to invalid imposts. (We shall refer to this as the ‘Woolwich principle’.) The Woolwich principle has been adopted in New Zealand and Canada5 but is yet to be adopted by the High Court of Australia. [2003] Impact of statute. Most of this chapter concerns money paid under the assumed obligation of statute. A statute purports to authorise the Revenue to demand an impost, yet it turns out that it did not in truth confer authority, either because the demand was ultra vires the statute, or because the statute itself was ultra vires.

Statute has at least three other roles in the present context: (1) It has removed any lingering immunity as regards the Crown being impleaded in at least some superior courts.6 (2) In some cases, statute has provided specific restitutionary remedies, enabling the recovery of overpaid imposts.7 (3) Statute severely qualifies common law restitutionary rights in most Australian jurisdictions.8 However, issues arise as to the valid application of these statutes given that they must in turn conform to the Australian Constitution.9 [2004] Unjust enrichment or constitutional principle? Some commentators10 have been critical of the House of Lords in Woolwich Equitable Building Society v Inland Revenue Commissioners11 for pursuing an unjust enrichment framework and/or for failing to identify clearly the unjust factor involved. Others12 have argued that Woolwich is in a separate category [page 785] that is informed by policy-motivated (here constitutional) unjust factors that take no account of the plaintiff’s subjective intention. The Canadian Supreme Court has rejected both the utility and application of the unjust enrichment concept in this area. In Kingstreet Investments Ltd v New Brunswick13 the court held that an unjust enrichment analysis was ill-suited to deal with the issues raised by ultra vires taxes. One hesitates in Australia to argue downwards from an assumed taxonomical position touching unjust enrichment. Indeed, Australian advocates in favour of Woolwich may perceive that their interest lies closer to the Canadian position. The taxonomical location of Woolwich may ultimately bear on its likely adoption and its available defences; alternatively stances taken on those matters may bear on the broader taxonomy.

As indicated elsewhere, the authors endorse an Australian law of restitution where the unjust enrichment concept plays a significant role in some areas, but where different concepts function in other areas. What may loosely be classed as policy-motivated restitution factors include the subject matters of Chapters 7 (Judgments Reversed or Set Aside), 8 (Necessitous Intervention), this and the next chapter involving special claims touching the Executive. [2005] Defences. We will note particular defences offered by the common law and statute, although detailed discussion will generally be found elsewhere.14 The status and scope of some defences in this context are uncertain. The defences and possible defences considered in this chapter include compromise, payment with intention to close a transaction, special limitation periods, failure to exhaust statutory remedies, change of position, value directly received by taxpayer, disruption of public finances, and passing on.15

2. Claims to Recover Imposts Based on Mistake, Improper Pressure, Contract or Statute (a) General [2006] No Executive immunity. The Crown possessed no immunity from restitutionary claims at common law, because they used to be regarded as contractual in nature and the Crown was liable to be sued on its contracts by petition of right. When the Executive enters into a transaction unrelated to an invalid demand for a tax or impost, it may be sued in restitution under general principles in those courts having jurisdiction to entertain claims against the relevant emanation of the Crown.16 [2007]

The existing law summarised. Until recently, writers and

courts outside the United States have treated restitutionary principles relating to [page 786] claims between citizen and citizen as equally applicable to the Executive and other public authorities. The eighteenth- and nineteenth-century case law is inconsistent, but the broad consensus of twentieth-century cases required the citizen who claimed repayment of taxes or other imposts demanded without authority to show something more than the mere invalidity of the Revenue’s initial demand. There were strands of recognition of constitutionally-based arguments favouring the taxpayer, although some of them are of merely historical interest.17 Recovery was generally denied unless there was a mistake (originally of fact);18 a demand colore officii,19 or some other form of illegitimate pressure, amounting in law to duress;20 or some agreement to refund in the event of excessive payment or the illegality of the impost being established. Proof of the unlawfulness of the official demand was, standing alone, considered insufficient to base recovery at common law.21 Nor did payment under protest or after a threat of legal action in itself establish improper pressure.22 There is no reason to think that any different principle applied if the taxing statute was valid, but the particular levy was unauthorised.23

(b) Mistake [2008] Mistake as the basis of restitution. A mistaken payment is now prima facie recoverable whether the mistake was one of fact or law.24 David Securities Pty Ltd v Commonwealth Bank of Australia25 saw the High Court declaring that mistake of law was henceforth to be a prima facie ground of restitution, although the court’s analysis of Bilbie v Lumley26 and earlier Australian authorities sought to demonstrate that

many apparent ‘mistake of law’ cases really involved payments made in settlement of an honest claim. Subject to this and other available defences,27 the Revenue is now exposed to claims to recovery of imposts made by plaintiffs who can demonstrate a causative mistake. Mistake may relate to the validity of the tax assessment or the law under which it purported to be made. It may also stem from reliance upon earlier precedent subsequently overruled.28 The right to bring [page 787] those claims may, however, be abridged by laws permitting the Executive to retain already collected imposts, by special limitation provisions,29 or perhaps the negative codifying effect of limited statutory rights to recover particular imposts.30 Those laws must, of course, be constitutionally valid in their application to the particular claim.31 [2009] Impact of mistake of law reasoning on recovery of ultra vires imposts. It has been demonstrated that judges stretched and perpetuated the old mistake of law doctrine in their anxiety not to cause undue disruption to governmental interests.32 The reasoning in many of the earlier cases is affected by now discredited statements denying a general right of recovery of moneys paid under mistake of law. Now that mistake of law may ground recovery, retention of the ‘old law’ has the added anomaly that the taxpayer who mistakes liability or the constitutional validity of the impost may recover, whereas (absent the Woolwich principle) the taxpayer who pays protesting liability or validity may not.33 Sometimes existing rules were stretched in the opposite direction, to facilitate recovery from the Executive. This tended to undermine the rules themselves. Once the Revenue was accountable in the courts for acting shabbily by keeping money paid under a mistake of law,34 it became difficult to explain why the citizen should be in any better position. The integrity of the old rule precluding recovery of moneys

paid under mistake of law could not and did not long survive ‘exceptions’ of so great a scope and so slender a principled justification.

(c) Improper Pressure [2010] Pressure in general. In Chapter 5 we discuss restitutionary claims to recover money conferred as the result of improper pressure. Generally, the plaintiff must demonstrate illegitimate pressure or its threat, and conferral of a benefit because of that conduct. Amongst the overlapping categories of improper pressure that may lead to restitution are those involving duress of the person or of goods35 and duress in the form of a refusal to perform a public law duty (duress colore officii).36 [page 788] [2011] Demand colore officii. Many of the old cases involving improper pressure discuss it under the rubric of unlawful demands colore officii (‘under colour of office’). This involves proof of a withholding or threatened withholding of the performance of some public duty or discretion unless a payment is made which is not lawfully due or is greater than that which is lawfully due.37 But the law as perceived over the last century did not countenance a right of recovery where all that occurred was a payment in response to an unauthorised demand by a public official, even if backed by a threat of legal proceedings for recovery.38 Such payments were frequently described as ‘voluntary’, a curious expression in relation to demands dressed in the livery of a tax. While some earlier cases suggested aspects of the ‘Woolwich principle’,39 later precedent turned its back upon it. The leading modern English case, before Woolwich Equitable Building Society v Inland Revenue Commissioners,40 was William Whiteley Ltd v R,41 where a claimant failed to recover payments which turned out not to be legally due. The claimant employed staff to prepare and serve meals to its

employees. The revenue authorities maintained that these persons were ‘male servants’ in respect of whom licence duties were payable under the Revenue Act 1869 (UK). Although this was disputed, payments were made under protest for a number of years. After the Revenue’s position was challenged successfully in separate proceedings,42 the claimant sought repayment of the sums paid in the past years. Walton J rejected the claim on the ground that the payments had not been made in discharge of a demand illegally made under colour of office or any other form of duress vitiating the ‘voluntary’ nature of the payment. The claimant knew all the relevant facts and could have resisted payment at any time. The case appears to have turned on the application of two principles: the irrecoverability of payments made under mistake of law; and a finding that the company had paid with intent to close the transaction. Until recently, it was usually cited for the former proposition, and the applicability thereof in favour of the Revenue. It may now be ‘distinguishable’ on the basis of the latter finding.43

(d) Contract [2012] Agreement to refund. Occasionally, courts have found and enforced an agreement on the part of the Executive to refund an impost paid under dispute in the event of its invalidity being later established.44 [page 789]

(e) Statutory entitlement to restitution [2013] Introduction. Statute may impose a duty or a discretion upon the Revenue to refund payment of an impost in particular circumstances. This will usually give rise to additional questions as to whether the statutory regime is obligatory or discretionary and whether

the taxpayer may resort to general principles of restitution to circumvent its limitations.45 [2014] No claim based upon Administrative Decisions (Judicial Review) Act. An ultra vires exaction by the federal Executive is not recoverable by resort to the Administrative Decisions (Judicial Review) Act 1977 (Cth)46 or invocation of prerogative remedies, unless some independent statutory basis of a right of recovery can be established.47 [2015] The Royal Insurance case. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd,48 s 111(1) of the Stamps Acts 1958 (Vic) provided that ‘where the Comptroller [of Stamps] finds in any case that duty has been over-paid … he may refund the amount of duty found to be overpaid’. Between 1985 and 1989 Royal Insurance paid nearly $2 million more than it was liable to pay, in ignorance of certain amendments to the Act. One such amendment (made in 1987), that exempted premiums on ‘cost plus’ policies issued after 30 June 1985, was deemed to have come into operation on 30 June 1985. The Comptroller found that duty had been overpaid but decided not to make a refund. Mason CJ alone saw a significant role for general restitutionary principles. He regarded the payments as having been paid under mistake of law, even the cost-plus payments effected before 1987.49 The majority held that s 111 gave rise to an obligation to refund the duty in issue and that that obligation was enforceable by an order in the nature of mandamus. Brennan J, with [page 790] whom Toohey and McHugh JJ agreed, regarded the payments other than for cost-plus policies as recoverable in restitution either because of mistake or because they were paid provisionally in circumstances calling for later adjustment.50 These were nevertheless also recoverable

through the remedy of mandamus, thereby circumventing a limitation statute enacted to protect the revenue. Section 111 conferred no residual discretion to refrain from making a refund once it had been found that there had been an overpayment. The right to recover the cost-plus payments stemmed solely from the retrospective amendment effected in 1987 and that right was wholly statutory.51 Dawson J held that s 111 conferred no discretion in the circumstances, expressing the view that a statute should not be construed as ‘authoris[ing] the retention of moneys received without any entitlement … unless such an intention [is] made explicit’.52 [2016] Statutory remedy subject to statutory limitations. Royal Insurance was distinguished in Commonwealth v SCI Operations Pty Ltd.53 Section 167(4) of the Customs Act 1901 (Cth) provided that ‘no action shall lie for the recovery of any sum paid to the Customs as the duty payable in respect of any goods’ except in specified circumstances, including circumstances prescribed in the Customs Regulations. Regulation 126(f) conferred an entitlement to a refund upon the making of a concession order. This provision was held to give rise to a cause of action in debt if the procedure in the regulations for a refund was followed.54 Sometimes, a statutory discretion to make or allow refunds is expressed to be ‘absolute’.55 But, in the absence of such expression, statutory powers to repay overpaid imposts may be construed as imposing a duty to do so where the conditions upon which the discretion may be exercised are satisfied.56 For certain types of impost, statutory rights of recovery may import their own restrictions, to the extent that they are to be treated as a code.57

3. The Woolwich Principle outside Australia [2017] Introduction. A growing appreciation that government is in a superior position to the citizen, and different from the private

defendant to a restitutionary claim, led initially to tampering with ordinary restitutionary principles where a taxpayer’s claim from a public authority was involved. For example, duress was seen by some judges to exist simply by virtue of the statutory capacity of the Crown to proceed against the goods of the subject who declined to pay what turned out to be an invalid impost.58 Another ‘device’ before the fact/law mistake distinction was effectively swept away was the creation of a further exception to the rule that moneys paid under [page 791] mistake of law were irrecoverable. Thus, it was suggested by Lord Bridge in R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd59 that statutory bodies (including local government) were intended to act in the ‘same high principled way expected by the court of its own officers and not retain rates paid under a mistake of law’ save in exceptional circumstances. This bold extension of a principle that previously applied to courts and those acting under the authority of a court order had been foreshadowed by Vaisey J in Sebel Products Ltd v Commissioners for Customs & Excise.60 Of course, it related only to mistaken payments, and not all who pay an impost that is not due can establish a causative mistake. [2018] The Woolwich decision and the English law. The force of the considerations favouring restitution was recognised by the House of Lords in Woolwich Equitable Building Society v Inland Revenue Commissioners.61 A building society paid tax on interest and dividends which the Revenue had demanded under a Regulation. Woolwich disputed the Regulation and successfully challenged its validity in proceedings commenced the day after payment. Its reasons for paying in the meantime included the desire to avoid the grave embarrassment from adverse publicity that would have accompanied proceedings by the Revenue to enforce the tax. Non-payment would also have risked penalties and interest charges which would have exceeded Woolwich’s

net return in investing the money. It can thus be seen that Woolwich laboured under no mistake, and that it did not make the payment with the intention of closing the transaction. Woolwich’s judicial review proceedings challenging the Regulation succeeded at first instance and, after a setback in the Court of Appeal, in the House of Lords.62 The Crown thereupon repaid the tax plus interest from the date of the first instance judgment. Woolwich countered with a demand for interest from the date of its original payment, arguing that the Crown had been under a legal obligation to repay the money from the outset. The relevant statute63 empowered the court to award interest on the judgment debt from the date the cause of action arose, so the critical question became whether the cause of action arose at the time the Crown received payment. Woolwich could not point to any entitlement based on duress or contract. However, it succeeded in persuading the Court of Appeal and the House of Lords to hold that the law of restitution should recognise a prima facie right of recovery based solely on payment of money pursuant to an ultra vires demand by a public authority. In each court Woolwich succeeded by a bare majority, with the judges dividing over whether or not it was appropriate that the old law should be changed in the light of constitutional and restitutionary principle. The majority in the House of Lords were Lord Goff, Lord Browne-Wilkinson and Lord Slynn. Lord Browne-Wilkinson and Lord Slynn agreed with Lord Goff although they also gave separate opinions. [page 792] While acknowledging that his speech represented a new development in the law, Lord Goff relied principally on general restitutionary principles of unjust enrichment, notably the injustice of the Revenue retaining the interest earned on money to which it had never been lawfully entitled. There are indications that he regarded the unjust factor as the ultra vires impost that led to the receipt. However a narrower, and more traditional, basis of recovery identified by the majority was absence of ‘consideration’ for the payment.64 The House

of Lords also cited the constitutional principle enshrined in the Bill of Rights 1689 (Imp) that taxes should not be levied without the authority of Parliament.65 Lord Goff also pointed out that to refuse Woolwich’s claim would penalise the good and trusting citizen who might suffer unpleasant economic and social consequences from refusing to pay in the first instance.66 It was not necessary for him to determine whether the right of recovery applied outside imposts that were not due because of ultra vires; for example, because the public authority had misconstrued a relevant statute or regulation.67 Naturally the case did not involve an unconstitutional law, nor did the earlier decision in the Woolwich litigation invalidating the Regulation amount to any sudden reversal of earlier precedent. It is likely that Woolwich extends to cases where the taxpayer pays an ultra vires tax in reasonable anticipation of a demand for payment.68 English law holds that the principle extends to taxes collected by selfassessment, ie without the necessity of a demand for payment.69 However, the taxpayer who compromises the ultra vires demand (namely by entering into a contractual settlement) or otherwise ‘submits to an honest claim’ or pays to ‘close the transaction’ should not recover, on the analogy of such ‘defences’ to payments under mistake or improper pressure.70 [page 793] The Woolwich cause of action carried a right to interest payable from when the invalid tax was received by the Revenue.71 In Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners,72 the House of Lords held that the Woolwich principle offered an alternative, not an exclusive, cause of action for the recovery of taxes. Accordingly, a plaintiff who could establish a claim on a traditional basis such as mistake could succeed, by demonstrating an entitlement for relief from the consequences of mistake in those jurisdictions where time may be extended on this basis.

An associated development occurred in Sempra Metals Ltd v Inland Revenue Commissioners73 in which restitution with respect to the use value of the tax collected without authority was found due at common law and calculated on a compound interest basis. [2019] The Woolwich principle in other jurisdictions. In Texaco (Ireland) Ltd v Murphy (No 2)74 the Supreme Court of Ireland held that the tax demanded on an incorrect interpretation of the statute that was paid was repayable with interest by the Inspector of Taxes. New Zealand law accepted the Woolwich principle in 2004.75 The Canadian Supreme Court has endorsed the application of the Woolwich principle in Canadian law in relation to taxes demanded under an unconstitutional law.76 A similar principle is widely recognised under American law although there are some very mixed messages across the American jurisdictions.77

4. Likelihood of Australia Adopting the Woolwich Principle (a) Status of the Principle in Australia [2020] Introduction. The Woolwich principle represents a conscious development beyond the ‘old law’ that, in the absence of a statutory or contractual right of recovery, requires proof of mistake or improper pressure (usually duress colore officii) before countenancing restitution from the Revenue. [page 794] We now consider whether Australian law is likely to follow the House

of Lords in Woolwich Equitable Building Society v Inland Revenue Commissioners.78 [2021] Woolwich not yet adopted. The High Court has not yet indicated whether this principle will be adopted. The likelihood is noted or discussed in several Federal Court cases79 and in academic writing.80 [2022] The gap identified. Woolwich Equitable Building Society would not have been able to recover under traditional restitutionary principles. Far from being mistaken about the law, Woolwich had challenged the taxing provisions in proceedings for judicial review. There was no evidence of compulsion, generally, or colore officii, because the tax did not constitute payment for performance of a duty. [2023] Extension of the colore officii basis? The general principles of the species of improper pressure known as duress colore officii are discussed elsewhere.81 In Sargood Brothers v Commonwealth,82 customs duty was demanded and paid under a change in legislation which was proposed and announced, but which at the relevant time had not yet come into force, and which did not eventually come into force. It was held that the duty was recoverable because it was demanded colore officii and therefore was paid under improper pressure. Some of the judgments appear to turn on a finding of duress because the exercise of Customs control over goods was impliedly threatened.83 Others, perhaps foreshadowing a principle more akin to the Woolwich principle, seem to suggest that the mere unenforceability of the demand was sufficient to ground recovery. Thus in Sargood, O’Connor J, in a passage cited in the English Court of Appeal in Woolwich Equitable Building Society v Inland Revenue Commissioners,84 said:85 The principle of law applicable in such cases is well recognised. Where an officer of Government in the exercise of his office obtains payment of moneys

[page 795]

as and for a charge which the law enables him to demand and enforce, such moneys may be recovered back from him if it should afterwards turn out that they were not legally payable even though no protest was made or question raised at the time of payment. Payments thus demanded colore officii are regarded by the law as being made under duress.

It is arguable that the last sentence stretches the concept of demands colore officii well beyond previous bounds,86 although the facts are consistent with a more traditional case. Mason v New South Wales87 has generally been regarded as authority for the proposition that the mere making of an unlawful demand by a person in authority is insufficient to establish a right of recovery.88 This interpretation was challenged by Professor Birks.89 In Mason, the plaintiffs were Victorian carriers who had paid, under protest, licence fees demanded by New South Wales in relation to a licence to carry goods into that State. After the statute imposing the fee was held unconstitutional,90 the plaintiffs sought recovery and their claim was upheld by the majority of the High Court. Regrettably, the precise ratio is elusive, because it is uncertain how far some of the judgments turn on the plaintiffs’ apprehension that, if they did not obtain licences, their vehicle would be stopped and seized under powers purportedly conferred by the unconstitutional Act. What is clear is that Dixon CJ, Kitto J and perhaps Menzies J91 suggest reservations about mechanically applying the private law of duress in this field. Kitto J in particular declined to place much weight on the evidence of the plaintiffs’ subjective apprehensiveness. He found for the plaintiffs because the unconstitutional Act, with its penalties and powers of seizure, was coercive in itself.92 These statements nevertheless fall short of the Woolwich principle because they still appear to require proof of compulsion, albeit it may be presumed from the statutory framework and perhaps independently of the subjective perception of the particular taxpayer.

(b) Australian Constitutional Background [2024]

Introduction.

Constitutional

principles

have

always

informed the Revenue’s immunity from or exposure to restitution. They affected the development of the law of mistaken payments93 and of duress colore officii.94 And they have been at the forefront of the development of the Woolwich principle in England, Ireland, New Zealand and Canada. The policies have tugged in different directions. Concern to subject public authorities to the rule of law fuelled the partial withdrawal from the Crown of the protection [page 796] of the old rule precluding recovery of payments made under mistake of law. The desire to maintain Parliament’s exclusive role as the levier of taxes has triggered the reception of the Woolwich principle in English and Canadian law. But the rule of law is not a self-executing principle, and the choice of remedies designed to further the principle must take account of countervailing policies. The ‘unlawfulness’ of an impost may come about through a change of the law as interpreted by the courts. In considering the likely adoption of the Woolwich principle there is a need to have regard to the potential disruption to the Revenue (and the programs it provides in the public interest) of unrestricted restitution, sometimes in favour of those who have already benefited from those programs. [2025] General constitutional principles favouring restitution against Revenue. Australian courts have not yet had to decide whether to add the Woolwich principle to the armoury of relief open to a taxpayer seeking to recover imposts levied without lawful authority. The principles of recovery of money paid under mistake, under duress (including colore officii) and the direct enforcement of statutory obligations to refund have thus far proved sufficient to do justice in particular cases. Australian law recognises the constitutional doctrines that, in England, have flowered into the adoption of the Woolwich principle. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd,95

Dawson J said that clear statutory words are required to authorise the retention of moneys received by the State without entitlement. He saw this as analogous to the principle that a statute will not be read as authorising expropriation without compensation unless an intention to do so is clearly expressed. In Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd,96 McHugh and Gummow JJ construed a procedural statute governing revenue appeals by way of case stated by reference to ‘an important principle of government and of the rule of law’.97 Their Honours cited with approval Lord Goff’s statement in Woolwich Building Society v Inland Revenue Commissioners:98 [T]he retention by the state of taxes unlawfully exacted is particularly obnoxious, because it is one of the most fundamental principles of our law — enshrined in a famous constitutional document, the Bill of Rights 1688 — that taxes should not be levied without the authority of Parliament; and full effect can only be given to that principle if the return of taxes exacted under an unlawful demand can be enforced as a matter of right.

The call to fashion a special right of recovery in this field came from academic lawyers who took as their starting point the constitutional principle embodied in Declaration 4 of the Bill of Rights 1689 (Imp)99 which provides that: … levying money for or to the use of the Crown, by pretence of prerogative, without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal.

[page 797] At first the academic call was qualified,100 but latterly uncompromising.101 The principle that Parliament alone may levy taxes arguably provides a constitutional basis for an independent right of recovery. So too does the need for the Crown, above all, to respect the rule of law in its letter and spirit. A third justification is more pragmatic: a government that expects its citizens to submit readily (if not cheerfully) to its revenue demands may find it easier to achieve that aim if it can assure the citizen that the money will be promptly returned should the demand be

shown to be unjustified.102 A fourth strand of reasoning points to the apparent unfairness of the Revenue’s position as defendant when contrasted with that as plaintiff. Under the principle in Auckland Harbour Board v R,103 if the Crown pays money out of Consolidated Revenue without authority, it is ipso facto recoverable from the payee. The comparison with the position of the citizen under the ‘old law’ was, as Lord Goff observed in Woolwich Equitable Building Society v Inland Revenue Commissioners,104 ‘most unattractive’. Fifth, there is a recognition that any demand for payment of a tax is implicitly backed by the coercive powers of the State which, if resisted, may lead to fines or penal interest, or damage to reputation in a society where ‘tax dodging’ is no longer as socially acceptable as it once was. Sixth, the old law contained an intolerable irony that was exposed by Professor Birks. In licensing cases, the logic of the duress principle means that the greater the invalidity the lower the chance of restitution:105 If the whole scheme is ultra vires, fees paid for licences cannot be recovered in the absence of some collateral duress … The withholding of the licence itself is not duress for the citizen can have no entitlement to a nullity. If, however, the power to issue licences is itself valid and only the demand for fees is ultra vires the fees can be recovered. For here … he is entitled to have the licence without charge and its withholding is itself duress.

[2026] Countervailing factors. But there are arguments the other way.106 Respect for the rule of law does not provide an automatic answer as to what remedy is appropriate. The criminal law chooses to punish only those whose infraction is proved beyond reasonable doubt and (usually) shown to be wilful. Some legal duties are of ‘imperfect obligation’, others are enforced [page 798] only by an award of damages, in lieu of specific relief. Unlawfully obtained evidence is not per se inadmissible. In the realm of public law, with which this chapter is involved, a retroactive declaration of voidness does not invariably follow judicial

determination of unauthorised conduct.107 And doctrines such as the de facto officers doctrine, and the principles protecting from personal liability those who act bona fide under what turns out to be an invalid warrant, all emphasise the remedial choices that are open. It is not axiomatic that vindication of Parliament’s role in this area requires more than a declaration of invalidity that operates in futuro.108 Leslie Green has categorised the philosophical approaches to the justification of the authority of States in terms of coordination, contract, consent and community.109 Whatever theory is favoured, they all have in common a belief in the value of social cooperation. Government may effectively solve many coordination problems that it is not legally entitled to solve. From this premise, some writers have concluded that a government can be morally justified in exercising authority in some areas despite such exercise of power being unlawful.110 The difficulty is that judges could only fully accept this philosophical approach at the cost of denying their own function. But the argument, which we have developed very inadequately, does justify the conclusion that the unjust factor relied upon by Professor Birks and others is certainly not self-evident. In consequence, the restitutionary remedy is not axiomatic, nor should it be unyielding in its impact. In Air Canada v British Columbia,111 La Forest J (with whom Lamer and l’Heureux Dube JJ agreed) advanced more pragmatic reasons against the Woolwich principle. The practical consequence of allowing restitution is that where a large number of taxpayers have paid unlawful exactions, the Crown will be obliged to repay the money and then reimpose taxes to recover the moneys paid out. The burden of repayment will ultimately fall on the community. The expenditure of the invalid exactions will have benefited or will benefit the community, including the persons who have paid the exactions. A taxpayer may ultimately pay the same amount of tax, through re-imposed taxes, as it would be paid if it had not obtained a refund.112 As La Forest J pointed out in Air Canada, the reimposition of invalid taxes is inefficient, and, until the tax is reimposed, the government’s ability to manage its revenues is likely to be severely disrupted as it repays large amounts to

claimants.113 The threat of fiscal chaos did not, however, deter the Supreme Court of Canada from later embracing the Woolwich principle.114 [page 799] One factor that might sway the High Court of Australia not to follow Woolwich is that the British jurisprudence in this field is now totally overlaid with the law of the European Union.115 [2027] Impact of the Australian Constitution. Woolwich Equitable Building Society v Inland Revenue Commissioners116 involved an ultra vires regulation made under a valid law, where the validity of the regulation was promptly challenged and had not been the subject of earlier inconsistent judicial decision. Federations with controlled constitutions, like Australia, are likely to throw up problems of a completely different order. The Australian Constitution has significantly greater impact upon the issue than the general principles applied in the United Kingdom because State and federal legislation that does not conform with it is rendered invalid.117 Australian constitutional theory proceeds upon the doctrine that once a court declares a statute to be invalid it is to be treated as void ab initio, and cannot provide any justification for earlier conduct in reliance upon it.118 The High Court has rejected the concept of prospective overruling.119 Statutory invalidity may be a factor giving rise to a restitutionary claim under the common law. Alternatively, legislation that attempts to shield the Revenue from the general application of restitutionary principles may itself be struck down. These two situations are illustrated in the following paragraphs. [2028] Common law restitution claim proceeding from constitutional invalidity? Where a taxing Act is held invalid, an initial question is whether the plaintiff’s restitutionary right can be

located in the Constitution itself. The orthodox view, in Australian law, is that the constitutional invalidity of a statute removes any statutory ‘defence’ but does not itself establish a cause of action. Thus, when s 92 of the Commonwealth Constitution (which provides that ‘trade, commerce, and intercourse among the States … shall be absolutely free’) led to the striking down of a legislative scheme pursuant to which goods had been seized, the plaintiff’s cause of action for damages was found in ordinary tort law and not in the Constitution itself. It was unjustified interference with the plaintiff’s property rights that led to damages, not the [page 800] mere infringement of the Constitution.120 This view was affirmed by the High Court in Northern Territory v Mengel.121 An impost may have been levied pursuant to a statute later declared invalid. The taxpayer who seeks restitution in these circumstances may invoke the principles relating to payment under mistake (mistake of law no longer being a problem) or improper pressure if he or she can establish the requisite elements of the restitutionary causes of action.122 The invalidity of the taxing Act will preclude the Revenue from justifying its retention of the money on the basis of it being a tax. The provisions struck down may also assist in the proof of the plaintiff’s mistake or the (unlawful) pressure that is a component of a claim to restitution on those accounts.123 Over the strong dissent of Kirby J, the High Court has emphasised that the common law (of restitution) is the juridical basis for disputes between citizens touching the recoverability of invalid taxes. In Roxborough v Rothmans of Pall Mall Australia Ltd124 the court rejected attempts to invoke ‘constitutional reason[s] for treating restitutionary claims against governments differently from claims against private citizens’.125 Thus, in British American Tobacco Australia Ltd v Western Australia,126 the majority were at pains to point out that the right to recover tobacco licence fees unlawfully levied by the State before they

were found to be an invalid excise was a common law cause of action, albeit ‘arising under’ the Constitution. This was in the context of treating the proceedings as involving federal jurisdiction governed by the choice of law provisions in s 79 of the Judiciary Act 1903 (Cth).127 [2029] Invalidity of statutory shields. The Constitution may also invalidate legislative attempts designed to shield the Revenue from restitutionary claims or to modify the full extent of those claims. Some constitutional prohibitions may prevent the prohibited Parliament(s) from passing legislation to eliminate or lessen the effects of invalidity.128 For example, legislation purporting to extinguish potential claims arising from the striking down of a statute has itself been declared invalid as offending [page 801] the same constitutional prohibition.129 Legislation that retrospectively imposed a one-year limitation period on actions for restitution for payments made pursuant to unlawful demands was also struck down, because it effectively barred such actions generally.130 The Commonwealth Revenue is generally not exposed to this constitutional risk, because it is ‘within the competence of the Federal Parliament to say that a sum of money erroneously collected under a tax Act by administrative officers acting in good faith should be retained’.131 Such an enactment is a law with respect to taxation and thus within the competence of the federal Parliament. It would only be if that law itself contravened some prohibition in the Constitution132 that the Commonwealth Revenue would face any constitutional difficulty as regards federally legislated bars to recovery. For State Revenues, the situation is considerably more difficult. State Parliaments are also subject to prohibitions in the federal Constitution that do not affect the Commonwealth, most notably s 90, prohibiting the States from imposing duties of customs and excise. And some causes of action against States will be held to arise under the

Constitution itself, thereby inhibiting State (or federal) restrictions or qualifications. This was demonstrated by British American Tobacco Australia Ltd v Western Australia.133 The Western Australian Crown Suits Act 1947 conditioned a right of action against the State Crown upon written notice being given as soon as practicable or within three months after the cause of action accrued. This did not occur. Proceedings were brought against the State based upon the principles in Mason v New South Wales134 and David Securities Pty Ltd v Commonwealth Bank of Australia.135 The proceedings were held to be in federal jurisdiction because they included a claim arising under the Constitution or involving its interpretation in that the State licence fee legislation was under attack in the proceedings for levying a duty of excise.136 In these circumstances, s 39(2) of the Judiciary Act 1903 (Cth) was held to confer the right to proceed against the State, rendering it unnecessary and inapt to look to the Crown Suits Act 1947 (WA) as authority to do so. In the upshot, the High Court did not have to decide whether the Judiciary Act had picked up an otherwise valid State limitations enactment designed to preclude claims against the Revenue that were not raised very promptly. [2030] Change of law. Governments, like citizens, may chart a course in reliance upon judicial decisions upholding the validity of a particular [page 802] exaction or the constitutionality of the statute under which it was imposed. Judicial recognition of this may lead to refusal to overrule earlier decisions.137 If, however, earlier precedents are overturned,138 the taxpayer will be able to invoke restitutionary principles in seeking to recover unlawful imposts.139 The taxpayer will be treated as having mistaken the law if the validity of the impost was assumed at the time.140 The Revenue cannot rely upon a discredited legal principle or the earlier upholding of a statute (later overturned) to justify its

retention of an impost, absent a (valid) statute enabling it to do so.141 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd142 suggests that the position is otherwise if a statutory obligation pursuant to which the payment was made is subsequently repealed with retrospective operation. However, Mason CJ was alone in that case in stating that the original payment was affected by operative mistake.143 We doubt that it was. We discuss below whether change of position is ever a defence to the Revenue.144

(c) The Woolwich Principle in Australia? [2031] Prospective overruling rejected in Australia. The possibility that a court could modify the retrospective impact of overruling earlier precedents led to suggestions that overruling might be effected prospectively if the impact of retroactivity were too substantial.145 This would have meant that payments made pursuant to legal obligation would not be exposed to restitutionary claims if the judicial displacing of the basis of the obligation were precluded from operating retroactively. The High Court rejected this proposition in Ha v New South Wales,146 unanimously declaring prospective overruling to be inconsistent with judicial power. [2032] Likelihood of adoption of Woolwich in Australia. Until the High Court addresses the issue squarely we will not know whether Australian law will follow Woolwich Equitable Building Society v Inland [page 803] Revenue Commissioners.147 However, we think it likely that Australian law will come to recognise a prima facie right of recovery (independent of mistake and improper pressure) of a tax or other impost that was not due, for the following reasons:

Woolwich, with its backing in the persuasive academic writing we (1) have noted, represents a logical development of the earlier law, and is justifiable in principle.148 It gives effect to general constitutional principles already recognised by the High Court.149 (2) A general right of recovery accords with the policy that the burden of an unlawful act should be spread evenly through the society that benefited from it. The policy is better expressed by Wilson J in Air Canada v British Columbia:150 Why should the individual taxpayer, as opposed to taxpayers as a whole, bear the burden of Government’s mistake? I would respectfully suggest that it is grossly unfair that X, who may not be (as in this case) a large corporate enterprise, should absorb the cost of Government’s unconstitutional act. If it is appropriate for the courts to adopt some kind of policy in order to protect Government against itself (and I cannot say that the idea particularly appeals to me), it should be one that distributes the loss fairly across the public. The loss should not fall on the totally innocent taxpayer whose only fault is that it paid what the legislature improperly said was due.

(3) No earlier High Court authority precludes such a holding. Indeed, some support can be drawn from (persuasive) obiter dicta in Sargood Bros v Commonwealth151 and Mason v New South Wales152 albeit that these go no further than stretching the concept of compulsion. Mason CJ expressed apparent support for the Woolwich principle, and rejected a general defence based on disruption to public finances.153 (4) The speech of Lord Goff in Woolwich Equitable is, in our opinion, particularly persuasive, and is bolstered by the reasoning of leading United States authorities as well.154 (5) Woolwich, with its constitutional underpinning, has its analogue with the Revenue’s right of recovery for unauthorised disbursements.155 [page 804] But if Australian law follows England in preference to United States, the right of recovery should, we believe, be finely tuned to take account

of the crippling disruption to State and federal revenues that would flow from an unrestricted right of recovery operating in the context of a changing Australian constitutional law. One claim may signal an avalanche of others. These limitations are addressed in the next section of this chapter. (We would, however, doubt Gobbo J’s suggestion in Esso Australia Resources Ltd v Gas & Fuel Corp of Victoria,156 that not even the colore officii doctrine is available where a demand was made that was within the power of the statute, but where the statute was ultimately ruled beyond power for constitutional reasons.) [2033] Misapplication of intra vires statutes. In Woolwich Equitable Building Society v Inland Revenue Commissioners,157 three Law Lords suggested that there is no distinction between misconstruction of a statute or regulation pursuant to which an impost is levied, and reliance upon an ultra vires statutory instrument. The English Court of Appeal adopted this view in British Steel Plc v Customs and Excise Commissioners.158 A similar view has been taken in Australia in the context of the ‘old law’.159 Although it can be argued that the Bill of Rights 1689 (Imp) principle is not offended by a tax imposed with the sanction of Parliament, even if Parliament exceeds its constitutional powers,160 it is, in principle, difficult to see why there is any difference, or why constitutional ultra vires should be treated more leniently than other grounds for rendering an impost invalid. In the converse situation of recovery by the Revenue, recovery will be permitted if the payment out of consolidated revenue is ultra vires a statute, regardless how this comes about.161 [2034] Range of imposts affected.162 Whatever its scope, the Woolwich principle is confined to unlawful demands by public authorities in relation to ‘taxes or the like … [and does] not apply to private transactions’.163 In the English Court of Appeal in Woolwich Equitable Building Society v Inland Revenue Commissioners,164 two judges indicated their view that the right to restitution should extend beyond the central Revenue and include at least local government bodies that purport to impose taxes, licence fees or other imposts. This seems an appropriate position, especially since it is in

[page 805] accord with the range of imposts amenable to the colore officii doctrine.165 Indeed, there appears to be no reason for stopping short of any compulsory impost, especially in the light of the very wide meaning of ‘tax’ adopted by the High Court of Australia in Australian Tape Manufacturers Association Ltd v Commonwealth.166 If the Woolwich principle is part of the law, there is no rationale for allowing any public authority to escape it, at least as regards exactions purportedly imposed by law, as distinct from negotiated contractual rights.167 English law even contemplates the Woolwich principle extending beyond taxes paid, to circumstances where taxpayers have foregone valuable rights conferred by revenue laws.168 Not every action by a public authority will expose its receipts to the Woolwich principle. There does not need to be a wrongful demand by the tax collector.169 But if money is paid pursuant to a commercial contract, it will not be recoverable merely because the contract’s terms (wrongly) presupposed the validity of an impost.170 It must of course be remembered that the general principles relating to improper pressure have particular application in the area of charges that claim statutory authority.171 However, particular imposts may more readily attract particular defences. For example, a licence fee paid for a monopoly right that is enjoyed before the licensee seeks recovery of the fee should not be recoverable in every case.172

5. Reimposition of Tax, Legislated Bars on Relief and Defences [2035] Reimposition of tax. Taxes that have been paid when they were not due may sometimes be reimposed by the passing of a new taxing statute with retrospective operation.173 The statute must, of course, be itself valid.

[2036] Legislated bars. Conversely, legislation may seek directly to bar common law rights to restitution. In some situations, State and federal parliaments have power to legislate to block restitution by sanctioning the retention of money erroneously collected under a taxing statute. Alternatively, recovery of taxes already paid may be restricted to those who satisfy conditions, such as proof that the tax has not been passed on. [page 806] The circumstances in which this may be done include payments made under a valid taxing statute which, on its true construction, did not impose the tax levied and paid;174 or payments made under an invalid taxing statute, provided at least that the source of invalidity was remediable in the sense that the tax could have been reimposed (retrospectively) in compliance with proper constitutional manner and form by the same legislature.175 An example of a ‘remediable’ or ‘procedural’ source of invalidity is failure to comply with s 55 of the Commonwealth Constitution, which requires laws imposing taxation to deal only with that subject, and for laws imposing certain types of taxation to deal only with that type of taxation.176 But this power is not available where the invalidity of the taxing statute had its origin in some want of legislative power or irremediable contravention of a constitutional prohibition.177 For example, in Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport,178 the High Court declared invalid legislation that had been enacted by the Parliament of New South Wales to abolish the right to recover moneys which had been paid by interstate carriers. This money had been paid under legislation which the Privy Council subsequently held to be in breach of s 92 of the Commonwealth Constitution. Because s 92 withdrew the power to tax interstate carriers, it followed that it prohibited legislation which sought to prevent the recovery of money obtained in breach of s 92. On appeal to the Privy Council,179 the

Judicial Committee said that ‘[n]either prospectively nor retrospectively … can a State law make lawful that which the Constitution says is unlawful’. The case represents an example of a constitutionally invalid attempt to do indirectly what could not be done directly. The ruling principle was pithily expressed by Dickson J in Amax Potash Ltd v Government of Saskatchewan.180 ‘If a State cannot take by unconstitutional means it cannot retain by unconstitutional means.’ [page 807] In the case of a legislature, like the Commonwealth Parliament, that cannot ‘acquire’ property otherwise than on just terms,181 a mere legislative cancelling of any contractual or restitutionary obligation to refund risks being characterised as such an acquisition, and invalidated accordingly.182 The critical distinction between the two categories was expressed by Brennan J in Mutual Pools & Staff Pty Ltd v Commonwealth183 as follows: [W]here a taxpayer is entitled to recover moneys exacted as a tax under a purported but invalid law, the question whether a legislature has power to enact a law which does no more than bar such recovery depends on whether the legislature had power to impose the purported tax (as in Werrin v Commonwealth)184 or had no such power (as in Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport).185

But not every legislative qualification of the right of recovery does ‘no more than bar such recovery’. And for both categories of constitutional invalidity, the High Court has recognised that rights of recovery may be qualified or subject to (stringent) limitation requirements, as we discuss below.186 [2037] General and special restitutionary defences. Like their North American counterparts,187 judges in Australia and England have recorded concerns about the impact of a belated discovery of invalidity on the finances of the public authority concerned, not necessarily being the central government.188 In other areas, the recognition of new or

broader rights to restitution has led to greater attention to defences which perform the role of protecting the security of receipts.189 Because the Woolwich principle is itself part of the common law of restitution, it should carry with it the standard restitutionary defences discussed elsewhere, regardless of whether it is informed by the unjust enrichment concept, broader constitutional factors, or some mix of the two.190 Since, however, some of these have received special attention in the case and statute law relating to claims against the Revenue, and since there is reason to believe that some special defences apply in this field, we address several defences and possible defences in the balance of this chapter. [page 808] [2038] Compromise and payment with intention to close transaction. Just as with ostensibly mistaken payments, so also a taxpayer who compromises the Revenue’s claim, with knowledge of the possibility of an argument about the validity of an assessment or the statute under which it was made, is not allowed later recovery if another and bolder taxpayer later establishes invalidity.191 Similarly, the taxpayer who pays with an intention to close a particular transaction should not on general principle be entitled to reopen it.192 Payment under protest will provide evidence of an intention not to close the transaction.193 [2039] Special limitation periods and failure to exhaust statutory remedies. In Woolwich Equitable Building Society v Inland Revenue Commissioners,194 Lord Goff acknowledged the legislature’s capacity to protect the Executive through the enactment of short time limits within which claims must be advanced. The validity of such enactments is generally clear, even when passed by legislatures that turn out to have lacked power to pass the taxing Act in question, so long as the limitation statutes validly apply in the jurisdiction invoked by the plaintiff195 and allow a realistic period within which claims may

be lodged.196 On the other hand, if the statute simply extinguishes, retroactively, all civil liabilities arising out of acts done in pursuance of a prior statute which has been adjudged unconstitutional for irremediable lack of power it should be held to represent an invalid attempt to do what cannot be done directly.197 The limitation periods relating to restitutionary claims are discussed in Chapter 27. The principles there discussed apply in this context except to the extent that particular provision is otherwise made, as we now discuss. [page 809] In each Australian jurisdiction there are special limitation statutes relating to restitutionary claims for the recovery of invalid imposts. In New South Wales, the Recovery of Imposts Act 1963198 enacts a twelve month window for claims for the recovery of money (paid by way of tax or purported tax) on ‘restitutionary grounds (including but not limited to mistake of fact or law)’ and extending to grounds that include the invalidity of taxation legislation.199 As regards nonlegislative changes of the law,200 money paid by way of tax or purported tax is not recoverable on such grounds if the money was paid before the change.201 Proceedings are only maintainable to the extent that the claimant satisfies the court that there has been no passing on of the tax.202 While the New South Wales provision in terms applies to restitution claims based on mistake, duress as well as any Woolwich principle, the provisions in other jurisdictions would appear to achieve the same object although they are framed differently.203 Other States and Territories have limitation statutes operating in this area. They also prescribe a short limitation period for the recovery of invalid taxes or taxes paid under mistake of fact or law.204 As might be expected, provisions of this sort will be construed fairly strictly, but it is

no objection that they apply to limit recovery action brought in relation to an ultra vires enactment.205 The statutory rights of recovery of customs and excise duty paid under protest also have short limitation periods, and have been held to constitute codes when their expansive terms are engaged.206 Exclusive objection [page 810] procedures under the Taxation Administration Act 1953 (Cth)207 as well as schemes under State legislation dealing with the refund of stamp duty, payroll tax and land tax have been similarly construed.208 If, however, there is resort to a truly alternative statutory procedure (such as application for review to the Administrative Appeals Tribunal), appropriate common law causes of action may lie if and when the determination is set aside and the invalidity of the impost finally determined in the taxpayer’s favour.209 [2040] Change of position. As a general restitutionary defence, the defence of change of position210 should be open to the Executive, all the more so since that would be the situation if the plaintiff relied upon mistake of law, as many plaintiffs could do. Irish and Canadian authority supports this proposition.211 The English authorities are conflicting.212 In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd213 Mason CJ appeared to contemplate that the defence was capable of operating in favour of the State in relation to unauthorised receipts. The real difficulty is the near impossibility of the Executive making out the defence, assuming it is bold enough to plead it. In the area of mistaken payments, a private litigant will not establish the defence merely by showing that he or she consumed a mistaken windfall in ordinary living expenses.214

[page 811] The government should be no better placed.215 The defence may also fail if it entails an element of absence of fault and relevant fault is found.216 Assuming the Woolwich principle applies to local government,217 the defence of change of position may be more accessible to a local government body that has put the unlawful impost into a fund for some specific purpose for which it was levied, such as the eradication of pests or weeds in an area. If the money has been spent, especially in aid of a class of persons that includes the plaintiff, it would be inequitable to order its recovery.218 The rejection of an unjust enrichment basis in favour of a ‘policybased’ right recognised by the Supreme Court of Canada in Kingstreet Investments Ltd v New Brunswick219 left no room for a defence based on fiscal chaos. [2041] Defence of value directly received by taxpayer? Based on analogous considerations, there should be a defence precluding claims by those who pay what turns out to be an invalid licence fee or other impost, and who receive a direct and comparable benefit from a branch of the Executive, where the effective source of that benefit was the money which the taxpayer later seeks to recover. In some cases, the taxpayer who sues to recover an invalidly levied tax may already, directly, and as a member of a specific class of persons, have received in the form of grants or services provided by government, the value of the benefit of the moneys paid. This could be the case with regard to statutory schemes whereby moneys are levied to fund the marketing of a primary product, or some local activity such as the eradication of a weed or pest, and where the taxpayer enjoys the benefit of the expenditure before suing for recovery. Similarly, certain types of licence may confer a valuable monopoly right in favour of a small class of persons. Recovery of the (invalid) licence fee after enjoyment of the right for which it was the consideration would result in unjust

enrichment, not its prevention.220 Sometimes ultra vires is the result of technical breaches and not fundamental absence of power. Respect for the constitutional principles underpinning the usual Woolwich situation does not require recovery in this limited class of cases.221 It is especially unjust to allow a plaintiff to attack the validity of legislation upon which he or she had earlier relied and under which benefits were obtained.222 [2042] Passing on (or windfall gain) defence rejected at common law. Indirect taxes are inherently capable of being passed on.223 Nevertheless, the High Court has rejected the Revenue’s claim to invoke a non-statutory [page 812] passing on or windfall gain defence when faced with a restitutionary claim by a taxpayer that has already recouped its outlay further down the chain of distribution.224 In the words of Brennan J (Toohey and McHugh JJ concurring):225 The fact that Royal has passed on to its policy holders the burden of the payments made to the Commissioner does not mean that Royal did not pay its own money to the Commissioner. The passing on of the burden of the payments does not affect the situation that, as between the Commissioner and Royal, the former was enriched at the expense of the latter … [No] defence of ‘passing on’ is available to defeat a claim for moneys paid by A acting on his own behalf to B where B has been unjustly enriched by the payment and the moneys paid had been A’s moneys.

Legislatures in Australia and elsewhere have, however, recognised the injustice of recovery by a party who has already recouped the burden of a tax by passing it on.226 In the Australian Capital Territory and most States there are broadly expressed passing-on defences which are available to the Revenue.227 In Victoria, the State Taxation (Amendment) Act 1992 (Vic) (which was enacted post-Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd) inserted into various revenue statutes a provision effectively ensuring that taxpayers who pass on the cost to third parties will be obliged to forward any refund of that tax to the third parties.

The question whether the State-enacted provisions will avail in proceedings in the federal jurisdiction is problematic.228 1.

See generally Chapter 5.

2. 3.

See generally Chapter 4. [1993] AC 70.

4.

[1993] AC 70. The right is alternative to claims based on general grounds, with the consequence that a plaintiff may seek to frame a cause of action based on mistake if that has Limitation Act advantages (see Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558). See [2019].

5. 6. 7.

See generally Hogg, Liability of the Crown, 4th ed, pp 352–5. See, eg Customs Act 1901 (Cth), s 167; Taxation Administration Act 1996 (NSW), ss 18– 20. See further [2039] below, where we discuss how these may be integrated with a general right of recovery based on the Woolwich principle.

8. 9.

See [2039]. See [2027]–[2029].

10. Lord Goff’s reasoning has been criticised for failure to identify clearly the ‘unjust factor’ involved: see E McKendrick, ‘Restitution of Unlawfully Demanded Tax’ [1993] LMCLQ 88; B Fitzgerald, ‘Ultra Vires as an Unjust Factor in the Law of Unjust Enrichment’ (1993) 2 Griffith LR 1. 11. [1993] AC 70. 12. See, eg Rebecca Williams, ‘Overpaid Taxes: A Hybrid Public and Private Approach’; and Simone Degeling, ‘Restitution of Unlawfully Exacted Tax in Australia: The Woolwich Principle’, chapters 2 and 15 of Restitution, Overpaid Tax. This approach would treat most elements of the cause of action as decided by the private law of unjust enrichment, with the reason for restitution being understood as a public law event. See also Derek Wong, ‘The High Court and the Woolwich Principle: Adoption or Another Bullet that Cannot be Bitten?’ (2011) 85 ALJ 597; Greg Weeks, ‘The Public Law of Restitution’ (2014) 38 Melb U L Rev 2014. 13. (2007) 276 DLR (4th) 342; [2007] SCC 1 at [12]. 14. See Chapters 22–27. 15. See [2032] (disruption of public finances), [2035]–[2042]. 16. Hogg, Liability of the Crown, 4th ed, pp 6–7, 348–55. See also Sargood Bros v Commonwealth (1910) 11 CLR 258 at 308–9. 17. See, eg Campbell v Hall (1774) 1 Cowp 204; 98 ER 1045; Attorney-General v Wilts United Dairies Ltd (1921) 37 TLR 884 at 887. 18. See [413]. 19. See [529]. See also Sargood Brothers v Commonwealth (1910) 11 CLR 258 especially at 301–2; Mason v New South Wales (1959) 102 CLR 108 at 140; Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 at 145. 20. Maskell v Horner [1915] 3 KB 106; McClintock v Commonwealth (1947) 75 CLR 1 at 40–1.

21. National Pari-Mutuel Assoc Ltd v R (1930) 47 TLR 110; Twyford v Manchester Corp [1946] Ch 236; Glasgow Corp v Lord Advocate 1959 SC 203. In Blackpool and Fleetwood Tramroad Co v Bispham with Norbreck UDC [1910] 1 KB 592 it was stated that sums paid to a public authority pursuant to an unlawful rating demand could be set off against sums owed by the payer to the same authority, although they might be irrecoverable if an action were brought for repayment. This distinction was, however, doubted by Lord Bridge in R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] AC 858 at 877. 22. See, eg Air India v Commonwealth [1977] 1 NSWLR 449. 23. See Jax Tyres Pty Ltd v Commissioner of Taxation (1986) 5 NSWLR 329 at 333. 24. See generally Chapter 4. 25. (1992) 175 CLR 353; 109 ALR 57. 26. (1802) 2 East 469; 102 ER 448. 27. See [2035]–[2042] and generally Part VIII. 28. See [416], [2030]. See generally Duncan Sheehan, ‘Mistaken Overpayments of Tax’ in Restitution, Overpaid Tax, Chapter 3. 29. See [2039]. Mistake may be the ground for extending normal limitation periods, depending on their terms (see Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558). However, the Australian provisions referred to at [2039] appear to be comprehensive in blocking sidestepping actions reliant on mistake. 30. See [2016], [2036]. 31. See further [2029]. 32. C Pannam, ‘The Recovery of Unconstitutional Taxes in Australia and the United States’ (1964) 42 Texas L Rev 777. See, eg Sargood Brothers v Commonwealth (1910) 11 CLR 258 especially at 303; Werrin v Commonwealth (1938) 59 CLR 150 at 163. 33. G Jones, ‘Restitution of Unconstitutional Tax’ [1992] CLJ 29 at 30. Contrast City of Rochester v Chiarella 448 NE 2d (NYCA, 1983) where only protesting taxpayers recovered a tax later held invalid. 34. R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] AC 858; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 65. 35. See as to duress of goods in the context of unauthorised imposts, Maskell v Horner [1915] 3 KB 106; McClintock v Commonwealth (1947) 75 CLR 1 at 40–1. 36. See [2011]. 37. See Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 and generally Chapter 5, especially [529]. 38. As to the threatened use of legal process as a legitimate form of pressure, see [513]–[515]. 39. Notably Steele v Williams (1853) 8 Ex 625, 155 ER 1502; Hooper v Exeter Corp (1887) 56 LJQB 457 and Melbourne Tramway & Omnibus Co Ltd v Melbourne City Corp (1903) 28 VLR 647. See also [2023]. 40. [1993] AC 70. 41. (1909) 101 LT 741. 42. Whiteley v Burns [1908] 1 KB 705. 43. See, eg Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70

at 100 (Glidewell LJ), 204 (Lord Slynn of Hadley). 44. Queensland Trustees Ltd v Fowles (1910) 12 CLR 111; Precision Pools Pty Ltd v Commissioner of Taxation (1992) 37 FCR 554; Sebel Products Ltd v Commissioners for Custom and Excise [1949] Ch 409, a decision that was doubted on its facts and firmly distinguished in Woolwich Equitable. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 89, sums paid on an understanding that they would be later adjusted gave rise to a restitutionary obligation to repay when the exact sum became known. As to the authority of the Executive to enter into such an agreement when doubt arises as to the entitlement of the government to collect a tax, see Precision Pools Pty Ltd v Commissioner of Taxation (1992) 37 FCR 554; 109 ALR 679; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 208–9 per McHugh J. But the Executive may not simply ‘dispense’ with taxation provisions: Vestey v Inland Revenue Commissioners [1979] Ch 198 at 202–4; R v Inland Revenue Commissioners; Ex parte Federation of SelfEmployed and Small Businesses Ltd [1982] AC 617 at 636; R v Board of Inland Revenue; Ex parte MFK Ltd [1990] 1 WLR 1545 at 1574; [1990] 1 All ER 91 at 114. Generally as to unlawful ‘dispensing’, see A v Hayden (1984) 156 CLR 532 especially at 580–1. 45. See generally M Chowdry and C Mitchell, ‘Tax Legislation as a Justifying Factor’ [2005] RLR 1. 46. See ss 5 and 16 and Pearce v Button (1986) 65 ALR 83 at 90; Park Oh Ho v Minister for Immigration & Ethnic Affairs (1989) 167 CLR 637 at 645; Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 2) (1991) 32 FCR 243; 103 ALR 637; Johns v Australian Securities Commission (1993) 178 CLR 408 at 433–4, 435, 437, 458. Cf Federal Airports Corp v Aerolineas Argentinas (1997) 76 FCR 582; 147 ALR 649. 47. Cf Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. 48. (1994) 182 CLR 51. The decision of the lower court is reported at (1992) 23 ATR 528. 49. Mason CJ held the 1987 retrospective amendment to have rendered the pre-1987 payments mistaken as to the applicable law. This strikes us as an extreme application of the principles of mistake (see [416]). Cf Brennan J at 89 and Dawson J at 100. Less controversial is the retrospective application of the principles in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, a decision announced in 1992 that retrospectively adjusted the common law. See [414]. 50. See (1994) 182 CLR 51 at 89. 51. See (1994) 182 CLR 51 at 89–90. 52. (1994) 182 CLR 51 at 99. See also [2025]. 53. (1998) 192 CLR 285; 152 ALR 624. 54. See also Mallinson v Scottish Australia Investment Co Ltd (1920) 28 CLR 66 at 70. 55. See, eg Stamp Duties Act 1920 (NSW), s 35C (now repealed). 56. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. 57. See [2036]. 58. Mason v New South Wales (1959) 102 CLR 108 at 129 per Kitto J. 59. [1988] AC 858 at 877. 60. [1949] Ch 409 at 413. 61. [1993] AC 70. This case and later developments in English law are discussed in

Restitution, Overpaid Tax. 62. R v Inland Revenue Commissioners; Ex parte Woolwich Equitable Building Society [1990] 1 WLR 1400. 63. Supreme Court Act 1981 (UK), s 35A. For the Australian counterparts, see [2809]. As to the possibility of recovering interest without reliance on statute, see Chapter 28. 64. [1993] AC 70 at 166 (Lord Goff), 197–8 (Lord Browne-Wilkinson), 201–2 (Lord Slynn). See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938; [1994] 4 All ER 890. As to the application of this principle beyond failure of contractual reciprocation, see Birks, Introduction, pp 223–6. But cf reservations as to whether the mere fact that a sum is not due is sufficient to ground restitution in Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 164–6, passage quoted in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 394. Cf also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 381–3; Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 67, Mason CJ said that ‘it is perhaps possible that the absence of any legitimate basis for retention of the money by the Commissioner might itself ground a claim for unjust enrichment without the need to show any causative mistake …’. 65. This constitutional argument was developed by Professor Birks in ‘Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights’ in Finn, Essays, p 164. 66. [1993] AC 70 at 172–3. Cf also Melbourne Tramway & Omnibus Co Ltd v Melbourne City Corp (1903) 28 VLR 647. 67. [1993] AC 70 at 177. However, he, like Lord Jauncey (at 196), and Lord Slynn (at 205) doubted any such distinction. The distinction was, however, recognised in Canada: see Air Canada v British Columbia (1989) 59 DLR (4th) 161 at 197; Allied Air Conditioning Inc v British Columbia (1992) 76 BCLR (2d) 218. Cf Kingstreet Investments Ltd v New Brunswick (2007) 276 DLR (4th) 342; [2007] SCC 1. 68. Cf [2417] (change of position defence extends to expenditure in reliance of anticipated receipt in some situations). 69. Test Claimants in the FII Group Litigation v Inland Revenue Commissioners [2012] 2 AC 337; [2012] UKSC 19. 70. See [2034]. 71. Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70; Texaco (Ireland) Ltd v Murphy (No 2) [1992] 1 IR 399. As to interest generally, see Chapter 28. 72. [2007] 1 AC 558; [2007] 1 All ER 449; [2006] UKHL 49. 73. [2008] 1 AC 561. 74. [1992] 1 IR 399. See further Niamh Connolly, ‘Overpaid Taxes and Constitutional Redress in Ireland’ in Restitution, Overpaid Tax, Chapter 13. 75. Waikato Regional Airport Ltd v Attorney-General [2004] 3 NZLR 1 (PC); Stiassny v Commissioner of Inland Revenue [2013] 1 NZLR 453 at [67] (SC). 76. See Kingstreet Investments Ltd v New Brunswick (2007) 276 DLR (4th) 342; [2007] SCC 1. See further Robert Chambers, ‘Restitution of Overpaid Taxes in Canada’ in Restitution, Overpaid Taxes, Chapter 14. See also McInnes, Chapter 24 for an excellent survey of the principles involved.

77. See Restatement, Third § 19; Atchison, Topeka and Sante Fe Railway Co v O’Connor 223 US 280 (1912) (Holmes J); McKesson Corp v Division of Alcoholic Beverages and Tobacco 496 US 18 (1990). Cf Palmer, §§9.16, 14.20; Field, The Effect of an Unconstitutional Statute, 1971, Chapter 10; C Pannam, ‘The Recovery of Unconstitutional Taxes in Australia and the United States’ (1964) 42 Texas L Rev 177; Mercury Machine Importing Corp v City of New York 154 NE 2d 400 (1957) (NYCA). 78. [1993] AC 70. 79. State Bank of New South Wales v Commissioner of Taxation (1995) 62 FCR 371; 132 ALR 653 (Wilcox J); Chippendale v Commissioner of Taxation (1996) 62 FCR 347 at 366 (Lehane J); SCI Operations Pty Ltd v Commonwealth (1996) 69 FCR 346 at 378, 397 (Beaumont, Einfeld and Sackville JJ). See also British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 42; 200 ALR 403; [2003] HCA 47 at [7]; Hollis v Atherton Shire Council (2003) 128 LGERA 348. 80. Peter Butler, ‘Restitution of Overpaid Taxes, Windfall Gains and Unjust Enrichment: Commissioner of State Revenue v Royal Insurance Australia Ltd’ (1995) 18 UQLJ 318; T Voon, ‘Restitution from Government in Australia: Woolwich and its Necessary Boundaries’ (1998) 9 Pub LR 15; Margaret Brock, ‘Restitution of Invalid Taxes — Principles and Policies’ (2000) 5 Deakin L Rev 127; Derek Wong, ‘The High Court and the Woolwich Principle’ (2011) 85 ALJ 597; Simone Degeling, ‘Restitution of Unlawfully Exacted Tax in Australia: The Woolwich Principle’ in Restitution, Overpaid Tax, Chapter 15; Greg Weeks, ‘The Public Law of Restitution’ (2014) 38 Melb U L Rev 198. 81. See [529], [2011]. 82. (1910) 11 CLR 258. See also Re Broughton (1897) 18 NSWR (L) 247; Kelly v R (1902) 27 VLR 522; Werrin v Commonwealth (1938) 59 CLR 150. 83. See, eg (1910) 11 CLR 258 at 287, 299 per Isaacs J. 84. [1993] AC 70 at 91 per Glidewell LJ. 85. (1910) 11 CLR 258 at 276. See also per Griffith CJ at 263–4 and per Higgins J at 308–9. See also Payne v R (1901) 26 VLR 705 at 719; Melbourne Tramway & Omnibus Co Ltd v Melbourne City Corp (1903) 28 VLR 647. 86. As to which, see [529]. 87. (1959) 102 CLR 108. 88. See, eg Esso Australia Resources Ltd v Gas & Fuel Corp of Victoria [1993] 2 VR 99. 89. P Birks, ‘Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights’ in Finn, Essays, pp 188–191. 90. In Hughes & Vale Pty Ltd v New South Wales (1954) 93 CLR 1. 91. (1959) 102 CLR 108 at 117, 125–9 and 134–5 respectively. 92. Cf, however, Kitto J’s views in Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969) 121 CLR 137 at 145. 93. See [416]. 94. See [529]. 95. (1994) 182 CLR 51 at 99; 126 ALR 1 at 34. See also Mason CJ at 64–6; 7–8. 96. (1995) 184 CLR 453 at 465–8; 133 ALR 130 at 137–8. 97. (1995) 184 CLR 453 at 467; 133 ALR 130 at 138.

98. [1993] AC 70 at 172. See also Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 312; 152 ALR 624; [1998] HCA at [63]. 99. 1 William & Mary sess 2 c 2. It is in force throughout Australia: see, eg Imperial Acts Application Act 1969 (NSW) s 6. 100. See C Pannam, ‘The Recovery of Unconstitutional Taxes in Australia and the United States’ (1964) 42 Texas LR 779; P Birks, ‘Restitution from Public Authorities’ (1980) 33 CLP 191; J D McCamus, ‘Restitutionary Recovery of Moneys Paid to a Public Authority Under a Mistake of Law: Ignoratia Juris in the Supreme Court of Canada’ (1983) 17 U Brit Col LR 233; R D Collins, ‘Restitution from Government Officers’ (1984) 29 McGill LJ 407. 101. See W R Cornish, ‘Colour of Office: Restitutionary Redress Against Public Authority’ (1987) Jo Malaysian and Comp Law 41; Hogg, Liability of the Crown, 2nd ed, pp 181–6; P Birks, ‘Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights’ in Finn, Essays, p 164; Jones, pp 42–3. 102. Cf the rationale behind restitution for judgments that are reversed: see Chapter 7. 103. [1924] AC 318. See Chapter 21. 104. [1993] AC 70 at 177. 105. P Birks, ‘Restitution from Public Authorities’ (1980) 33 CLP 191 at 196–7. 106. These are developed in the Australian context by Margaret Brock, ‘Restitution of Invalid Taxes — Principles and Policies’ (2000) 5 Deakin L Rev 127. The arguments are largely answered by Greg Weeks, ‘The Public Law of Restitution’ (2014) 38 Melb U L Rev 198 at 216–17. 107. See, eg Parkes Rural Distributions Pty Ltd v Glasson (1986) 7 NSWLR 332. 108. Regional Municipality of Peel v Canada (1992) 98 DLR (4th) 140 at 143–4. 109. Green, The Authority of the State, pp 92–4. 110. See the review by Brian Fitzgerald, ‘Ultra Vires as an Unjust Factor in the Law of Unjust Enrichment’ (1993) 2 Griffith LR 1 especially at 24–32. 111. [1989] 1 SCR 1161 at 1203; (1989) 59 DLR (4th) 161 at 194. 112. See, generally B C Wells, ‘Restitution from the Crown: Private Rights and Public Interest’ (1994) 16 Adel LR 191 at 212. Cf [2041]. 113. See also Mercury Machine Importing Corp v City of New York 154 NE 2d 400 at 426–7 (NYCA, 1957). 114. See Kingstreet Investments Ltd v New Brunswick (2007) 276 DLR (4th) 342; [2007] SCC 1. 115. See Restitution, Overpaid Tax esp at pp 5-6. 116. [1993] AC 70. 117. Corresponding issues would arise if legislation were struck down for non-compliance with State ‘manner and form’ requirements for valid legislation or on other constitutional bases. 118. R v Brisbane Licensing Court; Ex parte Daniell (1920) 28 CLR 23 at 29–30, 32; Riverina Transport Pty Ltd v Victoria (1937) 57 CLR 327 at 342; South Australia v Commonwealth (1942) 65 CLR 373 at 408; Bank of New South Wales v Commonwealth (1948) 76 CLR 1 at 230. See general discussion in Peters v Attorney-General (NSW) (1988) 16 NSWLR 24

at 38–40 per McHugh JA. It is otherwise if action is taken under the mandate of an order of a superior court of record before it is set aside: see New South Wales v Kable (2013) 252 CLR 118; 298 ALR 144; [2013] HCA 26. 119. Ha v New South Wales (1997) 189 CLR 465. 120. James v Commonwealth (1939) 62 CLR 339 at 361–2; Antill Ranger & Co Pty Ltd v Commissioner of Motor Transport (1955) 93 CLR 83 at 99. A related question is whether breach of a constitution can give rise to rights as between citizen and citizen: see A S Butler, ‘Constitutional Rights in Private Litigation: A Critique and Comparative Analysis’ (1993) 22 Anglo-American LR 1 and Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; Mulholland v Australian Electoral Commission (2004) 220 CLR 181 at [180]. 121. (1995) 185 CLR 307. See also Kruger v Commonwealth (1997) 190 CLR 1. 122. See Chapters 4 and 5. 123. Cf Mason v New South Wales (1959) 102 CLR 108 (discussed [2023]). 124. (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. 125. (2001) 208 CLR 516 at 530; 185 ALR 335; [2001] HCA 68 at [29] per Gleeson CJ, Gaudron and Hayne JJ. 126. (2003) 217 CLR 30; 200 ALR 403; [2003] HCA 47. See also Aid/Watch Inc v Federal Commissioner of Taxation (2010) 241 CLR 539; 272 ALR 417; [2010] HCA 42 at [44]. 127. See (2003) 217 CLR 30; 200 ALR 403; [2003] HCA 47 per Gleeson CJ at [6], [11], [15]–[16], per McHugh, Gummow and Hayne JJ at [39]–[41], [65], [75], per Callinan J at [168]. Contrast Kirby J at [118]ff. See also Werrin v Commonwealth (1938) 59 CLR 151; Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport (1955) 93 CLR 83 at 99. 128. Belinda C Wells, ‘Restitution from the Crown: Private Rights and Public Interest’ (1994) 16 Adel LR 191 at 209–10. See also [2035], [2036]. 129. Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport (1955) 93 CLR 83. 130. Barton v Commission of Motor Transport (1957) 97 CLR 633. 131. Werrin v Commonwealth (1938) 59 CLR 150 at 161 per Rich J. See also British American Tobacco Australia Ltd v Western Australia Ltd (2003) 217 CLR 30 at 46; 200 ALR 403; [2003] HCA 47 at [18]. See also [2035]. 132. Such as s 51(ii) (prohibiting laws with respect to taxation that discriminate between States or parts of States), s 55 (procedures for enacting laws imposing taxation), s 92 (freedom of interstate trade, commerce and intercourse) and s 99 (prohibiting certain Commonwealth preferences to one State or any part thereof over another State or any part thereof). 133. (2003) 217 CLR 30; 200 ALR 403; [2003] HCA 47. 134. (1959) 102 CLR 108. 135. (1992) 175 CLR 353; 109 ALR 57. 136. Section 90 of the Constitution gives the Commonwealth Parliament exclusive legislative power in this regard. The New South Wales licence fee was struck down in Ha v New South Wales (1997) 189 CLR 465. 137. See, eg Evda Nominees Pty Ltd v Victoria (1984) 154 CLR 311; Philip Morris Ltd v Commissioner of Business Franchises (Vic) (1989) 167 CLR 399.

138. As happened in Ha v New South Wales (1997) 189 CLR 465. 139. See Mason v New South Wales (1959) 102 CLR 108; British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30; 200 ALR 403; [2003] HCA 47. See [417]. 140. See Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581; 144 ALR 89 (special leave to appeal to the High Court was refused); Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349; Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 at 104; [1999] HCA 67 at [164]. See generally [416], where reference is made to statutory modification in the Australian Capital Territory, New South Wales and Western Australia. Care is required before assuming the application of these provisions in proceedings attracting federal jurisdiction: see British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30; 200 ALR 403; [2003] HCA 47. 141. See [415], [417]. See Taxation Administration Act 1999 (ACT), s 23. 142. (1994) 182 CLR 51 (discussed [2015]). 143. (1994) 182 CLR 51 at 66–8. See also Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 322; [1998] HCA 20 at [93]–[94]. 144. See [2040]. 145. See the first edition of this book. Cf Re Spectrum Plus Ltd (in liq) [2005] 2 AC 680. 146. (1997) 189 CLR 465 at 503–4, 515. 147. [1993] AC 70. 148. See [2025]. Cf [2026]. 149. See [2028]. 150. (1989) 59 DLR (4th) 161 at 169, cited by Lord Goff in Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 176. Wilson J was in dissent but her views have now prevailed in Canada (see [2019]). 151. (1910) 11 CLR 258. See [2023]. 152. (1959) 102 CLR 108. See [2026]. See also Melbourne Tramway & Omnibus Co Ltd v Melbourne City Corp (1903) 28 VLR 647. 153. See Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 68. To the extent that the other judgments addressed restitutionary claims, they confined themselves to recovery based on mistake, an implicit understanding that a refund would be effected if required (see [2012]) or in consequence of a direct statutory obligation: see Brennan J (Toohey and McHugh JJ concurring) 182 CLR 51 at 89–90. 154. See Restatement, Third § 19, citing Atchison, Topeka and Santa Fe Railway Co v O’Connor 223 US 280 (1912) and McKesson Corp v Florida 496 US 18 (1990). 155. See British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 65; 200 ALR 403; [2003] HCA 47 at [82]. See Chapter 21. 156. [1993] 2 VR 99 at 106. 157. [1993] AC 70 at 177, 196, 205. 158. [1997] 2 All ER 366. See also Greg Weeks, ‘The Public Law of Restitution’ (2014) 38 Melb U L Rev 198 at pp 222–30. 159. Jax Tyres Pty Ltd v Commissioner of Taxation (1986) 5 NSWLR 329 at 333. 160. See B C Wells, ‘Restitution from the Crown: Private Rights and Public Interest’ (1994) 16

Adel LR 191 at 196–7. 161. See Chapter 21. 162. See generally, J Beatson, ‘Restitution of Taxes, Levies and Other Imposts: Defining the Extent of the Woolwich Principle’ (1999) 109 LQR 401; Tania Voon, ‘Restitution from Government in Australia: Woolwich and its Necessary Boundaries’ (1998) 9 Pub LR 15 at 16–19. See also Baulkham Hills Shire Council v Wrights Road Pty Ltd [2007] NSWCA 152; (2007) 152 LGERA 219. 163. Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558 at [13] per Lord Hoffmann. See [2034]. 164. [1993] AC 70 at 79, 138. 165. See [529]–[530]. 166. (1993) 177 CLR 480. 167. Waikato Regional Airport Ltd v Attorney-General [2004] 3 NZLR 1 at 26; [2003] UKPC 50 at [79] (PC); Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558 at [13], [140]. See also Burrows, p 508. Privatisation may present issues of characterisation: see Law Commission, Restitution: Mistake of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227, 1994, §§6.43–6.45, 8.10, 8.16–8.19. 168. See Restitution, Overpaid Tax, pp 7–9. 169. Test Claimants in the FII Group Litigation v Inland Revenue Commissioners [2012] 2 AC 337; [2012] UKSC 19. 170. Esso Australia Resources Ltd v Gas & Fuel Corp of Victoria [1993] 2 VR 99. Cf also Air India v Commonwealth [1977] 1 NSWLR 449; Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567; 54 FLR 439; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 79. See also P Birks, ‘Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights’ in Finn, Essays, p 195 n 163. 171. See [529]–[530]. 172. See further [2041]. 173. For example the Franchise Fees Windfall Tax (Collection) Act 1997 (Cth). 174. Werrin v Commonwealth (1938) 59 CLR 150. Although this case deals with the federal Parliament, the situation in this regard is a fortiori for the State Parliaments, which, subject to the federal Constitution, have general legislative competence to enact laws with regard to the ‘peace, welfare [or order] and good government’ of their respective territories. 175. Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155. In Mutual Pools, the right extinguished was contractual, because the Commonwealth had previously agreed to repay the tax in the event, which happened, that the taxing statute was found to be invalid. But there is no reason why the same principles would not apply to the extinguishment of a Woolwich-based right, so long as it involved taxes that were not due for ‘remediable’ reasons (as explained below). Brennan J recognised the possibility of parallel restitutionary rights: (1994) 179 CLR 155 at 176. See also Anniston Manufacturing Co v Davis 301 US 324 (1937). See generally, J Beatson, ‘Restitution of Taxes, Levies and Other Imposts: Defining the Extent of the Woolwich Principle” (1993) 109 LQR 401. 176. Section 55 is a ‘manner and form’ restriction designed to protect the Senate from possible abuse of the restriction placed upon it by s 53 of the Commonwealth Constitution which

provides that the Senate ‘may not amend proposed laws imposing taxation’: see Mutual Pools & Staff Pty Ltd v Federal Commissioner of Taxation (1992) 173 CLR 450 at 455–6. 177. Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 167, 175, 183, 206, 212–16. 178. (1955) 93 CLR 83, affd (1956) 94 CLR 177; Barton v Commissioner for Motor Transport (1957) 97 CLR 633. See also Amax Potash Ltd v Government of Saskatchewan (1976) 71 DLR (3d) 1. 179. (1956) 94 CLR 177 at 179–80. 180. (1976) 71 DLR (3d) 1 at 12. 181. See Constitution, s 51(xxxi). 182. See Georgiadis v Australian & Overseas Telecommunications Corp (1994) 179 CLR 297. In Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 the Act was characterised as a law that did not fall within s 51(xxxi) because it adjusted conflicting claims and obligations flowing from the invalidation of the taxing Act after pool builders had built the tax into the cost of the pools. 183. (1994) 179 CLR 155 at 175. 184. (1938) 59 CLR 150. 185. (1955) 93 CLR 83. 186. See [2039]. 187. See [2026]. 188. See, eg Sargood Brothers v Commonwealth (1910) 11 CLR 258 at 303; Werrin v Commonwealth (1938) 59 CLR 150 at 163; R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] AC 858 at 879. 189. See, eg Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 695; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379. 190. See [2004]. The defence of change of position is available in Ireland and Canada, but possibly not in England (see [2040]). 191. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 87; Waikato Regional Airport Ltd v Attorney-General [2004] 3 NZLR 1 at 27; [2003] UKPC 50 at [84]. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. See also [524]. 192. McClintock v Commonwealth (1947) 75 CLR 1 at 40–1; South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65 at 74–5; Mason v New South Wales (1959) 102 CLR 108 at 143; Cam and Sons Pty Ltd v Ramsay (1960) 104 CLR 247 at 272; R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] AC 858 at 881; Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 100, 204. See generally David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 especially at 373–4, 402–3. Burrows, p 513 considers the notion of payment to close a transaction to be vague and confusing. He argues that it should not be a restriction on the Woolwich principle. 193. Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 166. Generally, as to protests, see [523]. United States law appears ready to treat protest as

proof of duress: see City of Rochester v Chiarella 448 NE 2d 98 (NYCA, 1983). 194. [1993] AC 70 at 174. 195. See [2029]. 196. See Antill Ranger & Co Pty Ltd v Commissioner for Motor Transport (1955) 93 CLR 83 at 99–100, 103; Barton v Commissioner for Motor Transport (1957) 97 CLR 633 at 641, 650, 659–60, 662, 666. See also McKesson Corp v Florida Alcohol & Tobacco Division 496 US 18 at 50 (1990). The limitation statute must indicate with sufficient clarity that it applies to claims based upon constitutional invalidity: cf Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. See also Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 141, 169–70; Kingstreet Investments v New Brunswick [2007] 1 SCR 3 at [59]–[61]. 197. See [2036]. 198. As amended by the Limitation of Actions (Recovery of Imposts) Amendment Act 1993 (NSW) and the State Revenue Legislation Further Amendment Act 1995 (NSW). 199. Section 2(1). ‘Tax’ is defined in s 1A to include a fee, charge or other impost. It has been held that this extends to a developer’s monetary contribution under s 94 of the Environmental Planning and Assessment Act 1979 (NSW) (see Baulkham Hills Shire Council v Wrights Road Pty Ltd (2007) 152 LGERA 219; [2007] NSWCA 152) and a fee for services under Chapter 15, Part 10 of the Local Government Act 1993 (NSW) (see Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123). 200. See [416] (change of law through judicial overruling). 201. Recovery of Imposts Act 1963, s 3. 202. Recovery of Imposts Act 1963, s 4 (see [2042]). 203. In other words, they preclude extending the standard limitation period for restitutionary claims by framing the claim as one based on mistake as distinct from the Woolwich principle. Contrast Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558. 204. ACT: Limitation Act 1985, s 21A (six months); NT: Limitation Act 1981, ss 35D, 35E (six months); Qld: Limitation of Actions Act 1974, s 10A (12 months); SA: Limitation of Actions Act 1936, s 38 (six months); Tas: Limitation Act 1974, s 25D (12 months for payments after 1993); Vic: Limitation of Actions Act 1958, s 20A (12 months); WA: Limitation Act 1935, s 37A; Limitation Act 2005, s 28 (12 months). See also Limitation Act 1985 (ACT), s 54 (actions by States and other Territories), a matter addressed in most other jurisdictions where it is declared that their special limitation periods are part of the substantive law of that jurisdiction. In some cases different periods apply in relation to taxes paid before amendments, or where special statutory schemes for recovery of overpaid valid taxes apply. 205. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. See also [2032]. 206. Customs Act 1901 (Cth), s 167; Excise Act 1901 (Cth), s 154. See Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12. See also Dahlia Mining Co Ltd v Collector of Customs (1989) 17 NSWLR 688; Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 2) (1991) 32 FCR 243; 103 ALR 637.

207. See Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473. 208. See generally the detailed and lucid survey of the law by Sloss J in ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at [65]–[66], [87]–[106], [120]–[122], citing many cases, including O’Sullivan v Commissioner of Stamp Duties [1984] 1 Qd R 212; Commissioner of State Taxation (WA) v Bayswater Hire Cars Pty Ltd (1989) 20 ATR 1606. 209. Collector of Customs v Gaylor Pty Ltd (1995) 127 ALR 641 (dismissing an appeal from Dahlia Mining Co Ltd v Collector of Customs (1989) 17 NSWLR 688). But resort to the alternative procedure must have first resulted in a successful re-determination: see BHP Petroleum (Bass Strait) Pty Ltd v Jenkins (1993) 115 ALR 179 (upheld on appeal, BHP Petroleum (Bass Strait) Pty Ltd v Jenkins (1994) Unreported, SC(Vic) (App Div) 15 August). The legislative scheme must still leave room for the common law action: see ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 (where the scheme was held (at [106] to preclude even this). 210. Discussed in Chapter 24. We do not confine the defence to claims based on unjust enrichment (see [2410]), although some other commentators do. See also [319], [2004]. See also Elise Bant, ‘Change of Position as a Defence to Restitution of Unlawfully Exacted Tax’ [2012] LMCLQ 122. 211. Spiers & Pond Ltd v Finsbury Metropolitan Borough Council (1956) 1 Ryde’s Rating Cases 219; Rural Municipality of Storthoaks v Mobil Oil of Canada Ltd (1975) 55 DLR (3d) 1; Murphy v Attorney-General [1982] 1 IR 241. See also P Birks, ‘Restitution from the Executive: A Tercentenary Footnote to the Bill of Rights’ in Finn, Essays, pp 200–1; Law Commission, Restitution: Mistake of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227, 1994, §§11.10–11.17. See also McInnes, pp 1054–5. 212. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 at 946–54 (supporting the defence) (affirmed on other grounds [1994] 1 WLR 938; [1994] 4 All ER 890 at 957); Test Claimants in the Franked Dividend Investment Litigation v Revenue and Customs Commissioners [2008] EWHC 2893 (Ch) at [302]–[352], [445] (rejecting the defence) (criticised by Burrows at 549–50). 213. (1994) 182 CLR 51 at 65. 214. See [2415]. 215. Cf Rural Municipality of Storthoaks v Mobil Oil of Canada Ltd (1975) 55 DLR (3d) 1 at 13. 216. See [2419]. 217. As to which see [2034]. 218. See [2041]. Cf R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] AC 858 at 879–80. 219. (2007) 276 DLR (4th) 342; [2007] SCC 1. See McInnes, pp 1052–4. 220. Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123 at [83], where Leeming JA suggests an analogy (if not overlap) of this defence with the defence of payment for good consideration (see [448] and Chapter 25). 221. Cf Field, The Effect of an Unconstitutional Statute, pp 253–4. See also Law Commission, Restitution: Mistake of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227, 1994, §§10.44–10.48. See also Chapter 25 (defence of consideration). 222. See L Katz, ‘Another Look at Davison’s Case’ (1977) 2 UNSWLJ 175.

223. Capital Duplicators Pty Ltd v Australian Capital Territory (No 2) (1993) 178 CLR 561 at 610 per Dawson J. 224. Mason v New South Wales (1959) 102 CLR 108 at 136, 146; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335; [2001] HCA 68. See also Hollis v Atherton Shire Council (2003) 128 LGERA 348. For an academic critique, that may yet prove useful in elucidating the scope of enacted passing-on defences (below), see Mitchell McInnes, ‘“Passing On” in the Law of Restitution: A Re-consideration’ (1997) 19 Syd LR 179. 225. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 90–1. 226. See, eg Sales Tax Assessment Act 1992 (Cth), s 51 and Schedule 1, Table 3 (CR1) (formerly Sales Tax Assessment Act (No 1) 1930 (Cth), s 26(3)(c)); Amway of Australia Pty Ltd v Commonwealth (1998) 158 ALR 652; Avon Products Pty Ltd v Commissioner of Taxation (2006) 227 ALR 398; [2006] HCA 29; Swimming Pools Tax Refund Act 1992 (Cth) (considered in Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155); Taxation Administration Act 1996 (NSW), s 20; State Taxation (Amendment) Act 1992 (Vic). See also Amministrazione delle Finanze delle Stato v SpA San Giorgio [1983] ECR 3595. 227. See ACT: Taxation Administration Act 1999, ss 21, 22; NSW: Taxation Administration Act 1996, s 20; Recovery of Imposts Act 1963, s 4; SA: Limitation of Actions Act 1936, s 38 (3a), (3b); Tas: Limitation Act 1974, s 25C; Vic: Limitation of Actions Act 1958, s 20B; WA: Limitation Act 1935, s 37B, Limitation Act 2005, ss 86 and 87. The onus rests upon the taxpayer to demonstrate that the tax has not been passed on: Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123 at [70]. 228. See [2029].

[page 813]

Chapter Twenty One

Restitution of Ultra Vires Disbursements from the Revenue 1. 2.

General …. The Principle ….

[2101] [2103]

1. General [2101] Objects. If the Crown enters into a transaction that attracts a right to restitution in accordance with the principles discussed in this work, its position will be similar to that of the citizen. Thus, a mistaken payment to or from the Crown is recoverable in accordance with the rules discussed in Chapter 4.1 This chapter deals with a restitutionary right peculiar to the Revenue. The right, usually attributed to Auckland Harbour Board v R,2 is to recover moneys disbursed ultra vires from the consolidated fund. It will be seen that the Crown’s right of recovery is not subject to the restitutionary defences of estoppel, change of position and receipt of consideration. [2102] Parliamentary control of public expenditure. The high constitutional principle that Parliament alone may authorise the disbursement of money from the consolidated fund is declared in s 83 of the Commonwealth Constitution and reflected in corresponding provisions in each State.3 The High Court has repeatedly affirmed it.4 Parliamentary control is maintained through an Appropriation Act, which serves a twofold purpose: ‘Not only does it authorise the Crown

to withdraw moneys from the Treasury, it restricts the expenditure to the particular purpose’.5 [page 814] The principle of Parliamentary control of public money underpins recent developments in the law relating to restitution from the Executive which is discussed in the previous chapter. It also gives rise to a general restitutionary remedy exclusively available to the Crown.

2. The Principle [2103] Auckland Harbour Board v R. In the leading case, Auckland Harbour Board v R,6 the New Zealand Minister of Railways had agreed with the Harbour Board that the Board should be paid £7500 in consideration for granting a lease over part of its property to a third party. The agreement was sanctioned by an Act which was held to authorise the payment only on condition that the Board entered into the lease. The agreement was duly made, and the Board stood ready to grant the lease at the request of the Minister. That request was never made and the lease was not granted. Nevertheless the money was paid to the Board. Because no mistake was involved the money was not recoverable under general restitutionary principles. The government eventually ‘resumed’ the land in issue, thereby vesting title in the Crown and rendering it impossible for the Board to grant the lease as requested. On advice that the payment was illegal, £7500 was set off against other money owing to the Board. The Board’s action to recover the sum that the Crown had set off failed before the Privy Council. Viscount Haldane said:7 The payment was … an illegal one, which no merely executive ratification, even with the concurrence of the Controller and Auditor General, could divest of its illegal character. For it has been a principle of the British Constitution now for more than two centuries, a principle which their Lordships understand to have been inherited in the Constitution of New Zealand with the same stringency, that no money can be taken out of the

consolidated fund into which the revenues of the State have been paid, excepting under a distinct authorisation from Parliament itself. The days are long gone by in which the Crown, or its servants, apart from Parliament, could give such an authorisation or ratify an improper payment. Any payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can, as here, be traced.

‘Tracing’ in this context does not refer to a proprietary remedy, but to tracing the identity of the recipient of the money.8 [2104] The right to recover ultra vires disbursements. In Maguire v Simpson,9 Gibbs J described the Auckland Harbour Board case as establishing that ‘any payment made out of the consolidated funds without Parliamentary authority is illegal and ultra vires, and may be recovered by [page 815] the government if it can be traced’. In Commonwealth v Crothall Hospital Services (Aust) Ltd10 Ellicott J, speaking with the concurrence of Blackburn and Deane JJ, summarised11 the Auckland Harbour Board line of cases as holding that: … where moneys are paid out of Consolidated Revenue without authority they may be recovered in an action by the Government. This could occur if a condition on which money was appropriated by statute had not been met at the time it was paid out or if money was paid out by mistake even though not recoverable under ordinary principles. The basis of the action is that there has been a payment out of the revenue fund without authority.

This principle has been repeatedly endorsed and applied in Australia.12 A leading case is Attorney-General v Gray,13 a decision of the New South Wales Court of Appeal. Money was paid to a public servant in excess of the salary authorised by statute for the position he in fact held. The Public Service Act 1902 (NSW) provided in effect that the salary payable to employees such as the defendant was the salary determined from time to time by the Public Service Board. The excess was held recoverable, without the need to prove that the payment had

been made under any mistake,14 and despite the fact that a defence by way of estoppel would have lain in relation to a mistake-based claim.15 Attorney-General v Gray16 demonstrates that the absence of Parliamentary authority extends beyond absence of a relevant appropriation. It applies to any disbursement that is ultra vires, whatever the reason. In Attorney-General v Gray the defendant had argued that, because the Appropriation Act made provision for a sum which was adequate to permit the payments actually made, there was Parliamentary authority for the payment. This argument was rejected because the Public Service Act stated by implication that the only salary properly payable to the defendant was that determined by the Public Service Board as appropriate to his particular grading. To similar effect is the decision of Zeeman J in Commonwealth v Ware17 where a widow’s pension paid to an unqualified person was recovered. If the purported authority for a disbursement from Consolidated Revenue is an ultra vires statute, the money paid is recoverable according to the principles discussed here.18 If, however, any payment was related to a contract to sell or perform services, the mere fact that the statute authorising the sale or performance of services was invalid would not bring the case within the Auckland Harbour Board principle. The delivery of goods or [page 816] services provided under the admittedly ultra vires contract would itself give rise to a restitutionary claim for a reasonable price or value.19 [2105] Excessive disbursements. To the extent that a payment from the Revenue is unauthorised it is recoverable. In Attorney-General v Gray20 there was a contract of employment pursuant to which the defendant performed services. But since he was paid more than was due according to statute, the excess was recoverable. According to Hutley JA:21 As payment of part of the moneys was properly authorised by statute, I can see no

difficulty in part being recoverable. The excess payment does not make the services rendered by the respondent illegal, and he is entitled to retain that which he is entitled to receive for them.

[2106] No defence of estoppel by representation. If the payment is unauthorised, a representation to the contrary cannot ground any defence based on estoppel. A representation of a state of affairs that is contrary to law cannot ground an estoppel.22 This contrasts with the private law principle that a misrepresentation about legality attracts a right to rescind.23 There are signs of a willingness to reconsider this approach in some situations,24 but the high constitutional function of the rule discussed in this chapter makes it unlikely and inappropriate that a misrepresentation by a Crown employee or agent could ground an estoppel. In Attorney-General v Gray,25 the moneys disbursed without lawful authority were recoverable even though a defence based on estoppel would have been available had the plaintiff’s case been based simply on mistake.26 As Hutley JA explained it:27 … no officer can certify so as to affect the State, otherwise than in accordance with Parliamentary authority … Public moneys disbursed contrary to statute can be recovered, despite representations by those who disbursed them.

This conclusion about estoppel is supported by other Australian authorities.28 Arguments based on estoppel in similar circumstances have also been rejected in the United States and Canada.29 [page 817] [2107] No change of position defence. In our view, the change of position defence is not open to a person sued on the basis of the Auckland Harbour Board principle.30 This defence requires that it be shown that the defendant acted to his or her detriment on the faith of the receipt,31 and it is difficult to see how reliance could properly be placed upon the faith of a payment prohibited by law.32 Others, including Goff & Jones, Burrows and McInnes favour the opposite view.33

[2108] Auckland Harbour Board principle confined to ultra vires payments. In all cases where recovery has been allowed, the recipient of the payment out of consolidated funds failed to satisfy the statutory requirement which constituted the sole authority to make the payment in question. In Auckland Harbour Board v R,34 the statutory authority for payment was conditional upon the happening of an event that never took place. In Commonwealth v Burns,35 the statutory qualification for payment of the pension is not precisely set out in the report of the case; but it is clear enough that the title of the defendant’s father to receive it ceased at his death, and with it the authority to pay it to her on his behalf. In Attorney-General v Gray,36 the defendant did not possess the qualifications entitling him to payment at the rate appropriate under the relevant statutory provisions for teachers in a higher classification than the one to which he belonged. As McPherson ACJ put it in Commonwealth v Hamilton:37 Before the principle of the Auckland Harbour case can be invoked it is necessary to identify the precise terms of the statutory authority to pay, and to ask whether the terms of that authority were exceeded. It applies only when it can be seen that no such authority exists, as where its operation is made to depend on the fulfilment of a statutory condition that is not satisfied; or on the absence in the recipient of a particular statutory characteristic or qualification that would entitle him to payment; or on some other defect in the source of authority to pay. It is in events like those that money paid out of consolidated funds under Parliamentary control will be recoverable according to this principle. As was recognised by Viscount Haldane …,38 and also by Gibbs CJ in Maguire v Simpson,39 the rule is an aspect of the ultra vires doctrine, which means that the payment must be shown to have been made without or contrary to or in excess of the statutory authority to make it.

In Commonwealth v Hamilton unemployment benefits had been paid to a person who fraudulently misrepresented his position. This was a basis for recovery, but not according to the Auckland Harbour principle. The facts as (mis)represented had given the Secretary of the Department of Social Security authority to pay the benefits. Accordingly that payment was not ultra vires. [page 818]

The requirement of showing that the disbursement was ultra vires means that money paid in accordance with the exercise of a statutory discretion cannot be recovered by virtue of the Auckland Harbour Board principle.40 It has been said that not every breach of procedural laws or regulations relating to payments of public moneys will suffice, at least where the payments are in accordance with a contractual obligation.41 [2109] Crown’s contractual obligations. Since the Crown has a general power to enter into contracts (subject to restraints flowing from the federal nature of the Australian Constitution),42 even though the satisfaction thereof may depend upon Parliamentary appropriation,43 the Auckland Harbour Board principle does not apply in relation to valid contracts to the extent that they provide for payments thereunder. Those contracts may be enforced in the courts, although the statute law of the various Australian jurisdictions differs as to whether a money judgment is capable of execution in the absence of appropriation.44 If money is due under a contract and paid by the Crown it cannot be recovered otherwise than in accordance with the ordinary principles of the law of contract and restitution. In other words, the Crown cannot simply choose to ignore the executed contract and claim under the Auckland Harbour Board principle.45 For example, in Commonwealth v Crothall Hospital Services (Aust) Ltd,46 claims for payment were made upon the Commonwealth that were calculated otherwise than according to the written contract between the parties. By that contract, which provided for price variations, the claimant had agreed to perform services for, and at a price to be paid by, the Commonwealth. The respondent’s claims for payment were held, on the facts, to be offers to vary the contract which were accepted by the Commonwealth’s unqualified payments. Mistake in payment was not alleged: rather the claims that were acknowledged and met were accepted as the result of a conscious decision to do so by the officers concerned. The Auckland Harbour Board principle was held inapplicable because the Commonwealth’s payments were unqualified, and constituted not only performance, but acceptance of offers to vary the original contract. In

Attorney-General v Gray,47 the defendant argued that the excess payments he had received were covered by this contract principle insofar as there was a contract of employment between him and the Crown. However, that contract did not, the New South Wales Court of Appeal held, impact upon the statutory restraint upon pay officers requiring them to pay no more than the salary determined by the Public Service Board as appropriate for the position in fact held by the defendant. [page 819] While payment, to the extent that it is in accordance with a contractual obligation, will be irrecoverable, it does not follow that the mere fact that the payee gave valuable consideration in exchange will constitute a defence in a true ultra vires situation.48 The failure to perform the condition pursuant to which the appropriated moneys were payable in Auckland Harbour Board v R49 (namely, the grant of a lease) meant that they were recoverable even though the Board had taken steps towards being able to do so.50 In Commonwealth v Burns,51 Newton J qualified his statement of the applicable principle by reserving the position of moneys paid ‘without any consideration’. It is, however, doubtful if this qualification has any application outside the situation of a payment to the extent that it was due pursuant to a contract.52 [2110] Statutory rights of recovery. As already indicated,53 these principles allow the recovery of pension or other welfare benefits paid to recipients who were not entitled to receive them. However, in this field one frequently encounters a statutory right of recovery, subject in some cases to proof of fault by the recipient and to a right of appeal, with (more significantly) a statutory discretion to refuse the government relief in some cases having regard to hardship or other personal circumstances of the wrongful recipient.54 Where the discretion not to pursue recovery is exercised in accordance with such provisions, either

by the initial repository of the discretion, or on appeal, by the Administrative Appeals Tribunal, then the statutory right may be viewed as a code with the consequence that nothing in Auckland Harbour Board v R55 requires the repayment of the moneys that were wrongfully paid.56 However, the mere fact that a statutory right of recovery may be in some respects wider and in other respects narrower than that conferred at common law under the Auckland Harbour Board principle does not in itself exclude the latter principle.57 [2111] Harshness of the rule. To the extent that the rule is designed to enhance the authority of Parliament, the usefulness of depriving the citizen of any defence in the form of ‘consideration received’ or change of position may be questionable. The main justification for imposing liability on a citizen is that the money received was paid out by a public servant in excess of authority. Yet the rule visits the consequences of the act upon the person who in many cases will be the victim, and not the perpetrator of the error. Because of this, calls have been made to mitigate the harshness of the Auckland Harbour Board principle, at least to the extent of allowing the [page 820] citizen to raise usual restitutionary defences such as change of position and estoppel.58 One criticism that in the past has been levied against the principle is that it does not acknowledge a reciprocal claim by the subject against the Crown: this of course may no longer be the case in the light of Woolwich Equitable Building Society v Inland Revenue Commissioners.59 To date calls for legislative reform of the appropriately stern rule based on Auckland Harbour Board v R60 appear to have fallen on deaf ears outside British Columbia. 1.

See also [2108]. As to special limitation provisions and other defences available to the Crown, see [2039].

2. 3.

[1924] AC 318. See NSW: Constitution Act 1902, s 5; Qld: Constitution of Queensland 2001, s 66; SA:

Constitution Act 1934, ss 59–64; Tas: Constitution Act 1934, ss 37–41, 42–45; Vic: Constitution Act 1975, s 62; WA: Constitution Act 1889, s 72. 4.

5.

Victoria v Commonwealth (1975) 134 CLR 338 at 354, 386, 392, 410–11; Davis v Commonwealth (1988) 166 CLR 79 at 93, 115; Brown v West (1990) 169 CLR 195; Northern Suburbs General Cemetery Reserve Trust v Commonwealth (1993) 176 CLR 555; Combet v Commonwealth (2005) 224 CLR 494; 221 ALR 621; [2005] HCA 61 at [44], [232]–[235]; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1; [2009] HCA 23. Brown v West (1990) 169 CLR 195 at 208 per the court, quoting Mason J in Victoria v Commonwealth (1975) 134 CLR 338 at 392. Combet v Commonwealth (2005) 224 CLR 494; 221 ALR 621; [2005] HCA 61 illustrates that Parliament may choose to frame its authorisation in the most general of terms. However, the decisions in the recent Williams litigation state that the Commonwealth’s power to appropriate is not unlimited: see Williams v Commonwealth (2012) 248 CLR 156; [2012] HCA 23; Williams v Commonwealth (No 2) (2014) 252 CLR 252; [2014] HCA 23.

6. 7.

[1924] AC 318. [1924] AC 318 at 326–7.

8.

Commonwealth v Burns [1971] VR 825 at 828; Williams v Commonwealth (2012) 248 CLR 156; [2012] HCA 23 at [116] (reference to ‘money had and received’). Contra Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 at 177. Cf Law Commission, Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227, 1994, §17.12. See also McInnes, pp 983–4. (1977) 139 CLR 363 at 388.

9.

10. (1981) 36 ALR 567; 54 FLR 439. 11. (1981) 36 ALR 567 at 580; 54 FLR 439 at 453. 12. See New South Wales v Bardolph (1934) 52 CLR 455 at 471, 522; Sandvik Australia Pty Ltd v Commonwealth (1989) 89 ALR 213; Brown v West (1990) 169 CLR 195 at 205; Combet v Commonwealth (2005) 224 CLR 494; 221 ALR 621; [2005] HCA 61 at [235]; Pape v Federal Commissioner of Taxation (2009) 238 CLR 1; [2009] HCA 23 at [59]. 13. [1977] 1 NSWLR 406. 14. See also R v Toronto Terminals Railway Co [1948] Ex C R 563. 15. See further [2106]–[2107]. 16. [1977] 1 NSWLR 406. Cf also [2034]. 17. (1992) Unreported, SC(Tas) (Zeeman J), 2 July. See also Formosa v Secretary, Department of Social Security (1988) 46 FCR 117 at 125; 81 ALR 687 at 696. 18. Breckenridge Speedway Ltd v R (1970) 9 DLR (3d) 142. 19. Re KL Tractors Ltd (1961) 106 CLR 318 at 335. See also Field, The Effect of an Unconstitutional Statute, p 215. See generally [1027]. 20. [1977] 1 NSWLR 406. 21. [1977] 1 NSWLR 406 at 410–11. See also per Glass JA at 413–14. 22. Minister for Immigration & Ethnic Affairs v Kurtovic (1990) 21 FCR 193; Attorney-General v Quin (1990) 170 CLR 1; Roberts v Repatriation Commission (1992) 111 ALR 436. 23. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385. See [2415].

24. See, eg Attorney-General v Quin (1990) 170 CLR 1 at 18. 25. [1977] 1 NSWLR 406. 26. Generally as to this defence, see Chapter 24. 27. [1977] 1 NSWLR 406 at 409, 410. 28. Commonwealth v Thompson (1962) 1 CCR (Vic) 37; Commonwealth v Burns [1971] VR 825; Formosa v Secretary, Department of Social Security (1988) 47 FCR 117 at 125; 81 ALR 687 at 696; British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 65; 200 ALR 403; [2003] HCA 47 at [82]. See also Commonwealth v Hamilton [1992] 2 Qd R 257. 29. United States v Wurts 303 US 414 (1938); Office of Personnel Management v Richmond 496 US 414 (1990); Corpus Juris Secundum, ‘United States’, 134; Breckenridge Speedway Ltd v R (1970) 9 DLR (3d) 142. 30. See [2410]. 31. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385. See [2415]. 32. Commonwealth v Burns [1971] VR 825 at 830. 33. See Goff & Jones §27-53; Burrows, p 519; McInnes, pp 986–7. See also Charles Terence Estates Ltd v Cornwall Council [2011] EWHC 2542 (QB). 34. [1924] AC 318. 35. [1971] VR 825. 36. [1977] 1 NSWLR 406. 37. [1992] 2 Qd R 257 at 263. 38. See the passage in [2103]. 39. (1977) 139 CLR 362 at 388. See [2104]. 40. See Trimboli v Secretary to the Department of Social Security (1988) 86 ALR 64, where the statute authorised the compromise pursuant to which the payment was made. 41. Commonwealth v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567 at 581–2; 54 FLR 439 at 454–5 per Ellicott J (Blackburn and Deane JJ concurring). 42. See Williams v Commonwealth (2012) 248 CLR 156; [2012] HCA 23; Williams v Commonwealth (No 2) (2014) 252 CLR 252; [2014] HCA 23. 43. New South Wales v Bardolph (1934) 52 CLR 455. 44. See Hogg, Liability of the Crown, 2nd ed, pp 48–50. 45. See New South Wales v Bardolph (1934) 52 CLR 455 at 471–2 per Evatt J. 46. (1981) 36 ALR 567; 54 FLR 439. 47. [1977] 1 NSWLR 406. 48. Contrast the general position, discussed in Chapter 25. 49. [1924] AC 318. 50. See also Attorney-General v Gray [1977] 1 NSWLR 406 at 413–14. 51. [1971] VR 825 at 827, citing Re KL Tractors Ltd (1961) 106 CLR 318 at 334, 335. 52. See also [2108].

53. See [2104]. 54. See, eg Social Security Act 1991 (Cth), Chapter 5 (and the former s 140 of the Social Security Act 1947 (Cth)); Customs Act 1901 (Cth), s 165; Director-General of Social Services v Hales (1983) 78 FLR 373; Re Keuker (1984) 5 ALD 626; Re Pappis (1984) 1 AAR 315; Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213. 55. [1924] AC 318. 56. Director-General of Social Services v Hales (1983) 78 FLR 373; Walker v Secretary, Department of Social Security (1995) 56 FCR 354; 129 ALR 198. Cf also [2039]. 57. Commonwealth v Burns [1971] VR 825 at 829. 58. Law Reform Commission of British Columbia, Report on the Recovery of Unauthorised Disbursements of Public Funds, LRC 48, 1980. The recommendation was adopted: see Financial Arbitration Act, SBC, 1981 c 15, s 67. For a contrary view, see Hogg, Liability of the Crown, 2nd ed, pp 185–6. The Law Commission UK recommended against altering the principle, but did so on the assumption that the standard restitutionary defences of change of position and submission or compromise apply: Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227, 1994, §17.20. See [2040]. 59. [1993] AC 70. See the discussion in Chapter 20. 60. [1924] AC 318.

[page 821]

PART VIII

Defences

[page 823]

Chapter Twenty Two

Introduction to Defences 1. 2.

General …. Classifying Defences ….

[2201] [2207]

1. General [2201] Objects. The principal object of this chapter is to explain the concept of a restitutionary defence. In later chapters we discuss in detail the defences identified, as well as important aspects of certain other defences which are more in the nature of general defences but which have significant applications to claims for restitution. A subsidiary object of this chapter is to classify the defences, and to place the discussion in subsequent chapters within the framework developed earlier in this work. In particular, it is necessary to explain the relevance of the unjust enrichment concept to defences to claims for restitution. [2202] Perspective. As we have seen, restitution as a field of law based generally on the unjust enrichment principle is still in its developmental phase.1 As a classifying theory its field of operation may be quite broad but as a doctrinal principle it would appear that in Australia it will be relatively narrow. Moreover, a clear consensus of the framework of the subject is still to some extent lacking. The unjust enrichment framework does not fit neatly with some of the older cases that continue, at least for the present, to be good law. Some of these cases need to be explained in a way which is consistent with unjust enrichment, others may in time be overturned because of disconformity with that framework, or more recent analogies. Some will demonstrate

that the unjust enrichment concept is not the universal touchstone in the Australian law of restitution. Two developments in particular have made the discussion of defences an important one. First, one aspect of restitution law that has emerged in Australia is the concept of a prima facie right to restitution in particular situations. Many of these have been rationalised in terms of the unjust enrichment concept. For example, in Australia and New Zealand Banking Group Ltd v Westpac Banking Corp2 the High Court characterised the right to recover money paid under mistake as ‘one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment’. As we have emphasised,3 the claim in restitution involves the enforcement of an obligation imposed by law on the basis that the defendant has been unjustly enriched. Accordingly, [page 824] the reference by the High Court to ‘compensation’ in the statement quoted should not be taken to imply that the relevant defences are those applicable to claims for compensation based on the commission of a wrong. Second, because the implied contract theory has been rejected,4 it has become clear that it is meaningful to consider defences which are specific (or exclusive) to the law of restitution. Therefore, in addition to general defences which operate within the law of civil obligations, including the law of restitution, there exist defences which apply only to claims for restitution. Although only the latter may properly be described as ‘restitutionary’ defences, it is important to deal with all the major defences to claims brought for restitution. [2203] Concept and onus of proof. The concept of a defence to a claim generally assumes two things: that the plaintiff has established (or is presumed to have established) a claim; and that the burden of

pleading and proving a defence to the claim rests on the defendant. When the concept of unjust enrichment was explained, reference was made to its fourth element, namely, the ‘defence’ to a claim for restitution.5 This means that, in so far as the unjust enrichment concept determines the extent of the law of restitution, a prima facie case for restitution may be defeated, or at least reduced in quantum, only where this fourth element is established. Some defences negative the injustice element of unjust enrichment, other defences, properly analysed, negative or qualify the enrichment. It would therefore be too restrictive to treat as possible defences only those matters which show that the receipt or retention of the benefit not to be unjust.6 Although the onus of proof is important in separating the claim from the defence, it is far from conclusive of the way in which restitutionary claims unfold in practice. Two examples may be given to show that no absolute distinction can be drawn merely by reference to the theory of unjust enrichment. First, the defendant may accept a burden of proof in relation to one of the elements of the plaintiff’s claim. Thus, although in a case based on mistake the plaintiff must prove the mistake, the enrichment of the defendant and a causal connection between the two,7 the defendant may, in the course of the proceedings, establish the lack of a causal connection. Again, in a claim based on a total failure of the agreed return, notwithstanding that the burden is on the plaintiff to establish both the failure and its character as a total failure, the defendant may establish that any failure was merely partial. In such cases the plaintiff’s claim will fail, not so much because the defendant has established a valid defence, but because the established facts show that no prima facie claim has been made out.8 Second, the onus of proof may shift during proceedings. Take, for example, a claim for a payment based on a total failure of the agreed return which arises in the context of a contract said to have been discharged for breach by the defendant. The plaintiff must prove the payment, a right to treat the contract as discharged, valid exercise of the right as well as the

[page 825] total failure. It is a good ‘defence’ to such a claim that the plaintiff affirmed the contract prior to exercise of the right of discharge. It is generally said,9 that the defendant bears the onus of proof in relation to matters such as affirmation. Therefore, although it is appropriate for restitution lawyers to regard the elements of unjust enrichment as requiring the plaintiff to prove valid exercise of the right, the plaintiff’s allegation that the right was validly exercised may place an onus on the defendant. Accordingly, notwithstanding that valid discharge is a matter which goes to the plaintiff’s prima facie case, the onus is on the defendant to allege and prove prior affirmation.10 [2204] Defences and the injustice element of unjust enrichment. It follows from the explanation above11 that by the expression ‘restitutionary defence’ we generally intend to refer to a matter which goes beyond denial of the defendant’s prima facie obligation to make restitution in a particular situation. Thus, in David Securities Pty Ltd v Commonwealth Bank of Australia12 Mason CJ, Deane, Toohey, Gaudron and McHugh JJ explained13 that there are ‘circumstances which the law recognises would make an order for restitution unjust’. They went on to explain:14 There can be no restitution in such circumstances because the law will not provide for recovery except when the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust.

This passage emphasises that it must always be inappropriate to make an order for restitution where neither the receipt nor the retention of a benefit is unjust. In other words, since the principles that inform the creation of restitutionary obligations establish, explain and mould what we call restitutionary defences, it may be difficult to draw a sharp distinction between the burden of the plaintiff to establish the injustice element of unjust enrichment and the ability of the defendant to defend the claim by proving that the enrichment was not unjust. It must

therefore generally follow that matters which go to the ‘injustice’ element of unjust enrichment are not necessarily defences in the strict sense. There are, furthermore, two important points which must be borne in mind. First, it is wrong to treat the defendant as having a general onus to establish the justice of the receipt or retention of the benefit. The error lies in inconsistency with the idea that there are recognised cases in which a prima facie obligation to make restitution arises. The idea of a prima facie case asserts that the injustice element of unjust enrichment is a matter which must be proved, not assumed, by bringing the facts within one of the established categories such as mistake.15 It is, of course, also wrong to [page 826] place on the plaintiff the burden of establishing that the defendant has no defence to the claim. However, in order that the injustice element does not become an overworked concept, we should keep distinct those matters which determine whether a prima facie case has been made out from those matters which operate even though all the elements of unjust enrichment appear to have been satisfied. Second, the idea that a restitutionary defence is relevant to the justice of a claim does not mean that any unjust circumstance pertaining to the defendant may constitute a defence.16 The idea of a restitutionary defence to a prima facie claim assumes that the proceedings did reach a stage where it was appropriate to describe the enrichment of the defendant as ‘unjust’. Just as a plaintiff must find some generally accepted basis for saying that an enrichment is ‘unjust’,17 so also must the defendant establish some recognised defence to the prima facie claim thus made out. In other words, just as a claim for restitution does not fall to be decided by some unprincipled conception of what is just and fair,18 so also whether the defendant has a good defence to the claim is not an issue to be decided simply by reference to whether the court considers it unjust or unfair that the plaintiff should recover.19

[2205] Relevant defences. The established defences separately addressed in subsequent chapters are: (1) election;20 (2) change of position;21 (3) bona fide purchase;22 (4) illegality;23 and (5) delay.24 Other defences which are tied to particular classes of restitutionary claim have been discussed in specific contexts.25 [2206] Contracting out. As a general rule it is open to parties to contract out of restitutionary liability. One important application of this, which itself has the status of a defence to restitution, is the bona fide compromise of the claim. The ability to contract out of the rules governing rights of discharge and rescission (implied by the general principle of freedom of contract) also implies that agreement may be reached that a claim which would otherwise [page 827] be available cannot be brought.26 Thus, although it is in practice rare, an exclusion clause may provide a valid defence to a claim for restitution. Similarly, we might therefore treat express (or implied) provisions for forfeiture as defences to claims for restitution. Where such clauses are present, the first issue, in all cases, is whether the parties intended the clause to apply in the circumstances which have occurred. Although this is an issue of contract construction, there is little case law except in the context of forfeiture clauses.27 Such authority as exists in the context of exclusion clauses indicates that the conclusion is unlikely to be drawn that the provision was intended to apply.28 In any event, some such clauses may be invalid or unenforceable under statute. There are also legislative provisions, applicable principally to ‘consumer’ transactions, which qualify

freedom of contract in relation to exclusion clauses.29 More generally, the discretion to order ‘restitution’ arising under statutes such as the Australian Consumer Law30 cannot be excluded by contract. We do not attempt to deal with the impact of such contractual provisions as defences to prima facie claims for restitution. Moreover, since principles which govern relief against forfeiture (and qualify the freedom to contract out of restitutionary liability) are themselves informed by unjust enrichment, it is preferable to see forfeiture clauses as defining the elements of the plaintiff’s claim. In other words, where a payment is affected by a forfeiture clause, the elements of the prima facie claim include proof of circumstances which both enliven the court’s jurisdiction to grant relief against forfeiture, and justify the grant of relief.31

2. Classifying Defences32 [2207] Introduction. It follows from what has already been said33 that we do not regard analysis in terms of whether the defence relates back to injustice or some other element of unjust enrichment as crucial. In any event, use of that classification might not be very helpful in analysing defences which are not peculiar to restitution. [page 828] It may also be implied from what has been said that the main classification is from the perspective of whether the defence is of a kind limited to restitutionary claims, or one which has other applications as well.34 There are, however, other bases for distinguishing defences.35 [2208] Specific and general defences. The list of defences specific to the law of restitution is a small one. It is now possible to say that change of position is a valid and established defence to a claim for restitution. It is, at least in terms, one which is restricted to

restitution.36 The defence of ‘consideration’ that is ‘value given or received’ comes very close to being a defence restricted to restitutionary claims. Although its claim to this status is controversial in view of its recognition as an element of the defence of bona fide purchase for value, it does have a broader operation in the context of restitution.37 There may be other restitutionary defences, which operate generally or in particular or limited circumstances.38 A contrast may therefore also be drawn between defences which are general, in the sense of applying to various types of claim for restitution, and those which are specific in the sense of applying only where the restitutionary claim takes a particular form. Thus, bona fide purchase has its main, if not exclusive operation, in relation to claims of a proprietary nature.39 Other defences are quite clearly general in their operation. They apply to civil claims of various types that do not necessarily entail unjust enrichment. Bona fide purchase is again an example. More general examples are estoppel40 and illegality (including public policy).41 These may be raised as defences to virtually any civil claim or action, including one for restitution. Other defences are general in the sense that, although relevant to restitutionary claims, they do not involve any working out of unjust enrichment principles. Estoppel is again an example, as is affirmation of a contract, which prevents the satisfaction of a precondition to a restitutionary claim.42 [2209] Other distinctions and classifications. An important distinction is between a total defence to a restitutionary claim and a merely partial defence. Thus, although change of position operates only to the extent of the defendant’s change of position, the orthodox view is that estoppel operates as a complete defence. On this view, estoppel is an all or nothing defence which does not operate pro tanto.43 [page 829] A distinction may also be drawn between cases in which the defendant can put forward some self-operative ground for denying

restitution and cases in which the defendant may appeal to factors which merely inform a court’s discretion to refuse an order in the nature of restitution. Although exercise of the discretion may not be based directly on unjust enrichment, the ultimate decision on the issue whether to exercise the discretion will in some contexts determine the success or failure of the claim for restitution.44 Other classifications are in our view less useful. Reference may be made to the scope of the defence. Thus, defences dependent on statute may only operate in some jurisdictions, or in limited circumstances.45 [2210] Statutory defences. The list of statutory defences to restitutionary claims is a long one. There are, however, very few examples of statutory defences limited to restitutionary claims. The contrast between statute and the general law is therefore not particularly helpful.46 In general terms, statutory defences may be classified in the following way.47 First, those statutes which are specific to restitutionary claims available under the statute itself. The main examples are the frustrated contracts legislation.48 Second, those statutes which are specific to claims for restitution, or analogous claims brought under statute. The examples here are more diverse, available in some jurisdictions but not others and often varying in their content and scope. They include statutory versions of the defence of change of position,49 statutory restrictions on the exercise of rights which might otherwise lead to restitutionary claims,50 and some statutes of limitation.51 Third, there are statutes which are general in operation, and which therefore apply to various claims, including claims for restitution. The main examples are statutes which not only render contracts void, but also prohibit claims for restitution,52 and statutes of limitation.53 Fourth, there are statutes which confer a statutory discretion to withhold restitutionary or analogous relief. The principal examples are statutes which regulate claims in respect of prohibited conduct, such as misleading or deceptive conduct.54 [2211]

Analysis. The diversity outlined above indicates that

although there are well-established defences to restitutionary claims, there is no obvious analytical structure. It is clear that we cannot restrict the analysis to defences peculiar to restitution, since that would leave unconsidered valid defences which happen to have a more general operation. Since the list of statutory defences defies genuine conceptual analysis, no particular [page 830] analytical distinction is suggested by the contrast between common law and statute. Moreover, most of the statutory defences have been discussed in their own particular contexts.55 To be helpful, the analytical structure must reflect the perception of those who seek to raise defences to restitutionary claims. Accordingly, the list which was made earlier56 emphasises the practical perspective of the facts on which the defendant may seek to rely, rather than the conceptual nature of the defence itself, or its relation with unjust enrichment. It is on this basis that we included ‘delay’ in the earlier list57 of possible defences even though it does not figure in the classifications outlined above.58 However, we appreciate that the analysis does bring in some matters which are more accurately treated as going to the elements of the plaintiff’s claim. This is true, for example, in relation to some aspects of the defence of election. As will appear, much of this material is familiar to lawyers conversant with contract law. It is not, however, our object to deal exhaustively with contractual principles. The perspective of restitutionary claims implies that we are concerned to explain and illustrate how contractual principles operate on claims for restitution.59 [2212] Role of discretion as a defence. Because discretion may occasionally operate as a complete defence to a restitutionary claim, illustrations should be given of the operation of discretion as a defence to a claim for restitution. However, we do not put forward the view that discretion is of itself a restitutionary defence, for the simple reason that,

save in exceptional cases, once a prima facie case for restitution has been made out there is no discretion to refuse relief.60 A general (equitable) discretion operates in three main situations, all relating in one way or another to adjustments on rescission or discharge.61 First, where there is no positive right to rescind a contract, but merely an ability to seek an order to have a contract set aside, for mistake, undue influence or unconscionable conduct, discretion determines whether or not the contract will be set aside. The inability to do justice by substantial restitution is certainly an aspect of the discretion, but it is also informed by matters such as hardship, laches and so on. In these cases it cannot be said that there is a right to restitution, since the claim for restitution depends on exercise of a discretion in the plaintiff’s favour.62 Second, discretion operates where consequential relief is sought on exercise of a right of rescission. This is clearly a requirement of substantial restitution, that is, the defence that counter-restitution is impossible.63 Third, in some cases of discharge, discretion will determine the form of relief.64 [page 831] More pervasive are the statutory sources for discretion as a restriction on claims for restitution. Although not limited to restitution in the context of ineffective transactions, they have their most frequent operation in that context.65 Two groups of illustrations may be given. The first comprises statutes in which the discretion qualifies a plaintiff’s ability to elect between rights.66 The second comprises statutes in which the discretion operates as a direct restriction on a restitution award. The most significant area is where restitution is sought following breach of the statutory prohibitions on certain classes of conduct under the trade practices and fair trading legislation.67 Although breach of the statutory prohibitions may lead to a claim for an order in the nature of restitution, it is a good defence for the defendant to show that the discretion should not be exercised in the plaintiff’s favour.68 There are other more specific examples.69

[2213] Role of estoppel as a defence. Most difficult to deal with is the defence of estoppel. Estoppel has played a major role in recent years in the definition of civil liability in Australia. One of the most significant developments in Australian law has been the movement towards a unified concept of estoppel, subsuming the traditional contrast between common law estoppel (generally based on representations of fact) and equitable versions of the concept, particularly promissory estoppel, within a single unified concept.70 Although neither this process nor the identification of the elements of estoppel is a concern of this work, we have had occasion to refer in various places to the importance of estoppel as a basis for liability in situations where the law of restitution may operate.71 The present concern is, of course, with estoppel as a defence to a claim in restitution. Our preference is to deal more with the relationship between estoppel and other defences than to treat estoppel as a separate defence. Accordingly, [page 832] references to estoppel will be found in the context of all the defences to restitutionary claims. The classification thus suggested for the operation of estoppel is as follows. First, estoppel may be a way of achieving the same results as established defences, or results sufficiently analogous to justify its treatment in those contexts. Thus, estoppel may be a basis for saying that a pre-condition to the plaintiff’s claim for restitution has not been satisfied. An example is where estoppel is equivalent in effect to an election between alternative claims or rights.72 Second, estoppel may operate as an independent defence to a claim for restitution, even though no alternative claim or right was ever at issue. We investigate this in the context of the relationship between estoppel, as a direct (and complete) defence to a restitutionary claim, and the change of position defence.73

Third, estoppel may be a way of establishing that a defence recognised as applying to restitutionary claims is present. Thus, a person may be estopped from denying that there has been a compromise of a restitutionary claim, so as to enable the defendant to establish the defence of consideration.74 Again, in some cases bona fide purchase may be proved by reference to estoppel.75 Similarly, but rarely, the defence of consideration may in effect be proved, where estoppel is established through delay amounting to acquiescence.76 Fourth, estoppel may be a defence to the plaintiff. In other words, where the defendant puts forward a particular defence to a restitutionary claim, such as the statute of limitations, it may be open to the plaintiff to invoke estoppel.77 1.

See Chapters 1–2.

2. 3.

(1988) 164 CLR 662 at 673; 78 ALR 157. See, eg [109], [160], [237]–[241].

4. 5.

See [110], [131], [132]. See [141].

6. 7.

See [2204]. See [429], [2909].

8. 9.

See, eg [1124] and further [2912]. See Carter, §1076.

10. See further [2316]. 11. See [2203]. See also [144]. See further James Goudkamp and Charles Mitchell, ‘Denials and Defences in the Law of Unjust Enrichment’ in Mitchell and Swadling (eds), Restatement Third Essays, Chapter 6. 12. (1992) 175 CLR 353; 109 ALR 57. 13. (1992) 175 CLR 353 at 379; 109 ALR 57. 14. (1992) 175 CLR 353 at 379 (emphasis in original). See also per Dawson J (1992) 175 CLR 353 at 405–6 and Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 673; 78 ALR 157. 15. See also [208] (no requirement of ‘unjustness’ over and above the unjust factor itself). 16. This is subject to statute. See [2210]. 17. See [132], [142], [166], [207]. 18. Cf [123], [222], [244] (perspectives on equity and proprietary relief). 19. See Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 578 (adopted Martin v Pont [1993] 3 NZLR 25 at 30). 20. See Chapter 23.

21. See Chapter 24. For an explanation of how we deal with the related defence of estoppel see [2213]. 22. See Chapter 25. 23. See Chapter 26. 24. See Chapter 27. 25. See, eg [447], [514] (voluntary submission to claim); [442] (payment over); [416] (change of law); [2036]–[2041] (defences available to Revenue). Cf [1033], [1035], [1042], [1227] (relevance of risk in negotiating or contracting). 26. See, eg [1240] (parties may exclude the operation of the frustrated contracts legislation). See also [645]. 27. See [1126]. 28. See Iezzi Constructions Pty Ltd v Currumbin Crest Development Pty Ltd [1995] 2 Qd R 350, where a provision in a sub-contract, stating that a sub-contractor’s entitlement to payment depended on the contractor having received payment from the principal, was treated as inapplicable to a claim for reasonable remuneration. Cf Trade Indemnity Australia Ltd v Parkinson Air Conditioning Pty Ltd (1994) 13 ACLR 19. 29. See Cth: Competition and Consumer Act 2010, Sch 2, Australian Consumer Law, ss 64, 64A; NSW: Sale of Goods Act 1923, s 64. Although this looks to be a narrow qualification, the definition of ‘consumer’ is sometimes a wide one, and many exclusion clauses which would be valid at common law, and effective to exclude a restitutionary claim, are void even in the context of commercial contracts. Moreover, these provisions are important in relation to the restitutionary rights (discussed [1147], [2323]) against a supplier of goods. See also [1042], [1047], [1334]. See further the more specific legislation referred to [1316], [1335]. 30. See [1042], [1047], [1334]. See also the more specific legislation referred to [1316], [1335]. 31. See generally [1136]–[1145]. 32. See Ross Grantham and Charles Rickett, ‘A Normative Account of Defences to Restitutionary Liability’ [2008] CLJ 92. 33. See [2203]–[2204]. 34. See further [2208]. 35. See further [2209]. 36. There are, perhaps, analogous defences, of which restitutio in integrum may be an example. See [2324]–[2335]. 37. See generally Chapter 25. 38. This depends on the extent of their validity or scope. For example, the status of ‘passing on’ as a defence varies between jurisdictions: see [2042]. 39. See generally Chapter 25. See also [320]. 40. For the treatment of estoppel see [2213]. 41. See generally Chapter 26. 42. See [2213] and further [2319], [2408]. 43. See further [2413], where we question this aspect of estoppel in relation to restitutionary

claims. 44. See further [2213], [2334]. 45. See further [2210]. 46. See further [2211], [2303]. 47. Cf [232]–[233]. 48. See generally [1236]–[1268]. 49. See generally [2416]. 50. See generally [2333]. 51. See generally Chapter 27. 52. See generally [230], [1003], [1014], [1022], [1028]. For the impact of illegality see Chapter 26. 53. See generally Chapter 27. 54. See generally [214], [226], [228], [1047], [1315], [1334]. 55. See, eg [1028], [1236]–[1268]. Cf [1336]–[1339] (impact of sale of goods legislation). 56. See [2205]. 57. See [2205]. 58. See [2207]–[2210]. 59. See especially Chapter 23. See also [215]. 60. See [2204]. 61. See generally [1431]–[1439]. 62. See generally [1329]–[1332]. 63. See generally [2324]–[2335]. 64. The most common case is where an order is sought for relief against forfeiture. Assuming that the plaintiff has established facts which suggest a situation in which such relief may be given, a choice may have to be made between restitution and specific performance. Moreover, whether substantial restitution can be achieved is important to the exercise of the discretion, and the plaintiff must submit to terms imposed by the court as a condition of relief. See [1136], [1439], [2334]. Cf [221], [242]ff, [1727]–[1730] (constructive trust). 65. See [1333]–[1335]. 66. See [2334]. 67. See [1047], [1334]. 68. See [1334]. 69. See, eg [1316], [1335] (general legislation applicable in New South Wales where relief is sought from an unjust contract or provision); [1148] (claims for the return of a deposit under the statutory discretions operating in New South Wales and Victoria). 70. See [2409]. The key cases are Legione v Hateley (1983) 152 CLR 406; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Foran v Wight (1989) 168 CLR 385; Commonwealth of Australia v Verwayen (1990) 170 CLR 394. See also Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at 575, per French CJ, at 623–5 per Gageler J; [2014] HCA 14 at [14], [18], [102], [152]–[156]. See further

the dissenting judgment of Priestley JA in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582; Sir Anthony Mason, ‘Changing the Law in a Changing Society’ (1993) 67 ALJ 568 at 572; Sir Anthony Mason, ‘The Place of Equity and Equitable Remedies in the Contemporary Common Law World’ (1994) 110 LQR 238 at 253–6; Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 Aust Bar Rev 284 at 300–1; and see Handley, Estoppel. 71. See [934] (estoppel and acceptance of benefit); [1035], [1046] (promissory estoppel and restitution in the form of reasonable remuneration); [1158], [1166], [1168], [1430] (estoppel and treatment of benefit in restitutionary claims against a party in breach of contract). See also [458], [1046] (proprietary estoppel and mistaken improvers). 72. See [2408]–[2409]. 73. See [2404]–[2405], [2413]. 74. Cf [2517] (abandonment). 75. See [2530]. 76. See [2712], [2713]. Cf [2517]. 77. See further [2712].

[page 833]

Chapter Twenty Three

Election 1. 2.

General …. Election Between Inconsistent Remedies ….

[2301] [2304]

(a) General ….

[2304]

(b) Alternative Claims Restitution …. 3.

4.

in

Contract

and [2309]

(c) Alternative Claims in Tort and Restitution …. [2311] Election Between Inconsistent Rights …. [2314] (a) General ….

[2314]

(b) Election as a Defence ….

[2317]

(c) Related Defences …. Restitutio in Integrum ….

[2321] [2324]

(a) General ….

[2324]

(b) Scope and Operation of the Defence ….

[2327]

1. General [2301] Objects. The object of this chapter is to explain why, and in what circumstances, the requirement of election between inconsistent remedies or between inconsistent rights will operate as a defence to a claim for restitution. Although the former may operate as a defence to a prima facie claim for restitution, the latter does not generally operate in this way. The concept of election between rights is more concerned

with the elements of the plaintiff’s claim. In other words, the remedy of restitution may be defeated because, as a result of a prior election between rights, the ability to prove one of the elements of the plaintiff’s claim is absent. We also discuss the inability of the plaintiff to make counter-restitution. Although distinct from, and narrower than, the rules on election between rights, this defence is too important to omit. It is relevant to election between rights because it operates by denying the effectiveness of the plaintiff’s election to terminate or rescind a contract in a situation where termination or rescission is essential to the restitutionary claim. We discuss it under the traditional description of restitutio in integrum.1 [2302] Concept. The concept of election is simple, perhaps deceptively so, because much of the applicable law is exceptionally complex. It may be expressed in terms that whenever a plaintiff is faced with alternative remedies or rights the plaintiff must at some stage, and so far as they are inconsistent,2 make an election between the remedies or rights. [page 834] It is clear that the rules applicable to election apply to claims in restitution. However, since the complexities in the law regulating election are not specific to claims for restitution, it would be inappropriate to consider in detail the controversial aspects of the general principles. Moreover, Lord Wilberforce’s statement in Johnson v Agnew3 — that election, though the ‘subject of much learning and refinement, is in the end a doctrine based on simple considerations of common sense and equity’ — is as applicable to claims for restitution as it was to the claim for compensation there in issue. [2303] Scope. When associated with contract, election is just one of a number of concepts relevant to actions for specific performance or an injunction, or claims to recover contract debts, damages or restitution.

Although it is true that the plaintiff in all cases seeks a remedy, the action or claim may (and frequently will) assume the exercise of some right conferred by the contract, statute or the general law. For contract lawyers, the relevant concepts are classified as restrictions on which reliance may be placed by a defendant concerned to repel the claim. Even though couched in terms of ‘restrictions’, the concepts are nevertheless examples of defences. Because the burden of proof in practice (if not in strict theory) rests with the defendant, the substantive effect of the restrictions is that the plaintiff’s claim will in most cases fail if the restriction is operative. The perspective of election as a concept is that it defines situations in which a particular remedy or right is not available. That perspective is indeed a general one to which other (related) restrictions are clearly relevant. Thus, although we give prominence to election, it must be considered in conjunction with certain other restrictions. Nevertheless, this is not a work on contract, and is not concerned in any general way with the restrictions which operate in relation to rights and remedies, and in discussing election as a defence to a claim for restitution it is not our concern to explain in detail the principles which regulate election and related restrictions. On this approach, but mainly for the purposes of comparison with election, we consider estoppel, certain statutory restrictions and restitutio in integrum. However, these are for the most part concepts concerned with the exercise of rights rather than the pursuit of remedies. In other words, although they generally assume the presence of alternative rights, they do not assume the presence of alternative remedies. Even so, because they present obstacles to the assertion of particular rights, they may affect the plaintiff’s ability to pursue a particular remedy. Since a remedy in restitution cannot be pursued if the defendant has a valid defence, namely, that the right on which the remedy depends cannot be asserted, in many cases the effect will be to prevent a claim in restitution. But we do not put the restrictions forward as distinct restitutionary defences.

[page 835]

2. Election Between Inconsistent Remedies (a) General [2304] Introduction. From the time of Slade’s Case,4 and no doubt from much earlier, it has been recognised that the one set of facts may provide the plaintiff with two (or more) alternative remedies. At the time of Slade’s Case this arose if there were two (or more) applicable forms of action. In that case the facts, in the opinion of the court, provided the plaintiff with an action on the case on assumpsit and an action in debt. The first resolution of the judges recognised the principle of election:5 ‘That although an action of debt lies upon the contract, yet the bargainer may have an action on the case, or an action of debt at his election’. However, as their fourth resolution indicated, recovery in one action would bar the other. The old learning on election was brought up to date in the leading decision of the House of Lords in United Australia Ltd v Barclays Bank Ltd.6 It was there recognised that the concept survived the abolition of the forms of action, but is to be considered with due regard to modern court procedures. The modern rules of court procedure permit a party to an action to amend pleadings, to add a claim, to delete one claim and to substitute another, or to pursue two or more inconsistent remedies simultaneously. Of course, in all these cases, there may be adverse decisions on costs to the plaintiff who amends its pleadings, and the rules and principles which govern pleadings may deny the ability to plead a cause of action which was not complete at the time when the action was initially brought, and also prohibit a late amendment if to do so will cause stress to litigants or disrupt overcrowded court lists. These matters aside, the position today is that procedural rules do not present substantive obstacles to pleading

inconsistent remedies. This includes the ability to combine different causes of action, such as tort and contract or tort and restitution. A plaintiff may, therefore, pursue alternative remedies without being held to have elected in favour of either, since the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other.7 It is open to a plaintiff to combine inconsistent causes of action in a single writ, and indeed to add or delete defendants. The United Australia Ltd case itself illustrates that alternative and inconsistent8 remedies may be sought in tort [page 836] and restitution, against different defendants.9 Other examples of election are between a contract debt and restitution,10 between specific performance and restitution,11 and between contract damages and restitution.12 Similarly, election may be made between damages and an account of profits.13 For example, in a New Zealand case, Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd,14 the plaintiff sued the defendant for breach of copyright, alleging that it had pirated the design of a dress and marketed it in an inferior version. It claimed an account of profits. Before trial the plaintiff applied to amend its pleadings by adding a claim for compensatory damages. Henry J permitted the amendment, concluding that the initial claim for an account of profits did not waive or extinguish any claim for compensatory damages. [2305] Elements. If a plaintiff satisfies the legal requirements for more than one remedy, and those remedies are mutually inconsistent, the plaintiff must at some stage choose between those remedies. Whether this has occurred will depend on whether the requirements for a valid election are satisfied. However, the focus is usually on whether the ability to seek one remedy has been lost by a choice in favour of another. It is beyond question that a binding election occurs once a person with sufficient knowledge of the ability to elect communicates

the election by unequivocal words or conduct addressed to the other party. In cases of election between remedies, ‘knowledge’ refers to knowledge of the ability to elect. As Lord Blackburn said in Kendall v Hamilton,15 ‘there cannot be an election until there is knowledge of the right to elect’.16 It follows that a claimant cannot be held to have made an election unless it is clear that more than one inconsistent remedy is available and that a choice must be made. For example, in Personal Representatives of Tang Man Sit v Capacious Investments Ltd17 a claim was brought for an account of profits and damages in respect of a breach of trust. Despite these being inconsistent remedies18 the trial judge ordered both an account of profits and damages. The granting of that order meant that when the claimant quickly took action to enforce [page 837] the award of an account of profits it could not be said to be making an election to choose an account of profits over damages to the extent that damages would be inconsistent with the account of profits.19 [2306] Time for election. Although the right to elect between remedies must be exercised, the general principle is that no election occurs until the plaintiff has chosen between the inconsistent forms of relief available. So far as election between remedies is concerned, the position was explained by Lord Atkin in United Australia Ltd v Barclays Bank Ltd,20 when he said that no question of election between remedies can arise ‘until one or other claim has been brought to judgment’. Therefore, at least as a general rule,21 the relevant time for election is the moment, if it occurs, at which the court (at trial or on appeal) decides that the plaintiff is entitled to two (or more) inconsistent remedies.22 [2307]

Impact of election. In Scarf v Jardine23 Lord Blackburn

explained the general principle as being that where a person has an ‘option to choose one or other of two inconsistent things, when once he has made his election it cannot be retracted, it is final and cannot be altered’. There are two common election situations relevant to the law of restitution, and in which the impact of election may be considered.24 The first is where the plaintiff is faced with alternative claims in contract and restitution. The second is where the plaintiff is faced with alternative claims in tort and restitution. In either case, if the claim for restitution (or the alternative claim) is brought to judgment it will bar any subsequent (and inconsistent) claim. Where a judgment is recorded for a cause of action, it is merged into judgment.25 The election is therefore final.26 [page 838] [2308] Estoppel and election between remedies. The rules on election between remedies themselves indicate that pleading one remedy does not preclude the plaintiff adding another, or substituting a different remedy, even though the initial statement may have been the subject of detrimental reliance by the other party. Historically, in the absence of contractual consideration, courts have been reluctant to conclude that a party is estopped from pursuing a remedy, otherwise open.27 However, at least in theory, this does not prevent a party being estopped from making a choice between two available remedies.28 Nevertheless, only rarely will estoppel operate to restrict the choice between remedies. The normal requirements of estoppel apply, so that there must be a representation, promise or conduct, relied on by the other party in circumstances which would make it inequitable to allow the plaintiff to make the choice which was formerly available.29 However, even if estoppel is established, this does not signify that the remedy has been lost. One justification for the generous approach of the rules on election between remedies is the costs sanction which may be imposed where pleadings are amended. This sanction may be exacted as the ‘minimum

equity’ required to do justice in cases of estoppel.30 Only exceptionally will the court require the estoppel to be enforced in the same way as an election at the trial, that is, as signifying that the remedy has been lost.31 Apart from the technical area of issue estoppel,32 there are additional situations where estoppel may impact on remedies. Because they do not assume the presence of alternative remedies they do not illustrate a special operation of estoppel in that context.33

(b) Alternative Claims in Contract and Restitution [2309] Election between restitution and damages. The ability to elect between restitution and damages arises principally in respect of claims for the recovery of money paid or in relation to non-monetary benefits in the [page 839] context of an ineffective contract.34 Thus, where a breach (or repudiation) confers a right of discharge, a claim for restitution is not available unless the right of discharge is exercised; but once this occurs the plaintiff may claim damages or restitution.35 Where the defendant has obtained a monetary benefit from the plaintiff, damages may be an alternative to recovery, as on a total failure of the agreed return for a benefit which, having been received at the plaintiff’s expense, could have been recovered as restitution for an unjust enrichment. For example, in Rowland v Divall36 the defendant’s failure in breach of contract to transfer title to goods permitted recovery of the price as restitution or damages. More generally,37 recovery in restitution may assume that a claim for damages would fail, or that recovery of damages for loss of the bargain would be inconsistent with restitutionary recovery of an advance payment. Thus, the other area in

which the ability to elect between damages and restitution appears to be recognised38 is where the plaintiff seeks restitution, instead of damages, in relation to a non-monetary benefit obtained prior to discharge for breach or repudiation. These cases assume that until judgment is taken for damages the plaintiff may pursue and recover on a claim for restitution in the form of reasonable remuneration. However, as has been explained,39 we doubt whether the general treatment of restitution and damages as alternative and inconsistent remedies is correct in cases of discharge for breach. If the cases illustrated a genuine form of election, the plaintiff’s recovery in restitution would bar the remedy in damages. The fact that discharge of the contract is a precondition to these claims shows that the main focus of election is in relation to rights not remedies. Accordingly, the true position is that damages may be claimed, in addition to restitution, so long as this does not amount to double recovery, or recovery on an inconsistent basis.40 [page 840] [2310] Election between restitution and specific performance. For completeness, reference may also be made to the need for an election between specific performance and restitution. The principles on election between remedies permit a plaintiff to issue a single writ making claims for specific performance (and damages) and restitution. Assume, for example, that a purchaser of land seeks restitution of money paid to the vendor on the basis that the vendor has not transferred title. This may be combined with a claim for specific performance of the contract of sale. If the court decides that the purchaser is entitled to succeed, the purchaser must elect between specific performance and restitution. Assuming that the purchaser elects for the latter, the vendor is discharged from the obligation to transfer title and there is a total failure of the agreed return. The plaintiff’s claim is then merged in the judgment in its favour. There is

therefore no difficulty in saying that the plaintiff cannot have this relief and also obtain the remedy of specific performance. The position where the purchaser (or vendor) elects for specific performance is not as clear. The plaintiff’s claim is not merged in the judgment in its favour, and the contract does not merge in the judgment.41 Therefore, if the defendant does not comply with the order, the plaintiff is entitled to apply for leave to vacate the judgment.42 If leave is given, the plaintiff may then recover restitution.43 In Johnson v Agnew44 Lord Wilberforce said that if a person ‘makes an election at all, he does so when he elects not to proceed under the order for specific performance, but to ask the court to terminate the contract’. This shows that an election in favour of specific performance, unlike an election for restitution consequent on discharge of the contract, need not be a final one. It also shows that the real justification for the election analysis is from the perspective of the remedy flowing from the exercise of a right, namely, the right of termination.

(c) Alternative Claims in Tort and Restitution [2311] Introduction. The law on election between a claim in restitution and a claim in tort is much more complicated, although it is at least clear that where fraud induces a contract the plaintiff may rescind the contract and elect between restitution and damages for deceit. Equally clearly, although the plaintiff has a choice between rescission and affirmation of the contract, the damages claim may be made whichever election is made.45 Accordingly, as in the case of discharge for breach, the true position is that damages may be claimed, in addition to restitution, so long as this does not amount to double recovery or inconsistent recovery.46 [page 841]

In other contexts the complications which arise are mainly due to the misleading (and mysterious) concept of ‘waiver’ of tort. However, since much of this area has been discussed,47 it is sufficient to illustrate the operation of election by reference to two situations. The first is where the defendant has been unjustly enriched by the plaintiff. The second is where the enrichment is at the plaintiff’s expense only in the sense that it is a consequence of the defendant’s wrong.48 [2312] Reliance on the enrichment. In most cases, the basis for the claim in restitution will simply be that the defendant has directly obtained from the plaintiff a benefit which the defendant wrongly refuses to hand over. So, in an independent claim for restitution49 based, for example, on a payment made to the defendant by reason of mistake, the fact that the defendant also committed some wrong to the plaintiff is largely irrelevant. In these cases, the enrichment of the defendant is the basis for the claim even if the plaintiff can also show tortious conduct. Accordingly, no issue of election arises, except to the extent that the wrong cannot subsequently be relied upon as a basis for recovery of the same sum. In some cases the wrong will look to be an inevitable element of the plaintiff’s claim, as where the cause of a mistake is the fraudulent misrepresentation of a defendant. However, even in such cases it is still the plaintiff’s mistake which is the basis for the conclusion that the enrichment was unjust. The impact of success on the claim is, again, the inability to recover the same sum as compensation for the tort of deceit. There are also cases in which the defendant’s conduct amounts to a wrong, and the position is not only that the enrichment of the defendant is the direct consequence of the wrong but also that the plaintiff may treat the defendant as, de facto, an agent.50 Recovery of the enrichment necessarily precludes a claim in reliance on the wrong since, ex hypothesi, no wrong has been committed. There is, however, an intermediate case in which the question whether the claim is independent of the wrong may be debated. Where the plaintiff transfers property to the defendant, which the defendant wrongly converts, a claim for the proceeds is a claim for restitution. In

the terminology of the forms of action, the claim was one for money had and received.51 Although the availability of money had and received suggests that the claim is independent of the wrong, it is by no means clear that in all cases we should treat the enrichment of the defendant as having been obtained at the plaintiff’s expense in the same way as in a mistaken payment case. Thus, it is arguable that the proper (general) analysis is to treat the claim as dependent on the wrong. However, whichever way it is examined, success on the claim bars a subsequent action in tort against the same defendant seeking damages for conversion. [page 842] [2313] Reliance on the wrong. Alternatively, the action may be brought in reliance on the wrong. This is manifestly the case where the claim is brought in tort.52 Thus, in United Australia Ltd v Barclays Bank Ltd53 the plaintiffs were payees of a cheque which was fraudulently endorsed by its employee in favour of a company. Their claim against the bank which had collected the cheque, for damages for conversion of their cheque, succeeded. Although they had originally sued the company seeking the amount on its face as money lent or money had and received, this action was discontinued. There was no election in those proceedings, and they did not bar the second action. However, success on that claim meant that the company could not be sued for money had and received. United Australia Ltd v Barclays Bank Ltd illustrates the obvious point that when a tort is committed the plaintiff may sue in respect of the tort and recover damages. The question then arises, as we have seen,54 as to how those damages should be assessed. Although damages in tort are usually compensatory, and were in fact calculated on that basis in the United Australia case, there are circumstances in which the damages may be assessed on a restitutionary basis. The quantification of the claim relies on the benefit to the defendant, which may or may not be equal to the loss sustained by the plaintiff. Clearly, if the proper

characterisation of a claim for the proceeds of a tort is as one for restitutionary damages, success on that claim will bar a subsequent action in restitution which seeks to rely simply on the enrichment of the defendant. Although we often speak of the plaintiff in these cases as making an election in favour of a particular method of damages assessment, this is for two reasons somewhat misleading. First, there is no general principle by which a plaintiff may elect between alternative methods of assessing damages.55 The true position, applicable in both contract and tort, is that it is for the court to decide, on the basis of the evidence and precedent, the appropriate method of calculating damages. Second, the availability under the law of quasi-contract of a claim for money had and received in relation to, for example, the tort of conversion, suggests that there is more at work here than the operation of principles governing the assessment of damages. Even though we may debate whether a given set of facts gives rise to two (or only one) causes of action,56 it is only meaningful to speak of election if alternative remedies are available on a given set of facts. This is well understood in the contract context. Where a negligent breach of contract gives rise to concurrent claims in contract and tort, an election in respect of one necessarily bars the other. Much of the confusion in the context of alternative claims in restitution and tort has arisen from the use of the ‘waiver of tort’ expression. Nevertheless, it does seem clear that in many cases, including those in which the tort of conversion is established, the plaintiff is confronted with a genuine choice between two alternative claims. Even if both are properly classified as being for damages, and the argument of the plaintiff can be expressed in terms [page 843] of two alternative methods of having the claim assessed, one restitutionary and the other compensatory, it is legitimate to say that the choice rests with the plaintiff.

3. Election Between Inconsistent Rights (a) General [2314] Introduction. In cases where the ability to claim restitution depends on the exercise of a right, so that a valid exercise of the right is a necessary requirement for the claim to proceed, the principles of election between inconsistent rights regulate the ability to claim restitution. In United Australia Ltd v Barclays Bank Ltd,57 Lord Atkin explained58 that if a person is entitled to two inconsistent rights: [I]t is fitting that when with full knowledge he has done an unequivocal act showing that he has chosen the one he cannot pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose.

Our concern is with the use of election59 as a valid defence to a restitutionary claim. The principal applications of election occur where the valid exercise of a contractual right is a pre-condition to the claim for restitution. The two areas are exercise of a right of discharge, and exercise of a right of rescission. Where discharge of the contract occurs by operation of law under the doctrine of frustration there is, it seems, no role for election.60 [2315] Descriptions and forms of election. An election may be in favour of a right or against a right. The words commonly used to describe the election in favour of a right of discharge or rescission are ‘termination’, ‘discharge’ or ‘rescission’. However, there is no requirement that these words be used, and other terms such as ‘cancel’ or ‘end’ are also in use for cases of discharge and rescission. Nor is there any requirement that parties use words in senses commonly understood by lawyers. For example, a party who claims to have ‘terminated’ a contract following misrepresentation will be regarded as having made a valid election to rescind the contract. ‘Affirmation’ of a contract is the expression generally favoured to describe an election against a right of discharge or rescission. It is not, however, a term of art. It is merely an expression frequently used by

lawyers to state a conclusion. The conclusion itself may arise from a positive communication or be simply an inference from what a person has said or done.61 The ubiquitous term ‘waiver’ is also frequently used to describe [page 844] the effect of an election against a right, however, it is too ambiguous to be useful as a general description.62 The only clear cases of election are those based on an express statement. Elections in favour of a right are generally of this form. However, because an election between rights is merely an effect which the law annexes, rather than a matter of intention,63 an election need not be expressly made: it may be inferred from conduct. Elections against a right are generally of this form. [2316] Impact and relevance. Where an allegation is made that an election has been made, one way or the other, the onus of proof is on the person who makes the allegation.64 If the claim in restitution depends on the discharge or rescission of a contract, a valid election in favour of the right is an essential ingredient of the claim. Since, in these contexts, a claim in restitution assumes a positive election in favour of the right, the plaintiff bears the burden of proof. An election to terminate or rescind achieves a final discharge of the parties or rescission of the contract. But valid elections in favour of rights of discharge or rescission are not relevant to a consideration of defences. Their relevance is to successful claims and illustrations will be found elsewhere in this book.65 An allegation may be made that, at the time of the election in favour of the right, the right was not available. Thus, where it is alleged that, notwithstanding the occurrence of an event giving rise to a right to terminate or rescind, there was a prior election against the right, the onus of proof is on the defendant.66 Proof that there has been an election against the right, because it destroys the plaintiff’s prima facie

claim, is necessarily a valid defence to the claim for restitution. Since the general rule of finality in relation to election between remedies67 also applies to an election between inconsistent rights, an election against discharge or rescission will generally be final.68 However, because the election is in relation to rights, not remedies, there is no question of merger of a cause of action in a judgment of the court.69 And, in some situations, a party who has elected against rescission or discharge may later be in a position to assert a fresh right based, for example, on a subsequent breach or repudiation.70 [page 845]

(b) Election as a Defence [2317] Introduction. Although an election between inconsistent rights is not of itself a choice between inconsistent remedies, a plaintiff’s election between the inconsistent rights may pre-determine the choice between remedies.71 As will already have become clear, there is no difference in principle between an election against discharge and an election against rescission. In either case, if the requirements of election are satisfied, the election will operate as a valid defence to the plaintiff’s claim for restitution consequent on the alleged (but ineffective) election to discharge or rescind the contract. However, for illustrative purposes, it is useful to distinguish the two categories of case. [2318] Requirements of election.72 The general requirements of election are unequivocal words or conduct evincing the election alleged to have been made.73 In default of contractual or legislative specification74 these requirements apply both to a positive election in favour of the right and to a negative election against the right. Election may be express or inferred.75 Clearly, the same general requirements of election apply irrespective of whether the alleged election was expressly made or is an inference from words or conduct. However, two matters

have been debated. The first is how far communication is an essential requirement. The general principle appears to be that provided sufficiently unequivocal words or conduct are established, communication is not an essential requirement.76 The second is how far a party who merely has knowledge of the circumstances which give rise to the ability to elect is bound by words or conduct which would be regarded as unequivocal in the case of a party with knowledge of the right to elect. Although it is clear that a person may elect to terminate or rescind without actually knowing of the right to do so, and also that an express affirmation may occur where there is merely knowledge of the facts, there is much uncertainty on the extent to which knowledge of the right to terminate or rescind is required in cases of inferred election.77 [page 846] The better view is that it is sufficient to establish knowledge of the facts, and this is clearly the law in cases where the right is expressly conferred by the contract. However, the Victorian Full Court held in Coastal Estates Pty Ltd v Melevende78 that where the right is conferred by law, election (by affirmation) cannot occur in cases of misrepresentation until there is knowledge of the right to rescind.79 The plaintiff sued to recover money paid under a contract to purchase eight allotments upon a subdivision of land which was induced by certain fraudulent misrepresentations. It was held that, as the right of rescission had not been lost by affirmation, restitution was available. Most of the conduct put forward as amounting to affirmation was regarded as irrelevant, as it was evidence of conduct preceding the discovery of the right of rescission. This view of the law was applied by the English Court of Appeal in Peyman v Lanjani,80 in the context of discharge for breach. However, Melevende was distinguished in Tiplady v Gold Coast Carlton Pty Ltd,81 as a case involving fraud. Moreover, in the context of fraud the case was not followed in Re Hoffman; Ex parte Worrell v Schilling.82

The principal criticism that can be levelled against Melevende is that it confuses the principle of election between remedies, where actual knowledge is required, with the principle of election between rights. The latter is concerned with the inferences properly drawn from conduct and should not be made to depend on the actual knowledge of the person alleged to have made the election. [2319] Election against discharge. There are literally thousands of cases which illustrate the defence of prior election against a right of discharge [page 847] essential to a restitutionary claim. No claim based on total failure of the agreed return may be made if the right of discharge has been lost.83 Similarly, because a valid election to discharge the contract is a necessary element of any claim for reasonable remuneration, proof of an election against discharge will be a valid defence to such a claim. The majority of the cases concern the former rather than the latter. For example, in Kwei Tek Chao v British Traders and Shippers Ltd84 buyers of goods claimed restitution on the basis of a total failure of the agreed return for money paid in exchange for bills of lading. Although the sellers breached an essential term of the contract, the buyers’ purported exercise of the right of termination was ineffective as they had affirmed the contract. Since the buyers were not entitled to treat the contract as discharged the sellers had a good defence to the restitutionary claim. [2320] Election against rescission. There are, again, countless cases which illustrate the defence of prior election against a right of rescission. A typical example is Bosaid v Andry,85 where an election against rescission of a contract for the sale of a business was final where an unequivocal act was done with knowledge that the representation made was false. The representee was thereby precluded from recovering a preliminary deposit.

An important example in the context of rescission for duress is North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron).86 A shipbuilder sought and received additional payments to which it was not entitled under the contract of sale. The payments were made under a separate contract under which the shipbuilder provided consideration by increasing the amount of a letter of credit given under the main contract as security for the repayment of the price in the event of breach. Mocatta J, holding that duress is not limited to duress to the person and to goods, found economic duress to be established. The shipbuilder had, without any bona fide belief that it was entitled to the extra payments, threatened to cancel the contract unless the increased payment was made. The fact that the buyer had fixed a charterparty with Shell was regarded as significant even though a substantial profit would nevertheless be made on the charter. Accordingly, the contract under which the extra amounts were paid was voidable for duress. Although the vessel was delivered on 27 November 1974, it was not until 30 July 1975 that the claim for repayment was made. Mocatta J decided in favour of the shipbuilder on the basis that the contract had been affirmed. [page 848]

(c) Related Defences [2321] Introduction. There can be no issue of election between rights unless the party alleged to have made the election at least had knowledge of the facts which gave rise to the right of election. Equally, however, it is not a requirement of election that the other party has acted in reliance on the words or conduct amounting to election.87 Accordingly, in cases where there is insufficient knowledge, requirements additional to the conduct of the plaintiff must generally be established before a conclusion may legitimately be drawn that the right is not available. This leads to the relevance of concepts such as

estoppel88 which focus more on the conduct of the defendant than that of the plaintiff.89 As a qualification to this general approach, there are examples of statutes which operate to deprive a party of the ability to assert a claim for restitution on the basis of a valid election to terminate or rescind a contract. The principal example, at least in relation to claims for restitution which assume a valid discharge of the contract, is the statutory concept of acceptance of goods. [2322] Estoppel and election between rights. Just as affirmation of a contract may provide a defence to a claim for restitution based on an election to rescind or terminate a contract, so also may estoppel provide a defence to such a claim. Thus, in so far as restitution depends on a valid election to treat the contract as discharged or rescinded, proof that there is an estoppel which precludes the plaintiff from asserting valid exercise of the right of discharge or rescission will provide a valid defence to the claim. Accordingly, even though there is no affirmation, the plaintiff’s words or conduct may preclude reliance on an election to terminate or rescind a contract. The essential elements of estoppel (to be proved by the defendant) are: unequivocal words or conduct — a promise or representation — by the plaintiff; reliance by the defendant; and injustice to the defendant or unconscionable conduct on the part of the plaintiff.90 Three points should be borne in mind. First, the key to cases of estoppel is that the law will not permit a party to go back on a representation or promise inconsistent with the exercise of a right of discharge or rescission. But estoppel operates as a restriction only in cases where justifiable reliance is present: the reliance may itself be detrimental or detriment may be suffered on the plaintiff going back on the representation or promise;91 and [page 849] estoppel operates only where it would be unjust or inequitable to

permit the plaintiff to assert the right.92 Second, in contrast with the position following an election against the exercise of a right, the right of discharge or rescission is not lost where estoppel is proved. The plaintiff is merely precluded from asserting the right or its exercise, and at least in cases traditionally analysed under the rubric of promissory estoppel, this may be merely temporary.93 Third, although, like election, for present purposes94 the principal operation of estoppel is in the context of ineffective contracts, the concept is more general in its orientation than election. Unlike that concept, estoppel does not assume the presence of alternative rights: it has a distinct operation and may therefore apply even though there is only one right at issue. [2323] Acceptance of goods. A situation closely analogous to election and one with great practical importance is an acceptance of goods. Except in the Australian Capital Territory, acceptance operates as a defence to a claim for restitution because it is a bar to discharge by rejection of goods in cases of breach of condition by the seller.95 If there is no right of rejection there can be no right of discharge, and if there is no right of discharge there can be no claim in restitution. What constitutes acceptance is a matter described by the legislation,96 and does not concern us. However, the scope of the provisions is important. First, in jurisdictions where the passing of property in specific goods bars rejection97 acceptance can be relevant only where property has not passed, or the goods are not specific. In other jurisdictions acceptance has a more general operation.98 Second, it has been debated whether rescission for misrepresentation is available although the goods have been accepted.99 The view that rescission is not available once goods have been accepted has some support in the cases.100 However, since the rules on acceptance do not mention rescission, [page 850] and the provisions are stated to apply on breach of condition, the better

approach is to treat loss of the right of rescission for misrepresentation as governed by the general law on election.101 In New South Wales it is now provided that rescission for misrepresentation is governed by the general law and not the provision regulating acceptance.102 Under the Australian Consumer Law103 section 259(3)(a) a consumer is entitled to reject goods if there is a major failure to comply with a consumer guarantee or if the failure cannot be remedied.104 Although not expressly stated the effect of a rejection would appear to be akin to a termination of the contract.105

4. Restitutio in Integrum (a) General [2324] Introduction. An important defence to claims in restitution made following an alleged rescission of a contract, for example, for misrepresentation, is the inability to achieve restitutio in integrum. For contract lawyers, restitutio is simply a restriction on rescission. The defence also operates in cases where relief is sought to set aside a contract, for example, for undue influence or unconscionable conduct, although, again, the usual perspective is as a limitation on the court’s ability to set aside the contract.106 From the same perspective, since restitutio is not a restriction on discharge, inability to achieve restitutio in integrum is not a defence to a claim for restitution following discharge of a contract.107 From the restitutionary perspective, treatment of the requirement of restitutio in integrum as a defence assumes that cases may arise where the plaintiff should be denied restitution because the defendant’s interests cannot be protected. In other words, restitution is denied because counter-restitution is impossible.108 Consideration of the defence then raises complex questions, which we have so far examined solely by [page 851]

reference to the scope and operation of the requirement of restitutio.109 The object of the current discussion is to draw together the threads of that earlier analysis and to express some further conclusions from the specific perspective of ‘counter-restitution not possible’ as a defence to a claim for restitution. Although we generally assume that a prima facie claim has been made out, the ultimate effect of the defence is to deny a precondition to the prima facie claim itself. [2325] Position where restitutio possible. Where the requirement of counter-restitution applies, and can be satisfied, the requirement does not operate as a defence. Instead, the proper perspective lies in examination of the adjustments required to give effect to the plaintiff’s claim for restitution.110 [2326] Effect of the defence. We can deal briefly with the effect of the defence. The effect is to deny the validity of an election in favour of discharge or rescission. Where a requirement of restitutio in integrum applies, but the plaintiff cannot make counter-restitution, the plaintiff’s claim for restitution will fail. In the ineffective contracts context, where the requirement of counter-restitution is most frequently applied, this is the same effect as election. There is, accordingly, a close connection between the two defences. Therefore, just as restitution will be denied to a party who has made an election against discharge or rescission,111 so a plaintiff who cannot make counter-restitution will be denied restitution.112 This is not necessarily productive of injustice. Where the only impact is to deny the valid exercise of a right of discharge or rescission, the plaintiff is not necessarily without remedy. For example, in the ineffective contracts context the plaintiff may well have a claim in contract or tort which does not assume a valid discharge or rescission of the contract. But, of course, this will not be true in all cases.

(b) Scope and Operation of the Defence [2327]

Introduction. There is considerable uncertainty as to the

situations in which counter-restitution is the price of restitution. The operation of the defence is, however, determined by two matters: what can be done in the name of restitutio in integrum;113 and the scope of the defence.114 Although the first of these questions is easily answered, the second is complex indeed. [page 852] We should preface the discussion below with the statement of some obvious points which are easily overlooked. When the law of restitution was analysed in terms of quasi-contractual liability based on implied contract, restitutio in integrum was treated as a general requirement of restitution in the context of what we now call ineffective contracts.115 The essence of that requirement was simply that the inability to grant restitution to the defendant in respect of the benefit obtained by the plaintiff was a complete defence to the claim for restitution. The modern contrast between discharge and rescission was not applied, and cases which we now regard as raising an issue of restitution following discharge of a contract for breach or repudiation were analysed in the same way as restitution following rescission of a contract for misrepresentation.116 Although we can now ignore the analysis which treated rescission ab initio as a requirement,117 we cannot ignore the adoption of a general requirement of total failure of consideration in cases where the plaintiff sued in quasi-contract to recover money paid under an ineffective contract. Although the fusion of law and equity meant that the defence ceased to be governed by common law principles, and was replaced by the process of equitable adjustment,118 it remained applicable to cases of discharge untouched by the gentle hand of equity. Total failure of consideration continues to govern the law in that context, since the requirement of total failure is of general application.119 From this perspective, the situations considered in earlier chapters where restitution has been denied on the basis of a partial failure of the agreed return,120 are no more than illustrations of the defence that counter-

restitution is impossible. In our view, the time has come to reconsider that approach.121 [2328] Content of restitutio. It has been explained122 that the courts of common law took a much stricter approach to the requirement of restitutio in integrum than courts exercising equitable jurisdiction. Assume, for example, that a plaintiff has paid the price and taken possession under a contract for the sale of business, and that the plaintiff has enjoyed the goodwill of the business and sold stock in running the business. Rescission on discovery of the misrepresentation would not be available under the old (common law) principles governing restitutio, and the restitutionary claim for return of the purchase price would therefore be denied.123 The equitable rule which now prevails124 posits a requirement of substantial restitution.125 Under the guidance of the equitable approach there is great flexibility. It is nevertheless a defence to a claim for restitution that the court cannot do substantial justice by ordering restitution in the defendant’s favour. [page 853] Moreover, although the equitable approach is significant in narrowing the defence, it does not necessarily assist in cases where equitable relief is not in issue. [2329] An unjust enrichment perspective. The traditional perspective of the courts’ approach to restitutio is the requirement that the parties be restored to their pre-contractual positions. This is, quite clearly, a perspective emphasising the fact that rescission is ab initio.126 However, if we were to apply this as the only perspective, the defence would never apply to cases of discharge, or cases involving inherently ineffective contracts. In any event, since we are considering the requirement of restitutio in integrum as a defence to a claim for restitution, it is necessary to take an unjust enrichment perspective.

On an unjust enrichment approach, the requirement of substantial restoration of the parties becomes a requirement that the court be in a position to award the defendant restitution in respect of benefits conferred on the plaintiff. There is, in principle, no reason why we should not apply this to all cases, including those which fall to be decided solely under principles derived from the common law. The idea that counter-restitution in specie is essential no longer governs the substantial restitution requirement.127 Thus, to the extent that the requirement of substantial restoration applied in cases of rescission is merely an assertion of the need for restitution and counter-restitution, there is no reason why it should not be applied in other cases as well.128 Although the requirement of total failure of the agreed return is not today analysed in terms of the defence that counter-restitution is impossible, it is clear that the defence does sometimes apply to claims made following discharge of a contract, and also to most cases involving inherently ineffective contracts. We must therefore find some criterion other than restoration of the parties to their pre-contractual positions. If it is correct to regard the requirement of restitutio in integrum as an insistence that the plaintiff make counter-restitution, the more appropriate general criterion is unjust enrichment.129 Where the defence is raised there are, in effect, two claims for restitution. Although one is asserted by way of defence, both are governed by unjust enrichment. The claim of the plaintiff is for the reversal of an unjust enrichment, that of the defendant is to prevent an unjust enrichment. Each claim is contingent on the success of the other. The defence succeeds if the plaintiff would be unjustly enriched by an order in favour only of the plaintiff. [2330] Cases of rescission. The restitutionary significance of the equitable approach to the subject may be seen in the rejection of common law ideas such as total failure of consideration. On rescission,130 substantial restitution [page 854]

may be achieved, for example by an order for the payment of money by the plaintiff, based on the receipt by the plaintiff of part of the agreed return promised by the defendant.131 For example, if a sale of business contract is induced by misrepresentation, the deterioration or use of property during the plaintiff’s occupation prior to rescission will not bar rescission provided that orders achieving substantial restitution are made.132 The defence succeeds only in those rare cases where it is impossible to achieve substantial justice; that is, the court is unable to order restitution against the plaintiff. In such cases, the plaintiff’s claim in restitution is defeated, and the plaintiff’s election (to rescind the contract) is ineffective. Thus, if a business has ceased to exist at the time of the alleged rescission of the contract of sale, restitutio in integrum may be regarded as impossible. The claim for restitution will then fail and the plaintiff’s rescission will be ineffective.133 [2331] Cases of discharge. The operation of the defence of restitutio is controversial in the context of discharge for breach, and unheard of under the common law of discharge by frustration. It is not clear why this should be so. Discharge operates in futuro, not ab initio.134 Thus, as Dixon J explained in McDonald v Dennys Lascelles Ltd:135 ‘When a party to a simple contract … elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning’. However, as has been explained,136 before the modern principles of discharge for breach were established, the requirement of restitutio was also insisted on in cases where a quasi-contractual remedy was sought. We rightly view these cases as heretical today. But it is important not to confuse the contrast between discharge and rescission with the question of whether counter-restitution is required following discharge.137 To the extent that rescission is a process which requires the parties to be taken back to their pre-contractual positions, there is good reason for rejecting a general requirement of substantial restoration of the parties to their pre-contractual positions in cases of discharge.138

However, in so far as an insistence on counter-restitution is simply the expression of the idea that [page 855] a plaintiff who seeks restitution for benefits conferred should be required to make restitution for benefits obtained, there is no a priori reason for rejecting the defence in the context of discharge.139 Even if we allow for the fact that the cases, particularly those involving relief against forfeiture,140 are analysed in terms of equitable relief, the position remains that the contrast between discharge in futuro and rescission ab initio is not at all conclusive of the scope of the defence of counter-restitution. If nothing else, this supports the argument141 that unjust enrichment is a better general criterion than restoration of parties to some prior position. In other words, since the orders are restitutionary in effect,142 and because restitution has been freed from its quasi-contractual limitations, the appropriate criterion is unjust enrichment. It was explained earlier143 that one significant feature of the growth of restitution in Australian law is the acknowledgment that the law may be extended — new claims may be recognised — if there is in place a proper set of defences to deal with the increase in categories of prima facie claims. It is in this context that the relation between the common law concept of total failure of the agreed return and the defence of counter-restitution may be noticed. The fact that statutes have been passed to remove this requirement in certain contexts144 is an illustration of the fact that the requirement often causes rough justice. In most cases where there is merely a partial failure of the agreed return the defendant has, by definition, conferred a benefit on the plaintiff. A proper basis for the recognition of partial failure of the agreed return as a sufficient basis for restitution in cases of discharge is that the defendant is entitled to claim restitution. In other words, the plaintiff’s claim should succeed unless counter-restitution is impossible.145 To the extent that the frustration statutes have replaced the requirement of

total failure with a requirement of fair adjustment or a generalised right to restitution, they also illustrate a movement in cases of discharge towards a requirement of substantial restitution.146 [2332] International sales. The only significant general example of substantial restitution in the discharge context is to be found in the United Nations Convention on Contracts for the International Sale of Goods 1980. On avoidance of a contract to which the Convention applies,147 a requirement of concurrent restitution by buyer and seller applies.148 Thus, it is provided that if ‘both parties are bound to make restitution, they must do so concurrently’.149 An order for restitution may be sought following avoidance [page 856] of the contract.150 Since it is also provided151 that a buyer may lose the right to reject where it is impossible for the buyer to make restitution of the goods substantially in the condition in which they were received, there is in operation a defence akin to the requirement of restitutio.152 However, the inability of a buyer to make counter-restitution (in specie) is not always a defence to the buyer’s claim. The defence will not apply in three situations:153 (1) if the impossibility of the buyer to make restitution is not due to the buyer’s act or omission; (2) if the goods have perished or deteriorated as a result of the examination which the buyer is entitled to make; or (3) if the goods have been sold in the normal course of business or have been consumed or transformed by the buyer in the course of normal use before the buyer discovered or ought to have discovered the lack of conformity. Moreover, in a case where a seller is bound to refund the price, but it is impossible for the buyer to make restitution of all or part of the goods, the avoidance is still effective and the buyer is required to

account to the seller for benefits derived from the goods or part of them.154 Therefore, although inability to make counter-restitution (in specie) is not a defence to the buyer’s claim, the buyer is required to pay (account) for benefits obtained. [2333] Related defences. Under the heading ‘related defences’155 may be put forward two specific rules, both of limited operation, which occupy the same role as the defence that counter-restitution is impossible. The first is the so-called ‘rule in Seddon’s case’,156 under which execution of the contract by complete performance is said to be a defence to restitution because it prevents exercise of the right of rescission. The restriction applies to contracts involving land,157 but is controversial outside that context. The rule, which has often been criticised,158 does not apply if there is a total failure [page 857] of consideration, or the defendant breached a fiduciary duty owed to the plaintiff.159 Nor does it apply in the case of a fraudulent misrepresentation.160 Although something may be said for the rule on the basis of a need for finality, the modern approach to the requirement of substantial restitution, and the recognition of the process of counterrestitution,161 indicate that the restriction will today seldom be applied. As the Privy Council said in Senanayake v Cheng,162 of ‘greater importance’ than seeking to attach the label of executed or executory to the contract ‘are the questions whether restitutio in integrum is substantially possible and whether rescission is timely and just and fair’. Moreover, the defence does not bind a court exercising a discretion to award restitutionary relief following conduct prohibited under the Australian Consumer Law.163 The rule has been abolished in the misrepresentation legislation in South Australia and the Australian Capital Territory,164 and also, in relation to sale of goods contracts, in New South Wales.165

The second defence is specific to sale of goods contracts under the legislation. Once the buyer has ‘accepted’ goods under a contract for the sale of goods, the contract cannot be terminated for the seller’s breach of a condition of the contract.166 In some (but not all) jurisdictions these provisions are expressed to apply to contracts for the sale of specific goods. Here it is provided that where there is a contract for specific goods the property in which has passed to the buyer, the breach of any condition to be fulfilled by the seller may only be treated as a breach of warranty and not as a ground for treating the contract as repudiated, unless there is a contrary [page 858] term in the contract.167 The impact of the provision is that there can be no claim for restitution of the price paid for specific goods, once property has passed, unless there is a term to this effect in the contract. As with the defence of election against discharge, and the defence that counter-restitution is impossible, the defence operates by denying the effectiveness of the buyer’s election to terminate the contract. It is, indeed, arguable that the whole basis for the defence is the belief that restoration of the parties to their pre-contractual positions is a requirement of discharge.168 For that reason alone the defence has an unsound basis. However, if the views expressed above169 are correct, the real error in the sale of goods legislation is the view that it is impossible for a requirement of counter-restitution to be applied. In other words, as under the legislation applicable to international sales,170 a better approach would be simply to say that the buyer is entitled to reject the goods provided that the buyer is in a position to make restitution. Only if that is not the case so — that the defence that counter-restitution is impossible applies — should rejection be barred. In New South Wales, s 38(2) of the Sale of Goods Act 1923 (NSW) expressly provides that rescission for misrepresentation is governed by the general law and not the provision (s 38(1)) governing acceptance.

[2334] Discretion. The idea of discretion operating by way of defence to a valid claim for restitution does not properly reflect the nature of the restitutio in integrum process. In cases where adjustments are sought on rescission of a contract, and adjustments are affected by equitable considerations, discretion may be said to play some role. Moreover, orders in the nature of restitution may be made on terms which operate as a condition of relief in favour of the plaintiff. However, the overriding consideration is whether substantial restitution is possible. On the other hand, where a court was asked to make a discretionary order for restitution under the now repealed trade practices legislation or fair trading legislation, the fact that the order was discretionary led the courts to doubt the utility of the restitutio in integrum defence, and also the defence of election against rescission. It was often pointed out that while these defences may be relevant, they are not determinative.171 For example, [page 859] in Byers v Dorotea Pty Ltd172 an order was made for the return of deposits paid on the purchase of home units notwithstanding conduct amounting to an affirmation of the contract which would have precluded rescission under general law. There is, similarly, no counterrestitution requirement. It remains to be seen whether a similar approach will be taken under the Australian Consumer Law which replaced these Acts.173 It is, of course, important that the orders made under this jurisdiction not give any encouragement to the conduct which amounted to a contravention. However, the High Court has made it quite clear that the power (discretion) to declare a contract void does not apply to a contract valid at its inception unless the general law or the legislation authorises such an order.174 Accordingly, at least some of the restrictions on election between rights will apply.175 Since we have accepted for hundreds of years that even a person guilty of fraud has some restitutionary interests, those of a defendant who has

engaged in prohibited conduct (which may fall far short of fraud) must always be considered.176 In South Australia and the Australian Capital Territory, legislation dealing with the effect of misrepresentations confers a discretionary power on the court, if it considers it just and equitable to do so, to declare a contract within the scope of the legislation to be subsisting, and to award such damages as it considers fair and reasonable in lieu of rescission.177 Thus, notwithstanding the existence or exercise of a right to rescind, the representee’s restitutionary claim consequent on rescission may be defeated by the exercise of a curial discretion. Moreover, by denying the effectiveness of the plaintiff’s election to rescind, the court obtains control over the remedy to which the plaintiff is entitled. Damages, rather than restitution, is the remedy which will be awarded to the plaintiff. [2335] Policy. Counter-restitution will not be insisted on in cases where this would be contrary to policy, as where the order would encourage illegal conduct.178 But policy is not limited to illegality cases, and there are other situations where restitution will still be ordered — the defence that counter-restitution is impossible will fail — even though it is not appropriate to order counter-restitution.179 [page 860] As might be implied from what is said above,180 in our view this is the proper approach to the trade practices legislation and fair trading legislation, which frequently operate in fact situations where counterrestitution would normally be required.181 1.

Discussion of that concept includes an analysis of certain closely related defences, namely, the rule in Seddon’s case and the passing of property in specific goods as well as the role of policy and discretion. See [2333]–[2335].

2.

See Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd [1994] 2 Qd R 390; Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006] 1 WLR 1492. [1980] AC 367 at 398. See also Personal Representatives of Tang Man Sit v Capacious

3.

Investments Ltd [1996] 1 AC 514 at 522 (principles of election are not ‘fixed and unyielding rules’ but give effect to the principle that ‘proceedings should be conducted in a manner which strikes a fair and reasonable balance between the interests of the parties, having proper regard also to the wider public interest in the conduct of court proceedings’). See further Balgobin v South West Regional Health Authority [2013] 1 AC 582 at 591; [2012] UKPC 11 at [23]. 4. 5.

(1602) 4 Co Rep 91a; 76 ER 1072 (see [108]). (1602) 4 Co Rep 91a at 93a; 76 ER 1072 at 1075.

6.

[1941] AC 1 (see [1517]). See also Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514; Balgobin v South West Regional Health Authority [2013] 1 AC 582; [2012] UKPC 11. See United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30 per Lord Atkin. See also at 19 per Viscount Simon LC; Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304 at 311; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 611–12; Ciavarella v Balmer (1983) 153 CLR 438 at 449; Amadio Pty Ltd v Henderson (1998) 81 FCR 149 at 264.

7.

8.

9.

The reference to ‘alternative and inconsistent’ remedies was adopted by Lord Nicholls in Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514 at 521, 525. Its meaning is explored by Stephen Watterson, ‘Alternative and Cumulative Remedies: What is the Difference?’ [2003] RLR 7. See also Stephen Watterson, ‘An Account of Profits or Damages? The History of Orthodoxy’ (2004) 24 OJLS 471. See the analysis in [1517], [1621]. See also Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514 at 522–5 and see Balgobin v South West Regional Health Authority [2013] 1 AC 582; [2012] UKPC 11. See further Stephen Watterson, ‘Alternative and Cumulative Remedies: What is the Difference?’ [2003] RLR 7 at 13–14 (suggesting that if different remedies are considered inconsistent if brought against one wrongdoer, but cumulative if brought against more than one wrongdoer, then there cannot be any substantive inconsistency between them).

10. See [1413]. 11. See [2310]. And, at least where damages for loss of the bargain are claimed, between specific performance and contract damages. See Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444; Johnson v Agnew [1980] AC 367. 12. For an illustration see Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 (see [1410]). See further [2309]. 13. For a statement see Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 at 110. See also [1511]. See further Spring Form Inc v Toy Brokers Ltd [2002] FSR 17. 14. [1989] 1 NZLR 234. 15. (1879) 4 App Cas 504 at 542. See also Evans v Bartlam [1937] AC 473 at 479, 485; Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 873; Balgobin v South West Regional Health Authority [2013] 1 AC 582 at 592; [2012] UKPC 11 at [29]. 16. Problems concerning communication of election are not likely to arise. Contrast [2318] (inconsistent rights). 17. [1996] 1 AC 514.

18. See [2313]. 19. The court found there was no inequity to the defendant in allowing the plaintiff to adopt the course it had upon giving credit for any amount received. It should be noted that at the time the claimant sought to enforce the award of an account of profits, it was also taking the necessary preparatory steps to assess damages. Therefore the plaintiff had not conducted itself in a manner that evidenced an election and in any case the plaintiff did not have the necessary knowledge at the time to make an election. 20. [1941] AC 1 at 30 (approved Ciavarella v Balmer (1983) 153 CLR 438 at 449). See also Meng Leong Development Pty Ltd v Jip Hong Trading Co Pty Ltd [1985] AC 511; Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514. 21. Subject to the impact of the rules on election between inconsistent rights: [2314]–[2323]. 22. See generally Fullers’ Theatres Ltd v Musgrove (1923) 31 CLR 524 at 546; United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30; Bosaid v Andry [1963] VR 465 at 486–8; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 611–12. It needs to be added that the plaintiff cannot be asked to make a choice when it is unreasonable to do so, for example, where the plaintiff lacks the knowledge to make a real choice. In such case orders, such as discovery, may be made in order to put the plaintiff into the position to be able to make an informed choice; see Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514 at 521 citing Island Records Ltd v Tring International PLC [1996] 1 WLR 1256. See also Braben v Emap Images Ltd [1997] 2 All ER 544; Dr Martins Australia Pty Ltd v BATA Shoe Company of Australia Pty Ltd (1997) 75 FCR 230 and the cases there cited. 23. (1882) 7 App Cas 345 at 360. See also O’Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 258 (reversed on other grounds (1937) 56 CLR 464); United Australia Ltd v Barclays Bank Ltd [1941] AC at 30; Amadio Pty Ltd v Henderson (1998) 81 FCR 149. 24. See [2304]–[2323]. 25. See, eg Aman v Southern Railway Co [1926] 1 KB 59 at 71; Republic of India v Indian Steamship Co Ltd (The Indian Grace) [1993] AC 410. But see [2310] (specific performance). 26. The position is the same where inconsistent rights are at issue. See [2316]. 27. See, eg Mulcahy v Hoyne (1925) 36 CLR 41 at 55, 56; Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 226–7; Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 477; Avtex Airservices Pty Ltd v Bartsch (1992) 107 ALR 539 at 563. See further on consideration and estoppel [2517], [2530]. 28. Cf Restatement (Second) Contracts, §378 (change of position). 29. The effect of such an estoppel is sometimes described by the word ‘waiver’, although this is an ambiguous terminology (see generally Commonwealth of Australia v Verwayen (1990) 170 CLR 394) and we regard it as unhelpful. See also [2315]. 30. It may be possible to award compensation as an alternative to costs. Compare the somewhat inconclusive discussion in Commonwealth of Australia v Verwayen (1990) 170 CLR 394. 31. For an illustration of the courts’ readiness to allow amendments that raise alternative claims in this context see Thornton Hall Manufacturing Ltd v Shenton Apparel Ltd [1989] 1 NZLR 234. However, there have been several cases stressing the fact that amendments

and adjournments will not necessarily be granted, if to do so will cause stress to litigants or disrupt overcrowded court lists. See Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 456–7, 461, 464–5; Sali v SPC Ltd (1993) 116 ALR 625; 67 ALJR 841. 32. On the distinction between res judicata and issue estoppel see the discussions in Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 115 ALR 377; Re Neal; Ex parte Neal v Duncan Properties Pty Ltd (1994) 123 ALR 614 at 619–20; Bryant v Commonwealth Bank of Australia (1994) 51 FCR 529 at 532–3; 123 ALR 642 at 645. 33. See further [2322]. 34. Most of the modern cases on restitution in relation to ineffective contracts state or assume that a claim for restitution is not available unless the contract has been discharged or rescinded. See [1003], [1032], [1103], [1155], [1213]. For the general principle, and references to contrary authority, see [909]. 35. See further [2203], and further [2311], [2316]. A plaintiff in breach does not enjoy the ability to elect, but may sometimes claim restitution if the contract is in fact discharged. See [1125] (total failure of the agreed return), [1431], [1438] (restitutio in integrum). Contrast [1157] (no claim for reasonable remuneration unless benefit accepted). 36. [1923] 2 KB 500 (see [1121]). Compare Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] 2 All ER 788 (payment made under advertising contract recoverable as damages where performance was seriously defective). 37. See [1514]–[1517]. 38. See [1168], [1408], [1430]. 39. See [1168], [1405], [1408], [1411], [1430]. 40. See [1410], [1411]. Cf Stephen Watterson, ‘Alternative and Cumulative Remedies: What is the Difference?’ [2003] RLR 7 at 15 (arguing that damages and gain-based damages may be cumulative and the limits on recovery are not governed by notions of preventing double recovery but rather ‘that a cumulation of the two would exceed the minimum necessary to achieve the aims of each. The principal reason why that is so is that one remedy, immediately directed at one aim, may indirectly achieve the aims of another. It is unnecessary, and therefore excessive, to award both to that extent’). See also Stephen Watterson, ‘An Account of Profits or Damages? The History of Orthodoxy’ (2004) 24 OJLS 471. See further J W Carter and M J Tilbury, ‘Remedial Choice and Contract Drafting’ (1998) 13 JCL 5 at 13. 41. See Johnson v Agnew [1980] AC 367 at 393–4. 42. The leading modern case is Johnson v Agnew [1980] AC 367 (see A J Oakley, [1980] CLJ 58; Dirik Jackson (1981) 97 LQR 26), a decision approved in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 259–60, 273 (see W D Duncan (1988) 62 ALJ 804). For earlier authority see Halkett v Earl of Dudley [1907] 1 Ch 590; Facey v Rawsthorne (1925) 35 CLR 566; Stevter Holdings Pty Ltd v Katra Construction Pty Ltd [1975] 1 NSWLR 459; Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444. 43. Alternatively, loss of bargain damages may be recovered. 44. [1980] AC 367 at 398. For a critical discussion see Marion Hetherington, ‘He Who Comes to Common Law Must Come with Clean Hands’ (1980) 9 Syd LR 71; Marion Hetherington, ‘Keeping the Plaintiff Out of His Contractual Remedies: the Heresies that Survive Johnson v Agnew’ (1980) 96 LQR 403.

45. See [1405] and see further [2312]. 46. See [1410], [1411], [1430]. 47. See generally Chapter 16. 48. For the distinction between the primary and secondary sense of ‘at the plaintiff’s expense’ see [160]–[161]. 49. For the distinction between dependent and independent claims see [222], [223], [1514], [1634]. 50. See [1517]. 51. See [113], [1618]. 52. See also Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] 1 AC 514 at 520, 525 (action for account for profits and damages in respect of a breach of trust, held that these remedies were alternative and inconsistent). 53. [1941] AC 1 (see [1517], [1621]). 54. See [1623]ff. 55. See [1508], [1812]. 56. See [2728]–[2734] (application of statutes of limitation). 57. [1941] AC 1. 58. [1941] AC 1 at 30. See also Carter’s Breach of Contract, §§11-03, 11-05 and further [2319]. 59. For discussion of related defences see [2321]–[2323]. 60. See generally Bank Line Ltd v Arthur Capel & Co [1919] AC 435 at 459; Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 at 203; Denny Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265 at 274. See further [2331] (defence of restitutio); [2405] (estoppel in relation to frustrated contracts legislation). 61. Cf Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 304 per Priestley JA (affirmation is not an ‘intelligible category in its own right’ but embraces ‘two particular legal theories, election and estoppel’). 62. See Carter’s Breach of Contract, §10-43. See J W Carter, ‘Waiver (of Contractual Rights) Distributed’ (1991) 4 JCL 59. For a rejection of waiver as an independent doctrine see Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd [1994] 2 Qd R 390, especially at 404. 63. See Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55 per Kitto J, with whom Taylor and Menzies J agreed. 64. See eg Cockerill v Westpac Banking Corp (1996) 142 ALR 227 at 279 per Cooper J, (reversed without reference to the point sub nom Westpac Banking Corp v Cockerill (1998) 152 ALR 267, FC); Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd [1994] 2 VR 463 at 499 per Hedigan J. See further Carter’s Breach of Contract, §10-04. 65. See generally Chapters 11 and 13. 66. See Carter’s Breach of Contract, §11-08. 67. See [2307]. 68. See Carter’s Breach of Contract, §11-16. 69. See also [2310] (specific performance).

70. See Carter’s Breach of Contract, §§11-57–11-70. Cf [2310] (specific performance). 71. Cf Restatement (Second) Contracts, §380. Contrast the position where a claim is made in tort for damages for misrepresentation: the plaintiff’s election, although barring restitution on the basis of rescission, does not bar the damages claim. See [1405], [2311], [2312]. 72. See Carter on Contract, §§26-040–26-080, 37-001–37-110. See also Handley, Estoppel. 73. See generally Wendt v Bruce (1931) 45 CLR 245 at 257; Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443; Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 at 616; United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30; Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 646; Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 398; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 30, 38. 74. See generally Carter’s Breach of Contract, §§10-10–10.24; Carter on Contract, §§37-060, 37070. 75. See [2315]. 76. See, eg Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525 and generally Carter’s Breach of Contract, §§10-18, 11-11. Cf Balgobin v South West Regional Health Authority [2013] 1 AC 582 at 592; [2012] UKPC 11 at [29]. 77. Apart from Lord Blackburn’s statement in Kendall v Hamilton (1879) 4 App Cas 504 at 542, which may in fact refer to election between alternative remedies (see [2305]), early authority supported a general requirement of knowledge of the relevant facts. See the analysis by Jordan CJ in O’Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 262–3, reversed on other grounds (1937) 56 CLR 464 (approved Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 at 617–18; Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 31–2 per Brennan J). The High Court has treated the question as an open one. See Sargent v ASL Developments Ltd (1974) 131 CLR 634; Khoury v Government Insurance Office of NSW (1984) 165 CLR 622 and generally JW Carter, ‘Problems in Enforcement Part I’ (1992) 5 JCL 199; K R Handley, ‘Exploring Election’ (2006) 122 LQR 82. See also GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 para 357. See further JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 385–6 per Full Federal Court (no affirmation where there is no knowledge that the representation was false). 78. [1965] VR 433. Cf Szep v Blanken [1969] SASR 65 at 74–5. 79. Contrast Restatement (Third), Restitution, §54(6); Restatement (Second) Contracts, §380(2). 80. [1985] Ch 457. See also Youell v Bland Welch & Co Ltd (The Superhulls Cover Case) (No 2) [1990] 2 Lloyd’s Rep 431. But cf Bliss v Southeast Thames Regional Health Authority [1987] ICR 700 at 717 (doubts on scope of Peyman v Lanjani). See also CMA CGM SA v Beteiligungs-KG MS ‘Northern Pioneer’ Schiffahrtsgesellschaft mbH [2003] 1 WLR 1015 at 1037 per the English Court of Appeal; Transcatalana de Commercio SA v Incobrasa Industrial e Commercial Brazileira SA [1995] 1 Lloyd’s Rep 215 at 220; Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia [1996] 2 Lloyd’s Rep 604 at 607; HB Property Developments Ltd v Secretary of State for the Environment (1999) 78 P & CR 108 at 112ff; Youell v Bland Welch & Co Ltd (The Superhulls Cover Case) (No 2) [1990] 2 Lloyd’s Rep 431 at 450; The Burns-Anderson Independent Network Plc v Wheeler [2005] EWHC 575

(QB); [2005] 1 Lloyd’s Rep 580. See further Handley, Estoppel, §14-009, 14-021, 14-036. 81. (1984) 8 FCR 438 at 451. See also JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 385. 82. (1989) 85 ALR 145 at 151–2. Cf Beach Petroleum NL v Johnson (1993) 43 FCR 1 at 53–4; 115 ALR 411 at 595–6. See also Australian Horizons (Vic) Pty Ltd v Ryan Land Co Pty Ltd [1994] 2 VR 463 at 494 per Hedigan J. 83. Discharge by way of performance may be sufficient to raise a claim for restitution; see Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; 185 ALR 335. 84. [1954] 2 QB 459. See also Yeoman Credit Ltd v Apps [1962] 2 QB 508 (hire purchase contract breached by owner). 85. [1963] VR 465. See also Hudson v Jope (1914) 14 SR (NSW) 351; Gormley & Co Pty Ltd v Cubit [1964–65] NSWR 557; Sargent v Campbell [1972–73] ALR 708. For an illustration in the context of a contract voidable under statute see Szep v Blanken [1969] SASR 65. See further Halifax Building Society v Thomas [1996] Ch 217 (a mortgagee elected to affirm a mortgage rather than rescind it for fraud; the mortgagee exercised its power of sale and recovered a sum greater than the mortgage debt; it was held that in affirming the mortgage, the mortgagee had no restitutionary claim to the sum received in excess of the mortgage debt). 86. [1979] QB 705 (see Brian Coote [1980] CLJ 40). Contrast Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833 at 841 (no affirmation where payment made on account); Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 (no affirmation where conduct relied on was equivocal). 87. See Carter’s Breach of Contract, §§11-04, 11-21. 88. Estoppel does not depend on the knowledge of the person sought to be estopped, apart, perhaps, from cases where estoppel is said to arise from silence. 89. More generally, unconscionable conduct on the plaintiff’s part may be a basis for denying effect to an alleged election. Cf CSS Investments Pty Ltd v Lopiron Pty Ltd (1987) 76 ALR 463 and Federal Airports Corp v Makucha Developments Pty Ltd (1993) 115 ALR 679 (wide view of jurisdiction to grant relief against forfeiture) and see the discussion in J W Carter, ‘Problems in Enforcement Part II’ (1993) 6 JCL 1. 90. See generally Mulcahy v Hoyne (1925) 36 CLR 41; Thompson v Palmer (1933) 49 CLR 507 per Dixon J; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 per Dixon J; Legione v Hateley (1983) 152 CLR 406; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Commonwealth of Australia v Verwayen (1990) 170 CLR 394. See also Handley, Estoppel, §14-007. 91. See generally Thompson v Palmer (1933) 49 CLR 507 at 547; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674–5; Legione v Hateley (1983) 152 CLR 406 at 431–2, 437; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 414, 444, 445; Commonwealth of Australia v Verwayen (1990) 170 CLR 394. 92. Accordingly, estoppel is not an operative defence where the defendant is guilty of disentitling conduct. See D & C Builders Ltd v Rees [1966] 2 QB 617 (duress); Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 (misrepresentation). 93. See generally Hughes v Metropolitan Railway Co (1877) 2 App Cas 439; Central London Property Trust v High Trees House Ltd [1947] KB 130; Je Maintiendrai Pty Ltd v Quaglia

(1980) 26 SASR 101; Reed v Sheehan (1982) 56 FLR 206 at 230–1; Legione v Hateley (1983) 152 CLR 406 at 421. 94. See also [2213] and further [2404]–[2405] (estoppel and change of position). 95. See NSW: Sale of Goods Act 1923, s 16(3); NT: Sale of Goods Act 1972, s 16(4); Qld: Sale of Goods Act 1896, s 14(3); SA: Sale of Goods Act 1895, s 11(3); Tas: Sale of Goods Act 1896, s 16(3); Vic: Goods Act 1958, ss 16(3), 99(1); WA: Sale of Goods Act 1895, s 11(3). The provisions do not apply where the buyer has accepted part of the goods and the contract is ‘severable’. See further Carter on Contract, §37-200. 96. See: ACT: Sale of Goods Act 1954, s 39; NSW: Sale of Goods Act 1923, s 38; NT: Sale of Goods Act 1972, s 38; Qld: Sale of Goods Act 1896, s 37; SA: Sale of Goods Act 1895, s 35; Tas: Sale of Goods Act 1896, s 40; Vic: Goods Act 1958, s 42; WA: Sale of Goods Act 1895, s 35. 97. See [2333]. 98. See ACT: Sale of Goods Act 1954, s 16(4); NSW: Sale of Goods Act 1923, s 16(3); SA: Sale of Goods Act 1895, s 11(3). 99. For a more general difficulty see [1337]. 100. See Long v Lloyd [1958] 2 All ER 402 (rescission for innocent misrepresentation as to condition of motor lorry not available once goods had been accepted). See also Leaf v International Galleries [1950] 2 KB 86 at 90–1, 95. 101. See Leason Pty Ltd v Princes Farm Pty Ltd [1983] 2 NSWLR 381 (buyer entitled to rescind contract for purchase of racehorse induced by misrepresentation even if the goods had been accepted); JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 (buyer of motor vehicle entitled to rescission for misrepresentation as there was no evidence of affirmation). See further McBride v Christie’s Australia Pty Ltd [2014] NSWSC 1729 at [349]. 102. See Sale of Goods Act 1923 (NSW), s 38(2) and generally New South Wales Law Reform Commission, Sale of Goods, Second Report, LRC 51, Chapter 2. 103. Competition and Consumer Act 2010 (Cth), Sch 2. For services that fail to comply with a consumer guarantee, see s 267. Here, if there is a major failure or the failure cannot be remedied, the consumer is given an express right to ‘terminate’ the contract, s 267(3)(a); see also ss 269 and 270. 104. What constitutes a ‘major failure’ is dealt with in s 260. Limits on the ability to reject goods are contained in s 262. As an alternative to rejecting the goods the consumer may ‘recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods’: s 259(3)(b). A procedure for rejecting goods where there is not a major failure is provided for in s 259(2). 105. See the ‘consequences’ of rejection in s 263. 106. For a broader approach see Restatement (Second) Contracts, §384 and further [2332]. 107. See Carter’s Breach of Contract, §10-42. This includes cases of discharge by frustration. 108. See generally [2326], [2330]–[2332]. 109. See generally [1331], [1431]–[1439]. See further [2327]–[2335] (scope and operation of the defence). 110. See generally [1431]–[1439] and further [2327].

111. See [2316]. 112. See Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278 per Lord Blackburn (‘as a condition to a rescission there must be a restitutio in integrum’). See also Adam v Newbigging (1888) 13 App Cas 308 at 320; Boyd & Forrest v Glasgow and SouthWestern Railway Co 1915 SC (HL) 20 at 37; Alati v Kruger (1955) 94 CLR 216 at 224–5; Szep v Blanken [1969] SASR 65 at 76; O’Sullivan v Management Agency and Music Ltd [1985] QB 428 at 449–50; Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650; Maguire v Makaronis (1997) 188 CLR 449; Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248; Restatement, Restitution, §65 (compare Restatement, Third, §54). 113. See generally [1329]–[1332]. 114. See further [2327]–[2335]. See also [1431]–[1439] (adjustments in name of restitutio). 115. See [918]. 116. See [1105]. 117. See [1217] (rejection of Chandler v Webster [1904] 1 KB 493 heresy). 118. See [1330], [1331], [1433]. 119. Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 433. See also [2333] (statutory version). 120. See, eg [1124], [1221]. 121. See also [1330], [1433], [1434]. 122. See [1318], [2327]. 123. See also [1331]. 124. See [1318], [1433]. But see [1337] (sale of goods). 125. See [1305], [1330], [1331], [1437]. 126. See [1329], [1433], [1434], [1438]. 127. See Smith New Court Securities v Scrimgeour Vickers (Asset Management) Ltd [1994] 1 WLR 1271 at 1280. 128. See also [1434], [1438]. 129. Adoption of this approach also assists in determining whether the circumstances make counter-restitution necessary. See [1434]. 130. We include here cases where an order is sought to set aside a transaction on equitable grounds. See [1437]. 131. See [1131], [1437]. 132. See [1331]. See also Adam v Newbigging (1888) 13 App Cas 308 (insolvency of partnership did not render restitutio impossible). 133. See, eg Sargent v Campbell [1972–73] ALR 708. See also Svanosio v McNamara (1956) 96 CLR 186 (where vendor sold hotel which stood partly on the land conveyed and partly on Crown land to which the vendor did not have title, there was a question whether substantial restitution was still possible); Szep v Blanken [1969] SASR 65 (although contract was voidable under statute, restitutio in integrum was impossible). Cf Clarke v Dickson (1858) E B & E 148; 120 ER 463 (restitutio impossible where the company in which the plaintiff had taken shares following fraudulent representations was converted to

a limited liability company and wound up). For the contrast between fraud and innocent misrepresentation see Lagunas Nitrate Co Ltd v Lagunas Syndicate Ltd [1899] 2 Ch D 392; Brown v Smitt (1924) 34 CLR 160; Spence v Crawford [1939] 3 All ER 271 at 280–2, 288; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 710, 714; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 386–7. 134. See [916], [1106]. 135. (1933) 48 CLR 457 at 476. 136. See [918], [1106], [2327], [2329]. 137. Reference has already been made to examples of this. See [1438] (necessary adjustments on discharge). 138. This includes cases of discharge by frustration. See [1217]. 139. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383 (see [1434]). 140. See [1141], [1144], [1170], [1439]. 141. See [1434]. 142. Some orders may be viewed as analogous to the change of position defence. See generally Chapter 24. 143. See [136]. 144. See also [1147], [1226], [1237], [1246], [1258]. But see [2333]. 145. For suggestions along this line see [1116], [1209], [1434]. It is likely that the defence of change of position (see generally Chapter 24) will be used to the same end. 146. See further [2332]. 147. For the operation of the Convention see [225]. 148. See also [1436]. 149. See CISG, Art 81(2). 150. See [1110], [1209], [1436]. 151. See CISG, Art 82(1). 152. Cf [1436], [2333] (domestic sale provisions). 153. See CISG, Art 82(2). 154. See CISG, Art 84(2). Cf [2528]. 155. Compare the requirement that election occur prior to the intervention of third party rights. See [2528]. 156. A reference to Seddon v North Eastern Salt Co Ltd [1905] 1 Ch 326. See M G Bridge, ‘Misrepresentation and Merger: Sale of Land Principles and Sale of Goods Contracts’ (1985) 20 UBC LR 53 at 94ff. 157. See Wilde v Gibson (1848) 1 HLC 605; 9 ER 897 (approved Svanosio v McNamara (1956) 96 CLR 186 at 198–9, 207); Angel v Jay [1911] 1 KB 666 (contract for lease was performed); Edler v Auerbach [1950] 1 KB 359 (executed contract for lease); Kramer v Duggan (1955) 55 SR (NSW) 385 (conveyance of title to land); Cousins v Freeman (1957) 58 WALR 79 (sale of land); Vimig Pty Ltd v Contract Tooling Pty Ltd (1986) 9 NSWLR 731 (performed sale of business contract); Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 585–6; 130 ALR 1 at 18 per Brennan, Deane, Dawson, Gaudron and

McHugh JJ; Pedashenko v Blacktown City Council (1996) 39 NSWLR 189 at 199–201, 203–4 per Hodgson J; McBride v Christie’s Australia Pty Ltd [2014] NSWSC 1729 at [351]. 158. See generally Armstrong v Jackson [1917] 2 KB 822 at 825; Solle v Butcher [1950] 1 KB 671 at 695–6; Leaf v International Galleries [1950] 2 KB 86 at 90; Goldsmith v Rodger [1962] 2 Lloyd’s Rep 249 at 251; Senanayake v Cheng [1966] AC 63. 159. See generally Kennedy v Panama New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 at 587; Hudson v Jope (1914) 14 SR (NSW) 351 at 359; Bendigo Central Freezing and Fertiliser Co Ltd v Cunningham [1919] VLR 387; Svanosio v McNamara (1956) 96 CLR 186 at 198–9, 207; Cousins v Freeman (1957) 58 WALR 79 at 82; Leason Pty Ltd v Princes Farm Pty Ltd [1983] 2 NSWLR 381 at 384; Baird v BCE Holdings Pty Ltd (1996) 40 NSWLR 374 at 379 per Young J (rule does not apply to prevent rescission of contract for allotment of shares even though the allottee’s name has been placed on the register). Cf Debenham v Sawbridge [1901] 2 Ch 98. 160. See Svanosio v McNamara (1956) 96 CLR 186 at 198–9 per Dixon CJ and Fullagar J (dictum in context of alleged mistake); Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 585–6; 130 ALR 1 at 18 per Brennan, Deane, Dawson, Gaudron and McHugh JJ (equity may intervene after conveyance of property, provided substantial restitutio in integrum is possible). Cf Bank of South Australia Ltd v Ferguson (1998) 151 ALR 729 at 735 per the High Court. 161. See [2327], [2329]. 162. [1966] AC 63 at 83. 163. See [2334]. 164. See ACT: Civil Law (Wrongs) Act 2002, s 173(b)(ii); SA: Misrepresentation Act 1972, s 6(1)(b). See, eg Shuman v Coober Pedy Tours Pty Ltd (1994) Unreported, SC(SA) (FC), 14 February (recovery of money paid under executed sale of goods contract rescinded for misrepresentation). See also JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 385 per the Full Federal Court; William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016 at 1035–6 per Hoffmann LJ, with whom Russell and Evans LJJ agreed, CA (interpreting corresponding provision in (UK) Misrepresentation Act 1967 and explaining its derivation). 165. See Sale of Goods Act 1923 (NSW), s 4(2A)(b). See also Australian Consumer Law and Fair Trading Act 2012 (Vic), s 25(4) (in contracts to which Pt 3.1 of the Act applies, where property in the goods has passed to a purchaser prior to discharge or rescission then the property will revest in the supplier). 166. See ACT: Sale of Goods Act 1954, s 16(4); NSW: Sale of Goods Act 1923, s 16(3); NT: Sale of Goods Act 1972, s 16(4); Qld: Sale of Goods Act 1896, s 14(3); SA: Sale of Goods Act 1895, s 11(3); Tas: Sale of Goods Act 1896, s 16(3); Vic: Goods Act 1958, s 16(3); WA: Sale of Goods Act 1895, s 11(3). 167. See NT: Sale of Goods Act 1972, s 16(4); Qld: Sale of Goods Act 1896, s 14(3); Tas: Sale of Goods Act 1896, s 16(3); Vic: Goods Act 1958, s 16(3); WA: Sale of Goods Act 1895, s 11(3). ‘Specific goods’ are goods identified and agreed upon at the time a contract of sale is made. 168. The rule is based on cases such as Street v Blay (1831) 2 B & Ad 456; 109 ER 1212 (rights limited to compensation for breach of warranty) and Mondel v Steel (1841) 8 M & W 858

at 870–1; 151 ER 1288 at 1293 (indefeasible transfer of property on sale of goods). See also Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584 at 614 and S J Stoljar, ‘Conditions, Warranties and Descriptions of Quality in Sale of Goods’ (1952–53) 15 MLR 425 at 436ff, 16 MLR 174. 169. See [2329]. But cf J C Smith, ‘The Right to Rescind for Breach of a Condition in a Sale of Specific Goods Under the Sale of Goods Act, 1893’ (1951) 14 MLR 173. 170. See [2332]. 171. See generally Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (1987) 16 FCR 410 at 418–19; 75 ALR 271 at 280; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at 564–5, 571; 79 ALR 83 at 102–3, 109; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 708ff; Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 138ff; 94 ALR 719 at 745ff; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 47–8; 110 ALR 608 at 625–6; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 380. 172. (1986) 69 ALR 715. 173. See s 237. This provision focuses on contraventions of chapters 2, 3 and 4 of the ACL and gives the court authority to make such orders as it thinks appropriate. However, given that this provision has as its focus a variety of conduct it must raise a doubt as to whether it confers a general power to declare void any contract affected by any prohibited conduct without regard to the nature of that conduct or its relevance to entering the contract. 174. See Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 179 CLR 15 at 37 (approving Trade Practices Commission v Milreis (1977) 29 FLR 144 at 160–1, 168; 14 ALR 623 at 638–9, 645–6). 175. See Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 179 CLR 15 (commencement of winding up of company as restriction on jurisdiction to declare contract void). 176. See Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471 at 473; 110 ALR 535 at 538. For the approach under general principles see [1331]. 177. See ACT: Civil Law (Wrongs) Act 2002, s 175; SA: Misrepresentation Act 1972, s 7(3). See further Carter on Contract, §§20-500–20-550. 178. See generally Chapter 26. 179. For an illustration see Guinness Plc v Saunders [1990] 2 AC 663 (see [1028]). 180. See [2334]. 181. See, eg Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700.

[page 861]

Chapter Twenty Four

Change of Position 1. 2. 3. 4.

General …. Recognition of the defence …. Ambit of the Change of Position Defence …. Operation of the Change of Position Defence ….

[2401] [2403] [2410] [2411]

1. General [2401] Objects. Change of position is a recognised defence in restitution.1 This chapter explains its comparatively recent emergence, its elements and ambit, and any bars to its application. We also discuss its relationship with other defences, notably estoppel and ‘payment over’. [2402] Varieties of change of position. Change of position operates principally as a defence under the general law that may displace a prima facie obligation to make restitution for unjust enrichment and on other bases.2 Unsurprisingly, the defence is also available under legislation providing for particular unjust enrichment claims in some jurisdictions.3 Principles reflecting the defence are also found in various equitable doctrines which in turn have influenced the development of the defence.4

2. Recognition of the defence [2403] Precursors. In her excellent monograph, Professor Bant demonstrates how estoppel by representation, the restitutionary

defence of payment over by agent and (to a lesser extent) rescission’s requirement of restitutio in integrum laid the way for recognition of the change of position defence and can be expected to influence its ongoing development.5 Estoppel can impact on restitutionary claims at many levels6 but the present estoppel focus is the express or implied representation that may accompany a mistaken payment. The links and overlaps between equitable estoppel and change of position were discussed by the High Court in Australian Financial Services [page 862] and Leasing Pty Ltd v Hills Industries Ltd.7 All of the justices drew analogies between equitable doctrines of detrimental reliance and the defence of change of position. Birks had suggested that change of position was equivalent to estoppel minus representation.8 In Australian Financial Services, French CJ9 and Gageler J10 appear to have endorsed this view expressly. The whole court also acknowledged the analogy of the principles of equitable detriment expounded by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd.11 The Australian law of estoppel in pais has, in recent years, developed less rigidly than in England; and its relocation, as a substantive doctrine as distinct from a rule of evidence, means that it need not produce an all-or–nothing consequence where that would undermine the rationale for its operation.12 [2404] Change of position recognised. Prior to its recognition by the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia,13 the defence of change of position had been restricted to agency relations and the collection and payment of bills of exchange by bankers.14 Although its availability as a general defence had previously been rejected by the Supreme Court of New South Wales in National Mutual Life Association of Australasia Ltd v Walsh,15 it was foreshadowed in other decisions,16 and in dicta by the High Court in Australia and New Zealand Banking Group Ltd v Westpac Banking

Corp.17 In recognising the defence as having general application, the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia brought the law of Australia broadly into line with that in the United States,18 Canada19 and New Zealand.20 England21 has followed suit. [page 863] [2405] Statutory change of position defences. A version of the defence was enacted in Western Australia where s 125(1) of the Property Law Act 1969 declares that mistaken payments are not recoverable:22 … if the person from whom relief is sought received the payment in good faith and has so altered his position in reliance on the validity of the payment that in the opinion of the Court, having regard to all possible implications in respect of the parties (other than the plaintiff or claimant) to the payment and of other persons acquiring rights or interests through them, it is inequitable to grant relief, or to grant relief in full.

As with the defence under the general law, the defendant invoking the provision must have altered position in good faith reliance on the validity of the payment. But, unlike the general law, the statutory defence is confined to mistaken payments23 and it imports a ‘balancing of equities’ approach.24 The New Zealand counterpart has been held not to exclude the general law defence.25 Particular manifestations of the defence are also found in statutes dealing with trust and estate distributions and cy-près distributions.26 [2406] Rationale and juristic origin of the defence. The High Court has recently approved Lord Goff’s expansive formulation in Lipkin Gorman v Karpnale Ltd as to the broad object of the defence:27 At present I do not wish to state the principle any less broadly than this: that the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full.

In the same breath, there have been customary warnings about the need for development to proceed on a case by case basis28 and for the

avoidance of ‘arbitrary judicial discretion’.29 Neither is there to be ‘a balancing of competing equities as between the parties, based on considerations such as fault.’30 [page 864] The ‘inequitable’ reference in Lord Goff’s dictum resonates with Lord Mansfield’s statement in Moses v Macferlan31 about a claim in money had and received being ‘a kind of equitable action’ capable of rebuttal in various situations where ‘the defendant may retain [the money] with a safe conscience’. In Lord Goff’s dictum, as with Lord Mansfield’s, there is ambiguity in that the word ‘inequitable’ could either be a reference to injustice in a moral or rhetorical sense (something for which Chancery law has no monopoly); or a reference to that branch of the unwritten law called Equity.32 When it was first squarely rejected in England and Australia in the early twentieth century, the defence was pilloried for its association with Lord Mansfield’s then discredited approach to money had and received with its suggestions of invoking ‘an equity’ in the Chancery sense.33 When the defence was again mooted by Robert Goff J in 197934 and accepted in Australia in 199235 it was presented as an outworking of the unjust enrichment concept without equitable trimmings. In the realm of mistaken payments, where the defence is most frequently encountered, it was seen to counterbalance too ready accessibility to restitution due to recent relaxation of the earlier requirement of a ‘fundamental’ mistake (of fact) in favour of the more liberal ‘causative’ mistake (of fact or law).36 Any references to matters of injustice and inequity were rhetorical and moralistic (which is not to say that they entailed matters foreign to legal reasoning). However, by 2014, when the High Court adopted Lord Goff’s statement as canonical, the court was signalling that the Australian law of restitution and the change of position defence embodied some distinctive, capital-E equity integers. This development and its limited impact on the substantive law has already been addressed by us.37 It

may be hoped that the whole court will come to endorse the summation of Gageler J who described the defence as ‘located at the second stage of an analysis founded ultimately on notions of conscience and explained (as distinct from defined) by the concept of unjust enrichment’.38 [2407] Change of position as a defence to certain equitable claims. Change of position, or its analogue, is also available to displace or qualify various equitable claims of a personal or proprietary nature.39 This in turn [page 865] reinforces the case for the inclusion of such claims in a coherent law of restitution. The defence also appears in cases where claims based on undue influence are modified having regard to good faith changes of position, albeit that the exact label is not used.40 [2408] Relationship of change of position to ‘payment over’ and estoppel in mistaken payments. The defence of change of position probably now encompasses the specific defence of ‘payment over’ that was available to certain mistaken payees during the era before change of position as such was accepted. The narrower defence could be invoked by agents and intermediaries such as banks.41 It also extended to agents who paid a person masquerading as the agent’s principal.42 We referred to this line of cases in our excursus on banking law in the context of mistaken payments.43 It is noted that the English Court of Appeal considers the agency defence and the defence of change of position remain distinct principles.44 In our view, this type of reasoning is unhelpful given the contribution that payment over has made to the acceptance of change of position itself and given that both defences appear to serve common goals. Developments touching equitable estoppel to which we now turn support our conclusion. The High Court has also borrowed extensively from the law of

equitable estoppel when explaining and developing change of position as a defence to claims to recover mistaken payments.45 Older cases where estoppel was raised as a complete defence in this area suggested that common law estoppel had requirements of a promise or representation,46 perhaps also a breach of a duty of accuracy in the plaintiff47 as well as detrimental reliance. But since the recognition of the change of position defence, attitudes about continuing to have an all-or-nothing but harder-to-access defence of estoppel have been influenced by broader views about the relationship between law and equity (fusion) and about whether estoppel and change of position serve differing normative functions. In addition, various opinions have been expressed in the cases and academic [page 866] writing as to whether estoppel by representation leads necessarily to an all-or-nothing result and as to the capacity of a broad defence of change of position to accommodate all of the functions addressed by the law of estoppel by representation.48 In Avon County Council v Howlett,49 the English Court of Appeal contrasted estoppel and change of position by reference to the inability of the former to operate pro tanto. In this regard, estoppel remains as a more favourable choice for defendants in applicable cases, since it is an all or nothing defence. However, consistently with dicta in Avon County Council, later English cases have been prepared to prevent defendants setting up estoppel unconscionably.50 Differing and still inconclusive views have been expressed on this matter in Australian cases.51 Canadian authority holds that since the defence of change of position operates pro tanto, the defence of estoppel to actions for the recovery of money paid under mistake ought to be rejected.52 Lord Goff has suggested that ‘in many cases, estoppel is not an appropriate concept to deal with the problem’.53 The High Court’s sweeping reappraisal of change of position in

Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd54 further supports this approach to the older defences when they are invoked within the very space occupied by change of position. The court determined that change of position has regard to ‘equitable principles’ while confirming that it may (but need not) provide a complete defence depending on the facts. In these circumstances, it is difficult to see how the modern law could or should tolerate ‘two streams’ flowing over the same ground with the ‘common law’s’ all or nothing defence being capable of trumping something decidedly ‘equitable’.55 [page 867] In our view, the nuanced change of position defence subsumes the defence of payment over, and (in this particular area) the defence of estoppel. Nevertheless, until the issue is resolved, pleaders who can point to a clear representation would be well advised to demonstrate that their situation falls within the older defence of estoppel rather than relying solely upon the broader defence of change of position. They should not, however, be surprised if the plaintiff’s reply contends for some basis why total preclusion may lead to an unconscionable outcome. [2409] Estoppel outside the area of mistaken payments. It would be wrong, however, to think that estoppel by representation plays no part in the law of restitution. Across the legal landscape, a representation that is relied upon detrimentally may preclude the representor from asserting a right or invoking a remedy.56 In the area of election between rights57 or between remedies,58 estoppel by representation may have impact. It can also operate as a direct defence to claims of a personal or proprietary nature.59 Estoppel may also play a role in fields where alternative rights (or remedies) are not in play.60 For example, although principles of election between rights do not operate to prevent the invocation of the

doctrine of frustration,61 estoppel may have this effect. Thus, a party may be estopped from relying on the discharge which would otherwise occur under the doctrine of frustration.62 In this context, since the ability to claim restitution depends on discharge, estoppel provides access to a defence which denies the existence of a prima facie claim. The operation of any claim or defence based on estoppel by representation depends on proof that all of the traditional elements of the concept have been satisfied. We add one rider touching policybased or statutory-based claims for restitution. Considerations which inform the decision that the plaintiff has made out a prima facie case for restitution may affect access to estoppel as a possible defence to such claim.63 This is particularly true where the claim derives from constitutional principles, or is made under statute, or the claim arises from a defendant’s failure to discharge a statutory duty. For example, there is a difference between claims made under the frustrated contracts legislation64 and a claim made under the Australian Consumer Law.65 Indeed, in all cases where the plaintiff’s claim for restitution is based on statute, [page 868] or the failure of the defendant to comply with a statute, the availability of the defence is subject to a consideration of whether the statute admits estoppel as a defence.66

3. Ambit of the Change of Position Defence [2410] Ambit of the defence. Subject to the principles set out below,67 the defence is available in response to all unjust enrichment claims and probably to all other types of restitutionary claims. But it

will be barred to defendants in particular circumstances where accessing it would stultify the policy underpinning the plaintiff’s right.68 Thus, it is available in answer to personal claims based upon mistake69 and claims to recover a payment made under an ineffective contract.70 Change of position has also been presented as the rationale for certain provisions in legislation dealing with the consequences of contractual frustration.71 It is also capable of answering restitutionary claims that cannot be justified or justified solely by reference to the unjust enrichment concept, including claims that vindicate proprietary interests. Accordingly, the defence may be raised in response to personal claims derived from the action for money had and received that vindicate title to money found or stolen, including claims brought against a person who received money from a ‘thief’ without providing valuable consideration.72 The defence has also been recognised in the context of subrogation claims involved in the tracing of stolen money73 as well as equitable claims to recover property.74 In principle, a claim for a remedial constructive trust or lien75 is capable of attracting the defence given that such remedies ‘can be tailored to the circumstances of the particular case, [so that] innocent third parties would [page 869] not be prejudiced and restitutionary defences, such as change of position, are capable of being given effect’.76 Dicta to the contrary in two Australian cases at first instance77 should be viewed in context. In those cases, the remedy was being sought against a person guilty of ‘knowing receipt’ under the doctrine of Barnes v Addy78 where the defendant’s knowledge of and participation in wrongdoing would have barred the defence in any event.79 Australian authority also recognises the availability of the defence (in

an exceptional case) where restitution is sought in respect of a sum paid under a judgment that is later reversed.80 Despite this body of case law, which includes the decision of the House of Lords in Lipkin Gorman, there is widespread academic disagreement as to whether change of position is (or should be) available to answer claims that cannot be characterised as responding to unjust enrichment.81 In our view, the defence should be available throughout the law of restitution except in those particular areas where the defence is barred for reasons of principle and coherence. In this, we effectively share the approach of Professor Bant82 and the Restatement, Third.83 Close analysis of the cases reveals that it is usually the conduct of the defendant rather than the nature of the plaintiff’s claim that bars or precludes the defence. We identify categories of barring conduct later in this chapter.84 It is, however, conceivable that the policy underlying particular types of claim is too strong to permit any role for change of position.85 Claims by and against the Crown involving the recovery of benefits or taxes that are paid by mistake or as the result of improper pressure may be capable of attracting the defence.86 But those grounded in constitutional doctrines, such as the [page 870] taxpayer’s claim under the Woolwich principle87 or the Revenue’s claim under the principle of Auckland Harbour Board v R88 would appear to repel the defence, just as they have repelled any resort to estoppel by representation. English authority suggests that the defence is not available to the Revenue, quite apart from the difficulty of having regard to the way governments fund their activities.89 For claims by the Revenue under the Auckland Harbour Board principle, the constitutional policy that protects Parliament’s role in appropriating

public money seems too strong to accommodate the defence, especially where an estoppel defence is also precluded.90 Some private law situations where the payer lacked legal capacity may be in the same position because of the impossibility of the payee establishing reliance on the faith of the receipt without undermining the very basis of the plaintiff’s original claim.91

4. Operation of the Change of Position Defence [2411] Introduction. The High Court has stressed that change of position is neither a narrow nor a technical concept.92 Nevertheless, several principles are now well-accepted and the dangers inherent in unduly open-ended concepts should be avoided as far as practicable. Accordingly, we state ten established propositions about change of position before identifying two small pockets of possible uncertainty.93 [2412] Onus on defendant. The onus of pleading and establishing change of position, including the necessary reliance, is on the defendant.94 But an unduly high evidentiary standard of proof should not be required of a defendant whose initial ignorance of the plaintiff’s mistake may have affected his or her capacity to prove the defence.95 The realities of commerce [page 871] and the uncertainties of litigation need to be taken into account.96 Courts tend to exercise leniency in favour of mistaken payees, recognising that:97 … to require that a private individual, who believed that she was spending her own money, prove her expenditures as if she was claiming damages in an action for negligence would be most unfair. It was the plaintiff’s error that put her in the funds in

the first place and led her to believe that the funds were hers to spend without having to account to anyone for her expenditure.

[2413] Defence capable of operating pro tanto. It is clear that the defence of change of position may be applied pro tanto so that the defendant can deny recovery as to part of the benefit initially received.98 Thus, in Lipkin Gorman v Karpnale Ltd99 the House of Lords treated the gambling club’s ‘net loss’ as the extent of its change of position. This is the hallmark of change of position which does not provide a complete defence unless the change of position is to the full extent of the defendant’s unjust enrichment. On its facts, there was held to be a complete defence in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd.100 [2414] Mere hardship does not qualify. Mere expenditure or the burden of being required to make restitution do not suffice to establish change of position. Nor will absence of means to pay the judgment.101 Supervening misfortune or hardship, such as the loss or theft of the money handed over by the plaintiff (sometimes called non-participatory change of position) will not qualify unless the defendant has first taken some step with the money in reliance on the faith of the validity of the receipt.102 [2415] Change of position must be detrimental and ‘substantial’ but it need not be calculable in monetary terms or ‘disenriching’. In David Securities Pty Ltd v Commonwealth Bank of Australia103 the core requirement of the defence was identified as the fact that ‘the defendant has acted to his or her detriment on the faith of the receipt’. Detriment and reliance are closely linked although we shall endeavour to address each separately. [page 872] In Gageler J’s summary in Australian Financial Services and Leasing

Pty Ltd v Hills Industries Ltd, the defendant must show that, by reason of having acted or refrained from acting in reliance:104 … the defendant would be placed in a worse position if ordered to make restitution of the payment than if the defendant had not received the payment at all. The detriment constituted by that difference in position need not, in every case, be financial or pecuniary. If financial or pecuniary, it need not, in every case, be established with precision. It can be an opportunity foregone. It must, in every case, be shown by the defendant to be substantial.

Expenditure of the money received on ‘ordinary living expenses’105 will generally106 not constitute a change of position.107 However, an uncustomary splurge on a luxury holiday,108 or unsuccessful gambling109 or a luxury car that is stolen uninsured,110 or even increases in daily outgoings111 may qualify. Another example, drawn from older estoppel cases, is detrimental reliance in the making of a (bad) investment that would not otherwise have been made.112 However, the fact that the defendant has lent the money to a third party does not suffice, because ‘until all reasonable efforts have been made by the defendant to get back the money and have proved unavailing, how can it be said that it would be inequitable to permit a recovery?’113 The critical element in these examples is not so much the ephemeral nature of the defendant’s acquisition as the detrimental reliance.114 Professor Mitchell has perceptively demonstrated that ‘the question whether a defendant has incurred extraordinary expenditure does not turn on the type of transactions he has entered, but on the question whether he would have entered them at all, but for his enrichment at the claimant’s expense’.115 [page 873] The court needs to consider what is ‘ordinary’ for the particular defendant, because the search is for evidence that the defendant acted differently (changed position) on the faith of the belief that the benefit conferred by the plaintiff was the defendant’s to spend.

A missed opportunity for gain may also be detrimental116 so long as the defendant can prove that he or she ‘refrained from acting (that is, not done something the defendant would otherwise have done)’.117 It is not enough for the defendant to show that the money has been spent on the purchase of an asset because the asset is likely to be worth what was paid for it. Indeed, by the time of the plaintiff’s claim it may be worth more or, if less, this may be the consequence of the defendant having used it in the meantime.118 It would be otherwise if the asset acquired in reliance were stolen or (if shares) rendered valueless in consequence of a company failure. In such circumstances, it does not matter that the downstream detriment flows from matters beyond the control of the defendant.119 The use of money to pay off debts is not in itself a detriment because there has been a corresponding release from liability to the creditor; and because refinancing may well be within the capability of the defendant when notified of the plaintiff’s claim for restitution. But there may be at least some disadvantage due to the favourable nature of the debt discharged or because the defendant’s capacity to refinance may have been affected by lifestyle changes made on the faith of the receipt.120 In Gertsch v Atsas121 $70,000 of a $100,000 legacy was used to extinguish a mortgage as part of the defendant’s lifestyle switch from paid employment to university student. When it turned out that the will had been forged the change of position defence was invoked in answer to the claim for the return of the legacy. Had the defendant stayed in employment she would have reduced the mortgage to about $10,000 by the time of the restitution claim. Accordingly, she was only required to repay $10,000 to the estate. These situations illustrate that the issues of detriment and reversibility must be considered together, and that in many cases the defence operates only pro tanto. There would be no detriment if a defendant assumed it owed a contractual obligation and paid it, only to discover later that the defendant owed the same or less sum by virtue of a restitutionary liability.122

[page 874] Statements that any change of position must be ‘substantial’123 will exclude trivial detriments but really emphasise that the defendant bears the onus of proof about matters usually falling within his or her own knowledge.124 Together with the cases illustrating the irreversibility requirement125 they show that the defence is concerned with matters of substance, not form. So long as the detriment is substantial ‘it need not consist of money or other quantifiable financial detriment’.126 Birks and other English academics argued that the change of position defence needed to be limited by a concept of ‘disenrichment’ which ‘ties the defendant’s liability to the amount of his extant gain’.127 That notion was consistent with Birks’ unhappiness with the soft edges of Lord Mansfield’s approach.128 However, ‘disenrichment’ produced at least two problems. First, it tended to look at things from the moment of receipt, rather than when restitution was sought, in contrast to the approach in the estoppel by representation cases.129 This in turn required the making of unsatisfactory post-receipt adjustments including the fictional notion of ‘subjective devaluation’ whereby a defendant who (with a mistaken payment) initially selected something of apparent or objective value no longer valued it once becoming aware of the plaintiff’s prima facie claim. The second problem was that ‘disenrichment’ encountered a growing body of cases recognising that change of position did not have to be inherently pecuniary in nature or even entail an outflow of wealth.130 Disenrichment as a necessary element of change of position has been rejected by the High Court in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd.131 The plaintiff company (AFSL) financed businesses so they could purchase commercial equipment. Two manufacturers (Hills and Bosch) supplied equipment to an entity known as TCP and each supplier was owed debts by companies in that entity. Unbeknown to all, a director of TCP had created false invoices suggesting that TCP had itself purchased the equipment from each of

Hills and Bosch. On the basis of these invoices, AFSL agreed to purchase the equipment and lease it back to TCP. AFSL paid the amounts of the false invoices to Hills and Bosch. Even though this was a classic case of deciding which of two innocent parties should suffer for [page 875] the fraud of a third party, proof of operative mistake meant that those sums were prima facie recoverable as moneys had and received. However, change of position was found to be a complete defence on the facts. The payees had effectively abandoned the opportunity of recovering their debts from TCP. AFSL had argued that merely because Hills and Bosch had entered into further transactions with the TCP entities did not suffice. It was contended that the mistaken payees were required to prove the value of what had been lost before they could establish that they were ‘worse off’ in economic terms and this had not been done. The mere entry into further transactions was incapable of establishing the defence, in light of the principle that change of position must be irreversible.132 The court rejected this argument on the facts, holding that the receipts were ‘irreversible as a practical matter of business’ whether or not they were legally reversible for some other reason.133 The court stressed the need to give the defence a ‘practical application’134 and to examine the relevant conduct in its commercial context, given that reasonable business people make decisions based on risk assessment.135 French CJ explicitly and the other justices implicitly accepted the idea that mathematical disenrichment might form a class or subset of case in which recovery could be held inequitable.136 [2416] The detrimental change must be legally or practically irreversible. According to the Western Australian Court of Appeal, ‘the recipient must have changed his or her position, and the change

must be legally or practically irreversible or there must be significant difficulties in reversing the change’.137 Many assets acquired with mistakenly paid money are relatively easy to sell, with the result that change of position will operate only to the extent necessary to meet the detrimental shortfall. The defence has been withheld in respect of tax liabilities incurred if those can be recouped in light of the plaintiff’s claim for restitution.138 Listed shares, even real estate, may be relatively easy to sell.139 So too a luxury car, so long as it has not been stolen [page 876] uninsured.140 And, where a mistakenly paid windfall is used to discharge a mortgage, the court would need to be satisfied that it is not practically open to the defendant to borrow afresh after the mistake is brought to attention.141 Non-pecuniary lifestyle changes like starting a family may be harder to reverse in practical terms and they can be expected to lead to a complete defence.142 Proof of irreversibility, like all aspects of the defence, is to be addressed in a practical manner.143 Essentially, the court is undertaking ‘a valuation of the (irreversible) changes to the defendant’s position and offsets that amount against what would otherwise be the full measure of restitution.’144 As with the duty to mitigate damage in tort situations, parties ought not to be expected to embark on difficult and problematic litigation. [2417] Good faith reliance. The defendant must show detrimental action ‘on the faith of the receipt’.145 This, in Gageler J’s summary, requires proof that:146 … the defendant has acted (that is, done something the defendant would not otherwise have done) or refrained from acting (that is, not done something the defendant would otherwise have done) in good faith on the assumption that the defendant was entitled to

deal with the payment which the defendant received. The defendant need not for the purpose of this condition have acted on knowledge derived from the payer.

It will normally be necessary for the payee to show that ‘the receipt of the money operated on his mind and caused him to act as he did’.147 In other words, the court asks whether ‘the defendant would have acted differently if he had not mistakenly believed that he was richer than he was, that because of his mistake, he had … altered his position’.148 The reliance factor is closely related to the requirement to show that the change of position was brought about by the receipt, in short, causation.149 The causation requirement is satisfied if the defendant proves that he or she [page 877] would not have changed position but for the receipt.150 A mix of decisions will not preclude the defence so long as one of them was reliance on the faith of the receipt.151 Nor will the harbouring of doubt, so long as blindness does not become wilful.152 Since reliance is critical, change of position cannot cover detriment incurred prior to the receipt of the benefit.153 If, however, the defendant acted detrimentally in reliance upon the anticipation or expectation of the receipt from the plaintiff the defence lies, so long as the receipt later occurs.154 Change of position does not address the loss of use of money during the intervening period between payment and recovery: this is the function of an award of interest.155 As an element of the defence, proof of good faith lies on the defendant. Bad faith will negate reliance on the defence, both at common law and in its statutory form.156 Negligence is not the same as bad faith,157 but the failure to make an obvious enquiry (especially where commercial practice dictates) may enable the court to infer want of good faith.158

[page 878] In most instances, want of good faith is just a reliance case that fails spectacularly. Thus, if it is clear that the defendant knew of the plaintiff’s mistake (either because the defendant knowingly induced it or because it was realised by the defendant at the time)159 or, if the mistake was discovered later by the defendant before the defendant embarked on the conduct said to be detrimental, the defendant cannot invoke change of position. Reversing the onus, absence of reliance has been proved in spades, as well as want of good faith.160 The availability of the defence means that a plaintiff should notify the defendant immediately upon discovery of a relevant mistake or other basis of restitutionary recovery. It is inconceivable that the defence could extend to expenditure after a reasonable opportunity to act on such notice.161 Under the earlier, narrower, defence available to agents who received mistaken payments and accounted to their principals, the absence of notice before payment was critical.162 [2418] Representation from plaintiff not required. So long as there has been detrimental reliance on the faith of the receipt, the defendant need not have acted on knowledge derived from the payer.163 Many cases involve parties deceived by information from a fraudulent third party.164 [2419] Defendant’s wrongdoing will often bar the defence. Lipkin Gorman v Karpnale Ltd165 was not a case of restitution from a wrongdoer. However, Lord Goff stated166 that ‘it is commonly accepted that the defence [of change of position] should not be open to a wrongdoer’, adding that consideration of such a proposition could await a proper case. Lord Goff’s statement certainly requires explanation. [page 879]

To allow change of position to be raised by a defendant whose deliberate deceit or threats to harm has triggered the plaintiff’s claim would be clearly unjust. It would stultify the very reason for the claim.167 And this would be so, even if the plaintiff elected to sue in unjust enrichment (ie ‘waived the tort’ in the old parlance) rather than directly relying on the wrongful conduct of the defendant. This explains why change of position should be denied to the defendant who has ‘knowingly received’ property misappropriated in breach of another’s fiduciary obligations.168 But there are multitudes of torts and equitable wrongs. A defendant whose negligence induced the plaintiff to make a mistaken payment ought not to be automatically deprived of setting up change of position in a proper case.169 Conversely, there will be situations where no compensable wrong has been committed by the defendant but where it would still be inequitable for the defendant to invoke the defence. An example would be where the defendant’s improper, but not necessarily tortious, pressure was the basis of the plaintiff’s original claim in unjust enrichment.170 There are several examples of disentitling ‘wrongdoing’ in the earlier case law relating to agents who ‘without notice of any mistake or irregularity in the payment’171 have paid money in accordance with their principal’s mandate. In the context of an intermediary’s change of position defence it had long been established that an agent is directly accountable to a payer, notwithstanding payment by the agent to his or her principal, if the agent was directly involved in the wrongdoing whereof the payment was made.172 As Palmer AJ expressed it, in a masterly review of the cases in Mercedes-Benz (NSW) Pty Ltd v ANZ and National Mutual Royal Savings Bank Ltd:173 [page 880] The ‘wrongdoing’ of the agent in such cases has ranged from threatening to execute a writ for distraint, as bailiff, upon the wrong person in order to obtain payment …, to collecting the assets of a deceased estate as agent for a person known by the agent to be an executor de son tort …, to paying over to his principal money received by a solicitor

from a debtor in consideration of adjournments of a bankruptcy petition presented against the debtor by the solicitor on behalf of his principal … In each of these cases it will be seen, firstly, that the wrongdoing which defeated the change of position defence was directly and immediately causal in the payment coming into or leaving the agent’s hands and, secondly, that the facts constituting the wrong were actually known to the agent.

The Restatement, Third declares that the defence is unavailable to a conscious wrongdoer or to a recipient who is primarily responsible for his own unjust enrichment.174 As indicated, this would include those who knowingly receive trust property or dishonestly participate in breaches by trustees and other fiduciaries. The situation of those who ‘induce’ a mistaken payment to themselves without committing any wrong or exerting improper pressure towards the plaintiff may require separate attention.175 [2420] Illegality as a bar. Where the recipient’s actions in changing position were illegal they cannot be relied upon, at least in certain circumstances. In Barros Mattos Jnr v McDaniels Ltd176 the defence was unavailable to a defendant who claimed change of position by entering into a foreign exchange transaction that was illegal under the law of a foreign country, before innocently distributing the proceeds in accordance with the original fraudster’s instructions. This and other overseas cases suggest that any form of illegality touching the receipt may debar.177 However, commentators have questioned the apparent rigidity of the reasoning in these cases.178 Care needs to be taken to ensure consistency with the principles governing the broader defence of illegality.179 If, however, the illegality of the defendant’s demand for payment is the very basis of the plaintiff’s right to restitution a change of position defence ought not to be entertained.180 [2421] Absent statute, no balancing of ‘competing equities’ as between the parties, based on considerations of fault. We have demonstrated that many types of wrongdoing on the part of defendants [page 881]

will bar them from invoking the defence.181 Beyond this, the courts do not and should not go when addressing the defence at common law. The High Court has declared that ‘any reference to equitable notions does not invite a balancing of competing equities as between parties, based on considerations such as fault’.182 This contrasts with the stance of some courts in the United States that weigh ‘equities’ and deny repayment ‘on patent equitable considerations’183 if the defendant has changed position. In such a context, the plaintiff’s negligence may be relevant when the defendant has changed position.184 This is also the position in New Zealand under both its statutory defence (confined to mistake)185 and its understanding of the common law.186 [2422] Two areas of possible uncertainty: ‘unreasonable’ reliance and ‘non-participatory change of position’. Two additional questions have been discussed in the academic literature. Does reliance have to be reasonable or is it sufficient that it is in good faith? And what is the situation of the mistaken recipient who does not act detrimentally but whose capacity to make restitution is affected by circumstances entirely beyond his or her control? As to the first issue, in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd187 Gageler J found it unnecessary to decide if the law required a defendant who established reliance to show also that it acted reasonably. Professor Bant argues in favour of such a requirement, although she cites no English or Australian case directly in point and the cases she discusses appear to have turned on alternative reasoning or somewhat forced factual conclusions.188 The cases deciding that negligence in itself is not want of good faith189 would appear to draw the line at that point, effectively denying a reasonableness element in good faith reliance. [page 882] The second issue is variously called non-participatory change of

position190 or independent change of position.191 The example offered by Professor Burrows is where a defendant who is paid by the mistake of his bank (perhaps even negligently) were to have the money stolen immediately afterwards.192 Burrows contends that it seems grotesque to hold the defendant strictly liable to make restitution. ‘Even though the subsequent loss of the benefit cannot be blamed on the bank, the fact remains that the bank started the chain of events by making the mistaken payment.’193 This so called ‘wider version’ of the defence involving ‘a change of position, causally linked to the mistaken receipt, which makes it inequitable for the recipient to be required to make restitution’194 has some support in overseas decisions in cases where there was a high level of carelessness by plaintiffs who vehemently denied their original mistake only later to rely upon it.195 Supporters of the Burrows’ position may be detecting things that are not universally apparent in the tea leaves of Lord Goff’s broad dictum in Lipkin Gorman v Karpnale Ltd.196 They can also contend that it is not easy to distinguish in a principled way those cases where a defendant was permitted to raise the defence after having made an uncustomary acquisition which led to detriment unconnected with any fault, such as the purchase of luxury car that was stolen, or of shares in a company that failed.197 But how is one to accommodate authoritative statements which insist that mere hardship does not constitute the defence and that detrimental reliance must be proved?198 In the overseas cases that contain dicta favouring Burrows’ position199 there were negligent statements effectively denying any mistake on the part of the plaintiff. But, to take this into account would be to embark upon the weighing of relative fault, something foreclosed under Australian law.200 Australian law’s general requirement of detrimental reliance on the faith of the receipt indicates to us that the defendant in Professor Burrows’ example cannot show conduct falling within the defence. The defence fails at the threshold, before one gets to apply any touchstone of ‘equitable principles’.201 Our view is supported by High Court dicta

[page 883] apparently approving the result in Martin v Pont.202 In that case, an agent was required to make restitution of money entrusted to him for investment with a nominated finance company despite the money having been stolen before investment by his dishonest employee. To shoehorn the sad situation posited by Professor Burrows into the defence of change of position does too much violence to the way that defence has been developed in the general law. It really shifts a loss without invoking a principle. Those minded to seek a remedy in a truly extreme case might do better to explore the outer reaches of the tort of negligent advice or the doctrines of equitable estoppel. 1.

See generally Elise Bant, The Change of Position Defence.

2. 3.

As to the ambit of the defence, see [2410]. See [2405] (statutory change of position defences), [1259] (frustrated contract claims in some jurisdictions).

4. 5.

See further [2408]. Bant, Change of Position, Chapters 2–4. See also [442] (payment over as a defence to mistake claims); Chapter 23 (election and restitutio in integrum).

6. 7.

See [2409]. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. See further Keith Mason, ‘Strong Coherence, Strong Fusion, Continuing Categorical Confusion: The High Court’s Latest Contributions to the Law of Restitution’ (2015) 39 Aust Bar Rev 284 esp at pp 300–1.

8. 9.

Birks, Introduction, p 410. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [14].

10. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [102]. 11. (1937) 59 CLR 641 at 674. See (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [23] per French CJ, [85] per Hayne, Crennan, Kiefel, Bell and Keane JJ, [149] per Gageler J. See also Gillett v Holt [2001] Ch 210 at 233 (Robert Walker LJ). The possibility that legitimate fusionist thinking might lead, from the opposite direction, to a modification of common law estoppel’s all or nothing approach was also mooted by French CJ (at [18]) and Gageler J (at [152]–[155]). Cf Commonwealth v Verwayen (1990) 170 CLR 394 at 409–13 per Mason CJ, 443–6 per Deane J. Cf Handley on Estoppel, pp 20–1. 12. See Australian Financial Services at [152]–[153] per Gageler J. 13. (1992) 175 CLR 353; 109 ALR 57. 14. This was the context of Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157 (see [440]).

15. (1987) 8 NSWLR 585, following Baylis v Bishop of London [1913] 1 Ch 127. See also The Commonwealth v Kerr [1919] SASR 201. 16. See Morton v Smith (1912) 18 ALR 322; Re Beard; Ex parte the Trustee (1935) 37 WALR 95; Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444 at 450; Bank of New South Wales v Murphett [1983] 1 VR 489 at 494, 496. Cf Bunge (Australia) Pty Ltd v Ying Sing (1928) 28 SR (NSW) 265 at 272–3. 17. (1988) 164 CLR 662 at 673; 78 ALR 157 at 161–2. 18. See Restatement, Third, §65; Palmer, vol III §16.8. 19. See Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1. 20. See Judicature Act 1908 (NZ), s 94B. See further [2405]. 21. See Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. 22. See generally Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (2008) 66 ACSR 594; [2008] WASCS 119. In Commonwealth Bank of Australia v Szczurek (2006) 45 SR (WA) 295; [2006] WADC 150 it was held that the section only applies where relief is sought from the person who actually made the mistake. Section 94B of the Judicature Act 1908 (NZ) is in substantially identical terms. The New Zealand provision is treated as leading to apportionment of loss as between payer and payee (see [2421]). 23. Cf [2410]. 24. Balancing of equities has been rejected in the Australian common law. See [2421]. 25. See National Bank of New Zealand Ltd v Waitiki International Processing (NI) Ltd [1999] 2 NZLR 211; ASB Securities Ltd v Geurts [2005] 1 NZLR 484. 26. See, eg Trusts Act 1973 (Qld), s 113(3); Trustees Act 1962 (WA), s 65(8). See further Bant, Change of Position, p 250. 27. [1991] 2 AC 548 at 580. This statement was approved in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd See (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [17] per French CJ, [72] per Hayne, Crennan, Kiefel, Bell and Keane JJ, [144] per Gageler J. See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385 (defence ‘necessary to ensure that the enrichment of the recipient is prevented only in circumstances where it would be unjust’, emphasis in original). 28. Lipkin Gorman at 558, 580; Australian Financial Services at [17], [97]–[98]. See also at [141] per Gageler J (process of elucidating ‘injustice’ must be ‘descriptive, accumulative and incremental’). 29. Australian Financial Services at [23] per French CJ. See also at [140] per Gageler J. 30. Australian Financial Services at [69] per Hayne, Crennan, Kiefel, Bell and Keane JJ. See further [2422]. 31. (1760) 2 Burr 1005 at 1008; 97 ER 676 at 681 (see [120]). 32. As to the differing positions taken about Lord Mansfield’s remarks, see [120]–[123]. 33. Bayliss v Bishop of London [1913] 1 Ch 127 esp at 137. See [121]. 34. See Barclays Bank Ltd v W J Simms, Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 695–6. 35. See David Securities. 36. See Chapter 4.

37. See [123]. The High Court used the term restitution but the context was a claim to recover a mistaken payment derived from the action for money had and received, ie a cause of action in unjust enrichment. Moses v Macferlan has not been rehabilitated in England to the extent that it has in the United States and (very recently) Australia. Nevertheless, the court in Australian Financial Services at [81] observed that whether the conclusion reached in the English cases, including Lipkin Gorman, is different from that which would be reached by reference to equitable principles, ‘is a moot point’. 38. Australian Financial Services at [143]. 39. As recognized in s 125 of the Property Law Act 1969 (WA) (set out at [2405]). See as to equitable estoppel [2408] and Bant, Change of Position, Chapter 2 (‘Lessons from Estoppel by Representation’). See also Re Diplock [1948] Ch 465 at 549–50, as explained in Boscawen v Bajwa [1996] 1 WLR 328 at 341. See also [2405]. 40. See Bant, Change of Position, pp 112–14, citing Allcard v Skinner (1887) 36 Ch D 145; Quek v Beggs (1990) 5 BPR 11,766; Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810. See also Ministry of Health v Simpson [1951] AC 251. See also, as to third party duress claims, Bant, Change of Position, pp 195–6. 41. See, eg Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662; 78 ALR 157 (see [434]). An agent or intermediary, like a bank, that received money on another’s behalf and paid it over before notice of the payer’s mistake could rely on this defence. See also Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [7]. 42. See Gowers v Lloyds and National Provincial Foreign Bank Ltd [1938] 1 All ER 766 (applied Koster’s Premier Pottery Pty Ltd v The Bank of Adelaide (1981) 28 SASR 355). 43. See [439]–[441]. 44. Portman Building Society v Hamly Taylor Neck (a firm) [1998] 4 All ER 202 at 207. 45. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385; 109 ALR 57 at 80; Australian Financial Services. 46. See Holt v Markham [1923] 1 KB 504; National Westminster Bank Ltd v Barclays Bank International Ltd [1975] 1 QB 654; National Mutual Life Association of Australasia Ltd v Walsh (1987) 8 NSWLR 585 at 596–7. 47. According to R E Jones Ltd v Waring & Gillow Ltd [1926] AC 670; Weld-Blundell v Synott [1940] 2 KB 107 and Avon County Council v Howlett [1983] 1 WLR 605 at 621. Cf Skyring v Greenwood (1825) 4 B & C 281; 107 ER 1064; Deutsche Bank v Beriro & Co (1895) 73 LT 669 where breach of duty is expressed as an alternative to estoppel based on representation. 48. The authorities, writings and normative arguments are well rehearsed by Jessica Hudson, ‘Estoppel by Representation as a Defence to Unjust Enrichment — The Vine has Not Withered Yet’ [2014] RLR 19. See also Paul Key, ‘Excising Estoppel by Representation as a Defence to Restitution’ [1995] 54 Cam LJ 525. Bant, Change of Position, pp 225–30, writing before Australian Financial Services, considers that the two defences should not be elided. Handley, Estoppel, p 94, considers that there is no reason why estoppel itself cannot operate pro tanto with respect to money. If this is accepted, much of the agony surrounding the correctness of Avon County Council is removed. 49. [1983] 1 WLR 605. Cf Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] QB 985.

50. Avon City Council at 612, 624 (defence may not be absolute if it would be ‘unconscionable’ or an ‘injustice’). See Scottish Equitable plc v Derby [2001] 3 All ER 818 and National Westminster Bank plc v Somer International (UK) Ltd [2002] 1 All ER 198. See also Philip Collins Ltd v Davis [2000] 3 All ER 808. See also Handley on Estoppel, pp 94–6; Bant, Change of Position, pp 224–30. 51. See TRA Global Pty Ltd v Kebakoska [2011] VSC 480 (the two defences still exist side by side); Citigroup Pty Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391; [2012] NSWCA 381 at [18] per Macfarlan JA (to same effect), at [130]–[135] per Barrett JA (preferring the view that, in the context under discussion, any defence of estoppel has been subsumed in the defence of change of position). See also Australian Financial Services at [18], [86]. 52. RBC Dominion Securities Inc v Dawson (1994) 111 DLR (4th) 230 (Newfoundland Court of Appeal). The decision has been followed in other Canadian cases (see McInnes, pp 1555–6). 53. Lipkin Gorman at 579. See also Philip Collins Ltd at 826. 54. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. Note, however, the statement at [86] per Hayne, Crennan, Kiefel, Bell and Keane JJ (‘it may be accepted that estoppel affords a level of protection to expectations different from that afforded by the change of position defence’). 55. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [12] per French CJ. 56. See generally Handley, Estoppel; Australian Financial Services at [149]–[154] per Gageler J. 57. See [2308] and further [2510], [2517] (consideration), [2530] (bona fide purchaser), [2710], [2712] (delay). 58. See [2308]. 59. See [2213]. 60. See [2322]. See also [2308] and further [2510], [2517] (consideration), [2530] (bona fide purchaser), [2710], [2712] (delay). 61. See [2315], [2331]. 62. See Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd’s Rep 446 at 457; Andrew Rogers, ‘Frustration and Estoppel’ in McKendrick, Force Majeure and Frustration of Contract, p 80. But cf BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 810–14 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352 but without reference to this point). 63. See, eg [2106] (non-availability of estoppel against the constitutional principles relating to Parliamentary control of appropriation of public moneys). See further [2410]. 64. See generally Chapter 12. 65. See generally [1334]. 66. This is often expressed in terms of whether the statute may be ‘waived’. See generally Commonwealth of Australia v Verwayen (1990) 170 CLR 394; 95 ALR 321. As to coherence generally, see Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498 (discussed [2608]). 67. See [2411]–[2422].

68. As to bars based on the defendant’s fault or wrongdoing, see [2419]. 69. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. See also Property Law Act 1969 (WA), s 125(1) (set out at [2405]). 70. See Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912; David Securities 384; 79-80; Fitzsimons v McBride, Minister for Liquor, Gaming and Racing (NSW) [2008] NSWSC 782. Jones, pp 105–7. See also Dr Gregory Moore v The National Mutual Life Association of Australasia Ltd [2011] NSWSC 416 (contract avoided for fraudulent misrepresentation), a decision we criticise on other grounds at [2419]. 71. See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 800, 804, affirmed [1981] 1 WLR 232; [1983] 2 AC 352 but without reference to this point. There are corresponding provisions in the Frustrated Contracts Act 1959 (Vic). See [1259], [1262]. 72. Gertsch v Atsas (1999) 10 BPR 1843; [1999] NSWSC 898 at [22]; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 (see [309]); Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252. Cf Armstrong Gmbh v Winnington Networks Ltd [2013] Ch 156. Such claims are not explained by reference to the unjust enrichment concept, in Australia at least (see [307]–[309]). 73. Boscawen v Bajwa [1996] 1 WLR 328 at 340–1; Gertsch at [98], [100]; Trust Co Fiduciary Services Ltd v Hassarati (No 2) [2011] NSWSC 1396. 74. See [319], [2407]. 75. See [249]. 76. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716 per Lord Browne-Wilkinson. See also [1733] (constructive trust may be awarded subject to an allowance). 77. Gertsch v Atsas [1999] NSWSC 898 at [25] per Foster AJ; K & S Corporation Ltd v Sportingbet Australia (2003) 86 SASR 312 at [157] per Besanko J. 78. (1874) LR 9 Ch App 244. See further [1705]. 79. See [2419]. See also Bank of Credit and Commerce International Ltd v Akindele [2001] Ch 437 at 456. 80. Corporate Management Services v Abi-Arraj [2000] NSWSC 361. A defendant who knew of the likelihood of an appeal being launched would find it difficult to show good faith reliance. This explains why, if an appeal is launched against a damages award on grounds that include contesting liability, the proper course is for the judgment to be stayed pending the appeal with an expedited hearing in cases of hardship. 81. Scholars opposed in principle to change of position being available outside unjust enrichment include Birks, Unjust Enrichment, pp 64–5; Burrows, pp 547–550; Goff & Jones, [8-80]; R Grantham and C Rickett, ‘Property Rights as a Legally Significant Event’ [2003] CLJ 717 at 734; D Fox, ‘Legal Title as a Ground of Restitutionary Liability’ [2000] RLR 465 at 488 (defence should only be available in vindication claims where the property right arose to reverse an unjust enrichment). See also Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156. Those who share our view that change of

position extends to claims for restitution generally, including those that vindicate proprietary rights include Virgo, pp 696–8; Bant, Change of Position, p 208. 82. See Bant, Change of Position, Chapter 7, esp pp 209–10. 83. See Restatement, Third, §65. 84. See [2419] (defendant’s wrongdoing will often bar the defence), [2420] (illegality). 85. As to coherence and stultification, see Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498; 286 ALR 12; [2012] HCA 7 (discussed [2608]). 86. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [19] per French CJ. See [2040]. If the Revenue has used improper pressure this may debar the particular claim (see [2419]). As to statutory defences available to the Revenue, see [2039]. 87. Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. See Chapter 20, esp [2040], noting that we suggest that the defence (or something analogous) may be available to a local government authority that has put the (unlawfully) raised money to its intended purpose, benefitting the plaintiff. Cf also Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123 at [70]. 88. [1924] AC 318. See Chapter 21, esp [2106]–[2107]. 89. See Goff & Jones, [27-51]. See also Elise Bant, ‘Change of Position and Unlawfully Exacted Tax’ (2012) LMCLQ 122. 90. See [2106]. 91. See South Tyneside Metropolitan Borough Council v Svenska International Plc [1995] 1 All ER 545 (a swaps case where the council had acted ultra vires); Williams v Williams [2003] EWHC 742 (Ch) (deed of gift void because of donor’s want of mental capacity). See also [2106]. 92. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14, esp at [24], [88]. 93. See [2412]–[2421], [2422]. 94. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379, 385, 405; 109 ALR 57 at 76, 79–80, 96–7; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [150]. 95. Philip Collins Ltd v Davis [2000] 3 All ER 808 at 827. 96. Australian Financial Services at [27], [28], [55], [92]. 97. RBC Dominion Securities Inc v Dawson (1994) 111 DLR (4th) 230 at 240 per Cameron JA for the court. As to this idea extending to proof of detriment and irreversibility, see Scottish Equitable Plc v Derby [2001] 3 All ER 818 at [31]. 98. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385; 109 ALR 57 at 80; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [17], [72]. 99. [1991] 2 AC 548. The facts are set out at [309]. 100. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. The facts are set out at [2415]. 101. See Hydro Electric Commission of the Township of Nepean v Ontario Hydro (1982) 132 DLR (3d) 193 at 215–16; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 580; Scottish

Equitable Plc v Derby [2001] 3 All ER 818 at [53]. 102. See [2422], where we point out that the issue is controversial. 103. (1992) 127 CLR 353 at 385 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. 104. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [157], citations omitted. Followed by the Victorian Court of Appeal in Southage Pty Ltd v Vescovi [2015] VSCA 117 at [65]. See also Australian Financial Services at [88] per Hayne, Crennan, Kiefel, Bell and Keane JJ. 105. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385–6; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 580 (‘the expenditure might in any event have been incurred by him in the ordinary course of things’). 106. In Gertsch v Atsas (1999) 10 BPR 1843; [1999] NSWSC 898 the defendants were able to show that, while much of the money was spent on ordinary living expenses, this had freed up other resources which had been used with detrimental consequences. Foster AJ counselled (at [67]) that it was ‘inappropriate to view individual expenditures in isolation’. 107. See Old Colony Trust Co v Wood 74 NE 2d 141 (Mass, 1947); Rural Municipality of Storthoaks v Mobil Oil Canada Ltd (1975) 55 DLR (3d) 1; Hydro Electric Commission of the Township of Nepean v Ontario Hydro (1982) 132 DLR (3d) 193 at 214; See also K J Davies (1976) Ltd v Bank of New South Wales [1981] NZLR 262 at 264–5 and K G Nicholson, ‘Recovery of Money Paid Under Mistake of Fact’ (1986) 60 ALJ 459 at 464–5. 108. Lipkin Gorman at 560. 109. Lipkin Gorman; Chong v Channell [2009] NSWSC 765. 110. Gertsch at [133]. Were the car not stolen, or if it had been insured, the loss would not be entirely irreversible (see [2416]). In any event, the owner is only unjustly enriched to the extent of the second hand value of the car when the plaintiff seeks restitution (Lipkin Gorman at 560). 111. Philip Collins Ltd v Davis [2000] 3 All ER 808 at 827–30. 112. See Holt v Markham [1923] 1 KB 504. If the investment had been a good one detrimental reliance could not have been established: United Overseas Bank v Jiwani [1976] 1 WLR 964. 113. See Phetteplace v Bucklin (1893) 18 R 1 297 per Matteson CJ. See further as to irreversibility [2416]. 114. As to which see [2417]. 115. Charles Mitchell, ‘Change of Position: the Developing Law’ [2005] LMCLQ 168 at 170– 1. 116. Palmer v Blue Circle Southern Cement Ltd (1999) 48 NSWLR 318; Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (in liq) (2006) 94 SASR 103; [2006] SASC 7 at [86]; Dr Gregory Moore v The National Mutual Life Association of Australasia Ltd [2011] NSWSC 416; 16 ANZ Ins Cas 90-146 at [100]; Australian Financial Services at [157]. 117. Australian Financial Services at [157] (passage set out at [2417]) per Gageler J. 118. Credit Suisse (Monaco) SA v Attar [2004] EWHC 374 (Comm) at [98]; Lipkin Gorman at 560. The principle of reversibility (see [2416]) will also explain why the defence would fail in many cases, at least in part. The difficulty of realising the asset may need to be taken into account.

119. See, eg United Overseas Bank (liquidation of company after defendant bought shares in it); Gertsch at [133] (luxury car stolen uninsured). Contrast the situation discussed in [2422] (non-participatory change of position). 120. See Scottish Equitable Plc v Derby [2001] 3 All ER 818 at [35]. 121. (1999) 10 BPR 1843; [1999] NSWSC 898. 122. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938 at 967; [1994] 4 All ER 890 at 952. Cf [446], [520]. 123. Australian Financial Services at [88] per Hayne, Crennan, Kiefel, Bell, Keane JJ, [150] per Gageler J (passage set out above); Ashton v Pratt (2015) 88 NSWLR 281. 124. See Commerzbank Ag v Price-Jones [2003] EWCA Civ 1663; Bant, Change of Position, pp 138–9. 125. See [2416]. 126. Australian Financial Services at [88] per Hayne, Crennan, Kiefel, Bell and Keane JJ. 127. Birks, Unjust Enrichment, p 127. See also Burrows, pp 526–7. See also Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193. 128. Birks described Lord Mansfield’s invocation of ‘natural justice and equity’ as invoking a ‘dangerously high level of abstraction’: Birks, Introduction, p 80. See also Birks, Unjust Enrichment, p 14. 129. See Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674–5 per Dixon J. See Bant, Change of Position, pp 48–51, 135–6. 130. Some of the cases involved estoppel or ‘payment over’, others change of position itself. See Morgan Guaranty Trust Co of New York v Outerbridge (1990) 66 DLR (4th) 517; Gertsch (‘radical’ lifestyle change by becoming a full-time student); Palmer v Blue Circle Southern Cement Ltd (1999) 48 NSWLR 318; Philip Collins Ltd v Davis [2000] 3 All ER 808 at 829–30 (bohemian lifestyle that was chosen and enjoyable); Sullivan v Sullivan [2006] NSWCA 312, Donis v Donis [2007] VSCA 312. 131. See (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. French CJ at [17] described disenrichment as ‘a global limitation [to the change of position defence] based on a quantitative or pseudo-quantitative concept’. 132. See [2416]. 133. See Australian Financial Services at [36], [95]. The court regarded it as irrelevant that the debts may have been valueless at the time the plaintiff made demand, it being sufficient on the facts that the plaintiff had continued to trade (see at [63]). 134. Australian Financial Services at [28] per French CJ. 135. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [55], [95] per Hayne, Crennan, Kiefel, Bell and Keane JJ. 136. See Australian Financial Services at [17], [23] per French CJ. 137. Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (2008) 66 ACSR 594; [2008] WASCA 119 at [202]. See also Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [23]– [25] per French CJ, [95] per Hayne, Crennan, Kiefel, Bell and Keane JJ (‘irreversible as a practical matter of business’). See further Jaffer v Commonwealth Bank of Australia Ltd

[2001] SASC 191 at [58]–[64]; Eden Productions Pty Ltd v Southern Star Group Ltd [2002] NSWSC 1166 at [226]; K & S Corp Ltd v Springbet Australia Pty Ltd (2003) 86 SASR 313 at 348; Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [3322]. See generally Bant, Change of Position, pp 130–43. 138. See, eg, K & S Corp Ltd [2003] SASC 96 at 348; Fazzolari v Coucheron [2003] VCAT 503; (2003) V Conv R 58-572. 139. See Saunders & Co v Hague [2004] 2 NZLR 475 at 495–6 (stressing that the onus of showing otherwise rests on the defendant). 140. Cf Gertsch v Atsas (1999) 10 BPR 1843; [1999] NSWSC 898 at [133]. 141. Cf Gertsch at [88]. See Bant, Change of Position, p 140. 142. See Australian Financial Services at [158]. 143. See [2412]. 144. Bant, Change of Position, p 137. 145. David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 385; 109 ALR 57 at 80–1; See also Property Law Act 1969 (WA), s 125(1) ([2405]) (‘in reliance on the validity of the payment’). Cf Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [22] per French CJ (change of position may happen in a wide variety of ways). 146. Australian Financial Services at [157], citations omitted. Followed by Victorian Court of Appeal in Southage Pty Ltd v Vescovi [2015] VSCA 117 at [65]. 147. Standard Bank London Ltd v Canara [2002] EWHC 1574 (Comm Ct) at [104] per Moore-Bick J. See also Bant, Change of Position, p 132 (‘the receipt must inform the defendant’s decision to act’). 148. See United Overseas Bank v Jiwani [1976] 1 WLR 964 at 968 per Mackenna J. See also National Mutual Life Association of Australasia Ltd v Walsh (1987) 8 NSWLR 585 at 599. 149. Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2004] VSC 400 at [42]–[43]. The decision was overruled by the Victorian Court of Appeal on a different ground, namely that the defendant had a defence of good consideration: see Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 5. 150. Scottish Equitable Plc v Derby [2001] 3 All ER 818 at 827 (Robert Walker LJ). See also Commerzbank Ag Price-Jones [2003] EWCA Civ 1664. 151. Southage Pty Ltd at [76]–[79]. 152. Cf Scottish Equitable Plc v Derby [2001] 3 All ER 818. Cf the approach to doubt, risktaking and mistake on the plaintiff’s side (see [432]). 153. Chirnside v Keating (1889) 15 VLR 697; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 at 948 (affirmed on other grounds [1994] 1 WLR 938; [1994] 4 All ER 890 at 957). 154. South Tyneside Metropolitan Borough Council v Svenska International Plc [1995] 1 All ER 545 at 565–6 (discussed by Richard Nolan in (1995) LMCQL 313); Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 (discussed by Mitchell McInnes in (2002) 118 LQR 209); Commerzbank AG v Gareth Price-Jones [2003] EWCA Civ 1163; Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd (2008) 66 ACSR 594; [2008] WASCA; Fitzsimons v Minister for Liquor Gaming & Racing (NSW)

[2008] NSWSC 782. 155. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 at 950–1 (affirmed on other grounds [1994] 1 WLR 938; [1994] 4 All ER 890 at 957). Cf Sempra Metals Ltd v Commissioners of Inland Revenue [2008] 1 AC 561 at [119], [237]. As to interest see Chapter 28. 156. See generally J Palmer, ‘Chasing a Will-O’-the-Wisp? Making Sense of Bad Faith and Wrongdoers in Change of Position’ [2005] RLR 53; Charles Mitchell, ‘Change of Position: the Developing Law’ [2005] LCMLQ 168 at 180–5. See Lipkin Gorman at 579, 580; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 384; 109 ALR 57 at 79; Dextra Bank and Trust Co Ltd; Cressman v Coys of Kensington [2004] 1 WLR 2775 at 2792; Perpetual Trustees Australia Ltd v Heperu Pty Ltd (2009) 76 NSWLR 195; [2009] NSWCA 84 at [136]. Commercial impropriety was not asserted in Australian Financial Services: see at [57], [64]. An assertion of bad faith was rejected on the facts in Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [3323]. 157. Dextra Bank and Trust Co Ltd; Maersk Air Ltd v Expeditors International (UK) Ltd [2003] 1 Lloyd’s Rep 491; Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] Qd R 661. Cf Abou-Rahmah v Abacha [2007] 1 Lloyd’s Rep 115; [2006] EWCA 1492, where the majority of the English Court of Appeal equated good faith and ‘commercially acceptable conduct’. In our view, the minority position of Arden LJ, that it is not the test, is to be preferred. See also Nikunj Kiri, ‘Dishonest Assistance: The Latest Perspective from the Court of Appeal’ (2007) 22 JIBLR 305; Rebecca Lee, ‘Dishonesty and Bad Faith after Barlow Clowes: Abou-Rahmah v Abacha’ (2007) JBL 209. Those who argue for a reasonableness longstop to good faith (see [2421]) will need to grapple with this line of cases. 158. See Orix Australia Corp Ltd v M Wright Hotel Refrigeration Pty Ltd (2000) 155 FLR 267 at 276; Port of Brisbane Corporation at [22] per McPherson JA, Davies JA and Mullins J agreeing (‘Good faith is all that is needed, subject of course to cases at the extreme when a person deliberately shuts his eyes to matters he realises will invest him with actual knowledge of fraud or impropriety.’); Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2004] QB 985 at 1003–4; Perpetual Trustees Australia Ltd v Heperu Pty Ltd (2009) 76 NSWLR 195; [2009] NSWCA 84 at [136]. See also David O’Brien, ‘Changing Position Conscientiously’ (2003) 77 ALJ 530 (suggesting that the Australian law may be receptive to honesty being governed by equitable principles). 159. As in Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2774. 160. See also Bant, Change of Position, p 252 (‘it is difficult to see what work is done by [the good faith requirement] that is not covered by the concept of reliance’). See further as to the defendant’s wrongdoing [2419]. 161. See E R Squibb & Sons v Chemical Foundations 93 F 2d 475 (CA, 2nd Cir, 1937). 162. See Baylis v Bishop of London [1913] 1 Ch 127 at 132–3. 163. Citigroup Ltd v National Australia Bank Ltd (2012) 82 NSWLR 391; 295 ALR 147; [2012] NSWCA 381; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [157] per Gageler J (passage set out at [2417]); Bernstone v Almack-Kelly [2014] VSC 358 at [44]. To the extent that it decides otherwise, State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR

350 was wrongly decided although there have been (in our view, generous) attempts to justify the result on other bases such as that the recipient exceeded its instructions (see Port of Brisbane Corporation v ANZ Securities Ltd (No 2) [2003] 2 Qd R 661; Perpetual Trustees Australia Ltd v Heperu Pty Ltd (2009) 76 NSWLR 195; [2009] NSWCA 84 at [139]) or unreasonableness (see Bant, Change of Position, pp 142–3, and further [2422]). 164. See, eg Orix Australia Corp Ltd v M Wright Hotel Refrigeration Pty Ltd (2000) 155 FLR 267; Australian Financial Services. 165. [1991] 2 AC 548 (discussed [306]). 166. See [1991] 2 AC 548 at 580. 167. See Bank of Credit and Commerce International Ltd v Akindele [2001] Ch 437 at 456; ASB Securities Ltd v Geurts [2005] 1 NZLR 484. See generally as to stultification Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498 (discussed [2608]). 168. See [2410]. See also Bank of Credit and Commerce International Ltd v Akindele [2001] Ch 437 at 456. We strongly doubt the correctness of Dr Gregory Moore v The National Mutual Life Association of Australasia Ltd [2011] NSWSC 416 at [100]; 16 ANZ Ins Cas 90-146 where a person who fraudulently misrepresented his position when applying for disability insurance, leading the insurer to rescind the policy, was held entitled to resist the insurer’s claim for repayment of the disability payments on the ground that he did not appreciate he was a wrongdoer or that the insurer would elect to avoid the policy. 169. Especially when it is recognised that negligence will not debar the plaintiff’s claim (see [424]). 170. Duress colore officii illustrates that improper pressure need not be tortious to generate a claim by the plaintiff who has been led to hand over money (see [529]). 171. See Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 682; 78 ALR 157 at 168 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ. 172. See, eg Snowdon v Davis (1808) 1 Taunt 359; 127 ER 872 (see [511]); Ex parte Edwards; Re Chapman (1884) 13 QBD 747. 173. Unreported, SC(NSW), 5 May 1992 at 48–9, noted in [1993] RLR 18, discussed by Damien O’Brien, ‘Change of Position: The Past, The Present and The Future’ (1995) 25 Q L Soc Jo 511 at 520–1. A substantial extract of the judgment is set out in Barker and Grantham, Unjust Enrichment, pp 471–3. Palmer AJ cited especially Sharland v Mildon (1846) 15 LJ Ch 434 at 435; Ex parte Edwards; Re Chapman (1884) 13 QBD 747 at 750, 752; Owen & Co v Cronk [1895] 1 QB 265 at 274. Palmer AJ’s views were endorsed by the Court of Appeal: Mercedes-Benz (NSW) Pty Ltd v National Mutual Royal Savings Bank Ltd, Unreported, NSWCA, 1 April 1996. As to incidental wrongdoing, see also Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2008] EWHC 2893 (Ch) at [320], [337]. Cf Cheese v Thomas [1994] 1 WLR 129 (‘sharing of the loss’ held to be justified in the pursuit of ‘practical justice for both parties’, albeit in a case involving non-reprehensible undue influence). 174. See Restatement, Third, §§ 51 (3), 52 (3), 65. 175. See Elise Bant, ‘Change of Position and Unlawfully Exacted Tax’ (2012) LCMLQ 122 at 138–9. 176. [2005] 1 WLR 247; [2004] 3 All ER 299.

177. See Equiticorp Industries Group Ltd v R (No 47) [1998] 2 NZLR 481 at 654, 730; Garland v Consumers’ Gas Co Ltd [2004] 1 SCC 629 at [63]–[66]. 178. See Edelman and Bant, pp 337–8; Charles Mitchell, ‘Change of Position: the Developing Law’ [2005] LCMLQ 168 at 184–5; A Tettenborn, ‘Bank Fraud, Change of Position and Illegality’ [2005] LMCLQ 6. Professor Tettenborn (at p 8) emphasised that Lord Goff’s remarks about wrongdoing in Lipkin Gorman referred to wrongdoing in the circumstances of the receipt of the original enrichment. 179. See generally Chapter 26. 180. Jeffrey v Fitzroy Collingwood Rental Housing Association Ltd [1999] VSC 335 at [44]. 181. See [2420]. 182. Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [69] per Hayne, Crennan, Kiefel, Bell and Keane JJ. See also at [145] per Gageler J. See also Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193 (PC). See also [2414] (mere hardship does not qualify) and [2422] (‘independent change of position’). 183. Bank of New York v Simmons & Co 190 NYS 602 at 603 (AT, 1921). 184. See Messner v County of Union 167 A 2d 897 (NJ, 1961); Maricopa County v Cities and Towns of Avondale 467 P 2d 949 (Ariz App, 1970). See also Restatement, Third, § 52 (3) (reviewed by Kremer (2011) 35 MULR 1197 esp at 1214). 185. This provision is substantially enacted in Western Australia as well (see [2405]). 186. Judicature Act 1908 (NZ), s 94B. See [2405]. As to the court being required to look at the equities from the point of view of both sides, see Thomas v Houston Corbett & Co [1969] NZLR 151; National Bank of New Zealand Ltd v Waitaki Processing (NI) Ltd [1999] 2 NZLR 211; Saunders & Co (a Firm) v Hague [2004] 2 NZLR 475 at 493. As to the virtual redundancy of the statutory defence and the concurrent applicability of the common law defence, with similar results, see National Bank of New Zealand Ltd v Waitaki Processing (NI) Ltd [1999] 2 NZLR 211. 187. (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14 at [157]. 188. Bant, Change of Position, pp 151–5. See State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350; Scottish Equitable Plc v Derby [2001] 3 All ER 818; Commerzbank Ag v Price-Jones [2003] EWCA Civ 1663. As to reasonableness of reliance in estoppel, see Low v Bouverie [1891] 3 Ch 82. 189. See [2417]. 190. See McInnes, pp 1512–14. 191. Bant, Change of Position, pp 145–6. 192. Burrows, p 529. Cf South Tyneside Metropolitan Borough Council v Svenska International Plc [1995] 1 All ER 545 at 563–4. 193. Burrows, p 529. 194. Scottish Equitable Plc v Derby [2001] 3 All ER 818 at [30] per Robert Walker LJ. 195. Scottish Equitable (elderly pensioner queried possible mistaken overpayment, was given written assurance that the sum was correct and spent money in ways that were, on a generous view of the facts, detrimental and irreversible); National Bank of New Zealand Ltd (repeated assurances by the payer that there was no mistake overrode defendant’s repeated

disputing, money invested by defendant in an inappropriate finance company that failed, loss apportioned having regard to respective levels of fault). 196. [1991] 2 AC 548 at 580 (see [2406]). 197. See [2414]. 198. See [2414], [2417]. 199. Scottish Equitable; National Bank of New Zealand Ltd. 200. See [2422]. Unless (which we doubt) it could be argued that carelessness after the original mistaken payment is relevantly different. Cf [424] (payer’s carelessness does not preclude recovery for mistake). 201. See also Goff & Jones at [27-27]–[27-28] who accept that first instance English cases on point are to similar effect, while regretting the outcome and pointing to contrary dicta. Bant, Change of Position at pp 145–6 also argues in favour of ‘independent change of position’. 202. [1993] 3 NZLR 25. See Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at [71] (Gummow J); Australian Financial Services at [142] (Gageler J). See also [239].

[page 885]

Chapter Twenty Five

Consideration and Bona Fide Purchase 1. 2. 3.

4.

General …. Consideration …. Compromises and Related Situations ….

[2501] [2507] [2511]

(a) General ….

[2511]

(b) Compromises ….

[2514]

(c) Release and Abandonment ….

[2516]

(d) Discharge of an Existing Debt and Other Cases …. [2518] Bona Fide Purchase …. [2523] (a) General ….

[2523]

(b) Relevant Situations ….

[2526]

1. General [2501] Objects. This chapter has three objects. The first — and least important — is to act as a reminder of the relevance (and importance) of consideration in various aspects of restitutionary claims. The second is to show how ‘consideration’ received by a plaintiff may be a defence to a restitutionary claim, as where the defendant has discharged a debt owed to the plaintiff. The third is to outline the situations in which ‘consideration’,

provided by a defendant as a bona fide purchaser for value and without notice, may operate as a defence to a restitutionary claim. [2502] Policy perspectives. Three different (but related) policy perspectives are relevant to consideration as a defence to a claim for restitution. The first is the idea that whether a defendant has been unjustly enriched may depend on whether (or the extent to which) value has been received for a benefit in respect of which the plaintiff subsequently seeks restitution. In some cases the ‘consideration’ provided will affect the question whether a prima facie claim has been made out, in others it may be more relevant to the valuation of the claim.1 Thus, the policy against allowing unjust enrichment, although affected, is not necessarily displaced. The principal focus is on consideration received by the plaintiff at the time of (or in consequence of) the enrichment. The second is the idea that, like most other claims, a claim in restitution may be the subject of a compromise or similar transaction. In this context the consideration is received after the enrichment, under an express or [page 886] implied agreement for discharge of the claim in restitution. Here the policy against allowing unjust enrichment is displaced by ‘the policy in favour of the finality of dispute resolution’.2 The third applies where relief is sought against a person who, although not enriched directly by the plaintiff, is nevertheless sought to be held liable. Consideration provided by the defendant may be relevant, notwithstanding that it was not to the direct benefit of the plaintiff. The policy against allowing unjust enrichment is necessarily affected. Moreover, where the defendant is a true bona fide purchaser, the policy against allowing unjust enrichment is displaced, usually by a denial of the wrong which the plaintiff alleges the defendant has committed.

[2503] The consideration concept. The description ‘consideration’ in the title to this chapter is not a very happy one. Clearly, it has a loud contractual overtone. In pursuing the objectives stated above3 we are not concerned, except in a general or basic way, with what amounts to consideration under principles of contract law. In fact, as has already been explained in the context of total failure of consideration,4 the word is ambiguous in the restitutionary context. To the extent that ‘consideration’ may be understood as a synonym for ‘value’, this chapter is concerned both with value received by a plaintiff, and value provided by a defendant. Since the bona fide purchaser defence is generally concerned with the provision of consideration for the benefit of a person other than the plaintiff, this contrast is more than an expression of different perspectives on the same thing. More generally, since the concept of ‘value’ is broader than the concept of (contractual) consideration, the extent to which value has been received is not limited by the requirement that it was bargained for by the plaintiff. Accordingly, the principal focus of contract law — on the value of a promise as consideration for a counter-promise — is not necessarily the focus of a defence to a restitutionary claim.5 In other words, when we speak of ‘consideration’ in the present context we use the word in a more general sense than the familiar requirement for promise validity, and more broadly than its description of something given or promised as an agreed return under the restitutionary concept of total failure of consideration.6 [2504] Onus of proof. The onus of establishing the defence that consideration was received or provided in good faith generally rests on the defendant.7 Thus, where a defendant alleges that a restitutionary claim has been the subject of a compromise or related contract, the defendant [page 887] must establish the contract and its validity. This includes the

contractual requirement of consideration. Similarly, under the bona fide purchaser defence, the onus is on the defendant to establish consideration, good faith and the absence of notice.8 [2505] Good faith. In cases where consideration is alleged to have been given under a contract of compromise, or as part of the bona fide purchaser defence, the defendant must act in good faith and without notice that the claim is bad or of the plaintiff’s interest. These are distinct requirements.9 The absence of either will prevent reliance on the compromise as a valid contract, and prevent assertion of the defence of a bona fide purchaser. Since they are not restitutionary concepts, we deal briefly with these requirements.10 We are not concerned to define exhaustively the content of the concept of ‘bona fides’ in the context of the defences of compromise and bona fide purchaser for value without notice. Generally, bona fides is understood to mean ‘honesty in fact’. Thus, under the sale of goods legislation, a thing is deemed to be done ‘in good faith’ when it is in fact done honestly, whether it is done negligently or not.11 Although this is directed to the bona fide purchaser exceptions to the rule nemo dat quod non habet,12 it is indicative of the general approach to the concept.13 [2506] Absence of notice. Although more frequently used in the context of the defence of bona fide purchase for value, notice is also relevant to the defence of compromise. A person who has notice that the claim put forward is bad in law will fail to satisfy the requirements for contractual compromise.14 Whether ‘notice’ of a person who claims to have purchased bona fide and for value is limited to actual notice, or also includes imputed and constructive notice, depends largely on the basis for the defence. Whether ‘notice’ extends to constructive notice has not been authoritatively determined in relation to the ‘common law’ principles applicable to a bona fide purchaser for value.15 On the other hand, it seems clear that, subject to statutory exceptions, imputed and constructive notice operate in relation

[page 888] to the equitable manifestations of the principle.16 In any event, there may be statutory registration procedures, the effect of which is to give deemed notice to defendants who seek to rely on a defence of bona fide purchase.

2. Consideration [2507] Introduction. ‘Consideration’, in the sense of ‘value received’, is relevant to restitutionary claims from a number of different perspectives. Whereas the absence (or failure) of consideration is important in establishing a prima facie claim for restitution, ‘value’ is more relevant to bases for saying that no claim for restitution may be made, or in limiting the extent to which the claim may succeed. Unless the defence actually denies the ability to claim restitution, as under the bona fide purchaser defence,17 consideration serves merely to reduce the plaintiff’s claim. It is therefore analogous to change of position.18 Bona fide purchase is different, at least under orthodox analysis, because the law does not inquire into the adequacy of consideration. Compromise is analogous to bona fide purchase because, by definition, the object of the exercise is to discharge the plaintiff’s claim for restitution. [2508] Absence and failure of consideration. Ineffective contracts are a frequent source for restitutionary claims.19 Clearly, a contract will be inherently ineffective if the consideration propounded is invalid in law.20 Accordingly, an obvious reason for inquiring whether consideration is absent is to determine whether a contract is an ineffective transaction. Absence of consideration then has a definite relevance to claims for restitution. Since the conventional wisdom is that the mere absence of consideration is not a recognised basis for restitution, the fact that consideration is absent is largely circumstantial.21 As we saw in the context of claims based on mistake

and improper pressure,22 the recitation that no consideration was provided (or received) for an enrichment is not at present a sufficient basis for restitution. In these cases, unjust enrichment is established by reliance on the factors of mistake and improper pressure. On this approach, the receipt of value may be important in providing a possible qualification to the plaintiff’s claim, notwithstanding that there is no contractual consideration. ‘Consideration’, when used in its quasi-contractual sense of ‘failure of consideration’, is the criterion for restitutionary claims to recover money paid, in a variety of contexts. Thus, a key factor in claims brought in relation to payments made under ineffective contracts is a total failure of [page 889] consideration, that is, total failure of the agreed return.23 The traditional (current) view is that a requirement of total failure applies. However, a total failure does not signify that no consideration has been received. Indeed, it is assumed that, from the contractual perspective, consideration was sufficient in law. The position is that the performance promised by way of exchange for the performance which the plaintiff rendered has not been received. It might be said that it is a defence to a claim based on total failure of the agreed return for the defendant to show that the failure was merely partial. However, the position is more accurately expressed by saying that the onus is on the plaintiff to establish a total failure. Moreover, proof that a partial failure has occurred does not signify that the restitutionary claim falls to be reduced. Rather, it signifies that no claim in restitution is available,24 unless there is some basis for the claim other than total failure of the agreed return.25 [2509] Presence of consideration. In the context of ineffective contracts it was emphasised that the existence of an effective contract is a general restriction on claiming restitution.26 Unless the basis for the

claim is the commission of a wrong — a basis which the law has not adopted as a general one in the contractual context — the obligation to make restitution assumes that there is no inconsistent contractual obligation. However, the emphasis does not rest either on the point that the defendant has given value, or that the plaintiff has received value. Instead, the emphasis lies in the fact that where a benefit is conferred under a contract supported by consideration no claim in restitution is available while the plaintiff (or defendant) remains bound to perform. Even if the contract is unenforceable, the existence of an executory promise to pay for a benefit will preclude a restitutionary claim unless the promise has been discharged or the contract rescinded. Accordingly, no restitutionary obligation will be established where the defendant remains subject to an undischarged contractual obligation.27 In these cases an essential ingredient of the plaintiff’s claim for restitution is absent. We can express this from the perspective of contractual consideration by saying that where the benefit in question was bargained for, no claim for restitution is available while there remains the possibility that the agreed return for the benefit will be rendered. [2510] Consideration as a defence. The approach outlined above28 has important ramifications for any analysis of the role of consideration as a defence to a restitutionary claim. First, it is wrong to see contractual consideration as a defence to claims arising from the performance of contracts.29 [page 890] Second, it is also generally wrong to treat bargained-for consideration as merely providing a defence in cases where a contract is in point of law ineffective. Thus, in cases where the defendant accepts the burden of proving that any failure of the agreed return was merely partial,30 it is not sufficient for the defendant to show that consideration was provided at the point of contract formation. What must be proved is

that the contract was partially performed, and that the partial performance has not been ‘undone’ by discharge or rescission of the contract.31 Third, it follows that, in the contract context, the only situation in which it is meaningful to speak of the defendant having the onus of proving contractual consideration is where the defence is the compromise of a restitutionary claim. However, it would appear from certain observations in David Securities Pty Ltd v Commonwealth Bank of Australia32 that bargained-for consideration may be relevant as a defence to a claim based on mistake where a payment is made under a contract term which is void. Fourth, consideration — in the sense of value received — has a more significant defensive role in situations where the plaintiff has established a prima facie claim. The prima facie claim will often be one arising in a context other than restitution for a benefit conferred under an ineffective contract. Thus, even if it does not amount to contractual consideration, giving value may provide a defence to a claim which would otherwise succeed, for example, on the ground of mistake. In the discussion below we concentrate on the third and fourth points.

3. Compromises and Related Situations (a) General [2511] Introduction. Payments and other benefits conferred by way of compromise form a large part of the cases that fall within a defence of value received in the form of what might be termed ‘good faith consideration’, or ‘bargained-for consideration’, received (by the plaintiff) from the defendant. If a valid contract of settlement of the defendant’s claim has been entered into in connection with an enrichment, the enrichment will be irrecoverable in restitution.

The common contexts for compromise are claims under contracts and claims asserting a tortious liability. There is, however, no reason for restricting the defence to particular categories. Therefore, although we recognise that the defence is particularly relevant to liabilities arising and enrichments conferred (and received) pursuant to contract,33 it is also relevant to claims arising in the context of mistake or pressure and, potentially, any type of [page 891] claim for restitution arising in any context.34 For example, a restitutionary claim to recover an invalid impost ought to be regarded as capable of valid compromise. As the Law Commission has commented:35 ‘The public interest in avoiding litigation is as important in the context of tax claims and other claims by public authorities as in other contexts’. [2512] Effect. The feature which justifies an analysis of compromise in the context of defences is that, whether or not the claim arose in the contractual context, the contract of compromise constitutes a valid defence to a claim in restitution. The rights and remedies of the plaintiff are to be found in the working out of the contract of compromise. In one sense the effect of the compromise rule is expressed in the general principle that restitution is not available where it would contradict an express (or implied) contract with executory obligations.36 However, the proper focus is on the liability to which the agreement relates, not the agreement itself. For example, if the liability arose under a contract, although the earlier contract has been discharged this does not mean that by virtue of the contract of compromise the (prior) contract has become a species of ineffective contract. Rather, the effect of compromise is that the liability — actual or potential — to make restitution is itself discharged by agreement. If the compromise is valid, the defendant’s liability to make restitution

has been extinguished. The defence arises because the plaintiff has agreed that the claim will not be pursued.37 [2513] Limitations. There is much technical learning on compromise, accord and satisfaction, release and abandonment. These concepts constitute genuine limitations on compromise agreements and include: satisfaction of the requirements of contract law, particularly the requirement of consideration itself; the impact of vitiating factors such as fraud; the relevance of public policy; and, of course, statutory qualifications.38 For our purposes it is sufficient to emphasise two points. The first is the general relevance (and importance) of consideration in compromise and most related situations. The second is that the law illustrates the simple proposition that a claim in restitution is not available if the claim has been satisfied, by the parties’ express or implied agreement or by operation of law.

(b) Compromises [2514] Compromise of disputed claim. The paradigm case within a defence of ‘bargained-for consideration’ is a payment made under a contract [page 892] of compromise. If one party entertains an honest belief that the other is subject to a liability, but the other disputes that claim, the parties may enter into an agreement to compromise that claim. If the agreement is a bona fide compromise of the dispute this amounts to a conclusion that the agreement is supported by consideration even if, in fact, the claim was a bad one. The word ‘compromise’ generally assumes mutual promises.39 The compromise may be express. For example, if A alleges that B owes A $1000 by reason of a payment alleged to have been made under mistake, B might offer to settle the claim for, say, $750.

Acceptance of the offer amounts to the formation of a contract of compromise. Even if, in fact, A was correct, B’s liability is reduced to $750, and A cannot claim the balance in a claim for restitution. The cause of action in restitution is extinguished by the compromise. Absent express agreement to compromise the claim, the compromise may be inferred from the terms of an agreement. This might arise, for example, in a case where A’s claim to restitution is based on the benefit conferred under an ineffective contract, and A and B enter into a second contract which, as a matter of construction, settles outstanding liabilities under the first transaction.40 It is assumed that A’s allegation is disputed, it is not necessary for proceedings to enforce the claim to have issued.41 However, it must always be determined that there was an intention to compromise the claim. In J & S Holdings Pty Ltd v NRMA Insurance Ltd42 threats of legal proceedings to wind up a debtor, and other conduct by the creditor, were found to amount to duress. The debtor was therefore held to be entitled to recover payments made to halt the proceedings. The Full Federal Court recognised43 that money paid in settlement of legal proceedings which a creditor is entitled to bring is generally not regarded as having been made under duress. An action was available to recover the debt. However, the winding-up proceedings were simply part of the conduct amounting to duress. Therefore the money paid by the debtor could not be seen as paid in settlement of legal proceedings. These examples assume compromise of the whole claim. Although, generally, there is no question of the defence extending to part only of the plaintiff’s claim,44 this is simply a question of contract construction. It is also assumed that the payment agreed on under the contract of compromise has been made. If this is not the case, A may have remedies for breach of contract, and this may include a right to treat the compromise as discharged.45 Alternatively, A may be entitled to revert to the restitutionary claim.46 [2515] Compromise may be ineffective contract. A contract of compromise also operates to bar a claim for restitution in relation to benefits conferred under the contract of compromise. In other words,

the impact of a contract of compromise is that a benefit received under the compromise will [page 893] be supported by consideration, so that, unless the contract is ineffective, it will bar recovery in restitution of the benefit conferred. For example, assume that A alleges that B is liable to pay A $1000 (as restitution) by reason of a payment alleged to have been made under mistake, and that A and B compromise the claim by B paying A the sum of $750. If the true position was that B owed A nothing, it would not be unnatural to say, once the true position is established, that the payer (B) was moved to make the payment by mistake. However, B cannot claim that payment as restitution. The mistake does not vitiate the contract, and the payment will itself be irrecoverable.47 Although the mere fact of mistake in relation to what has been compromised does not itself vitiate the contract of compromise, such a contract may nevertheless be an ineffective contract. Thus, if the contract of compromise is breached, and a right of termination is exercised, there may be an issue of restitution in relation to benefits conferred under the contract. Similarly, if a mistake as to liability was an induced one, or the compromise agreement was vitiated by improper pressure, the contract may be set aside or rescinded. However, it must be the contract of compromise itself which is affected. For example, in Mason v New South Wales48 the parties could have entered into a valid compromise of their dispute even though it entailed the State retaining some of the moneys previously obtained as the result of unlawful pressure (duress colore officii). That circumstance would not have been a reason for impugning the compromise, unless it was also affected by the unlawful pressure.

(c) Release and Abandonment

[2516] Release. Related to compromise are the concepts of release and accord and satisfaction. Thus, one party may agree to release the other from an accrued cause of action or liability. That cause of action or liability may arise in any way, and may therefore include a restitutionary liability. It has been the law for hundreds of years that an agreement to release a debt due is not binding on the creditor unless supported by sufficient consideration.49 Therefore, unless made under seal, the release of an accrued cause of action must be supported by a fresh consideration,50 and on this basis consideration provides a valid defence to the claim which has been released.51 Whether the cause of action in relation to the pre-existing liability is satisfied by the making of a contract, or the contract is merely an accord executory (contingent on performance of the contract), is a matter of interpretation. Assume, for example, that A agrees to release B from [page 894] a liability to make restitution for a fraud committed against A, and that B agrees to pay a certain sum. The promise to pay the amount specified is (contractual) consideration, for the promise of release. Only if the agreement was for immediate discharge will the release of B be immediate.52 Thus, if the agreement is that B’s liability is to be discharged only on performance of the promise, that is, payment of the money, the cause of action is not extinguished while the accord remains executory.53 Since in every case the question is one of construction, a release may be express or implied.54 [2517] Abandonment of claim. A cause of action in restitution may be abandoned. The abandonment may, as we have seen,55 occur expressly under a compromise or release, in which case consideration for the abandonment will be found in the acceptance of something in place of the cause of action. This may involve an exchange of mutual promises, the payment of money or the acceptance of some other

benefit. Equally, however, a claim may be abandoned less formally. It may be inferred from conduct, as where a contract is agreed which is inconsistent with the continued existence of an obligation to make restitution.56 It may also be inferred from conduct where there is inordinate delay,57 or where the circumstances satisfy the requirements of estoppel.58 Even if consideration may be quite difficult to identify, the general policy of finality is the appropriate rationale to be applied.

(d) Discharge of an Existing Debt and Other Cases [2518] Introduction. ‘Consideration’, in the form of payment or some other benefit under a compromise agreement, represents only part of the consideration category. In Barclays Bank Ltd v W J Simms Son & [page 895] Cooke (Southern) Ltd,59 in a passage cited with apparent approval in David Securities Pty Ltd v Commonwealth Bank of Australia,60 Robert Goff J spoke of a prima facie entitlement to recover money paid under a mistake of fact failing if:61 … the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt.

The fact that particular reference is made to the discharge of a debt does not signify that the defence is limited to this form of consideration. However, at least as the law currently stands, it appears to be limited to the discharge of a debt or the enrichment sought to be recovered in the restitutionary claim.62 Nevertheless, as a general principle it might be said that ‘consideration’ prevents the receipt or retention of a benefit being seen as unjust where the benefit in respect of which the plaintiff seeks restitution has been diminished, wholly or in part. This indicates

that there is scope for saying that the defence may be a partial one. Thus, whether it constitutes contractual consideration or not, the extent of the consideration may mark out the extent to which the plaintiff’s prima facie claim must be fulfilled in the order for restitution.63 [2519] Elements of proof. If the plaintiff has a prima facie entitlement to restitution, for example, in relation to a mistaken payment, the defendant, to qualify for the defence, may establish the justice of retaining the enrichment by showing that the payment was made for good consideration. Thus, the defendant may show that the plaintiff received consideration for the very payment sought to be recovered in the restitutionary claim.64 The defendant must also show, as in a compromise situation, that the consideration was provided in good faith.65 But, unlike the compromise situation, there is no requirement of proof that the plaintiff understood (or intended) that the claim would be discharged. [2520] Discharge of an existing debt. The defence of consideration applies to circumstances showing that the defendant had a right to receive the enrichment at its inception. Apart from payments made under effective contracts, where there is a more general ‘defence’ in operation,66 the classic example is a payment which discharges an existing debt owed by the payer to the payee or a person on whose behalf the payee is authorised to receive payment. This was considered in detail in the context of payments affected by mistake.67 [page 896] More controversial is Robert Goff J’s decision in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd.68 The bank’s payment on a countermanded cheque was held to provide no consideration (or change of position) because it did not discharge the customer’s liability to the defendant building company. Since the payment was made to

discharge another’s debt, and accepted as so doing by the payeecreditor, it could have been regarded as discharging the debt irrespective of the consent of the debtor. At the very least, it should have provided a sufficient ‘benefit’ to the customer.69 The defence also failed on the facts70 in David Securities Pty Ltd v Commonwealth Bank of Australia.71 The defendant bank argued that it had provided good consideration in that its loan was subject to the plaintiff’s promise to pay the additional amounts for withholding tax which the plaintiff sought to recover as having been paid under mistake. Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said72 that the defence required proof that consideration had been received for the payments which the plaintiff sought to recover. After analysing the law on total failure of consideration, they concluded that the consideration defence failed because liability to pay that tax fell on the defendant and the statute avoided any attempt to pass the burden on to the plaintiff as borrower. The plaintiff thus had no indebtedness in respect of withholding tax, the discharge of which could form consideration for the payments. To the extent that Mason CJ, Deane, Toohey, Gaudron and McHugh JJ treated73 the relevant perspective as the benefit bargained for, rather than that actually received, there is support for the approach of Robert Goff J in Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd. However, it is not clear that this was their intention. Moreover, the significance of the discussion from the perspective of total failure of consideration is difficult to appreciate in this context, and we agree with Professor Birks’s view74 that the failure of the defence was more simply and directly addressed in Brennan J’s judgment. Brennan J said75 that the only consideration received was performance which the defendant was entitled to receive ‘without payment of the tax equivalent’. [2521] Consideration not limited to payments. There seems no reason to limit the consideration defence to monetary payments. Indeed, it might be said, in cases where the consideration takes the form of discharge of an existing debt, that the real consideration is the

discharge rather than the payment. Moreover, the decision in National Mutual Life Association [page 897] of Australasia Ltd v Walsh,76 if it remains good law,77 illustrates that the relevant consideration may be provided after receipt, for example, in the form of the defendant’s promised services. The plaintiff sued to recover money paid as commissions to a divisional sales manager, the commissions having been calculated by reference to commissions earned by agents in his division. In fact, the moneys were not due because the insurance proposals were not authentic. The defendant was not party or privy to the frauds whereby the proposals were invalidated. Recovery from the defendant was refused because the defendant had provided consideration for the payments he had received. He had worked diligently and faithfully for his employer and in that sense provided real consideration for his remuneration. The fact that he was ‘unwittingly servicing rogues’ was not to the point.78 [2522] Limitations on the defence. There are a number of limitations on the consideration defence. To begin with, the principle may have no direct application where the alleged consideration is vitiated by fraud, misrepresentation or illegality. Therefore, in a case of mistaken payment, the principle will not apply if the consideration which is put forward as a basis for retaining the payment was illegal, or an element of the payer’s mistake, or induced by fraud or misrepresentation.79 There are also certain categories of claim, particularly those based on the breach of a fiduciary obligation, where it would be inappropriate to allow deduction for the consideration provided, and where the real issue is whether the defendant is entitled to remuneration (counterrestitution) for the benefit conferred by the alleged consideration. If such a defendant has contributed value, the entitlement is to receive a

‘just allowance’. But the defendant’s wrongdoing may deprive it of the ability to rely on the defence.80 While it may well be too restrictive to treat the contractual definition of consideration as expressing a general limitation on the defence, it is clear that in most cases where there is no contractual consideration the defendant must look to change of position rather than consideration. Thus, in Lipkin Gorman v Karpnale Ltd,81 although the House of Lords recognised the defence, and treated it as applicable in a common law restitution claim to ‘trace’ money belonging to the plaintiffs that came into the hands of the defendant, it was held not to apply on the facts. The money came into the defendant’s hands without it paying full consideration. Indeed, the consideration put forward — [page 898] the performance of gaming contracts — was void. The defendant, as owner of the Playboy Club, had exchanged gambling chips in return for stolen money: the chips were merely a convenient mechanism for facilitating void gambling contracts. Accordingly, the club’s net credit position at the end of the gambling spree was held to be the limit of its liability, on the basis of the change of position principle rather than the provision of consideration, or its status as a bona fide purchaser.82

4. Bona Fide Purchase (a) General [2523] Introduction. To the extent that it is recognised, the defence of bona fide purchase for value is a general one not limited to claims for restitution. Although the common law never recognised a general defence of this type, its origin lying in equity, it has been extended by statute to common law claims asserting a proprietary interest. This is important as an indication that the operation of the defence is in

relation to proprietary claims made against a defendant who has dealt with property in respect of which the plaintiff asserts an interest. It is, however, clear that the various manifestations of the bona fide purchase defence are important to restitutionary claims.83 Generally, the consideration perspective of the defence is expressed in terms of value provided rather than value received, since the ‘consideration’ usually moves from the defendant to a person other than the plaintiff. Since most restitutionary claims are personal, and based on the receipt of a benefit directly from the plaintiff, the scope for the operation of the bona fide purchase defence is fairly limited in the context of restitution.84 Although it is perhaps inherent in the consideration defence as applied to the discharge of a debt that a plaintiff may receive a benefit from the receipt by a third person of consideration provided by the defendant, there is little support for a defence of bona fide purchase to personal claims, and its existence has been denied in that context.85 [2524] Relation with change of position. The defence of bona fide purchase is akin to that of change of position, but it is not a species of it. [page 899] In Lipkin Gorman v Karpnale Ltd86 Lord Goff explained87 that this is ‘because change of position will only avail a defendant to the extent that his position has been changed; whereas, where bona fide purchase is involved, no inquiry is made (in most cases) into the adequacy of the consideration’. Therefore, unlike the change of position defence, which operates pro tanto, when the bona fide purchase defence is available it operates as a complete answer to the restitutionary claim.88 For example, in Lipkin Gorman the House of Lords accepted that had the defendant club provided value for the ‘stolen’ money gambled by the dishonest solicitor from the plaintiffs’ firm, it would have been a

complete defence to the plaintiffs’ claim for restitution of the money which it had received. Even if it is correct to say that bona fide purchase is not a species of change of position,89 there will clearly be cases in which the claim of the defendant does not extinguish that of the plaintiff, because the interest obtained serves merely to abate the plaintiff’s claim. The defendant may, in other words, simply obtain priority. For example, by virtue of the nemo dat exceptions,90 a defendant may have acquired a lien on the plaintiff’s property, so that the plaintiff’s claim is abated to the extent necessary to discharge the lien.91 [2525] The nemo dat rule. The common law rule is nemo dat quod non habet: a transferor cannot confer on a transferee a better title than that possessed by the transferor. The statement of the rule in the sale of goods legislation92 is in terms that where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had. The rule will apply to a defendant who deals with a person who obtained no title, or a defective title from the plaintiff. Although the nemo dat rule applies to transactions by way of sale,93 it is not restricted to such transactions.94 And it applies both at common law and in equity. The nemo dat rule is qualified by a long list of exceptions. Significant though they are, the exceptions do not, even when combined, amount to a general defence of bona fide purchase for value. Nor are they particularly [page 900] relevant to claims in restitution. Indeed, their principal connection with such claims is where a plaintiff seeks to assert a proprietary interest in property which has come into the defendant’s hands and to which the defendant asserts a title free of the plaintiff’s interest.95 Accordingly, the usual context is a plaintiff’s reliance on a pure proprietary interest

as a basis for asserting that the defendant has committed a wrong such as conversion or detinue.96

(b) Relevant Situations [2526] Introduction. The bona fide purchaser defence manifests itself in three overlapping situations discussed below.97 The first situation is where the defendant is entitled to rely on an exception to the nemo dat rule. The second situation is where the plaintiff relies on avoidance of a transaction as a basis for claiming restitution against the other party to the contract, or in order to assert a proprietary interest in goods which have come into the defendant’s hands through a dealing with that party. The third situation is where the defendant is alleged to have received money or property from a person whose ownership was subject to an equity operative in favour of the plaintiff. For completeness, we also deal briefly with the operation of estoppel.98 [2527] Exceptions to the nemo dat rule. In practice, the most important exception to the nemo dat rule is the idea that title to currency passes on delivery. This implies that, absent the ability to trace, a third party is generally immune to a proprietary claim in restitution.99 However, even here care must be taken. Although there is no right to sue for the conversion of notes and coin, and even a thief may pass good title, this does not mean that a third party recipient is immune from a restitutionary claim.100 First, in some cases tracing will be possible: money obtained from the plaintiff by a thief may be traced to a volunteer in a common law claim which is not necessarily proprietary in character.101 Second, even money may be impressed with a trust, so that a defendant who has taken with notice, or not provided valuable consideration, may be sued in a proprietary claim.102

[page 901] The principles of holder for value and holder in due course, contained in the bills of exchange legislation, are also important.103 The legislation recognises a principle of bona fide purchaser for value and without notice.104 In Lipkin Gorman v Karpnale Ltd,105 the House of Lords denied that the defendant was entitled to rely on the bona fide purchaser principle in relation to the solicitor’s gambling activities.106 It was also held that the defendant was not entitled to assert a status as a holder in due course in respect of its receipt of a banker’s draft. The draft represented the plaintiffs’ money, as it was made payable to the plaintiffs. The fact that the solicitor had, in the course of his gambling activities, indorsed the draft in favour of the defendant did not avail the plaintiffs. The solicitor had no authority to indorse the draft, and the defendant did not give value, because the alleged consideration was again void.107 The usual context of the nemo dat exceptions is in a dealing with personal property. Indeed, in any case in which a contract is held to be void as between the plaintiff and a person who purported to confer title on the defendant, the defence of bona fide purchaser will not apply unless an exception to the rule operates. For example, in the wellknown case of Cundy v Lindsay108 the House of Lords held that an alleged contract between the plaintiff and a rogue was void for mistake. The plaintiff’s delivery of goods to the rogue did not cause any title to pass to the rogue who was thus unable to pass title to the defendant. The defence of bona fide purchaser was not available in the plaintiff’s claim against the defendant for damages for conversion. It was of no consequence that the defendant acted bona fide: there was nothing to purchase. Nevertheless, even in this context, the transaction between the defendant and the person who purported to confer title on the defendant may be legitimised, and provide the defendant with the benefit of the bona fide purchaser defence. Any exception which provides a good defence to the plaintiff’s allegation of wrongful conduct (such as conversion) will also bar a claim for damages or restitution. The exceptions to the nemo dat rule, established for reasons of

commercial convenience, are now enshrined in the sale of goods legislation.109 [page 902] [2528] Avoidance of a transaction. A contract affected by a vitiating factor such as fraud or duress is not void,110 and a breach of contract does not automatically, that is, of itself, discharge a contract.111 It follows that the performance of an ineffective contract may cause property to pass from the plaintiff to the other party to the contract, and that, until the contract is avoided, the plaintiff cannot assert ownership of the subject matter or claim restitution. However, valid exercise of a right of discharge or rescission will be effective of itself to revest title in the plaintiff.112 Of course, neither rescission nor discharge is a requirement of a claim for damages, for breach of contract or fraud against the other party to the contract. Equally, however, the third party has not breached any contract with the plaintiff and the third party’s liability for a tortious wrong assumes involvement in the fraud or wrongful detention of the goods. But in cases where the other party to the contract has absconded, or is not worth suing, the plaintiff’s suit against the defendant necessarily assumes a prior discharge or rescission of the contract. For better or for worse, the position has been taken, both at common law and in equity, that the intervention of third party rights constitutes a bar. There is therefore a practical limitation applicable in two different ways. First, as against the other party to the transaction, the ability to obtain restitution is denied on the transfer of property to a third party.113 The plaintiff’s right of discharge or rescission ceases to be available because the law treats the ability to discharge or rescind the transaction as coincident with the ability to revest title.114 [page 903]

Second, a claim in tort or for restitution, for example, on conversion of goods, cannot be maintained against a third party (defendant) who is a bona fide purchaser for value prior to avoidance of the transaction. Clearly, it is this limitation which is relevant to the bona fide purchaser defence. As applied to ineffective contracts, there are four requirements: (1) bona fides; (2) executed valuable consideration; (3) absence of notice of the title defect; and (4) that the defendant acted prior to the plaintiff’s election to rescind or discharge the ineffective contract.115 In cases where these requirements are not satisfied, the nemo dat rule applies. On the other hand, as the sale of goods legislation recognises, if the defendant has given value, by providing valuable consideration (not to the plaintiff but to the fraudulent party), the defence will be available if the bona fide purchase precedes the plaintiff’s election to avoid the contract.116 Moreover, the legislation is usually treated as validating the transaction unless the plaintiff proves that there was notice or an absence of bona fides.117 A typical scenario is where the plaintiff has been induced to part with property by a fraudulent misrepresentation to which the defendant was not party and of which the defendant has no knowledge. For example, in Lewis v Averay118 the seller of a motor car was induced to transfer property in the vehicle to a rogue who fraudulently misrepresented his identity and the validity of the cheque which he wrote to pay for the goods. The contract was not void. Since the rogue entered into a contract of sale with the defendant, who acted bona fide and without notice, prior to any election to rescind the contract, the defendant’s rights were not affected by the defect in the rogue’s title. Accordingly, no claim was available against the defendant. On the other hand, if the defendant’s transaction takes place after avoidance of the transaction between the plaintiff and the party from whom the defendant obtained the property, the defence will fail. The importance attached to the timing of rescission or discharge has led to a

qualification to the general rule119 that election must be communicated to the person against [page 904] whom the right is available. In Car and Universal Finance Co Ltd v Caldwell120 a seller of goods was induced by fraudulent representation to transfer ownership to a rogue who passed a worthless cheque. It was impossible for the seller to communicate an election to rescind since the buyer absconded. Nevertheless, the seller took all reasonable steps to regain the goods, and although these fell short of communication (or repossession) they were held to be sufficient to amount to an election to rescind prior to the defendant’s acquisition of the goods from the rogue. Accordingly, the defendant did not occupy the position of a bona fide purchaser.121 [2529] Title free from equities. It is a well-established doctrine of equity that where dealings between A and B are such as to make B’s title to certain property subject to A’s interest in the property, a defendant who acquires the property from B may take the property free of A’s interest if the defendant acquired the property for valuable consideration, in good faith and without notice of A’s interest in the property.122 Although not limited to dealings with real property,123 the principle has its main application in the context of land dealings, and is usually analysed in terms of priorities between competing interests in property.124 The idea has many and varied applications. There is, for example, the general rule that the purchaser of a legal estate for value and without notice obtains priority over a prior equitable interest.125 Another application has already been considered. If a dealing between A and B is affected by fraud, A’s right to rescind the transaction constitutes an equity which will bind a defendant unless the defendant can establish the bona fide purchaser defence.126

[2530] Estoppel.127 In the bona fide purchaser defence the allegation is that the defendant benefited a person other than the plaintiff. Estoppel is more relevant to cases in which the defendant benefited the plaintiff.128 In [page 905] cases where the defendant is alleged to have committed a wrong by dealing with property, the effect of estoppel is to prevent the plaintiff suing the defendant in a personal action for damages, for example, for conversion of goods. This is rare indeed. Nevertheless, in the statement of the nemo dat rule in the sale of goods legislation, implied reference is made to an estoppel exception.129 Thus, the rule is qualified by the words, ‘unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell’.130 This states a bona fide purchaser defence in a very specific context. However, even in that specific context, the principle embodied defies succinct analysis. Accordingly, the cases have variously countenanced the operation of the provision as a kind of agency estoppel;131 as one embracing estoppel by representation;132 and also including estoppel by negligence, that is, breach of a duty of care owed by the plaintiff to the defendant.133 In relation to transactions where the defendant is a third party who dealt with a person to whom the plaintiff entrusted goods, estoppel provides the main doctrinal justification for the idea that an agent without authority may confer a good title on a purchaser for value without notice of the agent’s want of authority.134 But since the ultimate impact of the exception is that the defendant commits no wrong in dealing with the goods, it is sufficient to say that the effect is to bar any claim against the defendant for damages or restitution. 1.

Contrast [2105] (claim by revenue).

2.

See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375; 109 ALR 57. See also Colchester Borough Council v Smith [1992] 1 Ch 421 at 435;

3. 4.

[416], [441]. See [2501]. See [170], [916].

5. 6.

See further [2521]. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383.

7.

See Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 at 695; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379, 383, 405, 407. Cf Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. But see [2528].

8.

9. See the discussion in Linter Group Ltd v Goldberg (1992) 7 ACSR 580 at 634–5. 10. See also [2506]. 11. See ACT: Sale of Goods Act 1954, s 4(a); NSW: Sale of Goods Act 1923, s 5(2); NT: Sale of Goods Act 1972, s 5(2); Qld: Sale of Goods Act 1896, s 3(2); SA: Sale of Goods Act 1895, s A2(2); Tas: Sale of Goods Act 1896, s 3(2); Vic: Goods Act 1958, s 3(2); WA: Sale of Goods Act 1895, s 60(2). 12. See [2527]. For the rule see [2525]. 13. See also the general discussion in Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 at 298–9; 116 ALR 460 at 468–9. Cf [2422]. 14. See Carter on Contract, §§06-440–06-470; John P Dawson, ‘Restitution Without Enrichment’ (1981) 61 Boston ULR 563 at 566. 15. In practice this issue is restricted to the statutory exceptions to the nemo dat rule, where the general tendency has been to exclude constructive notice. Compare Worcester Works Finance Ltd v Cooden Engineering Co Ltd [1972] 1 QB 210 at 218; Robinson Motors Pty Ltd v Fowler [1982] Qd R 374 at 379. See further Craig Rotherham in Hedley and Halliwell, §§21.6, 21.9. See also Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978 at 1000 per Millett J (affirmed on other grounds [1996] 1 WLR 387). 16. See, eg Linter Group Ltd v Goldberg (1992) 7 ACSR 580 at 636–7; cf Polly Peck International Plc v Nadir (No 2) [1992] 2 Lloyd’s Rep 238 at 246–7; J D Heydon, ‘Recent Developments in Constructive Trusts’ (1977) 51 ALJ 635 at 640 and see generally Meagher, Gummow, and Lehane, §§8.255ff. 17. See [2524]. 18. See generally Chapter 24. 19. See generally Part IV. 20. See generally Chapter 10. 21. There are, however, indications that absence of consideration may itself provide a basis for a claim to restitution. See [166], [1015]. Cf [410]. 22. See generally, Chapters 4, 5. 23. See [915]–[930]. Cf [926] (suggested requirement of substantial failure). 24. Contrast [1124], [1132] (context of a severable contract). 25. See, eg [1142] (relief against forfeiture), [1226], [1242] (statute), [1331], [1433], [1434], [1438] (restitutio in integrum). 26. See [215], [905], [909]. See also [2314], [2316], [2317]–[2320]. Cf [2203].

27. For the position where a contractual dispute is compromised see [2501], [2512]. See also [405], [441], [442], [507], [514], [515], [528], [1312], [1328], [1332] (operation of general principles in contexts of mistake and improper pressure). 28. See [2509]. 29. See [2512]. 30. See [2203], [2508]. 31. See generally Chapters 11–13. See also [2317]–[2320] (defence of election). 32. (1992) 175 CLR 353 at 382–3. 33. See, eg R S Howard & Sons Ltd v Brunton (1916) 21 CLR 366 (compromise of liability for non-delivery under contract for sale of wheat). See also Terrex Resources NL v Magnet Petroleum Pty Ltd [1988] 1 WAR 144; Woolwich Equitable Building Society v IRC [1993] AC 70 at 165, 174. But see [2515] (ineffective contract). 34. See, eg Adamopoulos v Olympic Airways SA (1991) 25 NSWLR 75 at 86 (compromise of tracing dispute). But public policy issues may arise, in the contrast between the compromise of a personal claim and matters in which the public has an interest; see the discussion in Kerridge v Simmonds (1906) 4 CLR 253 at 260, 262, 264; PT Garuda Indonesia Ltd v Grellman (1992) 107 ALR 199 at 216. See further [441], [513], [2038]. 35. Restitution of Payments Made Under a Mistake of Law, Consultation Paper No 120, 1991, §3.69. See R v Tower Hamlets LBC; Ex parte Chetnik Developments Ltd [1988] 1 AC 858 at 881 and [442], [507], [511], [2038]. 36. See [904]. See also [905] (requirement of election). 37. See [2514]. 38. See also [2522]. 39. Cf S J Stoljar, ‘The Consideration of Forbearance’ (1965) 5 MULR 34. 40. See further [2517] (abandonment). 41. It is not entirely clear whether ‘good faith’ is the only test which the asserted claim must satisfy. See Carter on Contract, §06-470 (vexatious and frivolous claims). 42. (1982) 61 FLR 108; 41 ALR 539 (see [527]). 43. (1982) 61 FLR 108 at 129–30; 41 ALR 539 at 556–7. See [518]. 44. However, that may in fact have been the agreement of the parties. See [1216]. 45. See further [2515] (compromise an ineffective contract). 46. See further [2516] (accord but no satisfaction). 47. See, eg Wigan v Edwards (1973) 47 ALJR 586; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 395. For a more detailed analysis see [1332] (compromise of disputed claim affected by mistake). Cf the position under consent orders, see General Credits Ltd v Ebsworth [1986] 2 Qd R 162; Easyfind (NSW) Pty Ltd v Paterson (1987) 11 NSWLR 98 at 106, 107; Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528; Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 and [441]. 48. (1959) 102 CLR 108 (see [529]). 49. See Foakes v Beer (1884) 9 App Cas 605 (release of part of a debt). This is subject to the operation of promissory estoppel: D & C Builders Ltd v Rees [1966] 2 QB 617 at 624; Arrale v Costain Civil Engineering Ltd [1976] 1 Lloyd’s Rep 98 at 102. See also [528].

50. See Atlantic Shipping & Trading Ltd v Louis Dreyfus & Co [1922] AC 250 at 261–2. 51. For an illustration see Prudential Assurance Co Ltd v C M Breedon Pty Ltd [1994] 2 VR 452. 52. See Butler v Fairclough (1917) 23 CLR 78 at 96; Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93 at 114, 148–9. 53. Even so, there may be a release of equitable rights by conduct. See, eg Avtex Airservices Pty Ltd v Bartsch (1992) 107 ALR 539 at 567 and generally Meagher, Gummow and Lehane, Chapter 37. An action on a liability may also be restrained as a release of the defendant’s liability under equitable principles on an ‘agreement not to sue upon particular allegations’. See McDermott v Black (1940) 63 CLR 161 at 183 per Dixon J. See also [2713] (acquiescence). 54. See Ballantyne v Phillott (1961) 105 CLR 379 at 398; Allied Marine Transport Ltd v Vale do Rio Doce Nevegacao SA [1985] 1 WLR 925 at 933. See also Osborne v McDermott [1998] 3 VR 1; DCT v Hadidi (1994) 123 ALR 48 at 54, 62; FCT v Orica Ltd (1998) 194 CLR 500 at 544; 154 ALR 1; Jameson v Central Electricity Generating Board [2000] 1 AC 455; National Australia Bank Ltd v Pollak (2001) 186 ALR 44 at 52; Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251; Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 at 271; El-Mir v Risk [2005] NSWCA 215. See further [25–17] (abandonment). 55. See [2513]. 56. See [2514]. See also [1309]. There is perhaps more scope for restitution in relation to contracts discharged by a subsequent agreement which does not expressly deal with the fate of money paid under the earlier contract. Thus, assuming that agreement in relation to the fate of money paid under the discharged contract cannot be implied, principles of restitution apply and recovery must be based on total failure of the agreed return. See [1216]. 57. See, eg Avtex Airservices Pty Ltd v Bartsch (1992) 107 ALR 539 at 568 and generally [2712] (estoppel). Cf [2716] (delay in prosecution of arbitration). 58. See, eg Thompson v Palmer (1933) 49 CLR 507 at 547 per Dixon J (assumption adopted by another as a basis of some act or omission which, unless the assumption is adhered to, would operate to that other’s detriment) and generally Carter on Contract, §§32-020–32080. 59. [1980] 1 QB 677. 60. (1992) 175 CLR 353 at 380, 405. Cf Griffiths v Commonwealth Bank of Australia (1994) 123 ALR 111 at 123–4. 61. See [1980] 1 QB 677 at 695. 62. See further [2520]. 63. See also [448]. 64. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 especially at 383, 407. 65. See further [2522]. 66. See [2512]. 67. See generally Chapter 4, especially [440]. See also [433], [435], [437] (banker’s crediting

of account). See also Andrew Kull, ‘Defenses to Restitution: The Bona Fide Creditor’ (2001) 81 Boston Uni Law Rev 919; Alexander Schall, ‘Three-party Situations in Unjust Enrichment Epitomised by Mistaken Bank Transfers’ [2004] RLR 110. 68. [1980] 1 QB 677. See also Lloyd’s Bank plc v Independent Insurance Co Ltd [2000] 1 QB 110; Customs and Excise Commissioners v National Westminster Bank plc [2003] 1 All ER (Comm) 327; Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6. 69. See Chapter 8 (necessitous intervention). 70. See [414]. 71. (1992) 175 CLR 353 at 379–84, 400, 407. See also [442]. 72. See (1992) 175 CLR 353 at 383. 73. (1992) 175 CLR 353 at 382–3. 74. See Peter Birks (1993) 109 LQR 164 at 167. See also [448]. 75. See (1992) 175 CLR 353 at 400. Cf at 405, 406–7 per Dawson J. 76. (1987) 8 NSWLR 585. 77. Peter Birks (1993) 109 LQR 164 at 167 treats Walsh as wrongly decided on the basis of David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; 109 ALR 57. 78. See (1987) 8 NSWLR 585 at 596 per Clarke J. 79. See, eg Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482; O’Neill v Mincher [1926] QSR 250; Radford v Ferguson (1947) 50 WALR 14. But the defendant may be entitled to claim restitution, or to insist on counter-restitution. See [519], [1331], [1437], [1736]. But see [2613], [2634], [2639]. Cf David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 383, 400; 109 ALR 57. 80. See [1705], [1717], [1733]. See also [1028] (breach of fiduciary duty); [2616] (general denial in cases of illegality). But see [1437] (undue influence). 81. [1991] 2 AC 548 (see [1634]). See further K & S Corporation Ltd v Sportingbet Australia (2003) 86 SASR 312. See [306]. See generally Chapter 3. 82. See further [2524], [2527]. 83. See generally Birks, Introduction, pp 439–47; Kit Barker, ‘Bona Fide Purchase As a Defence to Unjust Enrichment Claims: A Concise Restatement’ [1999] RLR 75; William Swadling, ‘Restitution and Bona Fide Purchase’, in Swadling, Chapter 4; Eoin O’Dell, ‘Restitution, Coercion by a Third Party, and the Proper Role of Notice’ [1997] CLJ 71; Kit Barker, ‘After Change of Position: Good Faith Exchange in the Modern Law of Restitution’ in Birks, Laundering, Chapter 7; Jaffey, pp 239–53, 283–4, 289–92, 319–20, 323–25. 84. See further Kit Barker, ‘Bona Fide Purchase As a Defence to Unjust Enrichment Claims: A Concise Restatement’ [1999] RLR 75 at 87–91; William Swadling, ‘Restitution and Bona Fide Purchase’, in Swadling, Chapter 4, pp 92–5. Cf Craig Rotherham in Hedley and Halliwell, §21.13. See also Virgo, Chapter 23; Burrows, pp 585–91; McMeel, p 423. See also Papamichael v National Westminster Bank plc [2003] 1 Lloyd’s Rep 341 at 377. 85. See, eg Wheatley v Bell [1982] 2 NSWLR 544. See also William Swadling, ‘Restitution and Bona Fide Purchase’, in Swadling, Chapter 4. Cf Peter Birks, ‘The English Recognition of Unjust Enrichment’ [1991] LMCLQ 473 at 490; Kit Barker, ‘Bona Fide

Purchase As a Defence to Unjust Enrichment Claims: A Concise Restatement’ [1999] RLR 75 at 78. 86. [1991] 2 AC 548 (see [1634]). See [306]. See generally Chapter 3. 87. [1991] 2 AC 548 at 580–1. 88. Cf Bank of Cyprus UK Ltd v Menelaou [2015] UKSC 66 at [70] per Lord Neuberger. 89. Contrast P J Millett, ‘Tracing the Proceeds of Fraud’ (1991) 107 LQR 71 at 82; Birks, Future, pp 133–4. See further Ewan McKendrick, ‘Restitution, Misdirected Funds and Change of Position’ (1992) 55 MLR 377 at 384–5; Paul Key, ‘Bona Fide Purchase as a Defence in the Law of Restitution’ [1994] LMCLQ 421. 90. See [2527]. For the rule see [2525]. 91. See, eg Pulkownik v Public Trustee [1979] 1 NSWLR 716 (pledge by an agent entrusted with goods who contravened his actual authority by pledging the goods to a pawnbroker was valid as the pawnbroker acted in good faith and without notice of the limitation on the agent’s authority). 92. See ACT: Sale of Goods Act 1954, s 26; NSW: Sale of Goods Act 1923, s 26; NT: Sale of Goods Act 1972, s 26; Qld: Sale of Goods Act 1896, s 24; SA: Sale of Goods Act 1895, s 21; Tas: Sale of Goods Act 1896, s 26; Vic: Goods Act 1958, s 27; WA: Sale of Goods Act 1895, s 21. 93. See, eg Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marak Finance Australia Ltd (1985) 3 NSWLR 452 (seller who was lessee had no title to pass). 94. It may therefore apply to an attempt to make some lesser disposition, as where a defendant claims a lien on goods created by a person acting without the plaintiff’s authority. See, eg Fisher v The Automobile Finance Co of Australia Ltd (1928) 41 CLR 167 (nemo dat rule applied and hire purchaser could not create lien in favour of repairer so as to bind owner). 95. However, the exceptions include accession and intermixture. See Bergougnan v British Motors Ltd (1929) 30 SR (NSW) 61; Lewis v Andrews (1956) 73 WN (NSW) 67; Rendell v Associated Finance Pty Ltd [1957] VR 604 and generally Palmer, Bailment, § 3.063–3.068. These may be relevant to cases where the plaintiff asserts a right to restitution in relation to an improvement to personal property. See, eg [449]. 96. See generally Chapter 16. 97. See [2527]–[2529]. 98. See [2530]. 99. See also [303]. 100. See also [445]. See also David Fox, ‘The Transfer of Legal Title to Money’ [1996] RLR 60; David Fox, ‘Bona Fide Purchase and the Currency of Money’ [1996] CLJ 547. 101. See, eg Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 563. See also [302], [1632], [1634]. 102. See further [2529]. See generally Chapter 4. 103. Although bankers may in some cases be holders for value or holders in due course, they enjoy the benefit of further exceptions, see Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 437ff. 104. See Bills of Exchange Act 1909 (Cth), s 32. It is also recognised, by way of an exception to the general rule of contract law, that an antecedent debt or liability may amount to good

consideration: see Bills of Exchange Act 1909 (Cth), s 32(1)(a), (b). But see Walsh v Hoag & Bosch Pty Ltd [1977] VR 178; 12 ALR 411; (1976) 28 FLR 432, (antecedent debt or liability of third person). 105. [1991] 2 AC 548 (see [1635]). See Stephen Fennell, ‘Misdirected Funds: Problems of Uncertainty and Inconsistency’ (1994) 57 MLR 38 at 39–40. See also Radford v Ferguson (1947) 50 WALR 14; Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 427ff. Cf Belo Nominees Pty Ltd v Barellan Pty Ltd (1986) 3 SR (WA) 140. See [306]. See generally Chapter 3. 106. And the alleged consideration was held to be void. See [1635], [2522]. 107. There was one complicating feature. The draft was obtained by the solicitor from the plaintiffs’ clerk. However, since it was obtained pursuant to the solicitor’s fraud, the plaintiffs were able to assert title to the draft. Cf Peter Birks, ‘The English Recognition of Unjust Enrichment’ [1991] LMCLQ 473 at 496–7. 108. (1878) 3 App Cas 459. See also Shogun Finance Ltd v Hudson [2004] 1 AC 919 (mistake relied on to avoid a statutory provision). 109. For the principal exceptions see ACT: Sale of Goods Act 1954, s 29; NSW: Sale of Goods Act 1923, s 28; NT: Sale of Goods Act 1972, s 28; Qld: Sale of Goods Act 1896, s 27; SA: Sale of Goods Act 1895, s 25; Tas: Sale of Goods Act 1896, s 30; Vic: Goods Act 1958, ss 30, 31; WA: Sale of Goods Act 1895, s 25. The leading cases are Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] AC 869; Worcester Works Finance Ltd v Cooden Engineering Co Ltd [1972] 1 QB 210; Gamer’s Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236. See generally Sutton, Chapter 17. See also [2528] (sale under a voidable title), [2530] (estoppel). 110. But see [2527]. 111. But see [1102]. 112. See [918], [1118], [1318], [1438]. See also Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] EWCA Civ 195; [2013] Ch 91 (here a consent order was set aside on the application of the payee, prior to the re-hearing the payee obtained notice that a third party had a claim for the monies paid to her by the payer who had taken the monies with knowledge that they had been paid in breach of trust, it was held that the payee could no longer rely on the bona fide purchaser defence that she could rely on while the initial order was in place). 113. The usual rationalisation is as a restriction on the plaintiff’s right of rescission or discharge. See, eg Clough v London & NW Rly Co (1871) LR 7 Ex 26; Civil Service Cooperative Society of Victoria Ltd v Blyth (1914) 17 CLR 601 at 613; Phillips v Brooks Ltd [1919] 2 KB 243; Coastal Estates Pty Ltd v Melevende [1965] VR 433 at 452; Lewis v Averay [1972] 1 QB 198; Gould v Vaggelas (1984) 157 CLR 215 at 221. Cf Clarke v Dickson (1858) E B & E 148; 120 ER 463 (restitutio impossible); Hunter BNZ Finance Ltd v C G Maloney Pty Ltd (1988) 18 NSWLR 420 at 433–4 (rescission would be unjust). See also Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409 at 425; Bristol and West Building Society v Mothew [1998] Ch 1 at 22–3. Contrast Kramer v McMahon [1970] 1 NSWR 194 (intervention of mortgagee did not prevent rescission and restitution). The restriction is expressly preserved in cases of misrepresentation by Misrepresentation Act 1972 (SA), s 6(2). Apparently, the restriction may operate in the context of claims for discretionary relief under the trade practices and fair trading

legislation. See Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 179 CLR 15 (commencement of winding up of company as restriction on jurisdiction to declare contract void). 114. See the statements in Smith New Court Securities v Scrimgeour Vickers (Asset Management) Ltd [1994] 1 WLR 1271 at 1280, 1283 (requirement of substantial restitution in specie). But see Roy Goode, ‘Property and Unjust Enrichment’ in Burrows, Essays, p 235; Paul Key, ‘Bona Fide Purchase as a Defence in the Law of Restitution’ [1994] LMCLQ 421 at 425; cf Fair Trading Act 1999 (Vic) s 32PA. See further, Birke Häcker, ‘Rescission and Third Party Rights [2006] RLR 21; W Swadling, ‘Rescission Property, and the Common Law’ (2005) 121 LQR 123; Birke Häcker, ‘Rescission of Contract and Revesting of Title: A Reply to Mr Swadling’ [2006] RLR 106. See [243]. 115. If the plaintiff affirmed the contract, the defendant is able to assert the position of a bona fide purchaser because the plaintiff’s right to elect in favour of avoidance has been lost. Similarly, other restrictions, such as delay (see [2703], [2706]–[2710]) and estoppel (see [2213], [2322]) which operate against the plaintiff may assist the defendant. 116. See ACT: Sale of Goods Act 1954, s 27; NSW: Sale of Goods Act 1923, s 27; NT: Sale of Goods Act 1972, s 27; Qld: Sale of Goods Act 1896, s 25; SA: Sale of Goods Act 1895, s 23; Tas: Sale of Goods Act 1896, s 28; Vic: Goods Act 1958, s 29; WA: Sale of Goods Act 1895, s 23. For discussion see Sutton, §17.43; Benjamin, §7-021ff. 117. But see Paul Key, ‘Bona Fide Purchase as a Defence in the Law of Restitution’ [1994] LMCLQ 421 at 427–8. 118. [1972] 1 QB 198. See also Phillips v Brooks Ltd [1919] 2 KB 243. Cf Shogun Finance Ltd v Hudson [2004] 1 AC 919. See further Saunders v Anglia Building Society [1971] AC 1004 (defence of non est factum failed). 119. See [2305], [2315], [2318]. 120. [1965] 1 QB 525. For an illustration of statutory recognition see Australian Consumer Law and Fair Trading Act 2012 (Vic) s 26(1)(b). 121. Apparently, no argument based on the ‘buyer in possession’ exception (stated in the sale of goods legislation (see [2527])) to the nemo dat rule was made. 122. As regards the concept of notice, see Meagher, Gummow and Lehane §8.255–8.285 See also MBF Australia Ltd v Malouf [2008] NSWCA 214 at 51 per Hodgson JA (a thief handed a cheque to a lessor as an advance payment for a proposed lease, the lease contract at that time was subject to a number of contingencies taking place and the lessor was under no obligation to contract with thief at that time, prior to entry into the lease the lessor gained knowledge such that it was ‘unreasonable’ not to investigate further and which prevented the lessor being a bona fide purchaser for value without notice). 123. The operation of the bona fide purchaser principle, whether in equity or under the exceptions to the nemo dat rule, has had a significant influence on the documentation of many transactions. Thus, the Romalpa clause acknowledges that where a buyer of raw materials on-sells, the innocent purchaser will obtain good title despite the reservation of title as between the immediate buyer and seller. Accordingly, the object of the clause is to create a proprietary restitutionary claim against the money obtained from the innocent purchaser. 124. See generally Meagher, Gummow and Lehane, Chapter 8. 125. See generally Meagher, Gummow and Lehane, §8.240ff.

126. Cf Meagher, Gummow and Lehane, §4.175. Even if there is no positive right of rescission, there may be a right to have the transaction set aside, which constitutes an equity binding a defendant which cannot establish the bona fide purchaser defence. 127. See generally Handley, Estoppel. 128. See, eg [2322]. See also [2213], [2530]. See also Blue Haven Enterprises Ltd v Tully [2006] UKPC 17. See further Craig Rotherham in Hedley and Halliwell, §§21.16–21.25. 129. See generally Sutton, Chapter 15; Benjamin, §7-008ff. 130. See ACT: Sale of Goods Act 1954, s 26; NSW: Sale of Goods Act 1923, s 26; NT: Sale of Goods Act 1972, s 26; Qld: Sale of Goods Act 1896, s 24; SA: Sale of Goods Act 1895, s 21; Tas: Sale of Goods Act 1896, s 26; Vic: Goods Act 1958, s 27; WA: Sale of Goods Act 1895, s 21. 131. See Eastern Distributors Ltd v Goldring [1957] 2 QB 600. Cf Lloyds and Scottish Finance Ltd v Williamson [1965] 1 All ER 641; Fitznead v DJ Motors Ltd [1977] Tas SR 134. The nemo dat exception stated in the factors legislation is perhaps more significant. See generally Sutton, Chapter 16; Benjamin, §7-031ff. On the other hand, the idea that ostensible authority is sufficient to bind a principal is more important to the question whether the transaction with the agent was an ineffective contract than as a defence to a claim for restitution. See [1010]. 132. See, eg Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371; United Tool & Die Makers Pty Ltd v JV Motors Pty Ltd [1992] VR 266 at 271. 133. See, eg Moorgate Co Ltd v Twitchings [1977] AC 890; Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marak Finance Australia Ltd (1985) 3 NSWLR 452. 134. The principle of feeding title is also a manifestation of estoppel. Thus, if A purports to sell X’s goods to B, and B purports to sell to C, and C to D and so on down to Z, the principle may apply to provide Z with a defence to a claim by X. If A subsequently obtains title to the goods, A’s title is fed down the line to Z. However, this assumes (1) that title was obtained prior to discharge or rescission by X for breach or fraud (contrast Lucas v Smith [1926] VLR 400 and Butterworth v Kingsway Motors Ltd [1954] 2 All ER 694 where discharge prevented feeding of title) and (2) that Z provided consideration in good faith and without notice. For an illustration see Patten v Thomas Motors Pty Ltd (1965) 65 SR (NSW) 458; [1965] NSWR 1457. Cf Denis Geary Motors Pty Ltd v Hunter Street Finance Ltd [1979] Qd R 207.

[page 907]

Chapter Twenty Six

Illegality 1.

2.

General ….

[2601]

(a) Introduction ….

[2601]

(b) Unjust Enrichment …. Scope of the Defence ….

[2606] [2610]

(a) General ….

[2610]

(b) Action Founded on Illegality ….

[2613]

(c) Action Independent of Illegality ….

[2617]

(d) Condition of the Plaintiff Better than that of the Defendant …. [2625]

1. General (a) Introduction [2601] Objects. The defence of illegality is a complex one. And it is not viewed with any fondness by the courts. We have already1 drawn attention to the fact that the relevance of illegality to the law of restitution is somewhat ambiguous, and the attitude of the courts correspondingly ambivalent. Thus, the law abounds with exceptions to the general rule that illegality is a defence. Although, on occasions, illegality operates as the very basis for restitution, that is, the unjust factor in unjust enrichment,2 and indeed has been recognised as such by the High Court,3 most discussions of

illegality focus on how far it provides a defence to a plaintiff’s claim for restitution.4 Typically, the issue arises in the context of ineffective contracts,5 and the perspective taken is how far the bar to claims in contract extends to claims for restitution. However, the ineffectiveness of the contract (through illegality) provides merely the occasion for a restitutionary claim, without ensuring its success. It is, moreover, clear that the defence may apply in cases where there is no contract (or purported contract), and also in other contexts in which the only issue is whether illegality is a defence to the plaintiff’s claim for restitution based, for example, on the commission of a tort,6 or the breach [page 908] of a fiduciary duty.7 In these cases it would be contrary to public policy to allow the plaintiff to use the civil processes of the court to enforce a restitutionary obligation, since that might involve the court in recognising and encouraging the particular illegality.8 The object of this chapter is to consider the defence of illegality in these contexts as well: to draw together the principles relating to illegality as a defence to claims otherwise available according to the unjust enrichment concept. [2602] The concept. There are various species of illegality. However, the basic contrast is between illegality arising under statute and illegality based on common law principles.9 Although in both these manifestations the concept relies on public policy, it is convenient to describe the contrast as one between statutory illegality and public policy, and to use ‘illegality’ as a description for both. We take as given that one at least of the parties is implicated in a departure from society’s norms which may impact on the plaintiff’s ability to rely on general principles governing civil responsibility. It is often the case that a statutory offence has been committed, or that one or other of the parties has been guilty of criminal conduct. On this basis we put to one side those cases in which there is in truth no illegality, but merely a failure to comply with a statutory requirement,

for example, relating to the formality of a transaction, which has the effect of rendering a transaction void or unenforceable but not illegal.10 However, illegality is not always associated with the commission of an offence or crime. Thus, sexual immorality, gaming and wagering contracts and contracts in restraint of trade are invariably discussed under the heading of illegality, even though these situations do not usually signify criminal conduct. We are more concerned to identify the scope of the defence in the restitutionary context than to explain the law of illegality. Therefore, except incidentally, we are not concerned to define the impact of illegality on contracts or claims in tort. Our concern is with the narrow question of the impact of illegality on claims in restitution. [2603] Onus of proof. Generally, as would be expected of any genuine defence, the onus is on the defendant to raise the question of illegality. However, there is authority that in some situations the court must take notice of illegality when it arises, even though neither party has taken the point.11 Failure to plead the illegality expressly may lead to success of the plaintiff’s claim, even though there was an element of illegality, because the plaintiff [page 909] may have been able to cure the illegality, or to adduce (additional) evidence to negative the defence.12 Nevertheless, in most cases, when the plaintiff puts forward the restitutionary claim the onus is on the defendant to raise the defence of illegality. The defendant may do so even though implicated in the illegality. In other words, participation in illegal conduct does not estop the defendant from raising the defence.13 But where the restitutionary claim is put forward as a cause of action independent of an illegal contract, it is in practice often difficult to be confident as to the placement of the burden. Nevertheless, at least as a general rule, if the plaintiff is able to frame the action without relying (directly or

indirectly) on the illegality, the onus is on the defendant.14 In some cases the onus may shift to the plaintiff during the course of the proceedings. Thus, once a defendant has established that the benefit in question was received under an illegal transaction or as a result of some illegal dealing in which both are implicated, the onus may shift to the plaintiff to establish that the in pari delicto maxim does not apply. Some doubt about the onus lying with the defendant was raised in Alexiadis v Zirpiadis.15 In this case the respondent had delivered two cheques to the appellant and alleged at first instance that this was a loan that had not been repaid and commenced an action for repayment. The appellant alleged inter alia that it was not a loan but rather a scheme to keep money away from the respondent’s de facto partner and that he was to clear the cheques and then repay the cash to the respondent which he had done.16 The trial judge rejected the testimony of both parties but treated the case as a claim for restitution based on failure of consideration and gave judgment for the respondent although suggesting, but not finding, that the money was intended to be used for an illegal purpose. In the appeal Kourakis CJ held that in a claim for restitution based on a failure of consideration, it was necessary for the plaintiff (the respondent in the appeal) to provide evidence of the purpose of the payment so that it can be judged whether the consideration for it had failed. The respondent had not done that and so he held the claim for restitution must fail and the appeal therefore upheld.17 He recognised the three limbs of a restitutionary claim noting that when it came to proving total failure of consideration and that it was unjust for the appellant to retain the money, this required proof by the claimant ‘that the purposes of the transfer were not criminal’.18 In contradistinction to a claim in contract, where the onus of proving illegality rests with the defendant, and an illegal contract case where ‘the illegality must be established by the party denying the contractual claim before the restitutionary claim can arise’,19 [page 910]

here in a claim for money had and received where no contract had been proven,20 the plaintiff must prove that the defendant is unjustly enriched21 and here the claimant had failed to prove a cause of action, he failed to prove there was a loan.22 He thought the weight of evidence supported a finding that the loan was for an unlawful purpose but there was no need to make a finding to that effect as the claim failed for want of the claimant proving a cause of action.23 Gray J agreed that the onus of proving there was a loan as opposed to a gift lay with the claimant,24 adding that he would draw the inference that ‘there was an illegal purpose to the advances’ and that both parties were involved.25 White J dissented, noting that neither party had alleged that the advance was for an illegal purpose.26 He also saw the case as flowing out of a contract where there was no dispute that the advance was not by way of gift nor that it had to be repaid, the only issue was whether it had been repaid. He thought the purpose of the advance was fundamental27 to the claim and here the trial judge had found that the advance was not by way of gift, that there was an obligation to repay the advance and that the appellant was not to misappropriate the monies for his own purposes which he had done. For that reason there had been a failure of consideration.28 He thought that it was for the defendant to raise any issue of illegality and he had not done this at the trial and it was not then possible to base an appeal on an issue that was never ‘agitated at the trial’.29 Whether the difference in the views expressed here on the onus of proof can be explained by reference to the different views the court took on whether there was a loan contract or not is unclear. However, White J went on to state that he viewed illegality as a defence which arises when the circumstances are such that it would be otherwise unjust for the defendant to retain the enrichment.30 Moreover, he thought it wrong to suggest that a finding of illegality necessarily meant the claim must fail.31 Account must be taken of the culpability of the parties in any illegality32 and to withhold relief here on the ground of illegality would result in the appellant not having to repay money he had misappropriated and which he admitted was subject to an obligation to repay.33 [2604]

Relevance of illegality. The relevance of illegality extends

far beyond its role as a defence to a restitutionary claim.34 We take as the major [page 911] theme for this chapter the operation of the two maxims of the common law, by reference to which the civil rights of parties to an illegal transaction are generally worked out.35 The first, the maxim ex turpi causa non oritur actio, is that no cause of action arises out of illegality (the ex turpi maxim).36 The second, the maxim in pari delicto potior est conditio defendentis, is that if the parties are alike (par) guilty of wrongdoing (or equally at fault) the condition of the defendant is stronger or better (the in pari delicto maxim).37 In Smith v Bromley38 Lord Mansfield said:39 If the act is in itself immoral, or a violation of the general laws of public policy, there, the party paying shall not have this action; for where both parties are equally criminal against such general laws, the rule is, potior est conditio defendentis.

Lord Mansfield explained the relation between the two maxims in his classic statement in Holman v Johnson:40 The principle of public policy is this; ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiff’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est conditio defendentis.

The two maxims have their principal impact in the context of ineffective contracts.41 The ex turpi maxim is, under Australian law, confined to the law of contract.42 However, the High Court has recognised43 that the maxim states one aspect of a broader principle of public policy. Similarly, the idea that if the parties are equally at fault the condition of the defendant is better has most often been applied to claims brought in contract.

There are recognised exceptions to the in pari delicto maxim. Moreover, in recent cases the traditional approach of the common law to illegality has been questioned so that relief may be available under the modern law even [page 912] though none of the common law exceptions applies.44 In Nelson v Nelson45 McHugh J explained that in Holman v Johnson Lord Mansfield recognised four exceptions:46 First, the courts will not refuse relief where the claimant was ignorant or mistaken as to the factual circumstances which render an agreement or arrangement illegal. Second, the courts will not refuse relief where the statutory scheme rendering a contract or arrangement illegal was enacted for the benefit of a class of which the claimant is a member. Third, the courts will not refuse relief where an illegal agreement was induced by the defendant’s fraud, oppression or undue influence. Fourth, the courts will not refuse relief where the illegal purpose has not been carried into effect.

McHugh J went on to suggest47 that, in the context of illegality resulting from a failure to comply with statute: … courts should not refuse to enforce legal or equitable rights simply because they arose out of or were associated with an unlawful purpose unless: (a) the statute discloses an intention that those rights should be unenforceable in all circumstances; or (b)(i) the sanction of refusing to enforce those rights is not disproportionate to the seriousness of the unlawful conduct; (ii) the imposition of the sanction is necessary, having regard to the terms of the statute, to protect its objects or policies; and (iii) the statute does not disclose an intention that the sanctions and remedies contained in the statute are to be the only legal consequences of a breach of the statute or the frustration of its policies.

It is not necessary in this text to engage in a detailed analysis of these comments except to note that they do give rise to some difficulties.48 [2605] Impact on transactions and transfers. The impact of illegality on transactions and the transfer of benefits does not admit of succinct or straightforward analysis. There are too many inconsistencies to dignify the law by reference to a coherent theoretical basis. However, the impact on contractual claims is not a concern of this work,49 except in so far as it either creates situations in which restitution is sought because no claim in contract is available, or assists in the determination

of the scope of the defence to restitutionary claims. In other words, in the context of illegal contracts, we simply assume that no contractual claim is available. Despite occasional suggestions to the contrary,50 the general rule is that title to money or property may pass notwithstanding that there is an element of illegality in the transfer. A distinction can, of course, be drawn between cases where transfer of title depends on the validity of a transaction, as where [page 913] a seller purports to confer title to goods by virtue of the contract itself, and cases where a sale is effected by delivery.51 If a transfer of title depends on the validity of a transaction, property will remain with the transferor, since to hold otherwise would give the transaction an effect which the law relating to illegality denies.52 However, where transfer is effected by delivery it would contradict the general approach of the in pari delicto maxim to deny the effectiveness of the transfer, since the effect of such a denial would be to prefer the position of the plaintifftransferor. On this approach, a gift53 effected by delivery will generally be effectual notwithstanding the element of illegality, as will a pledge54 or other disposition.55 The same approach can be made to transactions relating to land. Thus, although a contract to transfer an estate in land will not be specifically enforced if the transaction is an illegal one,56 performance of a contract of sale57 or lease58 may be effective.

(b) Unjust Enrichment [2606] Introduction. The policies which support the ex turpi and in pari delicto maxims are generally assumed to apply to restitutionary claims. The ordinary rule is therefore that restitution is not available where founded on illegality.59 This is the prima facie rule, as much in cases where the illegality renders ineffective a contract pursuant to

which a benefit is transferred to the defendant as in cases where the prima facie obligation to make restitution arises from other causes, such as total failure of the agreed return. Therefore, as a matter of substance, the rule that no cause of action arises out of illegality has the effect of making illegality a general defence, potentially applicable to any restitutionary claim whether or not there is a contract or a purported contract.60 However, now that the focus of inquiry is upon the unjustness of the defendant’s receipt or retention of an enrichment, it is possible and necessary to look at the public policy espoused in the particular illegality, to see whether there is anything to displace the ordinary rule. Similarly, the in pari delicto maxim is applicable to a claim which would otherwise require the defendant to make restitution to the plaintiff of a benefit received in the course of illegal activity, including cases where the conferral of the benefit was an illegal act. This is because it would be inconsistent with the idea that the condition of the defendant is better to order the defendant [page 914] to give up the enrichment. Thus, where a contract is illegal under statute or for reasons of public policy, a total failure of the agreed return may not be a sufficient basis for a restitutionary claim.61 However, there are limitations on the illegality defence, implied not just by an analysis of whether the claim is based on illegality, but also by the need to consider the relative fault of the parties.62 Moreover, since a contract which is illegal in its inception or affected by supervening illegality cannot be regarded as one in which there is an executory (enforceable) promise, benefits conferred under such contracts may be the subject of restitutionary claims and are not affected by the principle63 that no claim in restitution is available while an inconsistent basis for liability exists between the parties in relation to the subject matter of the claim.

[2607] Influence of implied contract. Before the law of restitution was rescued from its implied contract fallacy,64 a defendant’s ability to invoke the defence depended very much on a perception of whether the illegality extended to the implied contract necessary to found the claim. This provided little assistance in explaining cases where the plaintiff (not being equally at fault) was able to recover, and tended to lead to a circular approach. For example, if restitution was based on the performance of an ineffective transaction — illegal and void — any implied contract to return a benefit initially provided by the plaintiff would, on ordinary principles, itself be void. Similarly, no contract to repay money following a total failure of consideration could be implied if an express contract was illegal.65 Whether the law’s escape from this conundrum was a principled one in the days of quasi-contract need not detain us. However, the rejection of the implied contract theory will clearly have an impact.66 [2608] General assumption of prima facie claim. A defendant’s prima facie obligation to restore a benefit conferred, so as to avoid or reverse an unjust enrichment, is clearly counterbalanced by the policy that courts should not lend their aid in support of illegal dealings. What at first blush may appear to be an unjust enrichment of the defendant may on closer examination not call for reversal. That ‘closer examination’ may be quite easy to make if illegality itself rendered ineffective a contract under which [page 915] a benefit was conferred, but even in such situations there will be occasions where the plaintiff’s fault is markedly less than that of the defendant. If we are to conceive of illegality providing a defence — illustrating a fourth factor67 in the unjust enrichment analysis — it must be assumed that, apart from illegality, the plaintiff would be entitled to restitution.68 The concept of unjust enrichment assumes the presence of an unjust

factor, and the general perspective is of bases for imposing liability. In order for illegality to operate as a defence to a claim for restitution based on unjust enrichment, it must be contrary to policy to impose liability. Because restitution is now more generally based on the notion of an imposed liability, it appears that there is less scope for the defence of illegality. Thus, assuming that the requirements of unjust enrichment are otherwise made out, the law promotes a more rational inquiry, namely, whether the policy infringed negates the imposition of the liability.69 This approach informs the view taken in Hurst v Vestcorp Ltd.70 Money was paid under a loan agreement which was not severable from an illegal contract, made in breach of a statutory prohibition. McHugh JA, with whom Kirby P agreed, said71 that restitution for unjust enrichment is available in such cases, provided there is no legislative intent to deny the claim, and the debtor would otherwise obtain an ‘unmerited benefit’.72 Nevertheless, there is a problem with this analysis.73 It is that there is no explanation of [page 916] how the prima facie claim was established. McHugh JA’s statement does not rely on any recognised unjust factor. Rather, the suggestion appears to be that unjust enrichment may operate on the basis of an unmerited benefit. As a matter of substance this is either indistinguishable from the ‘conscience test’, now rejected in England,74 or equivalent to an ad hoc approach to illegality which McHugh JA himself rejected in Gollan v Nugent.75 The recent decision of the High Court of Australia in Equuscorp Pty Ltd v Haxton76 may provide an example of the retreat of the defence of illegality in the face of unjust enrichment despite the High Court rejecting the concept of unjust enrichment at the level of legal principle and relegating it to a taxonomic role.77 The case involved an investment scheme by which investors would obtain an interest in a blueberry farm and farming business. Investors were required to

maintain the plants and entered into a management agreement with a related company to carry out that task. In order to pay those managers a loan could be obtained from another company which was also controlled by the scheme promoters. In due course the investment scheme collapsed, the investors recovered no proceeds from the sales of any fruit but also did not repay the loans. The investment scheme was held to be illegal for failure to register a prospectus under the relevant companies legislation. That provision prohibited the issuing or offering of prescribed interests to the public unless a prospectus was registered, however, it did not relieve the issuer (or offeror) of liability to the holder of a prescribed interest. The trial judge held, and it was not contested before the High Court, that this also resulted in the loans being illegal and ‘unenforceable’, not because they were prohibited by the statute but rather on the common law ground that they were made to further an illegal purpose.78 The issue before the High Court was whether the assignee of the lender could recover the amount of money lent as restitution based on a failure of consideration. It was held that to allow restitution here would stultify the purpose of the statute. The claim was therefore not allowed. It may be noted that the focus was on the existence of the restitutionary claim rather than whether the illegality could be a defence to the claim. For French CJ, Crennan and Kiefel JJ, whether the claim was possible depended on whether allowing such a claim would have the effect of frustrating or defeating or otherwise would be inconsistent with the purpose of the statute.79 Interestingly they recognised ‘failure of consideration’ as a possible basis for a claim caused by illegality but thought the issue in the case was one of determining the ‘interaction between the foundation for the claims for money had and received … and the policy of the common law which renders unenforceable an agreement made for the furtherance of an illegal purpose’.80 They appeared to fall back on unjust enrichment when stating that the claim [page 917]

would depend on whether it would be unjust for the defendant to retain the payment.81 They also agreed with a statement made by Birks that the action of a lender under a contract to enforce a loan and the recovery of sums lent on the basis of a failure of consideration yielded ‘substantially the same performance’.82 In the result they thought that to allow the claim would be to allow the lender, who was not at arms’ length, to recover a sum which the policy of the law denied them under the agreements. Any alleged failure of consideration in fact resulted from the lender’s conduct in furthering an illegal purpose. Moreover, to allow the claim would be to allow a claim against the very persons the statutory scheme intended to protect and who were not in pari delicto with the lender.83 Gummow and Bell JJ recognised that the refusal of a contractual remedy did not always result in the refusal of a restitutionary remedy.84 Nevertheless, the issue turned on whether the policy of the statute was such as to deny the claim in restitution; this would be the case if to allow the claim would defeat or frustrate the purpose of the statute. They held that the legislative scheme was at odds with allowing restitutionary claims against holders of prescribed interests in respect of loans entered into as a consequence of a contravention of the legislation.85 The legislation was enacted to protect the person in the position of the borrower. The approach taken by the High Court in this case is not without difficulty and it may be questioned whether it is in line with previous decisions. The case involved two issues, first, did the prohibition extend to the loan, and second was the loan an interdependent transaction. The contract was illegal on the second basis.86 Had it been an independent transaction, analysis could then have been made about ‘purpose’. Previous cases appear to take this approach, that is, that the basis for these types of statutory prohibitions being illegal is either the first or second of the issues noted and not the furthering of an illegal purpose. In addition, as noted above, the focus of the case was on whether there was a claim, rather than illegality as a defence. However, in the context of the case this is problematic. If the borrower had repudiated the contract then the claim is for contract damages not restitution. The reason for the claim in restitution was that the contract

was illegal. Illegality was a good defence to a claim in contract. The question was whether it was also a good defence in restitution. That should logically have depended on whether it would result in an indirect enforcement of the contract. Earlier decisions of the High Court such as George v Greater Adelaide Land Development Company Ltd87 adopted the view that total failure of consideration is an indirect enforcement of the contract. It must be so [page 918] much more the case when using total failure of consideration to recover a sum lent rather than bringing an action in debt. On that analysis the question before the court was the same as in Bowmakers Ltd v Barnet Instruments Ltd,88 namely, was there an independent cause of action that did not rely on the illegal transaction. Unless there is an independent cause of action the claim in restitution must fail. [2609] Giving effect to the policy of unjust enrichment.89 As instruments of policy, the ex turpi and in pari delicto maxims are fairly blunt. The approach to illegality itself must be a principled one. Therefore, although it is always relevant to consider whether or not the need to discourage illegal conduct requires a result in terms of upholding the defence, the fundamental question is whether the policy which has been infringed also prohibits actions in restitution. Suggestions in several English cases90 that relief should ultimately be governed by an overriding rule of public policy — the ‘conscience test’ — against the enforcement of an independent cause of action or right have been discredited by the House of Lords.91 Like the defence of illegality, the obligation to make restitution also gives effect to a policy concern. Clearly, that policy concern may include the reversal or prevention of an enrichment obtained by illegal conduct. Thus, one justification for allowing the plaintiff to assert a property interest derived from an illegal transaction is that this is itself a way of preventing unjust enrichment. For example, in Singh v Ali92 the

Privy Council was impressed by the point that if the law did not allow the plaintiff to recover his goods, it would have left the defendant in possession of both the goods and the money he received for them. Illegality may be part and parcel of the tortious or other wrong that leads to a valid restitutionary response. The person who, by a fraudulent misrepresentation, induces a plaintiff to part with money commits both a tort and a crime. No-one would suggest that the plaintiff’s claim can be defeated simply by reliance on the illegal nature of the conduct which led to the conferral of a benefit. Similarly, a claim based on equitable wrong cannot be defended simply on the basis that the wrong was also a criminal offence.93 In these examples — the list does not purport to be exhaustive — the conduct which is illegal may be an [page 919] element of the plaintiff’s claim. It may comprise, or at least be part of, the unjust factor which justifies the claim under the unjust enrichment concept. Now that unjust enrichment has been recognised, one might have envisaged that that concept will be used to extricate the defence of illegality from the morass of unsatisfactory decisions which make up the corpus of the law on illegality. Although we should resist the temptation to reduce the law to the exercise of an informed discretion,94 effect may be given to the policy of the law against the unjust enrichment of a defendant even if the enrichment is associated with illegal conduct. Even when the law of restitution was based on quasi-contractual analysis and forms of action, it was recognised that a claim to recover money had and received could be founded on the receipt of a payment following an illegal demand.95 More generally, there are five main situations in which restitution may be available, where the defendant’s reliance on the defence of illegality can be regarded as inconsistent with the policy to which restitution for unjust enrichment seeks to give effect. In consequence, all amount to restrictions on the illegality

defence. The first involves an inquiry into the placement of the duty not to engage in the infringing conduct. If it can be shown that the duty was cast on the defendant (rather than the plaintiff) the defence should generally fail.96 The concept of unjust enrichment may be used to rationalise the recognised exceptions to the ex turpi maxim by the invocation of the nature of restitutionary liability as distinct from contractual liability. Thus, second, if the claim is truly independent of the illegal conduct, the claim should not be defeated by reasoning derived from cases in which the defendant’s liability was seen as analogous to contract.97 Third, if success in the claim for restitution would further the policy basis for the illegality, the defence should again fail, because this discourages the conduct on which society frowns. Indeed, on this basis, the law is not necessarily tied to the bases for restitution derived from quasi-contract. Thus, it has been held that a payment may be recoverable, even though the failure of the agreed return is not total, where this furthers the policy object of the law.98 The concept of unjust enrichment may similarly be used to rationalise the recognised exceptions to the in pari delicto maxim by the invocation of bases for restitution which indicate that the maxim is inapplicable. Thus, fourth, if the plaintiff’s involvement arose from mistake as to the nature of the transaction, from a representation of legality by the defendant, or from compulsion, the defence should generally fail.99 Fifth, if the plaintiff’s involvement arose from oppression (including unconscionable conduct) by the defendant, or the defendant’s abuse of [page 920] a relationship which placed the plaintiff in a position of vulnerability, the defence should likewise fail.100 In addition, remarks have been made in the High Court that suggest a more general approach to restitutionary claims in this area may be

adopted. Thus, in Fitzgerald v F J Leonhardt Pty Ltd,101 McHugh and Gummow JJ treated Pavey & Matthews Pty Ltd v Paul as consistent with the more generous approach to illegality which they advocated. They said: However, the flexibility attending the administration of equitable relief is not so readily available where what is claimed is a legal remedy in aid of a legal right and there is no equity to qualify or displace, wholly or partially, enforcement of that legal right. Nevertheless, as was pointed out in Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 445– 6, what may now be classified as restitutionary remedies may be available to assist in the striking of a balance. For example, it was held long ago that where a borrower had paid interest in excess of the rate permitted by statute, whilst the debtor could not recover the whole back, an action would lie to recover the surplus. (Smith v Bromley, reported as a Note to Jones v Barkley (1781) 2 Doug 684 at 697; 99 ER 434 at 444; Stoljar, The Law of Quasi-Contract, 2nd ed, 1989 pp 228–9; Palmer, The Law of Restitution, 1978, vol 2, par 9.14.) The use of the quantum meruit in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 may be seen as another example. Set-off may also have a role to play in adjusting the respective final positions of the parties. However, it is unnecessary to consider further any such questions, the present being a plain case.

This suggests that they perceived Pavey as implying that restitutionary remedies may be available notwithstanding illegality.102 However, in recent years the High Court of Australia has limited the unjust enrichment concept to a taxonomic role and in the area of illegality this means that the use of the concept in the ways suggested may be difficult to sustain leaving this area of law in the unprincipled way we find it.103

2. Scope of the Defence (a) General [2610] Introduction. Although it is clear that illegality may be a defence to a claim for restitution, there is great uncertainty as to its scope. In part this is due to the inherent difficulty of the subject, in part it is due to the inconsistencies in the decisions themselves and in part it is due to the influence of the implied contract theory. But the major difficulty is that the scope of the illegality defence is determined, largely, by the scope of the exceptions to the ex turpi and in pari delicto maxims. This creates an obvious analytical difficulty, namely, the

notion of exceptions to an exceptional defence. However, three propositions may be stated to provide a general structure [page 921] for analysis. First, the defence will apply,104 in any case where the action in restitution is itself founded on the illegality. Second, the ex turpi maxim applies only where the claim in restitution is, as a matter of substance rather than form, dependent on contractual illegality. Since the High Court has said that restitutionary issues are decided as a matter of substance rather than form,105 the application of the maxim cannot depend on form. Accordingly, the defence of illegality will not succeed if, as a matter of substance, the claim in restitution is an independent one. Third, because the in pari delicto maxim assumes that the plaintiff and defendant are equally responsible, a restitutionary claim may succeed if the position of the defendant is better. Their responsibility is not always alike, and if the court discerns this to be the true position, the defence will fail. Thus, the plaintiff’s knowledge of the illegality which gave rise to the restitutionary claim, and whether the plaintiff was equally at fault, may be critical. The maxim must be displaced as a matter of substance, and the concept of unjust enrichment is itself important in that process. [2611]

No estoppel. In Holman v Johnson106 Lord Mansfield said:107

The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say.

Thus, the defence of illegality is upheld because of policy itself rather than the merits of the defendant. Indeed, in most cases the defence is far from meritorious. Similarly, the idea that persons should not be advantaged by their own wrongs,108 cannot be applied as a general

principle in the context of illegality. There is therefore little scope for application of implied representations of legality, and generally it is not open to the plaintiff to rely on an estoppel precluding the defendant from relying on the illegality defence.109 Accordingly, because of the public policy perspective, the defence of illegality is not qualified by principles of estoppel. There are, however, several exceptions or apparent exceptions to this rule. The most obvious cases are where illegality is actually the relevant unjust factor, or where the conduct which forms the basis for concluding that the defendant’s enrichment is unjust happens also to involve illegal conduct.110 [page 922] Second, in cases where the illegality arises from a promise or representation of legality, the defendant will not be permitted to resile from the representation, although this may lead to a claim in contract or tort rather than restitution.111 Finally, and related to the second exception, where an inquiry into relative fault or knowledge is appropriate, the defendant may not be permitted to put forward its illegal conduct as a defence to the claim.112 [2612] Claims by the Revenue. The general principles governing illegality do not apply to claims by the Crown to recover moneys unlawfully disbursed from Consolidated Revenue. The Crown’s right of recovery is not affected by the defence of illegality.113

(b) Action Founded on Illegality [2613] Introduction. When the principles regulating the defence of illegality were established, the view could have been taken that a principle of restitutio in integrum would be applied, and all illegal payments and transactions undone. However, the law did not take this

approach, with the general result that losses and benefits lie where they fall. Since the courts do not, as a general rule, attempt to unravel illegality, an award of restitution may be refused simply on the basis that it is really an attempt to restore the parties to the position which they occupied prior to the commission of the illegality.114 Three categories of case are discussed below. The first is where the plaintiff relies on the illegal conduct as the foundation for the claim in restitution. The second occurs where, although the plaintiff puts forward what is alleged to be an alternative claim, the defence succeeds because the defendant can point to a rule of policy which extends to a claim for restitution. The third occurs where an alleged independent claim in fact relies on illegality. [2614] Reliance on illegal conduct. There are clear cases, even in the difficult area of illegality. The clearest cases are those where the plaintiff’s claim relies on the illegality itself. Thus, a restitutionary claim which arises from fraud and collusion cannot succeed: illegality is a good defence.115 It would be an affront to justice for a person who paid a contract killer to recover by action the fee if the killing is called off, or if performance is otherwise ‘frustrated’. Application in those circumstances of the total failure of the agreed return concept would be offensive, as well as provide an unwanted incentive to the defendant to carry out the ‘job’ in order to argue that the ‘consideration’ did not fail. Parkinson v College of Ambulance116 [page 923] may illustrate this principle. The plaintiff bargained with the secretary of the college that arrangements would be made for him to get a knighthood in return for a large donation which the plaintiff gave to the college. The bargain was illegal and void because it was against public policy. Lush J had little hesitation in refusing the plaintiff’s claim to the

return of the donation because the plaintiff had to prove the corrupt bargain to show a basis for seeking to recover what had been treated ostensibly as a donation. The only way in which the plaintiff could avoid the effect of the completed gift was to put forward the unfulfilled contingency. Since the insistence on the contingency was the basis upon which illegality arose, the defence was clearly available. [2615] Policy extending to claims for restitution. Policy is clearly a consideration which applies to all claims in restitution. Particularly in cases where a transaction is ineffective by reason of public policy or statute, a proper basis for denying a restitutionary claim is that the policy object or legislative intent which renders the contract ineffective also extends to a claim in restitution.117 If it is clear that the intention behind a statutory prohibition on a contract also extends to a claim in restitution, the defence will succeed. The defence of illegality is most likely to succeed in a case where the burden of complying with a statute is imposed on the plaintiff, and the policy is designed to protect a person such as the defendant. For example, in Re Central Queensland Leather Industries Ltd118 a claim for reasonable remuneration failed where the contract was illegal under the companies legislation. Similarly, a rule of public policy which renders a contract illegal may also be inconsistent with a successful claim for restitution relying on the ineffective nature of the contract. Again, therefore, the defence will succeed. For example, in Kearley v Thomson119 the defence of illegality succeeded where the plaintiff sought to recover money paid to solicitors where the payment was pursuant to a contract not to appear at the public examination [page 924] of a bankrupt. This was illegal, the plaintiff was forced to rely on the illegality to prove the claim, and the policy in question extended to a claim in restitution to recover the money paid.120

[2616] Claims dependent on illegality. There are many situations in which a claim in restitution must rely on facts which are part and parcel of the illegality committed. To the extent that the claim is dependent on the ability to prove and rely on these facts the claim in restitution will fail. Arguably, the two categories briefly discussed above121 are no more than illustrations that any claim dependent on illegality for success will be subject to the defence of illegality. However, it is important to illustrate that the mere ability to frame a claim in restitution which does not plead the illegal conduct as the basis for the claim is far from conclusive. Since the concern is with substance rather than form, what matters is whether the claim is dependent for its success on the illegal conduct.122 Obvious cases arise where restitution is not the most natural basis for the plaintiff’s claim. There may, for example, be a breach of contract or tort which would, apart from the presence of illegality, be the more logical basis for the claim. The fact that illegality led the plaintiff to put forward a restitutionary claim will at least engender a degree of scepticism. For example, where a contract is illegal for failure to obtain a licence for building work, a quantum meruit claim, to recover reasonable remuneration has routinely been denied, simply on the basis that the nature of the claim is not sufficiently independent of contract.123 Thus, in Bostel Bros Ltd v Hurlock124 work done in excess of that which could be done under licences obtained for building work could not be recovered under a quantum meruit claim. Similarly, where an employment contract is illegal the employee is not entitled to recover a reasonable sum for services rendered.125 This approach was inevitable while the implied contract theory was applied. In St John Shipping Corp v Joseph Rank Ltd126 Devlin J said that if ‘an unlicensed broker sues for work and labour, it does not matter that no express contract is alleged and that the claim is based solely on the performance of the contract, that is to say, the work and labour done; it is as much unenforceable as an express contract made to fit the work done’. Although, when this statement was approved by Lockhart, Gummow and Lee JJ in Farrow Mortgage Services Pty Ltd v Edgar127 it was recognised that unjust enrichment, not implied contract, is the basis for

the claim, we must even today be sceptical of a restitutionary claim which is based on a request to do work expressed in an [page 925] illegal contract, where acceptance of benefit takes place under the contract and the only reason for claiming in restitution is the illegality. However, since a restitutionary claim for reasonable remuneration is different from a contractual claim, there will be cases in which the claim in restitution is as a matter of substance an independent claim. For example, the claim may succeed where the plaintiff is not implicated in the illegality.128 Although claims based on the assertion of property rights are often independent,129 they cannot be so regarded where reliance is placed on the illegality. The defence of illegality will succeed even if there is no special policy consideration in relation to the property itself. For example, in Taylor v Chester130 half of a banknote was pledged as security for payment in respect of goods supplied under an illegal transaction. An action for the return of the half banknote in the defendant’s possession failed because it relied on the transaction in order to establish that the defendant’s possession was wrongful. Many of these cases are not, however, genuine examples of illegality as a defence to a restitutionary claim. Rather, they usually exemplify an inability to sue in tort for a wrong to a proprietary interest. For example, in Thomas Brown & Sons Ltd v Fazal Deen131 a quantity of gold was deposited with the defendants by way of an illegal bailment. When the gold was not returned, claims were made in detinue and conversion. Although this was not in terms an action for breach of bailment or breach of contract, such claims were clearly precluded by the statute which rendered the bailment illegal. The High Court held that the claim in detinue failed because it was not independent of the illegal contract.132 Reliance on the bailment was, it appears, necessary to establish a wrongful act on the part of the defendant. The reasoning

is equally applicable to a claim which relies on a tort as the basis for a claim in restitution.

(c) Action Independent of Illegality (i) General [2617] Introduction. In the law of contract it is well established that illegality is not necessarily a defence where the illegal nature of the transaction is relied upon by the defendant but the plaintiff’s cause of action is independent of the contract. Common categories are claims based on a collateral contract133 or statute.134 The categories of independent claims also include claims in restitution. However, the mere fact that an action in restitution based on unjust enrichment is not a claim in contract does not establish the independent character of the claim. The claim must not only be independent of the contract, it must also be independent of the illegality. Therefore, there is no general principle that a claim in restitution [page 926] is sufficiently independent of the contract as to be available as a matter of course. This is true not only in the context of ineffective contracts but generally in the law of civil liability. Two types of independent claim are discussed below. One is where the illegality has no impact at all, either on the benefit claimed in restitution or the claim itself.135 The other comprises claims based on the assertion of property rights. There may be other examples. Thus, the frustrated contracts legislation136 appears to apply to frustration by supervening illegality. Although the claim in contract would be defeated by the illegality, the claim in restitution, under the statute, has the character of an independent claim. Again, as always, we must not forget statutes which confer a general discretion to make awards in the

nature of restitution, or to declare contracts void and to make consequential orders for restitution.137

(ii) Illegality having no impact [2618] Illegality merely an historical fact. In some cases illegality is merely an historical fact with no effect on a claim for restitution. These are cases in which any illegal conduct is spent, and has no relevance to the claim for restitution. For example, in Strang v Owens138 money which was earned by the plaintiff in an illegal and immoral business was deposited with the defendant’s father as trustee for the plaintiff. Subsequently, the father wrongfully withdrew the money and placed it in a joint bank account. Although the transactions by which the money was earned were illegal, the money deposited was recoverable. A cause of action arose when money was appropriated and the manner by which the money was acquired was not relevant. The plaintiff was not seeking to enforce a right arising out of the illegal business or an agreement between herself and the trustee affected by illegality. In relation to her claim, the effect of the illegality was spent. [2619] No relevant illegal conduct. The defence of illegality will fail if an illegal purpose is severed, that is, the offending parts of a transaction can be deleted.139 Where severance takes place, the independent action is in relation to the part of the transaction which remains after the illegality is severed. Although this generally means that the plaintiff is able to sue in contract,140 severance may also assist in the assertion of a proprietary interest. For example, although in Thomas Brown & Sons Ltd v Fazal [page 927] Deen141 there was an invalid bailment of gold, this was severable from a valid bailment of gems delivered at the same time. Accordingly, although no independent claim could be asserted in relation to the

gold, there was an independent claim in relation to the gems because the obligation to return property on demand applied to every part of the property deposited whether demanded separately or not.

(iii) Assertion of property rights [2620] Introduction. The most controversial area is where the plaintiff seeks to use a property interest to establish a claim independent of illegality. It is not a general principle of the law of illegality that it should work a forfeiture of a person’s property.142 Therefore, in principle, there is no reason why illegality should prevent a person obtaining restitution of property which happens to have come into the defendant’s hands by reason of some illegal dealing. A claim for specific restitution may therefore be put forward as an independent claim, as may a claim in tort asserting a right to damages for trespass, conversion or detinue, or a claim for a declaration that property is held on trust for the plaintiff. Of course, a successful claim in tort — based on the assertion that the relevant proprietary interest never left the plaintiff — is not a claim for restitution. If the claim fails, we cannot meaningfully say that the defendant has been unjustly enriched. And if the claim succeeds it will generally be for compensatory damages.143 Although the connection with pecuniary restitution is therefore often tenuous,144 the reasoning in the cases is relevant to a restitutionary claim based on the defendant’s wrong,145 and may also be relevant to an independent restitutionary claim, as where the plaintiff relies on rescission or discharge of the contract by which the property was obtained.146 The controversial issue in these cases is when a person should be regarded as having to rely on the illegal dealing as the basis for the claim. To some extent, this difficulty arises, at least in relation to wrongs to interests in goods,147 from the absence of documents of title, and the presumption that a defendant in possession is the owner. The former implies that proof of ownership independently of the transaction by which the defendant obtained possession is, because of the absence of possession, largely a matter of assertion. The latter suggests that

since a mere assertion of ownership does not rebut the implication that the defendant’s possession is lawful, the plaintiff must rely on dealings in relation to the property. [page 928] [2621] Elements of the independent claim. In order for the claim to be regarded as an independent one, it must be established by reference to circumstances other than the illegality itself. However, this does not mean that the case must be pleaded and proved without bringing illegality to the attention of the court. Rather, it means that the illegality must not form the basis for the claim. Reliance must be placed either on the defendant’s receipt or on some prior dealing with property to which the defendant was a party. In addition, a basis for restitution must be established. Where the claim asserts a proprietary interest, this involves proof of a wrong such as conversion. Where proof of a wrong is required, there appears to be a tension between the Australian and English authorities. The Australian cases, at least as typified by Thomas Brown & Sons Ltd v Fazal Deen,148 appear to be based on the view that in most cases the claim will fail, as the illegal dealing is the basis for saying that the defendant has committed a wrong. On the other hand, the English cases, beginning with Bowmakers Ltd v Barnet Instruments Ltd149 and culminating in the House of Lords decision in Tinsley v Milligan,150 indicate that claims are more likely to succeed, as the tendency of those cases is to treat the defendant as relying on the illegal dealing as a basis for showing that no wrong was committed. Nevertheless, even in the Australian cases the view is expressed that, in principle, there is nothing to prevent a plaintiff asserting an independent claim. [2622] Proving title. Where it is essential for the plaintiff to prove ownership to support an independent claim, reliance may be placed on a prior dealing with the property even though the prior dealing is itself an illegal transaction. The leading case is Bowmakers Ltd v Barnet

Instruments Ltd.151 The plaintiff obtained machine tools under contracts of sale, and let out the goods under three hire-purchase contracts to the defendant. The contracts of sale were illegal and the hire-purchase contracts were assumed to be illegal. It was alleged that the defendant had refused to pay hire due, and wrongfully converted the goods to its use. No claim could be made (in contract) for the payments, but the plaintiff asserted that it was entitled, as owner of the goods, to sue for conversion. It was accepted that the illegality of the contracts of sale did not prevent property passing to the plaintiff, and the English Court of Appeal held that the defence of illegality failed, as the plaintiff relied on ownership of the goods. An essential element of the decision in Bowmakers was therefore that an illegal contract may be effective to transfer property rights.152 The court emphasised that the plaintiff was doing no more than asserting its [page 929] ownership, and therefore could rely on the principle that one person’s right to possess chattels will as a general rule be enforced against anyone who has converted them. However, on this basis, the delivery under the hire-purchase agreements must have been effective to transfer possession to the defendant. The plaintiff’s claim was based on a right to immediate possession, and the defendant was seeking to assert possessory rights as against the plaintiff. In this regard it was clearly significant that the defendant had conceded not only the title of the plaintiff but also that it had done the physical acts relied on as conversion of the goods. The effect of the concessions was to place the defendant in the position of relying on the illegal contracts to defend the plaintiff’s claim, and the plaintiff therefore succeeded. It is nevertheless clear, both from the judgment of the Court of Appeal and the subsequent English decisions,153 that the concessions were not determinative. In other words, the plaintiff succeeded because the only basis for retention of the goods was the illegal hire-purchase contracts.

[2623] Proving the wrong. In cases where the defendant’s wrong is conceded to have been committed, there should be no difficulty in allowing the plaintiff’s claim to succeed as an independent one. It was on this basis that the decision in Bowmakers Ltd v Barnet Instruments Ltd154 was approved (but distinguished) by the High Court in Thomas Brown & Sons Ltd v Fazal Deen.155 It will be recalled156 that a bailment of gold was illegal under statute, and the court held that a claim in detinue was not sufficiently independent of the illegal contract. An alternative claim in conversion was barred by the Statute of Limitations. In distinguishing Bowmakers, the High Court emphasised the concessions made by the defendant in that case and it appears that the court considered that without those concessions the claim would have failed. Unfortunately, there is no discussion of why reliance on the illegal bailment was necessary to establish a cause of action in detinue, and no analysis of whether the claim in conversion would have succeeded. There is, of course, a distinction between conversion and detinue. The former relies on a dealing inconsistent with the plaintiff’s right to immediate possession, whereas the latter relies on a failure to comply with a lawful demand. Perhaps the decision in Fazal Deen can be justified on that basis. However, since the title of the plaintiff was not in issue, the only basis by which a refusal to hand over the goods could not be described as wrongful conduct was that the bailment had not expired. Not only was this an unlikely interpretation of the facts, it also amounts to reliance on the illegal bailment as a basis for defending the claim. Thus, in Singh v Ali157 the Privy Council saw no difficulty in applying Bowmakers to a claim based alternatively on detinue and trespass. [page 930] [2624] Assertion of equitable interest. In Nelson v Nelson,158 the High Court, in considering the impact of illegality in the enforcement of a resulting trust over property, made it clear that the decision in

Bowmakers Ltd v Barnet Instruments Ltd159 has no application to claims for equitable relief. In doing so the High Court refused to follow the House of Lords in Tinsley v Milligan. In Tinsley v Milligan160 the approach in Bowmakers Ltd v Barnet Instruments Ltd161 was extended. The case is indeed a striking illustration of the contrasting perspectives which may be taken of property dealings alleged to be tainted with illegality. The plaintiff was the registered owner of a house in MidGlamorgan. She lived there with the defendant and together they ran a lodging house. They had in fact been engaged in a business venture of this type for some time, and had financed the purchase of the house from three sources. First, there was the realisation of an equity in a former property. Second there were the proceeds of the business. Third, money was obtained by making false claims to the Department of Social Security. Indeed, the property in question was placed in the plaintiff’s name in order to assist in the fraud. The plaintiff and defendant regarded the business as a joint one. However, they fell out, and the plaintiff served a notice to quit on the defendant. In a claim for possession of the property, the defendant counter-claimed for an order for sale, and a declaration that the property was held by the plaintiff on trust for the two of them. Sometime before the proceedings, the defendant disclosed her fraud to the Department of Social Security, and thereafter drew benefits lawfully. The House of Lords162 held that the defence of illegality to the defendant’s counter-claim failed. Lord Browne-Wilkinson delivered the main speech.163 It was clear that, apart from the illegality, the defendant was the owner in equity of a half share in the property, on the basis of a resulting trust arising from her financial contribution to the purchase. The illegal conduct in which the parties had engaged did not of itself prevent the operation of equitable principles regulating resulting trusts. In other words, whether or not illegality was a defence to the counter-claim, it did not have the effect that the plaintiff held the full beneficial ownership in the property. The critical question was whether the illegality had the effect of preventing the defendant from asserting her interest in the proceedings. Lord Browne-Wilkinson said164

[page 931] that a party to an illegality ‘can recover by virtue of a legal or equitable property interest if, but only if, he can establish his title without relying on his own illegality’. The effect of this statement of principle is that in England the Bowmakers principle applies to the assertion of property rights, whether legal or equitable. In order to establish her interest in the property it was not necessary for the defendant to rely on the illegal conduct. She could establish that she had contributed to the purchase price without showing why title had been placed in the name of the plaintiff. On this approach, it was the plaintiff who sought to rely on illegality: to contradict the resulting trust.165 On the other hand, in his dissenting speech Lord Goff, with whom Lord Keith agreed, considered166 that the Bowmakers principle was not applicable to a case where the property right, being equitable, depends on the plaintiff having ‘clean hands’. In his view, since the assistance of the court was required to enforce the alleged resulting trust, it was essential that the trust not be tainted with illegality. It was because the alleged qualification to the plaintiff’s ownership was part and parcel of the illegal scheme that the defendant could not assert her equitable title. In Nelson v Nelson167 a mother supplied the purchase money for a residential property that was then registered in the name of her son and daughter. The reason for registering it in the name of the children was that the mother would then still be appear eligible for a subsidised loan under the Defence Service Homes Act 1918 (Cth). Eligibility required her not to have the ownership or a financial interest in another house. She later did purchase another property with the help of such a subsidised loan. When the property held in the name of the children was sold, the mother claimed a beneficial right to the proceeds on the basis that she could rebut any presumption of advancement; thus the funds would be held on a resulting trust for the mother. Relying on Tinsley v Mulligan’s extension of Bowmakers into the field of equity, the mother argued that the issue of illegality did not arise because the presumption of

advancement could be rebutted without relying on the illegal purpose. The daughter claimed the mother could not rebut the presumption because to do so she had to disclose the illegal purpose which had already been carried into effect and the court would not lend it aid to such a claimant. Moreover, it was argued that in such a case equity would let the loss lie where it falls. In addressing the approach taken in Tinsley v Mulligan,168 McHugh J said:169 I think that the majority speeches in the House of Lords in Tinsley were correct in denying the existence of the ‘wide principle’ [that a court exercising equitable jurisdiction would not assist a claimant to recover property that had been transferred to another person for an unlawful purpose] … I do not think that the clean hands doctrine constitutes or provides a sound basis for a special rule in equity. The illegality principle is one of general application; it is not limited to proceedings in equity. To say that in the equitable context it derives from the clean hands doctrine is to wrongly deny its conceptual links to the rule as it is applied in other areas. Further, it fails to recognise that the

[page 932] rationale for the two doctrines is distinct: the clean hands doctrine arises from the relationship between the parties to the proceedings, the illegality doctrine derives from public policy considerations … But that said, I do not think that this Court should adopt the majority’s rule [in Tinsley v Mulligan] that a claimant cannot obtain relief in any court if that person must plead or rely on illegal conduct (the Bowmakers rule) … A doctrine of illegality that depends upon the state of the pleadings or the need to rely on a transaction that has an unlawful purpose is neither satisfactory nor soundly based in legal policy. The results produced by such a doctrine are essentially random and produce windfall gains as well as losses, even when the parties are in pari delicto. To demonstrate the random nature of the assignment of substantive relief under the Bowmakers rule approved by the majority in Tinsley one has only to consider the application of that rule to the circumstances of the present case. If the rule were applied in this case, the determining factor would be whether a presumption of advancement arose. Only if it did, would Mrs Nelson need to answer the presumption of a resulting trust and rely on her illegal purpose. If the presumption of advancement did not arise, there would be no need to rely on the illegal purpose to rebut the presumption and the result would be the reverse … The Bowmakers rule has no regard to the legal and equitable rights of the parties, the merits of the case, the effect of the transaction in undermining the policy of the relevant legislation or the question whether the sanctions imposed by the legislation sufficiently protect the purpose of the legislation. Regard is had only to the procedural issue; and it is that issue and not the policy of the legislation or the merits of the parties which determines the outcome. Basing the grant of legal remedies on an essentially procedural criterion which has nothing to do with the

equitable positions of the parties or the policy of the legislation is unsatisfactory … A final criticism of the Bowmakers rule adopted by the majority in Tinsley is that it may often defeat the intention of the legislature.

The rest of the court made similar remarks.170 Deane and Gummow JJ held that the crucial issue was to identify the policy informing the legislation.171 Here the purposes of the legislation were served by the penalty set out in the legislation. However, the majority held that the mother could only obtain equitable relief by doing equity, she could not retain the benefit of her unlawful conduct and must therefore, as a term of relief, pay a sum representing the unlawful benefit received to the Commonwealth; failing such payment, the sum representing that unlawful benefit was to go to the daughter.172 In the result, it would appear that in Australia, Bowmakers only applies to claims to legal title.

(d) Condition of the Plaintiff Better than that of the Defendant (i) General [2625] Introduction. The in pari delicto maxim operates, principally, on contractual claims and claims arising out of ineffective contracts. Whenever the maxim operates, the defence of illegality will succeed. Although, ex hypothesi, it often leaves the defendant with a windfall, restitution is not [page 933] ordered in circumstances where the pull of the illegality is such that policy requires the plaintiff to fail. For example, in George v Greater Adelaide Land Development Co Ltd,173 in the context of a claim made for money paid under a sale of land contract rendered illegal by statute, Knox CJ said, with regard to the total failure of the agreed return, that the money was not recoverable unless the parties were not in pari delicto. There are a great many cases to this and similar effect.174

The illegality defence runs only so far as it can be justified by public policy, and the scope of the illegality defence is limited by the exceptions to the in pari delicto maxim.175 The exceptions operate in cases where it is possible to say that the plaintiff is not equally at fault with the defendant. The exceptions are confusing and it is impossible to reconcile all the cases. However, they illustrate that the policy in question may be displaced by other considerations. Although ostensibly based on the exceptions to the in pari delicto maxim itself, the underlying theme is that public policy may require restitution. Whether we describe the justification as the policy inherent in the particular illegality rule or the policy of unjust enrichment does not matter a great deal. On either basis the public good may be called in aid. [2626] Exceptions. Although it would appear that the law is moving closer to an approach based on general principle, it is still appropriate and necessary to examine the specific exceptions to the operation of the in pari delicto maxim.176 The bulk of the exceptions to the in pari delicto maxim rely on the presence of factors which, consistently with the illegality in question, determine the fate of restitutionary claims.177 Thus, as a qualification to his statement quoted earlier,178 Lord Mansfield went on to say in Smith v Bromley:179 But there are other laws which are calculated for the protection of the subject against oppression, extortion, deceit, etc. If such laws are violated, and the defendant takes advantage of the plaintiff’s condition or situation, there the plaintiff shall recover, and it is astonishing that the reports do not distinguish between the violation of one sort and the other.

In accordance with this statement, the modern cases refer to mistake, oppression or duress, fraud as well as undue influence, and the abuse of a fiduciary relationship between the parties as factors the application of which will deprive the defendant of the ability to rely on the defence of illegality. The list of categories is not closed, and any list of categories is bound to be incomplete. Although there may be residual cases in which restitution

[page 934] is available, for our purposes the exceptions may be grouped under three headings: (1) absence of common purpose; (2) repentance of illegal purpose; and (3) mistake and improper pressure. [2627] Scope. The exceptions to the in pari delicto maxim are not closed. For example, in Money v Money (No 2)180 the plaintiff transferred his interest in the matrimonial home to the defendant, his wife, pursuant to an illegal attempt to oust the jurisdiction of the court in relation to maintenance. She promised that she would maintain herself and their children and make no further claim on him for maintenance. Sometime later the defendant lodged the memorandum of transfer for registration. The plaintiff then sought a declaration that the defendant had no interest in the home, an injunction restraining registration and an order that the memorandum be delivered up for cancellation. The repentance exception to the rule was not available, since the contract was partially executed.181 Nor was there any fraud, mistake or improper pressure. Nevertheless, Jacobs J granted the orders sought, and the agreement was set aside.182 He took the view that a special exception to the in pari delicto rule operates where the continued existence of a document prepared under an illegal transaction might be a source of possible confusion and fraud.183 In the instant case, a court which came to deal with the question of maintenance could not ignore that the illegal transaction achieved a transfer of property, and might therefore be compelled to make an order on the basis of the illegal transaction. Jacobs J said184 that where public policy requires that equity intervene it ‘may do so on terms as to restitution’. The decision in Money v Money is an example of the intervention of equity into this area. In Nelson v Nelson185 Deane and Gummow JJ said: [E]quity has not subscribed to any absolute proposition that the consequence of

illegality, particularly where what is involved is contravention of public policy manifested by statute, is that neither side may obtain any relief, so that the matter lies where it falls. Rather, in various instances equity has taken the view that it may intervene, albeit with the attachment of conditions, lest there be ‘no redress at all against the fraud nor any body to ask it’ (Turton v Benson (1718) 1 P Wms 496 at 498; 24 ER 488 at 489).

[page 935] Where equity does intervene it may do so subject to conditions. In Nelson v Nelson186 itself the plaintiff in seeking equitable relief in relation to a resulting trust affected by an unlawful purpose was required to do equity according to the requirements of good conscience. It was not necessary to withhold restitution as the purposes of the relevant statute that had been contravened were served by the statute’s penalty regime. However, the extent to which equitable principles may apply in the context of an illegal contract, and whether equitable relief may be obtained under an exception to the in pari delicto rule, are matters of debate. Nevertheless, as Money v Money shows, there is authority which supports the existence of a special equitable exception to the common law rule against the assistance of a party in pari delicto, where the equitable jurisdiction to order delivery up of instruments such as bonds, negotiable instruments, or deeds upon which a party could sue at common law is applicable. The exception operates where equitable relief in favour of one party to an illegal contract is necessary to secure the protection of the public, notwithstanding that there is an illegal consideration if this does not appear on the face of the document.187

(ii) Absence of common purpose [2628] General. The clearest cases of illegality, that is, of cases where the defence will succeed, are those in which the parties share a common (illegal) purpose. Subject to the rules on repentance,188 it is clear that the in pari delicto maxim will apply. It is therefore correct to say that the maxim may not apply where there is no common purpose.

The clear cases where the maxim will not apply are therefore those in which the illegality is specific to the defendant. A fraudulent misrepresentation may be illegal conduct, but it is obvious that it would not be sensible to suggest that, where the misrepresentation induced the plaintiff to enrich the defendant, the illegality is a defence to a restitutionary claim.189 Similarly, where the basis for the claim in restitution is the breach of a fiduciary duty, it would be absurd to suggest that the claim cannot proceed if the breach happens also to amount [page 936] to criminal conduct. Thus, in Reading v Attorney-General190 Sergeant Reading breached his fiduciary obligation, committed crimes, and would also have committed breaches of contract had it not been for the fact that he was in the armed services. However, an absence of common purpose is by no means conclusive. Thus, in the law on ineffective transactions, there is no general right to restitution in relation to benefits conferred under contracts prohibited by statute, where neither party knew that the transaction was illegal. To the extent that this approach has been influenced by the rule that money paid under a mistake of law191 is not recoverable, it is clearly open to review. Thus, even where there is no representation of legality, mistake or ignorance may now be a sufficient basis for restitution in many cases.192 But the rejection of that rule is by no means conclusive, since the policy expressed in the statute may extend to restitutionary claims,193 or the transaction may be ex facie illegal.194 [2629] Ignorance of purpose. The maxim may not apply in a case of ignorance, that is, where one party did not have knowledge of the illegality.195 The plaintiff who has made out a prima facie entitlement to a restitutionary response may recover despite the illegality, because the parties are not in pari delicto. In Oom v Bruce196 the plaintiff recovered insurance premiums paid

under what he had supposed was a valid contract. Unknown to the plaintiff, war had already broken out between Russia and England and the contract was therefore illegal and unenforceable. The importance of the plaintiff’s ignorance of illegality is demonstrated in Lord Ellenborough CJ’s response to the defendant’s submission that the insurance contract was illegal from its inception:197 It is so, without doubt, if the party making the insurance knew it to be illegal at the time; but here the plaintiffs had no knowledge of the commencement of hostilities by Russia, when they effected this insurance; and therefore no fault is imputed to them for entering into the contract; and there is no reason why they should not recover back the premiums which they had paid for an insurance from which, without any fault imputable to themselves, they could never have derived any benefit.

More recently, in Ambassador Refrigeration Pty Ltd v Trocadero Building and Investment Co Pty Ltd198 restitution was ordered of a deposit paid for defective goods where the contract was impliedly prohibited by statute but [page 937] the buyer took no part in the illegal act. The buyer had validly terminated the contract and could rely on failure of the agreed return. Now that the distinction between mistake of law and mistake of fact has been rejected199 there is no reason to go through a process of classifying the mistake as one of fact, and no reason why restitution should not in these cases be based primarily on the plaintiff’s mistake. Nevertheless, this is a narrow principle. Not only is it limited to cases in which the payment would have been legal had the mistake not been made, it may also be limited to cases where the illegality is such that the knowledge of the parties is a relevant consideration. [2630] Transaction illegal on its face. Knowledge is not relevant where the making of the contract is ex facie illegal. If a benefit was conferred under a contract, and the contract was on its face one which was obviously unlawful, a plaintiff will be considered in pari delicto with the defendant, and the defence of illegality will succeed. In these

cases, ignorance cannot be regarded as a sufficient justification for a claim in restitution. For example, payments made under contracts which are illegal by statute are not recoverable simply on the basis of mistake.200 Similarly, Parkinson v College of Ambulance201 demonstrates that a fraudulently induced payment may be left to lie where it falls if the plaintiff knew enough about the transaction to be tainted with its improper purpose. The plaintiff may have been the victim of a criminal deceit by the secretary of the defendant (who represented that a knighthood could be procured in return for a donation) but he was still unable to recover in a restitutionary claim, because of his participation in a transaction known to be against policy (the trafficking in honours).

(iii) Repentance of illegal purpose [2631] Introduction. The repentance exception applies to cases in which the plaintiff seeks restitution on the basis that the illegal transaction has been rescinded. The cases in which it is possible to consider repentance are therefore those in which, prior to performance, the plaintiff rescinds the contract and claims restitution on the basis that the fault of the plaintiff is less than that of the defendant. In Hatcher v White202 Herron J described repentance as an exception affording a plaintiff protection on the basis that ‘public policy is best served by allowing a party to an illegal arrangement to repent before it is too late and to prevent the completion of the illegal purpose by reclaiming the money paid by him in pursuance of it’. Claims for restitution based on repentance of an illegal purpose are nevertheless often problematic.203 There is, for example, a general uncertainty as to the relevance of a party’s motive for repentance.204 [page 938] Three factors combine to limit severely the operation of the exception. The first is a general policy rule, namely, that courts do not attempt to unravel illegality.205 Thus, where the court’s aid is necessary

to secure restitution, the mere fact that one party asserts rescission is not sufficient if it would be contrary to policy to unravel a transaction. The second is that the mere fact of entry into a contract may amount to the carrying out of the illegal purpose, in which case repentance will not avail the plaintiff.206 The third is that there is authority to the effect that the repentance exception does not apply if the making of the contract is prohibited by statute.207 [2632] Illegal purpose not carried out. The fact that a benefit is conferred on a person in contemplation of illegality does not mean that there is a relevant illegality. If a payment is made or a transaction is executed without carrying out an illegal purpose, illegality is not a defence, as it will play no part in the claim. Where the illegal purpose has not been carried out at all, restitution is available — the defence will fail — because the in pari delicto rule does not apply. In effect, the claim brought is independent of the illegality. Therefore, as a general principle, where a prima facie claim in restitution is established, illegality will be no defence where a payment is made or a transaction is executed without carrying out an illegal purpose which lay behind or motivated the transaction.208 In Payne v McDonald209 it was said that a plaintiff who has paid money or transferred property to the defendant is entitled to rescind the contract and recover back the money paid or property transferred where no part of the illegal purpose of the contract has been carried out. A declaration was thus made that the defendant, as executor of Ellen Payne’s will, held land purchased with money which the plaintiff provided as trustee for the plaintiff, even though the certificate of title to the land was issued in Ellen’s name in order to defeat the plaintiff’s creditors. Although there was an illegal intent, it formed no part of the claim and no part of the intent had been effectuated since no creditors were defrauded.210 [page 939]

[2633] Illegal purpose achieved. Repentance is clearly not relevant in cases where the illegal purpose has been achieved. Moreover, there can be no relief where the illegal purpose has been substantially achieved.211 This may be the basis on which it is said that the rule does not apply where the making of the contract is prohibited by statute. Thus, in George v Greater Adelaide Land Development Co Ltd212 it was held that a payment made under an illegal contract for the sale of land was not recoverable, when the illegality arose from statute.213 In these cases the defence will succeed, because repentance is not available to the plaintiff. [2634] Partial execution of transaction. Some cases have treated partial execution of the contract as fatal to a claim for money paid, at least where the parties were in pari delicto at the time of payment.214 However, this seems now too narrow a view to take. For example, where money has been received by a third party as a stakeholder or quasi-stakeholder, under instructions to pay it to one or other of the parties in certain defined circumstances, it may be recovered, provided the illegal purpose has not otherwise been carried out, if notice is given before the stake is paid over pursuant to the contract.215 [page 940] The stakeholder cases were relied on in Clegg v Wilson216 to support recovery of money from a party to the illegal contract. Although we have some difficulties with the actual decision in that case,217 we agree with Long Innes J’s view that the defence of illegality is not available in all cases of partial execution. We also agree that the stakeholder cases are not themselves anomalous. [2635] Motive and frustration of purpose. The law is unclear on how far the repentance exception is affected by the defendant’s motive in rescinding the transaction. Related to this is the question whether repentance should be available in cases where it occurs after it has

become clear that the illegal purpose has been (or will be) frustrated. Indeed, the most obvious reason for repenting from the illegal purpose is that it has been frustrated. A broad view was taken in Clegg v Wilson.218 In that case the plaintiff and defendant entered into a contract whereby, in consideration of a transfer of property to the defendant, the defendant promised to see that criminal charges brought against the plaintiff’s son would be withdrawn. This was an illegal contract to stifle a prosecution. When the plaintiff learned that the charge had been withdrawn, because other charges had been brought, she purported to avoid the transaction. She then sued to recover her interest in the property. Long Innes J, treating the stakeholder cases as illustrating a general principle permitting recovery where the illegal purpose has not been carried into effect, held the plaintiff entitled to the relief claimed. It was true that the illegal purpose had not been carried out, since the defendant played no role in having the charges dropped. Equally, however, it was clear that the reason for repentance was that the transaction would not have the desired effect. Since the object of encouraging abandonment of the transaction before the illegal purpose is carried out cannot be pursued if the purpose is frustrated, the decision seems to us a doubtful one. In many cases the view has been expressed that frustration of the illegal purpose is not the same as repentance, and cannot form a basis for a claim.219 The better view is probably that if the reason for repentance is the realisation that the contract will not achieve the desired result, repentance will not avail the plaintiff.220 [page 941]

(iv) Mistake and improper pressure [2636] Introduction. A mistake may arise spontaneously, or as a result of an innocent or fraudulent misrepresentation by the defendant (or a third party). In the former case, as we have already seen,221 there is scope for saying that the in pari delicto maxim does not apply.

Induced mistake looks to be an even clearer case. Again, since improper pressure is a recognised basis for a claim in restitution,222 and also for saying that the parties are not equally guilty, there is good reason to say that the defence of illegality ought not to be available. In these cases, because the law is more concerned to discourage particular kinds of conduct by defendants than to uphold the policy expressed in the illegality rule, the law recognises ‘differing degrees of guilt of parties who concur in an illegal act’.223 Since the parties are not equally to blame — the in pari delicto maxim does not apply — the plaintiff is entitled to claim restitution. We must also take account of oppression. The concept of pressure extends to advantage-taking by one party. It also explains the statutory protection of certain classes of person, as well as the relief available for abuse of a fiduciary relationship.224 Thus, the cases do not draw a sharp distinction between improper pressure and the abuse of a position or relationship. For example, in Marks v Jolly225 it was said that, in the context of illegality, improper pressure embraces not only fraud and duress but also undue influence. [2637] Induced mistake. If the defendant knowingly made a misrepresentation which, if it had been true, would have made the contract legal, the plaintiff may be entitled to claim restitution. The cases certainly support claims for restitution based on fraudulent factual statements which, had they been true, would have rendered the transaction legal. For example, in Radford v Ferguson226 money paid to an unregistered builder for the building of a house was held to be recoverable where the builder fraudulently misrepresented that he was registered.227 Similarly, fraudulent concealment of the nature of a transaction may be a basis for saying that the plaintiff is entitled to rely on mistake. Thus, if the defendant fraudulently concealed the nature of the transaction so as to prevent the plaintiff discovering the illegality, the plaintiff may seek restitution.228 In Hatcher v White229 fraud was relied on for the purpose of establishing an independent claim. In that case there was a contract to do certain building work for which a licence was

[page 942] required. The defendant fraudulently represented that he was the holder of a building permit. The plaintiff sued on an indebitatus count for work done and materials supplied and made alternative claims for damages for breach of contract and for damages in tort for fraud. The Full Court of the Supreme Court of New South Wales upheld the trial judge’s decision on the claim in fraud. What made the claim in tort an independent one was that the plaintiff was not seeking to enforce the contract. It is clear that the mere fact that the impact of illegality is to make the claim in contract unavailable does not imply that a claim in tort must succeed. As we have seen,230 the fact that tort and contract are different legal categories does not establish that either is independent of the illegality. The same is true of a contrast between contract (or tort) and restitution. That they are different legal categories does not establish that either is independent of the illegality. Thus, in Hatcher v White the defendant argued that the plaintiff was relying on evidence of the illegality in proof of his damages. Owen J, in his dissenting judgment, said231 that ‘the same reason which would defeat a claim in debt affords an answer’ to the plaintiff’s claim in fraud. Although he may have been influenced by the implied contract theory, this is not of itself a reason for treating restitution as available. What was common to both claims was that the defendant was, in effect, relying on its own illegal conduct to defend the claim. Thus, Street CJ considered232 that the plaintiff was relying on the contract merely to show that ‘he was induced by fraud to place himself in the position, innocently on his part, whereby he became involved in a transaction in fact illegal, though not known to him to be so’.233 The same was true in relation to the indebitatus count. Because the parties were not equally at fault, the indebitatus for work done and materials supplied should have succeeded. The in pari delicto maxim will apply in cases where the parties know of the illegality. Therefore, the fraud relied upon must itself be a basis

for saying that the parties were not equally at fault. The representation must be that the transaction is legal. However, since the plaintiff is relying on an exception to the in pari delicto rule, the transaction must not have been one which was, on its face, obviously unlawful. Thus, in Hatcher v White the court considered it to be significant that the contract was not illegal in its inception. Only the performance of the contract, not its making, was illegal. It has also been held that an innocent misrepresentation is not sufficient.234 Nevertheless, recent authority would suggest that relief would not be refused where the claimant was ignorant or mistaken as to the factual circumstances which render an agreement or arrangement illegal.235 It may be that the basis for the limitation is the distinction previously drawn between mistake [page 943] of law and mistake of fact. Although that distinction has been rejected in the context of claims to recover money paid otherwise than under contract,236 the step has not yet been taken of removing the distinction drawn between representations of fact and representations of law. Nevertheless, we should not in the present context be troubled by that distinction. [2638] Duress and oppression. If the plaintiff entered into the contract as the result of duress, oppression or actual undue influence by the defendant, the parties will not be considered equally at fault.237 Thus, in Andrews v Parker,238 on the assumption that a contract contravened public policy by reason of being based on an immoral consideration, the plaintiff was held not to be equally at fault since he entered into the contract as a result of pressure by a strong-willed and ruthless woman. He was therefore entitled to a reconveyance of property transferred pursuant to the contract. On the other hand, the exception has sometimes been treated as a narrow one, limited by the character of the illegality. For example, in

Callaghan v O’Sullivan239 the exception was held not to be applicable where a contract to stifle prosecution was entered into as a result of oppression. This is difficult to reconcile with the application of the repentance rules in that context in Clegg v Wilson.240 It is impossible to see why a narrower rule should apply to cases where the plaintiff was subjected to improper pressure. [2639] Plaintiff a member of a protected class. An important exception is that which operates where the plaintiff is a member of a class for the benefit of whom a statutory prohibition was enacted. In Browning v Morris241 Lord Mansfield said242 that: … where contracts or transactions are prohibited by positive statutes, for the sake of protecting one set of men from another set of men, the one, from their situation and condition, being liable to be oppressed or imposed upon by the other; there the parties are not in pari delicto; and in furtherance of these statutes, the person injured, after the transaction is finished and completed, may bring his action and defeat the contract.

It has therefore been recognised for a long period of time that ‘where the only illegality is that it infringes a statute and the statute was passed for the protection of a class of person, the performance by a person of such a class [page 944] of an illegal contract will not disentitle him to obtain relief as a plaintiff’.243 In such cases the plaintiff will not be considered in pari delicto, and the defence of illegality will fail. Under this approach the plaintiff may claim restitution of money paid under a transaction made illegal by statute even though the statute does not in terms confer a right to restitution. For example, in Kiriri Cotton Co Ltd v Dewani244 the plaintiff, without knowledge of the illegality, paid an illegal premium in order to obtain the lease of a flat. The sum was not extortionate, no repentance had occurred prior to execution of the lease, and the legislation by virtue of which the transaction was illegal did not confer a right to recover the premium. However, since the legislation was passed for the protection of lessees and the duty of observing the law was

placed on the defendants, the Privy Council held that the claim to recover the premium could succeed. The rationale was stated245 by Lord Denning, delivering the advice of the Board, in terms of ‘an action for restitution of money which the defendant has received but which the law says he ought to return to the plaintiff’. The protection provided by the statute must be for a particular class of the public, rather than for the protection of the public generally. If it is for the protection of the public generally the defence of illegality will succeed. Thus, in South Australian Cold Stores Ltd v Electricity Trust of South Australia246 restitution was refused in respect of payments made for electricity supplied at prices in excess of those permitted, since the statute was directed to the regulation of prices generally and not concerned with the protection of a class of persons.247 However, given the developments in relation to the recovery of money from the Crown,248 the fact of illegality —and the in pari delicto maxim — now seems a slim basis upon which to deny the claim for restitution. The extent to which a plaintiff who is granted relief under this exception to the in pari delicto rule must make restitution is the subject of some uncertainty.249 However, the balance of authority supports a rather unsatisfactory approach under which restitution is not required unless the [page 945] plaintiff claims ‘purely equitable’ relief.250 Accordingly, in a case where the plaintiff seeks an order for restitution of money paid, the defendant cannot insist on counter-restitution.251 [2640] Abuse of position or relationship. Jurisdiction has long been exercised under equitable principles to order restitution on the basis that the in pari delicto rule does not apply. Indeed, it would appear that relief from the oppression is discretionary, that is, exercised on an equitable rather than common law basis.252 Abuse of a position of dominance or influence may also be a proper basis for saying that the

in pari delicto rule does not apply.253 In George v Greater Adelaide Land Development Co Ltd254 Knox CJ included ‘circumstances creating a fiduciary relationship between the parties’ within the categories of exceptions to the in pari delicto rule. Thus, a party in breach of a fiduciary duty to the plaintiff cannot retain moneys received pursuant to an illegal arrangement. There are, however, very few illustrative cases. In Re Ferguson255 it was said that a company director could not retain moneys received pursuant to an illegal arrangement where the director abused his position of confidence to procure an illegal payment from the company. 1.

See [136], [906], [1003].

2. 3.

See [136], [137]. See David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; 109 ALR 57. See also Aviacion Colombiana Limitada Aviaco Ltda v Commonwealth of Australia (1994) Unreported, FCA (FC), 14 February per Cooper J. See further [2609], [2611]. See also [1633] (tort amounting to crime). Cf Chapter 19 (wrongful death).

4.

5.

Illegality on the part of the defendant may prevent the defendant relying on some other defence such as change of position; see Barros Mattos Junior v MacDaniels Ltd [2005] 1 WLR 247. See generally Part IV.

6. 7.

For a review of the authorities see Gala v Preston (1991) 172 CLR 243; 100 ALR 29. Cf The Highwayman’s Case (1725) (Everet v Williams) discussed (1893) 9 LQR 197.

8. 9.

See Alexiadis v Zirpiadis (2013) 302 ALR 148; [2013] SASCFC 64. See [1013]–[1014]. See further Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 513 per French CJ, Crennan and Kiefel JJ, at 537–38 per Gummow and Bell JJ; [2012] HCA 7.

10. Whether seen as a defence to the claim, or as going to the justice of the plaintiff’s claim, the issue has already been discussed. See generally [1017], [1019]–[1021], [1024], [1026]–[1032]. 11. See the summary by Devlin J in Edler v Auerbach [1950] 1 KB 359 at 371. For illustrations see Noble v Maddison (1912) 12 SR (NSW) 435 at 436 (sufficient that illegality appears from the plaintiff’s evidence); North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461 at 469 (illegality could not have been cured); Re Mahmoud and Ispahani [1921] 2 KB 716 (contract ex facie illegal); Donaldson v Freeson (1934) 51 CLR 598 at 611 (illegality must be beyond dispute or question); North v Marra Developments Ltd (1981) 148 CLR 42 at 60 (plaintiff unable to prove case without relying on illegality). 12. See Knowles v Fuller (1947) 48 SR (NSW) 243. 13. See further [2611]. 14. The position may then be reached that the defence is not available because the defendant is regarded as making a countervailing claim based on the illegality itself. See further

[2622]. 15. (2013) 302 ALR 148; [2013] SASCFC 64. 16. In the appeal there appeared to be some difference of opinion as to whether the appellant had admitted there was an obligation to repay the monies, see Alexiadis v Zirpiadis (2013) 302 ALR 148 at 155 per Kourakis CJ, at 175 per Gray J, cf at 179, 183 per White J; [2013] SASCFC 64 at [33], [34], [130], [158], [178]. 17. (2013) 302 ALR 148 at 154–5; [2013] SASCFC 64 at [30]–[31]. 18. (2013) 302 ALR 148 at 156; [2013] SASCFC 64 at [38]. 19. (2013) 302 ALR 148 at 160; [2013] SASCFC 64 at [61]. 20. (2013) 302 ALR 148 at 160; [2013] SASCFC 64 at [62]. 21. (2013) 302 ALR 148 at 159; [2013] SASCFC 64 at [57]–[58]. 22. (2013) 302 ALR 148 at 160; [2013] SASCFC 64 at [62], relying on Heydon v Perpetual Executors Trustees and Agency Co (WA) Ltd (1930) 45 CLR 111 at 113 per Gavin Duffy J and distinguishing the current position in England: see (2013) 302 ALR 148 at 161; [2013] SASCFC 64 at [67]–[68]. 23. (2013) 302 ALR 148 at 162; [2013] SASCFC 64 at [72]. 24. (2013) 302 ALR 148 at 172–3; [2013] SASCFC 64 at [119]–[121]. 25. (2013) 302 ALR 148 at 175; [2013] SASCFC 64 at [131]. 26. (2013) 302 ALR 148 at 178; [2013] SASCFC 64 at [154]. 27. (2013) 302 ALR 148 at 182; [2013] SASCFC 64 at [173]. 28. (2013) 302 ALR 148 at 183; [2013] SASCFC 64 at [181]. 29. (2013) 302 ALR 148 at 185; [2013] SASCFC 64 at [188]. 30. (2013) 302 ALR 148 at 190; [2013] SASCFC 64 at [216]. 31. (2013) 302 ALR 148 at 189; [2013] SASCFC 64 at [214]. 32. (2013) 302 ALR 148 at 191; [2013] SASCFC 64 at [217]. 33. (2013) 302 ALR 148 at 191; [2013] SASCFC 64 at [218]. 34. The impact of illegality has been noted at various points in this work. See, eg [231] (illegality as unjust factor); [1020]–[1022] (illegality as countervailing factor where benefit conferred under inherently ineffective transaction); Chapters 20 and 21 (restitution where Crown involved); [1633] (tort amounting to crime). Cf also Chapter 19 (wrongful death). 35. See further [2622] (impact on transactions). 36. See generally Carter on Contract §§28-030 and 28-070. 37. See generally Carter on Contract §§28-090–28-180. 38. (1760) 2 Doug 696n; 99 ER 441. 39. (1760) 2 Doug 696n at 697; 99 ER 441 at 443. 40. (1775) 1 Cowp 341 at 343; 98 ER 1120 at 1121. 41. See [1003]. 42. See Gollan v Nugent (1988) 166 CLR 18 at 28, 46 and generally Carter on Contract, §28030. Contrast the wider application of the maxim in England: Hardy v Motor Insurers’ Bureau [1964] 2 QB 745 at 767. See also Stone & Rolls Ltd (in liq) v Moore Stephens [2009] 1 AC 1391 at 1451, 1452 per Lord Phillips; [2009] UKHL 39 at [18], [20]; Gray

v Thames Trains Ltd [2009] 1 AC 1339 at 1370 per Lord Hoffmann; [2009] UKHL 33 at [30] (cf Miller v Miller (2011) 242 CLR 446 at 467; [2011] HCA 9 at [56] criticising the approach taken in Gray v Thames Trains Ltd). See further Law Commission, The Illegality Defence, Law Com No 320 (2010) at [3.1]–[3.41]. 43. See Smith v Jenkins (1970) 119 CLR 397 at 410ff; Gollan v Nugent (1988) 166 CLR 18 at 28, 46. 44. See Nelson v Nelson (1995) 184 CLR 538 at 613–14; 132 ALR 133 at 193 per McHugh J; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 230; 143 ALR 569 at 579 per McHugh and Gummow JJ. 45. (1995) 184 CLR 538 at 604–5; 132 ALR 133 at 186 per McHugh J. 46. His remarks are not without difficulty, see Carter on Contract, §28-080. 47. (1995) 184 CLR 538 at 613; 132 ALR 133 at 193 per McHugh J (approved Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 229–30, 249–50; 143 ALR 569 at 579 per McHugh and Gummow JJ, 595 per Kirby J). 48. See Carter, §27-10. 49. But see [1044] (non-restitutionary claim put forward in the inherently ineffective contract context). 50. See Bassin v Standen (1945) 46 SR (NSW) 16 at 19. Cf Newcastle District Fishermen’s Cooperative Society v Neal (1950) 50 SR (NSW) 237 at 238, 243. 51. See, eg Leonard v Booth (1954) 91 CLR 452 at 483 (transfer of shares); Singh v Ali [1960] AC 167 (sale of goods); DJE Constructions Pty Ltd v Maddocks [1982] 1 NSWLR 5 at 9, 23 (transfer of shares). Cf Ison v Australian Wheat Board (1967) 68 SR (NSW) 102. 52. But see Birks, Introduction, p 303. 53. See, eg Ayerst v Jenkins (1873) LR 16 Eq 275 (settlement of shares by way of gift). 54. See, eg Taylor v Chester (1869) LR 4 QB 309 (see [2616]). 55. Bailment is an obvious example. See, eg Bowmakers Ltd v Barnet Instruments Ltd [1945] 1 KB 65 (see [2622]). Cf Thomas Brown & Sons Ltd v Fazal Deen (1962) 108 CLR 391 (see [2616], [2619], [2623]). 56. See, eg Chapman v Wade [1939] SASR 298 at 302–4. 57. See, eg Chettiar v Chettiar [1962] AC 294 (transfer of land); McKenna v Perecich [1973] WAR 56 at 59–60 (property passes by conveyance). 58. Execution of a lease is effective to transfer the estate. See, eg Alexander v Rayson [1936] 1 KB 169 at 186; Wilson International Pty Ltd v International House Pty Ltd (No 2) [1983] WAR 257. 59. Cf Restatement (Second) Contracts, 197 (general rule that restitution not available, save where denial would cause disproportionate forfeiture). 60. Cf Pitts v Hunt [1990] QB 302. 61. Illustrations include Harse v Pearl Life Assurance Co [1904] 1 KB 558; Berg v Sadler [1937] 2 KB 158; Callaghan v O’Sullivan [1925] VLR 664 (see [2638]); Marks v Jolly (1938) 38 SR (NSW) 351 at 358 (see [2636]); Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7; Alexiadis v Zirpiadis (2013) 302 ALR 148 at 155; [2013] SASCFC 64 at [31] per Kourakis CJ. See further [2626]. Cf Parkinson v College of Ambulance [1925] 2 KB 1 (see [2614]). Similarly, claims for reasonable remuneration have regularly been

refused. There is, however, some support for a distinction between illegality under statute and common law illegality. See Newton v Brownett (1940) 41 SR (NSW) 1 at 6 (affirmed without reference to the point sub nom Brownett v Newton (1941) 64 CLR 439). See further [2616]. 62. See generally [2625]–[2640]. 63. See [108], [909]. 64. See [131]. 65. See, eg Hirsch v The Zinc Corp Ltd (1917) 24 CLR 34 at 57. Cf Sinclair v Brougham [1914] AC 398. But see Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 414 and contrast Kiriri Cotton Co Ltd v Dewani [1960] AC 192 at 204–5. 66. See Alexiadis v Zirpiadis (2013) 302 ALR 148 at 162; [2013] SASCFC 64 at [71] per Kourakis CJ. 67. See [141], [2203]. 68. Alexiadis v Zirpiadis (2013) 302 ALR 148 at 190; [2013] SASCFC 64 at [216] per White J. 69. See Alexiadis v Zirpiadis (2013) 302 ALR 148 at 162; [2013] SASCFC 64 at [71] per Kourakis CJ. 70. (1988) 12 NSWLR 394. 71. (1988) 12 NSWLR 394 at 445–6. See, also Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 at 542 per Wilcox and Lindgren JJ, with whom Lee J agreed, FC (subject to restitutionary defences, restitution available where money was paid under loan contract which was illegal because of its association with a prohibited contract). See further Spedley Securities Ltd v Greater Pacific Investments Pty Ltd (1992) 30 NSWLR 185; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 231; 143 ALR 569 at 580 per McHugh and Gummow JJ. Compare, however, Henderson v Amadio Pty Ltd (No 1) (1996) 62 FCR 1 at 186–9; 140 ALR 391 at 563–6 per Heerey J (affirmed sub nom Amadio Pty Ltd v Henderson (1998) 81 FCR 149); Gray v Pastorelli [1987] WAR 174 at 177; Linter Group Ltd v Goldberg (1992) 7 ACSR 580 at 647. Contrast Edler v Auerbach [1950] 1 KB 359 at 375–6. See further Akron Securities Ltd v Bernborough Breeding and Racing Ltd (1994) Unreported, SC(NSW) (Rolfe J), 1 August, 50271/92 (affirmed without reference to the point sub nom Stammers v Akron Securities Ltd (1997) 140 FLR 146; 24 ACSR 498) (obiter, on assumption that contract of loan was illegal under companies legislation, creditor entitled to return of money lent, with interest, since debtor would otherwise have been unjustly enriched). 72. Perhaps Aratra Potato Co Ltd v Taylor Joynson Garrett [1995] 4 All ER 695 (overruled on another point Thai Trading Co v Taylor [1998] QB 781) is an example of where an unmerited benefit would have accrued if restitution were allowed — even though the defendant would appear to have been more at fault than the plaintiff; in this case fees paid to a solicitor under a contract that was held to be champertous, and therefore unenforceable, were not recoverable because it could not be said there had been a total failure of consideration and the payee had not (except for entering into the contract) acted unconscionably. 73. An additional problem with the approach is that, in George v Greater Adelaide Land Development Co Ltd (1929) 43 CLR 91 (see [2625], [2633]), the High Court held that money paid under a contract prohibited by statute is not recoverable unless an exception

to the in pari delicto rule applies. See also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 523; [2012] HCA 7 per French CJ, Crennan and Kiefel JJ. See further Aratra Potato Co Ltd v Taylor Joynson Garrett [1995] 4 All ER 695 (overruled on another point Thai Trading Co v Taylor [1998] QB 781). 74. See [2609]. 75. (1987) 8 NSWLR 166 at 188 (affirmed without discussion of the point (1988) 166 CLR 18). 76. (2012) 246 CLR 498; [2012] HCA 7. 77. (2012) 246 CLR 498 at 515–16; [2012] HCA 7 at [29] per French CJ, Crennan and Kiefel JJ. 78. Applying Miller v Miller (2011) 242 CLR 446 at 458. 79. (2012) 246 CLR 498 at 514; [2012] HCA 7 at [25]. 80. (2012) 246 CLR 498 at 518; [2012] HCA 7 at [33]. 81. (2012) 246 CLR 498 at 518; [2012] HCA 7 at [34]. 82. (2012) 246 CLR 498 at 519–20; [2012] HCA 7 at [37]. 83. (2012) 246 CLR 498 at 523; [2012] HCA 7 at [45]. 84. (2012) 246 CLR 498 at 540; [2012] HCA 7 at [101]. 85. (2012) 246 CLR 498 at 544; [2012] HCA 7 at [111]. 86. Usually this would also have resulted in it being void rather than unenforceable, but as noted, before the High Court it was agreed that the effect of illegality here resulted in it being unenforceable. 87. (1929) 43 CLR 91. Indeed it might be added that until Hurst v Vestcorp Ltd (1988) 12 NSWLR 394, it had not been suggested that restitution is, in this context, sufficiently independent of contract to justify use of the independent cause of action basis. Clearly, a party’s refusal to perform an illegal contract, and a refusal to hand back money paid under an illegal contract, are not of themselves logical bases for restitution. 88. [1945] 1 KB 65. 89. See generally, Aleco Vrisakis and J W Carter, ‘Restitution of Payments Made Under Contracts Prohibited by Statute’ (2000) 15 JCL 228; Peter Birks, ‘Recovering Value Transferred Under an Illegal Contract’ (2000) 1 Theoretical Inquiries in Law 155; Ross Grantham, ‘Illegal Transactions and the Powers of Company Directors’ (1999) 115 LQR 296; C E F Rickett, ‘The New Zealand Illegal Contracts Act 1970: Two Models of its Fit with the Law of Restitution’ (1997) 11 JCL 148; Graham Virgo, ‘The Effect of Illegality on Claims for Restitution in English Law’ in Swadling, p 141; Nili Cohen, ‘Illegality; The Case for Discretion’ in Swadling, p 186. 90. See Thackwell v Barclays Bank Plc [1986] 1 All ER 676; Saunders v Edwards [1987] 1 WLR 1116; Euro-Diam Ltd v Bathurst [1990] QB 1 at 35. 91. See Tinsley v Milligan [1994] 1 AC 340; see also Les Laboratoires Servier v Apotex Inc [2015] AC 430; [2014] UKSC 55. Cf Hounga v Allen [2014] 1 WLR 2889; [2014] UKSC 47; Gollan v Nugent (1988) 166 CLR 18 at 33–5. See further James C Fisher, ‘The Ex Turpi Causa Principle in Hounga and Servier’ (2015) 78 MLR 854. 92. [1960] AC 167 at 178. The High Court of Australia, in Nelson v Nelson (1995) 184 CLR 538 whilst refusing to follow Tinsley v Mulligan, did not approve a conscience test.

93. See, eg Reading v Attorney-General [1951] AC 507 (see further [1714]) and P D Finn ‘Official Misconduct’ [1978] 2 Crim LJ 307. 94. But see Illegal Contracts Act 1970 (NZ) and Brice Dickson, ‘Restitution and Illegal Transactions’ in Burrows, Essays, p 171. 95. See [117]. 96. Cf [2625]–[2640]. 97. Cf [2613]–[2624]. 98. See, eg Hermann v Charlesworth [1905] 2 KB 123 (money paid under marriage brokage contract recoverable even though only partial failure of consideration). Cf [2634]. 99. See [2636]–[2638]. 100. See [2638]–[2640]. 101. (1997) 189 CLR 215 at 231; 143 ALR 569 at 580 per McHugh and Gummow JJ. See also Nelson v Nelson (1995) 184 CLR 538 at 562–9, 617; 132 ALR 133 at 152–7 per Deane and Gummow JJ, 196 per McHugh J. 102. [2608]. 103. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7. 104. Subject to the question whether illegality is in fact the unjust factor: see [2609], [2611]. 105. See [101], [108]. 106. (1775) 1 Cowp 341; 98 ER 1120. 107. (1775) 1 Cowp 341 at 343; 98 ER 1120 at 1121. 108. See [1502]. 109. See, eg Roach v Bickle (1915) 20 CLR 663 at 671–2; Re Mahmoud and Ispahani [1921] 2 KB 716 at 729, 732; Hatcher v White (1953) 53 SR (NSW) 285; Day Ford Pty Ltd v Sciacca [1990] 2 Qd R 209 at 216; Re Rosemac Pty Ltd’s Caveat [1994] 1 Qd R 137 at 141. Compare, more generally, the law’s reluctance to allow estoppel to operate against the exercise of statutory powers and public law discretions. See, eg Attorney-General (NSW) v Quin (1990) 170 CLR 1; Roberts v Repatriation Commission (1992) 39 FCR 420. 110. See [2609]. 111. See [1043], [1044] and further [2636], [2637]. 112. See Psaltis v Schultz (1948) 76 CLR 547 at 558 and further [2637]. 113. See generally Chapter 21. 114. See further [2631]–[2635]. 115. See Redmund v Wynne (1892) 13 LR (NSW) 39. 116. [1925] 2 KB 1. See also [2630]. See further Alexiadis v Zirpiadis (2013) 302 ALR 148 at 156; [2013] SASCFC 64 at [39]. 117. See Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7. Further examples of plaintiffs failing to overcome statutory bars by making restitutionary claims are given in Chapter 16. 118. [1969] QWN 26. See also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 543; [2012] HCA 7 at [111], and see [2608]. See further Newton v Brownett (1940) 41 SR (NSW) 1, affirmed Brownett v Newton (1941) 64 CLR 439 (supplier not entitled to prove

in liquidation for quantum valebat where the contract was void and illegal under statute); Williamson v Diab [1988] 1 Qd R 210 (no quantum meruit where contract was illegal under building legislation even though the contract was executed); Sutton v Zullo Enterprises Pty Ltd [2000] 2 Qd R 196 at 204 per McPherson JA, 208 per Pincus JA, with both of whom Jones J agreed, (where contract was illegal under builders licensing legislation, quantum meruit was not available). See also Hussein v Secretary, Department of Immigration and Multicultural Affairs (No 2) (2006) 155 FCR 304. 119. (1890) 24 QBD 742. See also Noble v Maddison (1912) 12 SR (NSW) 435 (no account of profits under partnership agreement when parties entered into illegal contracts). Cf Taylor v Taylor (1890) 11 LR (NSW) 323 where ‘restitution’ was refused in respect of expenses incurred in candidature at an election where the promise to pay was made in consideration of a promise opposed to public good, namely, to retire from candidature. Contrast Newton v Brownett (1940) 41 SR (NSW) 1 at 6, affirmed without reference to the point sub nom Brownett v Newton (1941) 64 CLR 439 (quantum valebat for accepted goods if the contract is void and illegal at common law but the supplier has no knowledge of the illegality). 120. More generally still, policy considerations may bar a claim for restitution even though no illegality is involved. See, eg Morgan v Ashcroft [1938] 1 KB 49 (see [1021]). See also [126], [1020]–[1022], [1028]. 121. See [2614], [2615]. 122. Contrast the position where there is merely reference to illegality. See [2618]. 123. See also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 519–20; [2012] HCA 7 at [37] per French CJ, Crennan and Kiefel J. 124. [1949] 1 KB 74. See also Sutton v Zullo Enterprises Pty Ltd (1998) [2000] 2 Qd R 196. 125. See Wild v Simpson [1919] 2 KB 544 at 565. See also Awwad v Geraghty (a firm) [2001] QB 570. Cf Mohamed v Alaga & Co (a firm) [2000] 1 WLR 1815. See further Re Trepca Mines Ltd (No 2) [1962] Ch 511 (solicitor not entitled to recover ordinary costs where retainer champertous). 126. [1957] 1 QB 267 at 283–4. 127. (1993) 114 ALR 1 at 12. 128. See [2603], [2625]–[2640]. 129. See further [2621]. 130. (1869) LR 4 QB 309. 131. (1962) 108 CLR 391. See further [2619], [2623]. Cf Newcastle District Fishermen’s Cooperative Society v Neal (1950) 50 SR (NSW) 237. 132. However, it was held that the claim could succeed in relation to the gems as the contract was severable and not illegal so far as these goods were concerned. For the conversion claim see [2623]. 133. See [1044]. 134. Cf [2639]. 135. For cases of repentance of illegal purpose see [2631]–[2635]. 136. See generally [1236]–[1268]. 137. See [1334].

138. (1925) 42 WN (NSW) 183. 139. For discussion see, eg N S Marsh, ‘The Severance of Illegality in Contract’ (1948) 64 LQR 230 and 347; R E McGarvie, ‘Illegality and Severability in Contracts’ (1977) 13 UWALR 1. See also Carter on Contract, §§28-300–28-370. 140. See, eg Carney v Herbert [1985] AC 301 where buyers of shares contended that because the sale was secured by an illegal mortgage they were under no obligation to pay the purchase money, but the Privy Council held that the purchase money was recoverable since the contract was one for sale to which the mortgage was ancillary and severable. See also Noble v Maddison (1912) 12 SR (NSW) 435 (account of partnership profits); McFarlane v Daniell (1938) 38 SR (NSW) 337 (claim for wages where contract contained severable clause in restraint of trade) and the discussion in Humphries v Proprietors ‘Surfers Palms North’ Group Titles Plan 1955 (1994) 179 CLR 597. Contrast DJE Constructions Pty Ltd v Maddocks [1982] 1 NSWLR 5. For a broader approach see Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 at 445–6. 141. (1962) 108 CLR 391. See also [2616], [2623]. 142. But see the discussion of the forfeiture rule in Chapter 19. 143. See Birks, Introduction, p 73 (the assertion of ownership relies on a ‘pre-existing and therefore non-restitutionary right in rem’). But see [2624] (resulting trust). 144. See [1606]ff. 145. See [1514]. 146. Cf Birks, Introduction, p 303. 147. For discussion of independent claims asserting an interest in land see, eg Chettiar v Chettiar [1962] AC 294; McKenna v Perecich [1973] WAR 56; Munro v Morrison [1980] VR 83; Wilson International Pty Ltd v International House Pty Ltd (No 2) [1983] WAR 257. See also [2624] (assertion of equitable interest). 148. (1962) 108 CLR 391. See [2616], [2619], [2623]. 149. [1945] 1 KB 65 (see [2622]). 150. [1994] 1 AC 340 (see [2624]). 151. [1945] 1 KB 65. See M J Higgins, ‘The Transfer of Property Under Illegal Transactions’ (1962) 25 MLR 149; Brian Coote, ‘Another Look at Bowmakers v Barnet Instruments’ (1972) 35 MLR 38; Andrew Stewart, ‘Contractual Illegality and the Recognition of Proprietary Interests’ (1988) 1 JCL 134. Contrast Webb v Chief Constable of Merseyside Police [2000] QB 427 at 444, per May LJ (with whom Pill and Hale LJJ agreed), 449 per Pill LJ (with whom Hale LJ agreed), (although exception would have applied to claim for return of controlled drugs, it did not apply to a claim for money). See also Costello v Chief Constable of Derbyshire Constabulary [2001] 1 WLR 1437. 152. See [2605]. 153. See [2624]. 154. [1945] 1 KB 65 (see [2622]). The hire purchasers had sold all the machines except that which was the subject of the second agreement. They also converted the machines hired under that agreement, by refusing to deliver them to the plaintiffs. For the complications which arose in relation to the machines hired under the second agreement see Brian Coote, ‘Another Look at Bowmakers v Barnet Instruments’ (1972) 35 MLR 38; Carter, §2721.

155. (1962) 108 CLR 391 at 411. See also Gollan v Nugent (1988) 166 CLR 18 at 28, 48–9. 156. See [2616], [2619]. 157. [1960] AC 167. 158. (1995) 184 CLR 538 at 558–9, 609; 132 ALR 133 at 148–9 per Deane and Gummow JJ, 190 per McHugh J. Cf Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 248; 143 ALR 569 at 594 per Kirby J. 159. [1945] 1 KB 65 (see [2622]). 160. [1994] 1 AC 340. See Rosy Thornton [1993] CLJ 394; R A Buckley (1994) 110 LQR 3; Hugh Stowe (1994) 57 MLR 441; Nili Cohen [1994] LMCLQ 163. See also Lowson v Coombes [1999] Ch 373; Silverwood v Silverwood (1997) 74 P & CR 453. Mortgage Express Ltd v Robson [2001] EWCA Civ 887; [2001] 2 All ER Comm 886; Stone & Rolls Ltd (in liq) v Moore Stephens [2009] 1 AC 1391; [2009] UKHL 39. Compare Munro v Morrison [1980] VR 83 (no declaration that defendant held land on trust for plaintiff available where claim founded on illegal transaction) (see J C Phillips (1981) 55 ALJ 292); Blackburn v Y V Properties Pty Ltd [1980] VR 290; Weston v Beaufils (No 2) (1994) 50 FCR 476 at 494–9; 122 ALR 240 at 261–6 per Hill J. 161. [1945] 1 KB 65 (see [2622]). 162. Lord Keith and Lord Goff dissenting. 163. Lord Jauncey and Lord Lowry delivered short speeches, in which they agreed with Lord Browne-Wilkinson. 164. See [1994] 1 AC 340 at 375. See also Weston v Beaufils (No 2) (1994) 50 FCR 476 at 495–6; 122 ALR 240 at 261–2. 165. In accord: Blackburn v YV Properties Pty Ltd [1980] VR 290. Cf Martin v Martin (1959) 110 CLR 297 at 305. 166. See [1994] 1 AC 340 at 357–8, 362. 167. (1995) 184 CLR 538. 168. [1994] 1 AC 340. 169. (1995) 184 CLR 538 at 607–10. 170. See (1995) 184 CLR 538 at 557–9 per Deane and Gummow JJ; at 579–80 per Dawson J; at 592–3 per Toohey J. 171. (1995) 184 CLR 538 at 567. 172. (1995) 184 CLR 538 at 572–3 per Deane and Gummow JJ, at 616–7 per McHugh J. 173. (1929) 43 CLR 91 at 100. See also [2633]. 174. See, eg Harse v Pearl Life Assurance Co [1904] 1 KB 558; Berg v Sadler [1937] 2 KB 158; Callaghan v O’Sullivan [1925] VLR 664; Marks v Jolly (1938) 38 SR (NSW) 351 at 358; Australian Real Estate Investment Co Ltd v Gillis [1935] SASR 148 at 153–4. See further Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 523; [2012] HCA 7 at [45] per French CJ, Crennan and Kiefel JJ. 175. See [2604], [2625]–[2640]. 176. See Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 228–9; 143 ALR 569 at 578 per McHugh and Gummow JJ. Cf Nelson v Nelson (1995) 184 CLR 538 at 613; 132 ALR 133 at 193 per McHugh J.

177. Cf Restatement (Second) Contracts, 198, 199. 178. See [2604]. 179. (1760) 2 Doug 696n at 697; 99 ER 441 at 443. 180. [1966] 1 NSWR 348 (approved Nelson v Nelson (1995) 184 CLR 538 at 563; 132 ALR 133 at 152 per Deane and Gummow JJ). See also Hall v Potter (1695) Show Parl Cas 76; 1 ER 52 (marriage brokage); Vauxhall Bridge Co v Spencer (1821) Jac 64; 37 ER 774 (fraud on the legislature); Re Commonwealth Homes and Investment Co Ltd [1943] SASR 211 at 235 per Mayo J (scheme for the benefit of persons interested in life policies). See Meagher, Gummow and Lehane, §27-035. 181. Not only was the memorandum of transfer delivered to the defendant, she also, it appears, refrained from applying for statutory maintenance in reliance on the agreement. 182. No order was made for restitution to the plaintiff of rents received by the defendant, and the operation of the orders was postponed until the final determination of any proceedings for maintenance. 183. Jacobs J rejected the view that the principle is limited to marriage brokage contracts. 184. [1966] 1 NSWR 348 at 352. 185. (1995) 184 CLR 538 at 558–9; 132 ALR 133 at 149 per Deane and Gummow JJ. 186. (1995) 184 CLR 538 at 558–9, 571, 617–18; 132 ALR 133 at 149, 159 per Deane and Gummow JJ, 196 per McHugh J (see David McLean (1997) 71 ALJ 185). See also Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 231; 143 ALR 569 at 580 per McHugh and Gummow JJ. However, the imposition of a requirement of repayment, as a condition of equitable relief, is not possible where it would constitute a claim in respect of a transaction within the very terms of a statutory prohibition; see Nelson v Nelson (1995) 184 CLR 538 at 563, 617; 132 ALR 133 at 153 per Deane and Gummow JJ, 196 per McHugh J. See, eg Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 (creditor was not entitled to return of money lent under a void contract because the debtor’s claim was not one for purely equitable relief). See also Lejo Holdings Pty Ltd v Deutsche Bank (Asia) AG [1988] 2 Qd R 30 at 32–4, 41–3, 45–8; Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12–13, 19; Henderson v Amadio Pty Ltd (No 2) (1996) 62 FCR 221 at 227; 140 ALR 596 at 601 per Heerey J (affirmed sub nom Amadio Pty Ltd v Henderson (1998) 81 FCR 149). 187. See Vauxhall Bridge Co v Spencer (1821) Jac 64 at 67; 37 ER 774 at 775; Re Great Berlin Steamboat Co (1884) 26 Ch D 616; Hermann v Charlesworth [1905] 2 KB 123 at 133ff; Money v Money (No 2) [1966] 1 NSWR 348 at 351–2 per Jacobs J; Andrews v Parker [1973] Qd R 93 at 106 per Stable J. 188. See [2631]–[2635]. 189. See Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482. See also Nelson v Nelson (1995) 184 CLR 538 at 563 per Deane and Gummow JJ, 604–5 per McHugh J. But see [2609] (illegal conduct an integral part of the unjust factor). 190. [1951] AC 507 (see [1714]). Cf Islamic Republic of Iran Shipping Lines v Denby [1987] 1 Lloyd’s Rep 367 (liability of solicitor who took bribe or secret commission in breach of contract to account). 191. See generally Chapter 4. 192. See [2629].

193. See [2615]. 194. See [2630]. 195. See Nelson v Nelson (1995) 184 CLR 538 at 604–5; 132 ALR 133 at 186 per McHugh J. See also Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 228–9; 143 ALR 569 at 578 per McHugh and Gummow JJ. There is also authority to support the view that where money has been paid under a (spontaneous) mistake of fact the defence of illegality is not available. 196. (1810) 12 East 225; 104 ER 87. 197. (1810) 12 East 225 at 226; 104 ER 87 at 88. 198. [1968] 1 NSWR 75. 199. See [414]. 200. The cases draw no distinction between contract and restitution. See, eg Kearley v Thomson (1890) 24 QBD 742 at 746; Re Mahmoud and Ispahani [1921] 2 KB 716 at 729, 732; Wilson International Pty Ltd v International House Pty Ltd [1983] WAR 243. 201. [1925] 2 KB 1 (see [2614]). 202. (1953) 53 SR (NSW) 285 at 298. 203. See generally J K Grodecki, ‘In Pari Delicto Potior Est Conditio Defendentis’ (1955) 71 LQR 254; J Beatson, ‘Repudiation of Illegal Purpose as a Ground for Restitution’ (1975) 91 LQR 313; Robert Merkin, ‘Restitution by Withdrawal from Executory Illegal Contracts’ (1981) 97 LQR 420. But see Burrows, pp 424–5. 204. See [2635]. 205. But cf Spedley Securities Ltd v Greater Pacific Investments Pty Ltd (1992) 30 NSWLR 185 (apparently general (ie, restitutionary) approach to illegality based on restitutio in integrum); Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 19 (restitutio in integrum applicable where contract not prohibited by statute). 206. See [2633]. 207. See Marks v Jolly (1938) 38 SR (NSW) 351 at 358. 208. See Patel v Mirza [2015] 2 WLR 405; [2014] EWCA Civ 1057. 209. (1908) 6 CLR 208 at 212, 213. See also Nelson v Nelson (1995) 184 CLR 538 at 561–2, 581–2, 613; 132 ALR 133 at 151–2 per Deane and Gummow JJ, 167 per Dawson J, 193 per McHugh J; Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 229–30; 143 ALR 569 at 579 per McHugh and Gummow JJ. See further Gray v Pastorelli [1987] WAR 174 at 177; Freedom v AHR Constructions Pty Ltd [1987] 1 Qd R 59 at 69; Linter Group Ltd v Goldberg (1992) 7 ACSR 580 at 647. Suggestions that a different view is perhaps the law in England (see Martin v Martin (1959) 110 CLR 297 at 305; Donaldson v Freeson (1934) 51 CLR 598 at 617) must now be seen in the light of Tribe v Tribe [1996] Ch 107. 210. See also Symes v Hughes (1870) LR 9 Eq 475 (recovery of property assigned so as to defeat creditors where the illegal purpose never took effect); Taylor v Bowers (1876) 1 QBD 291 (damages for detention by the defendant of goods acquired from a third party to whom they had been transferred by the plaintiff in order to defraud creditors where the fraudulent purpose was not carried out); Perpetual Executors and Trustees Association of Australia Ltd v Wright (1917) 23 CLR 185 (declaration of entitlement to money and property where intent to defraud creditors not carried into effect); Donaldson v Freeson

(1934) 51 CLR 598 (successful claim for declaration of trust where illegal purpose of defrauding revenue was not carried out, and the transferee was not party to the scheme); Tribe v Tribe [1996] Ch 107 at 121, 122 per Nourse LJ, with whom Otton LJ agreed, 131– 2, 135 per Millett LJ, with whom Otton LJ agreed (although the purpose of the voluntary transfer of shares was to deceive creditors, the plaintiff was entitled to give evidence rebutting the presumption of advancement, and to recover the shares, where the unlawful purpose was not carried into effect) (see Graham Virgo [1996] CLJ 23; Peter Creighton (1997) 60 MLR 102). 211. The decision in Kearley v Thomson (1890) 24 QBD 742 (see [2615]) is perhaps an example. However, the statement at 746, disapproving a dictum in Taylor v Bowers (1876) 1 QBD 291 at 300, was subsequently explained in Petherpermal Chetty v Muniandi Servai (1908) LR 35 Ind App 98 at 103 as not affecting the authority of the case. 212. (1929) 43 CLR 91 (see [2625]). See also Cheers v Pacific Acceptance Corp Ltd (1959) 60 SR (NSW) 1 (no restitution of money paid under prohibited hire-purchase agreement). Contrast Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33, where the contract was held not to be illegal and the payer recovered money paid on the basis of a total failure of consideration. 213. The ‘stakeholder cases’ were distinguishable, because the payment was made to a party to the contract. See further [2634]. 214. See Harse v Pearl Life Assurance Co [1904] 1 KB 558, as interpreted in George v Greater Adelaide Land Development Co Ltd (1929) 43 CLR 91 at 100, 101 (premiums paid under illegal insurance policy not recoverable unless there is an element of fraud, duress or oppression or some circumstances creating a fiduciary relationship). See also Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194 at 202; Cheers v Pacific Acceptance Corp Ltd (1959) 60 SR (NSW) 1 at 2, 4. Compare Tribe v Tribe [1996] Ch 107 at 124 per Millett LJ (with whom Otton LJ agreed). See further Aratra Potato Co Ltd v Taylor Joynson Garrett [1995] 4 All ER 695 (overruled on another point Thai Trading Co v Taylor [1998] QB 781). 215. See Hermann v Charlesworth [1905] 2 KB 123 (money paid to quasi-stakeholder under marriage brokage contract to abide event of marriage recoverable); George v Greater Adelaide Land Development Co Ltd (1929) 43 CLR 91 at 100–1 per Knox CJ (in pari delicto principle does not apply to cases of stakeholder or quasi-stakeholder). See also Taylor v Bowers (1876) 1 QBD 291; Perpetual Executors and Trustees Association of Australia Ltd v Wright (1917) 23 CLR 185. There is an amusing line of American cases concerning payments to stakeholders in respect of fake footraces. See, eg Hobbs v Boatwright 195 Mo 693; 93 SW 934 (1906); Falkenberg v Allen 18 Okl 210; 90 P 415 (1907). 216. (1932) 32 SR (NSW) 109 at 122–4. 217. See [2635]. 218. (1932) 32 SR (NSW) 109. 219. See, eg Berg v Sadler [1937] 2 KB 158 (where a criminal attempt to obtain goods by false pretences was frustrated by seller’s refusal to deliver goods, the recovery of money paid was denied); Bigos v Bousted [1951] 1 All ER 92 (repentance of illegal currency transaction of no effect and a share given as security certificate was not recoverable); Sykes v Stratton [1972] 1 NSWLR 145 at 166 (repentance was not the reason why the illegal purpose was not carried out). Cf Weston v Beaufils (No 2) (1994) 50 FCR 476 at 501; 122 ALR 240 at

268. Compare, however, Tribe v Tribe [1996] Ch 107 at 134–5 per Millett LJ, with whom Otton LJ agreed (Bigos v Bousted [1951] 1 All ER 92 a dubious extension of rule, but cf Patel v Mirza [2015] 2 WLR 405 at 418 per Rimer LJ; [2014] EWCA Civ 1057 at [41]). 220. See, eg Alexander v Rayson [1936] 1 KB 169, (contract by which the plaintiff had sought to perpetrate fraud on local council); Sykes v Stratton [1972] 1 NSWLR 145 (repentance too late). Compare Berg v Sadler [1937] 2 KB 158 (frustration of illegal purpose). However, see Tribe v Tribe [1996] Ch 107 at 135 per Millett LJ, with whom Otton LJ agreed (restitution not confined to the penitent, and voluntary repentance at the appropriate time is sufficient). 221. See [2628], [2629]. 222. See generally Chapter 5. 223. See Hatcher v White (1953) 53 SR (NSW) 285 at 299 per Herron J. 224. But see [505] for a more precise classification. 225. (1938) 38 SR (NSW) 351 at 358. 226. (1947) 50 WALR 14 at 20. See also Nelson v Nelson (1995) 184 CLR 538 at 563, 604–5; 132 ALR 133 at 152 per Deane and Gummow JJ, 186 per McHugh J. 227. In fact the defendant in the action had cashed a cheque which the plaintiff paid to the builder. 228. See Harse v Pearl Life Assurance Co [1904] 1 KB 558 at 563; Nicholls v Stanton (1915) 15 SR (NSW) 337 at 341–2; Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482; George v Greater Adelaide Land Development Co Ltd (1929) 43 CLR 91 at 101; Australian Real Estate Investment Co Ltd v Gillis [1935] SASR 148 at 154; Marks v Jolly (1938) 38 SR (NSW) 351 at 358. Cf Edler v Auerbach [1950] 1 KB 359 at 376. 229. (1953) 53 SR (NSW) 285. 230. See, eg [2616]. 231. See (1953) 53 SR (NSW) 285 at 292. 232. (1953) 53 SR (NSW) 285 at 289, 299 (applying Burrows v Rhodes [1899] 1 QB 816). 233. (1953) 53 SR (NSW) 285 at 289 per Street CJ. 234. Compare and contrast: Harse v Pearl Life Assurance Co [1904] 1 KB 558 (premiums paid under insurance policy void for want of insurable interest not recoverable); Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482 (recovery of insurance premiums where an insurer fraudulently deceived an insured as to the existence of an insurable interest). But cf Burrows, p 593. 235. See Nelson v Nelson (1995) 184 CLR 538 at 604–5; 132 ALR 133 at 186 per McHugh J. See also Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 228–9; 143 ALR 569 at 578 per McHugh and Gummow JJ. 236. See Chapter 4. 237. See Harse v Pearl Life Assurance Co [1904] 1 KB 558 at 563; Jones v Bouffier (1911) 12 CLR 579 at 621; George v Greater Adelaide Land Development Co Ltd (1929) 43 CLR 91 at 99, 101; Re Ferguson (1969) 14 FLR 311 at 316; DJE Constructions Pty Ltd v Maddocks [1982] 1 NSWLR 5 at 9. Cf Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. 238. [1973] Qd R 93. Contrast Cheers v Pacific Acceptance Corp Ltd (1959) 60 SR (NSW) 1 (no allegation of duress).

239. [1925] VLR 664. 240. (1932) 32 SR (NSW) 109 (see [2635]). 241. (1778) 2 Cowp 790; 98 ER 1364. See also Nelson v Nelson (1995) 184 CLR 538 at 604–5; 132 ALR 133 at 186 per McHugh J. See also Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215 at 228–9; 143 ALR 569 at 578 per McHugh and Gummow JJ. 242. (1778) 2 Cowp 790 at 792; 98 ER 1364. See also Moses v Macferlan (1760) 2 Burr 1005 at 1012; 97 ER 676 at 681 per Lord Mansfield (money had and received available where undue advantage is taken of the plaintiff’s position contrary to the laws made for the protection of a person such as the plaintiff); Smith v Bromley (1760) 2 Doug 696n at 697; 99 ER 441 at 443 (see [2604]). 243. See Hatcher v White (1953) 53 SR (NSW) 285 at 299 per Herron J. See also DJE Constructions Pty Ltd v Maddocks [1982] 1 NSWLR 5 at 9. 244. [1960] AC 192. See also Bonnard v Dott [1906] 1 Ch 740; Re Cavalier Insurance Co Ltd [1989] 2 Lloyd’s Rep 430; Henderson v Amadio Pty Ltd (No 2) (1996) 62 FCR 221 at 231; 140 ALR 596 at 604–5 per Heerey J (affirmed sub nom Amadio Pty Ltd v Henderson (1998) 81 FCR 149). Equally the statute could protect the defendant and so prevent a restitutionary claim: see Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at 543; [2012] HCA 7 at [109]. 245. See [1960] AC 192 at 204–5. 246. (1965) 115 CLR 247. See also Henderson v Amadio Pty Ltd (No 2) (1996) 62 FCR 221 at 231; 140 ALR 596 at 604–5 per Heerey J (affirmed sub nom Amadio Pty Ltd v Henderson (1998) 81 FCR 149). 247. The case was referred to without disapproval in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 400. 248. See generally Chapter 20. 249. The cases were reviewed by the High Court in Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 at 451ff. See also Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 463–4; Mediservices International Pty Ltd v Stocks & Realty (Security Finance) Pty Ltd [1982] 1 NSWLR 516 at 524; Lejo Holdings Pty Ltd v Deutsche Bank (Asia) AG [1988] 2 Qd R 30 at 32ff, 41–3, 45–8; Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 12–13, 19. 250. See Farrow Mortgage Services Pty Ltd v Edgar (1993) 114 ALR 1 at 19 (equitable relief by way of declaration and orders for delivery up and associated relief). See also [2626], [2640]. 251. See, eg Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428 where a creditor was not entitled to return of money lent under a void contract because the debtor’s claim was not one for purely equitable relief. See also Deposit & Investment Co Ltd v Kaye (1962) 63 SR (NSW) 453 at 464; Lejo Holdings Pty Ltd v Deutsche Bank (Asia) AG [1988] 2 Qd R 30 at 32ff, 41–3, 45–8. 252. See Jones v Bouffier (1911) 12 CLR 579 at 621 (reference to equitable relief in the form of declaration that transaction void and order of cancellation). 253. See Hatcher v White (1953) 53 SR (NSW) 285 at 299. 254. (1929) 43 CLR 91 at 101. See also Harse v Pearl Life Assurance Co [1904] 1 KB 558 at 563; Re Ferguson (1969) 14 FLR 311 at 316–17; Sykes v Stratton [1972] 1 NSWLR 145 at

163; DJE Constructions Pty Ltd v Maddocks [1982] 1 NSWLR 5 at 9; Abdurahman v Field (1987) 8 NSWLR 158 at 162–3; Weston v Beaufils (No 2) (1994) 50 FCR 476; 122 ALR 240 at 267 per Hill J; Nelson v Nelson (1995) 184 CLR 538 at 562; 132 ALR 133 at 152 per Deane and Gummow JJ. 255. (1969) 14 FLR 311. See also cases on the solicitor–client relationship: Abdurahman v Field (1987) 8 NSWLR 158; Weston v Beaufils (No 2) (1994) 50 FCR 476; 122 ALR 240. Contrast Sykes v Stratton [1972] 1 NSWLR 145 (beneficiary knew of the illegality).

[page 947]

Chapter Twenty Seven

Delay 1. 2. 3.

General …. Delay in the Exercise of a Right …. Delay in the Pursuit of a Remedy ….

[2701] [2706] [2711]

(a) General ….

[2711]

(b) Statutes of Limitation ….

[2714]

1. General [2701] Objects. Delay is, inevitably, as relevant to a claim for restitution as to any other claim. For example, statutes of limitation apply to all claims derived from the common law. Although delay therefore exemplifies a general defence, the circumstances in which delay may operate as a defence to a claim for restitution are clearly relevant concerns for this book. The object of this chapter is to outline the relevance of delay as a defence, and to identify situations in which it has an independent application. This involves a consideration of the role of delay in the context of rights and remedies.1 [2702] Remedies and rights. In theory, if not always in practice, delay in the pursuit of a remedy is distinguished from delay in the exercise of a right. Since an action for restitution is invariably presented as a claim for a remedy, delay in the pursuit of a remedy is the main topic for discussion in this chapter. The principal concern is with statutes of limitation. The statutes operate simply on the basis of the

effluxion of time, and do not in terms depend on a defendant’s reliance or detriment.2 There is also, in theory, a clear contrast between delay in seeking the recovery of money on the basis that it was paid under compulsion, and the recovery of money on the basis that the discharge of a contract has caused a total failure of the agreed return. In the former case, for the purposes of the statutes of limitation,3 time generally runs from the time of payment. However, in the latter case, until the contract has been discharged or rescinded,4 no claim may be made in restitution.5 Delay may also be a factor in estoppel and the equitable defence of laches. Equally, there is no doubt that delay in the exercise of a right may prevent a party asserting that the right is available. Where a claim for restitution assumes the prior (valid) exercise of a right, the claim is not available if the right has not been exercised in time. If this is the case, delay will be a defence. [page 948] Accordingly, there are cases in which delay in the exercise of a right is in effect a defence to a claim for restitution. Although we do not intend to discuss the area exhaustively, it is important to indicate in a general way the impact of delay from this perspective. The usual contexts are claims for restitution based on exercise of a right of rescission or discharge following misrepresentation or breach of contract. However, the relevance is not limited to claims arising out of ineffective contracts. Thus, even apart from statutes of limitation, where a statute confers a right, that right may be lost if the plaintiff has been guilty of delay. [2703] Onus. The onus of pleading and proving that a remedy is barred by delay rests on the defendant,6 except where the plaintiff seeks in effect an extension to the limitation period in order to overcome the primary rule, such as by a plea of disability, mistake or concealment of fraud.7 The obvious analogy with general principles governing election between rights8 suggests that the onus of alleging and proving that a

particular right has been lost through delay also rests with the defendant. In the same way, if there is no allegation that a right has been lost, but the question is whether the right has, by reason of delay, ceased to be available, the defendant bears the onus of proof. Thus, if the question sought to be raised is whether a remedy has, by reason of delay, ceased to be available independently of the statutes of limitation, the defendant bears the onus of proof. Although delay is often associated with defences to restitutionary claims, its scope as an independent defence is somewhat limited. In many cases delay is merely circumstantial (or evidential). For example, if one party to a transaction vitiated by fraud delays the election to rescind long enough to allow the other to dispose of the subject matter to a bona fide purchaser, there will be a defence.9 Similarly, if the plaintiff delays making a claim for a period of time in which the defendant changes its position, the claim for restitution will be affected.10 However, in such cases it is the fact of purchase, or the fact of change of position, and not the mere fact of delay, which is the basis for the defence.11 [2704] Unreasonable delay. In all cases, the relevant inquiry is whether there has been ‘unreasonable delay’. The concept of ‘unreasonable delay’ is obviously a relative one. However, there is a more fundamental problem. [page 949] It has been doubted whether, outside the context of statutes of limitation, the concept of delay has an independent operation.12 Unless a remedy or right is one which has a definite (that is, prescribed) duration, it is arguable that the mere effluxion of time can never bar the exercise of a right or the pursuit of a remedy. Where there is unreasonable delay in the exercise of a right or the making of a claim, and the conclusion is reached that the right has been lost or that the claim cannot be made, we might therefore question

whether it is the mere fact of delay which is the basis for the conclusion. There is clearly a danger inherent in the conception of mere delay — not coming within the statutes of limitation — as barring a claim in restitution. That danger is that the real basis for the conclusion is ignored. The true position may simply be, for example, that delay amounts to an election against exercise of the right, that is, affirmation has occurred. The argument that delay is not an independent defence is therefore based on the view that the criterion of unreasonable delay is satisfied only where there is more than the mere effluxion of time. Accordingly, in cases where delay in the exercise of a right is at issue, the real basis for the conclusion that delay is a defence may be the operation of (inferred) election or estoppel. [2705] Effect of delay. The mere fact of delay hardly ever extinguishes a remedy. Even statutes of limitations, the most common ground for a conclusion that a remedy cannot be sought on the basis of delay, illustrate a procedural bar to a claim. Generally,13 the remedy is not extinguished by reason of the plaintiff’s delay. Similarly, a mere election against one contractual right in favour of another does not extinguish a remedy: consideration is generally required for this to occur.14 However, if the valid exercise of a right is a pre-condition to the existence of a remedy, the effect of delay — if this is the basis upon which the conclusion of election is made — is to bar the remedy.15 A remedy or right which has not actually been lost by reason of delay may nevertheless cease to be available. Estoppel may operate to achieve this result, that is, estoppel may preclude the plaintiff asserting an otherwise valid legal or equitable remedy or right.16 Although in some cases estoppel may have a greater impact,17 it is usually sufficient for the defendant’s purposes to rely on the concept as a procedural bar.

2. Delay in the Exercise of a Right [2706] Introduction. Although the contrast between rights and remedies looks to be clear enough, there are situations which are

difficult to classify. In particular, the classification tends to break down when we consider rights [page 950] with an equitable basis. Take, for instance, the case of misrepresentation. In relation to contracts induced by innocent misrepresentation there were formerly both a common law and an equitable jurisdiction to order restitution.18 However, today the equitable approach prevails, and the plaintiff’s claim is generally governed by the principle of restitutio in integrum.19 To the extent that the valid exercise by the plaintiff of the right of rescission depends on the court granting relief to achieve substantial restitution, the right is inextricably connected with the remedy in restitution. When we move from misrepresentation to undue influence and unconscionable conduct, there is arguably no positive right of rescission. Rather, there is merely a ‘right’ (or ‘equity’) to approach the court for an order setting aside the contract.20 Even if the court is asked to do no more than confirm an avoidance of the contract, and to award restitution on that basis, the operation of discretionary factors suggests that the only concern is with a remedy.21 [2707] Exercise of right expressly conferred. Where a right of rescission or discharge is expressly conferred by a contract, that right must be exercised within any period of time specified. If it is not so exercised the right is regarded as having been permanently lost.22 Where no time is expressly stated, a reasonable time period will be implied.23 Once an unreasonable time has expired it will not be open to the plaintiff to assert valid exercise of the right as an election. In either case, if valid election is necessary to the claim in restitution — for example, to establish a total failure of the agreed return in relation to benefits conferred — the defence of delay will succeed.24 The claim in restitution will fail unless there is an alternative common

law right, outside the scope of that which was expressly conferred, which may be used to establish that election was valid. [2708] Exercise of right conferred by law. In cases where the right is conferred by general principles of the common law or equity, there is usually no question of an express (specified) period for election. But such specification may be present, or a provision applicable to express rights may, [page 951] as a matter of construction, also apply to implied rights.25 This suggests that in analysing delay in the context of contractual rights the concern is simply to give effect to the terms of the contract. Where a contract does not specify a period for election, the question may arise whether, and on what basis, the defence may be raised that the right has not been exercised within a ‘reasonable’ period of time. It has been doubted whether there is a general rule that a right conferred by law must be exercised within a ‘reasonable’ time.26 It is therefore hardly accurate to say, as a matter of principle, that election must be ‘prompt’.27 As a matter of logic and principle, there is no reason why delay should of itself bar a right to elect. The cases which apparently assert that ‘unreasonable delay’ is a defence, for example in relation to discharge for breach of contract or rescission for misrepresentation,28 simply illustrate proof of election or estoppel by reference to delay. Because the proper approach to such matters is not a concern of this work,29 it is sufficient to explain and illustrate the undoubted proposition that delay in the exercise of a right may be a defence to a claim for restitution. We prefer to express this by saying that ‘unreasonable’ delay may give rise to an inference of election,30 or be part of the circumstances establishing estoppel.31 If principles of election are operative, the right has been lost. If principles of estoppel are operative, the right has ceased to be available. From the perspective of election between contractual rights, the

delay must constitute conduct amounting to an affirmation of the contract. In Leaf v International Galleries32 the buyer of a painting who had paid the price brought a restitutionary claim to recover the price of the painting, alleging a total failure of the agreed return flowing from rescission of the contract. However, the buyer did not attempt to rescind for misrepresentation until five years after the purchase. The English Court of Appeal held that the claim was barred: delay was a valid defence. It appears that rescission was [page 952] not available because the contract had, in effect, been affirmed.33 More recently, in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (The Atlantic Baron)34 Mocatta J’s decision was that delay on the part of the buyer of a vessel meant that it could not claim to have validly rescinded a price variation contract even though it was obtained by economic duress. The claim for restitution failed because rescission was not valid. The only rational justification for concluding that there was unreasonable delay was that the circumstances justified an inference that the buyer had elected to affirm the contract. [2709] Exercise of right conferred by statute. Irrespective of whether a contract specifies a time limit for the exercise of rights, delay may be governed by statutory rules. So far as a plaintiff’s claim for restitution is concerned, these have contrasting orientations. One is found in statutes which state that the exercise of a right is barred on the expiry of, or must be exercised before the expiry of, a reasonable or specified period of time. Thus, the sale of goods legislation deems ‘acceptance’35 of goods to have occurred if rejection does not take place within a reasonable period of time.36 A second orientation is to be found in the operation of the trade practices and fair trading legislation.37 Since the jurisdiction to make awards, whether for compensation or in the nature of restitution, does not depend on the prior exercise of a right conferred under the general

law, delay is not determinative of the exercise of the jurisdiction. Accordingly, although the right to rescind a contract induced by misleading or deceptive conduct amounting to misrepresentation may be lost by delay, the court’s discretion38 to set aside a contract and order restitution is not directly affected. In effect, the proper perspective is delay in the pursuit of a remedy.39 [2710] Estoppel. Delay in the exercise of a right on which the claim to restitution is founded may be a defence even apart from the rules on election between rights. It has already been explained40 that just as affirmation of a contract may provide a defence to a claim for restitution based on an election to rescind or terminate a contract, so estoppel may provide a defence to such a claim. Its operation depends on words or conduct, relied upon by the defendant, which preclude the plaintiff from asserting the right on the exercise of which restitution depends. [page 953] Since delay of itself amounts to no more than silence, estoppel by reference to delay is in practice more difficult to establish than an election between inconsistent rights.41

3. Delay in the Pursuit of a Remedy (a) General [2711] Introduction. Delay in the pursuit of a remedy has a more direct impact on a claim in restitution than delay in the exercise of a right. Nevertheless, at least until the period specified by any statute of limitations has expired, delay cannot of itself bar a claim to restitution. For example, where the plaintiff has a choice between alternative remedies, delay occasioned by proceedings in which one (but not the other) is sought does not bar an action for the alternative remedy. This

is because, under the principles established in United Australia Ltd v Barclays Bank Ltd,42 the plaintiff’s right to elect between the remedies lasts until judgment has been taken for one of the remedies.43 However, the general rule, that the mere effluxion of time cannot be relied upon as a defence, is subject to a major qualification, namely, the operation of statutes of limitation. These state specific periods within which claims in restitution may be brought. A claim which is not brought in time is statute barred. If there is no limitation statute, or it is argued that delay of a shorter period operates as a defence in the circumstances of the case, something more than the passing of time must be shown. There are two situations. First, prior to the expiry of the limitation period, delay may be a circumstance relevant to proof of estoppel or some related defence.44 Second, in any case where direct or consequential equitable relief is sought, so that the remedy in restitution depends on the exercise of a discretion in the plaintiff’s favour, delay will be a factor relevant to the exercise of that discretion. Statutes of limitation preserve equitable rules which, where applicable, may cause the loss of a remedy in a shorter period of time than statutory standards.45 We deal (briefly) with both before analysing the operation of statutes of limitation. [2712] Estoppel. Delay in claiming a remedy generally does not create an estoppel. There are a number of reasons for this. Thus, given the ability to amend pleadings, the mere fact of delay in making a claim cannot estop the plaintiff.46 Again, and more fundamentally, the concept [page 954] of estoppel relies on conduct. Although silence may be conduct, it is generally equivocal. In any event, estoppel assumes induced reliance that is (or may be) prejudicial. There may be no prejudice to the

defendant, and no unconscionable conduct on the part of the plaintiff. Indeed, the defendant may well have benefited from the delay. There are, however, two cases in which delay may be significant in establishing estoppel against the plaintiff. First, estoppel may operate to create a defence to restitution by precluding a plaintiff from denying the existence of an agreement to compromise (or abandon) a restitutionary claim.47 Second, the equitable concept of estoppel by acquiescence, which operates in diverse situations,48 may preclude the plaintiff from asserting a restitutionary claim.49 Estoppel may, alternatively, operate against a defendant. Since pleading the statute of limitations is a matter of right rather than obligation, there may be an estoppel where the defendant is otherwise entitled to plead the statute. Initial failure to invoke a statute does not ordinarily have this effect, since the defendant may amend its pleadings in the course of the trial. However, if there has been a representation or promise not to plead the statute of limitations, relied upon by the plaintiff in circumstances where it would be unjust or inequitable to permit the statute to be pleaded, the estoppel may be established.50 [2713] Delay relevant to discretion. In equity, the mere fact of delay is no bar. Thus, in Redgrave v Hurd51 Jessel MR referred to the ‘settled doctrine of equity’ that where a contract may be rescinded for fraud, delay is not an answer ‘unless there is such delay as constitutes a defence under’ a statute of limitations. The claim in restitution, for example, for total failure of the agreed return, is then subject only to the statutes of limitation.52 On the other hand, in Erlanger v New Sombrero Phosphate Co53 Lord Blackburn insisted that courts of equity ‘require those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been [page 955] such notice or knowledge as to make it inequitable to lie by’.54

Nevertheless, in the absence of ‘notice or knowledge’, it can only be ‘inequitable to lie by’ if prejudice or hardship has been caused by the plaintiff’s delay.55 Equitable principles relevant to claims for restitutionary relief rely on acquiescence and laches. The considerations relevant to estoppel by acquiescence56 are also relevant to any restitutionary claim which depends directly or indirectly on the grant of discretionary relief setting aside a transaction. The relevance is to any claim dependent on an order setting aside a transaction, and to the grant of relief57 consequent on the order or consequent on the exercise of a positive right of rescission. For example, delay amounting to acquiescence is a good defence to a claim to set aside a contract for unconscionable conduct or mistake.58 However, what matters is not the length of time per se, but whether it is in the circumstances fair and just to make the order in question.59 Although laches is an equitable concept which is not available as a direct defence to a common law claim for restitution,60 the equitable approach may apply where relief is sought following the exercise of a legal right, for example, to rescind for misrepresentation. This is because the objective of achieving substantial restitution through restitutio in integrum may be affected by delay. Thus, delay may bar the claim for restitution, if it is so prejudicial that an order for restitution would be practically unjust.61 But the onus is on the defendant,62 and if there is merely evidence of inactivity, and no prejudice, an order will be made in the plaintiff’s favour.63 [page 956] In relation to the statutory discretions applied under the Australian Consumer Law,64 delay in approaching the court is governed by statutory limitation periods.65 The periods referred to render general and specific equitable principles largely irrelevant.66

(b) Statutes of Limitation

(i) General [2714] Purpose and restitutionary problems. As Kirby P remarked in Hawkins v Clayton,67 the purposes fulfilled by limitations statutes include: … not only the encouragement of reasonable diligence in the pursuit of legal rights; but also the legitimate need in society to finalise the possibility of litigation where, years later, witnesses may have died or be unavailable, evidence may be destroyed, memory may have faded and business and property may have passed hands on the faith of an immunity from old claims.

Although these purposes are as relevant to claims in restitution as they are to claims in tort and contract (the context of Hawkins v Clayton), statutes of limitation present special problems for restitution. First, there is the general difficulty that the relevant limitation periods are not found solely in the statutes of limitation themselves.68 Account must also be taken of statutes which permit orders in the nature of restitution, and which contain their own particular limitation periods.69 A second difficulty arises from the federal system. The Australian statutes of limitation are not uniform in their terms or scope, or even in the limitation periods stated.70 Moreover, although the statutes do not state absolute periods, and generally operate as procedural bars which may themselves be extended,71 there are exceptions.72 Again, within a particular jurisdiction, choosing the applicable limitation period may be a matter of debate.73 For restitution lawyers, a third difficulty is that the statutes of limitation are themselves drafted on the basis of quasi-contract.74 They do not in [page 957] terms refer to unjust enrichment. Nor is it simply a matter of assuming that the limitation periods imposed on quasi-contractual claims apply to claims based on the unjust enrichment concept. The latter is broader

than the former, so that there may be some claims for which there is no limitation period.75 [2715] Application of limitation statutes. The limitation statutes of the States76 and mainland Territories77 are reasonably uniform in their application to restitutionary claims. Generally speaking, the enactments govern actions commenced in the respective State and Territory courts. For private international law purposes, all States and Territories treat the limitation statutes of other Australian jurisdictions as substantive. This means that the limitation law of the forum does not apply to a transaction whose ‘proper law’ is that of another (Australian) jurisdiction.78 There is no federal limitation statute of general application, either to actions commenced in the federal courts or to rights of action derived under federal legislation or involving the Commonwealth. Under the Judiciary Act 1903 (Cth) the law of the State or Territory in which the proceedings are heard at first instance is applied, unless otherwise provided for by federal legislation.79 Actions commenced in the original jurisdiction of the High Court are governed by the law of the State or Territory in which the action is tried or remitted (including, of course, its private international law).80 [2716] Arbitration. Delay in the prosecution of a claim made in arbitration proceedings may result in the dismissal of the claim or the making of directions for the specific determination of the claim.81

(ii) Limitation periods [2717] Standard limitation periods. To the extent that statutes of limitation apply to claims in restitution, a sufficiently long delay will preclude the claim. The first question, obviously, is the choice of limitation period. If it is possible to state a general rule, it is the rather unsatisfactory [page 958]

one that claims in restitution are subject to the same limitation period as actions brought on simple contract. The standard limitation period for such contractual claims is six years in all jurisdictions, except the Northern Territory, where it is three.82 The period applicable to most restitutionary claims is therefore the same. Although not as relevant, it may be noticed that the same period applies, generally, to claims in tort. Thus, other than in the Northern Territory, a standard limitation period of six years applies where the cause of action is for tort,83 except that if the tort occasions personal injury the period is three years (or less in some circumstances).84 In the Northern Territory the standard tort period is three years.85 The restitutionary position is achieved in various ways. In the Australian Capital Territory86 and Western Australia under its Limitation Act 200587 it is simply prescribed that a standard six-year limitation period applies to all actions on any cause of action except those for which another period is provided by the Act. Accordingly, except where it is contended that a period provided for elsewhere in the legislation applies, there is no need to classify the restitutionary claim. In other jurisdictions (and in Western Australia prior to 2005) the language of the legislation is, as might be expected, that of ‘quasicontract’, and the now discredited understanding of the law of restitution as based on implied contract. Thus, the limitation statutes in the Northern Territory, New South Wales and Queensland provide that ‘contract’ includes ‘quasi-contract’.88 Similarly, in Tasmania, Victoria and Western Australia under the Limitation Act 1935 (WA) reference is made to contracts ‘implied by law’.89 The South Australian provision90 refers to ‘implied contract’. Even if it was not intended that ‘implied contract’ would include ‘contract imposed by law’, there is authority to support the application of this type of provision to restitutionary claims. In Re Diplock,91 the English Court of Appeal was faced with a limitation statute that imposed a limitation period for contractual claims but made no express provision for what were then known as quasi-contractual claims. Since, however, these were then generally believed to be causes of

[page 959] action based on an implied contract,92 it is hardly surprising that the court was prepared to assume that such actions should be treated as ‘actions founded on simple contract’ for limitations purposes. It was added93 that ‘the words used cannot be regarded as felicitous’. The action for an account is addressed separately in some jurisdictions.94 [2718] Effect of expiry of limitation period. As regards personal claims, the operative statute in most jurisdictions (if duly invoked)95 bars the plaintiff’s remedy as distinct from the underlying right upon the expiry of the limitation period. However this is not the case in New South Wales, where effluxion of time bars the underlying right if the statute is invoked.96 There is also an exception in the case of successive wrongs to goods where there is an effective prescriptive title to chattels in most, and probably all, jurisdictions. Although this mainly affects pure proprietary claims,97 it is also relevant to claims for restitution or restitutionary damages based on torts such as conversion and detinue.98 [2719] Problems of application. In claims for breach of contract, the cause of action accrues at the moment of breach, and the limitation period commences to run from the time of breach.99 Because a breach of contract is not the usual basis for a claim in restitution, the general prescription of equivalent periods for claims in contract and claims in ‘quasi-contract’ or under contracts that are ‘implied’ or ‘implied by law’ turns out to be of limited assistance. Apart from the obvious point that there is now, as a matter of substance, no true analogy between contract and restitution (for unjust enrichment), four problems may be noticed. First, although it is essential, both to work out the event from which time commences to run, and to apply the applicable limitation period, the statutes provide very limited assistance on these matters.100

Nevertheless, the courts, relying mainly on a characterisation of claims in restitution as of a quasi-contractual nature, have, at least in relation to common law claims, generally been able to discern a legislative intention that such claims are barred on the expiry of a period stated in the statutes.101 For example, [page 960] although a claim in restitution for the recovery of money paid made on the basis of total failure of the agreed return usually depends on the exercise of a right of discharge or rescission to which no limitation period applies,102 it cannot be doubted that the time for bringing the restitutionary claim is regulated by statute.103 Second, the statutes do not expressly deal with situations in which alternative claims may be made.104 As we have explained,105 alternative claims may arise for a number of reasons.106 The same set of facts may provide the plaintiff with a choice between alternative claims in restitution. Again, the same set of facts may provide the plaintiff with a choice between a claim in restitution and a claim in contract or tort. We deal separately with the limitation issues touching claims in relation to wrongs.107 The differences which necessarily occur are particularly important to an analysis of when the relevant period expires. Third, the general limitation provisions yield to specific statutory rules that affect some categories of what we have treated in this work as restitutionary claims, or bases for the recovery of restitutionary damages, including claims based on fraud, mistake, frustrated contracts, contribution and certain claims affecting trust property and estates. These specific rules operate in various ways: they sometimes postpone the date of accrual of the cause of action; at other times extend the standard limitation period;108 and on other occasions they merely state special limitation periods or define a specific cause of action or the time of its accrual.109 The list is illustrative rather than exhaustive.

Fourth, because the impact of the law of restitution is felt throughout the law of civil obligations, any analysis of statutes of limitation inevitably draws in provisions more relevant to non-restitutionary claims. Clearly, and obviously, the law in such contexts has developed without regard to issues specific to the law of restitution.

(iii) Independent claims [2720] Accrual of cause of action. In applying the limitation statutes we begin with the most common type of restitutionary claim, namely, the (independent) claim which arises where, independently of any wrong, a claim in restitution may be made on the basis of recognised grounds illustrating the unjust enrichment concept.110 For the purpose of statutes of limitation, the general rule, subject to special rules permitting the extension or postponement of limitation periods, is that [page 961] time runs from the commencement or accrual of the cause of action.111 However, except in specific situations, some of which are dealt with below,112 the enactments offer no assistance as to when time commences to run in restitutionary claims. In fact, exactly when a restitutionary cause of action arises may differ from situation to situation. The case law is sparse, and many questions await elucidation, presumably by reference to principles of unjust enrichment.113 We limit ourselves in the analysis below to a consideration of when causes of action in restitution generally accrue. [2721] Guidance of unjust enrichment concept. If (as in most cases) the nub of a restitutionary claim is that it is the law’s response to an unjust enrichment that would otherwise be obtained by the defendant, then principle suggests that the cause of action accrues when that enrichment occurs. In indicating a general rule that time

should run from the date of the defendant’s enrichment, we are suggesting that the law (which is far from certain even in the situations addressed specifically in the limitation statutes) should prefer such a reasonably certain event.114 The limited case law to date supports the principle we espouse,115 in particular the decision in Torrens Aloha Pty Ltd v Citibank NA.116 However, there are many cases in which it will not be apparent, at the moment of receipt, that the enrichment is unjust. For example, it is difficult to say that a payee is unjustly enriched by a payment the recovery of which (by the payer) depends on proof of a total failure of the agreed return occurring on discharge of the contract. We must therefore take account of the reason why the defendant was enriched, and why it is contended that the enrichment is unjust. Accordingly, as we explain below117 the general principle is qualified by the proposition that time cannot begin to run until the cause of action is complete, or at least may be made so by action on the part of the plaintiff. In adopting this line we follow the approach, taken in earlier chapters,118 that where a claim for restitution assumes the prior occurrence of an event, such as exercise of a right against the defendant, the occurrence of the event is generally part of the plaintiff’s cause of action rather than an issue which may be raised by way of defence to a prima facie claim. [page 962] In other words, the period of time which runs between an enrichment of the defendant and the occurrence of the event which is a precondition to the claim in restitution should not usually count in the assessment of whether the limitation period has expired, since the limitation period has not in fact commenced. [2722] Claims where enrichment does not discharge valid obligation. In the case of money, not paid in discharge of a valid legal obligation, the time of the defendant’s enrichment will usually be when the payment was received. The very transfer of money from the plaintiff

to the defendant in a situation where the defendant in justice had no right to receive it is the restitution-causing event. Thus, where the payment was due to mistake,119 or improper pressure,120 or involving misdirected funds121 the cause of action should arise at the time of payment. The same approach may be made where payment is made following an unlawful or illegal demand, or if a payment is made under some categories of inherently ineffective contract,122 as where what was thought to be a contract was in fact void for mistake.123 In these cases some guidance may be obtained from decisions relating to interest.124 Thus, in Woolwich Equitable Building Society v Inland Revenue Commissioners125 the building society recovered interest from the date on which it met the Revenue’s unlawful demand, albeit that the unlawfulness was not established judicially until the regulation under which payment was demanded was declared ultra vires.126 A claim for reasonable remuneration for work done will generally arise when the work is done and accepted, because it is at that point of time that the defendant has received a benefit in circumstances giving rise to an obligation to make restitution.127 Thus, where non-monetary benefits are accepted, and no contract materialises, or the ‘contract’ is void, time runs from the time when the recipient accepted the benefit of the work done. [page 963] The position may be the same in a case like Pavey & Matthews Pty Ltd v Paul,128 where non-monetary benefits were conferred and accepted under a contract unenforceable under statute. In principle, a like rule should apply to goods accepted under a contract which is inherently ineffective, although most such claims are either contractual or statutory in character.129 [2723] Claims where enrichment made pursuant to obligation. In the case of money paid in discharge of a contractual obligation, the position is far from clear. In principle, time should not run until the

plaintiff is in a position to claim restitution. In some cases, this will be from the time of payment, as where the plaintiff has a right of contribution or recoupment arising out of the discharge of a valid obligation owed to a third party which, as between plaintiff and defendant, was partly or wholly due to the defendant.130 In other situations, the time of accrual will be later. Thus, where money is paid pursuant to a binding legal obligation existing solely as between the plaintiff and defendant, the principle that there can be no restitution so long as that obligation stands131 will mean that it is not immediately recoverable in restitution.132 In those circumstances, it is difficult to see how time can begin to run from the time of payment. Common sense dictates that the plaintiff’s cause of action accrues at the moment when the claim can be brought, and not before. Thus, English cases have held that the cause of action under the Law Reform (Frustrated Contracts) Act 1943 (UK) accrues at the date of frustration.133 It is also clear that the cause of action for restitution based on total failure of the agreed return accrues at the date of that event, and not the prior date of payment.134 Similarly, it seems absurd to say, where money is paid under a judgment given against the plaintiff, that time begins to run in a claim for restitution of the amount of the judgment from the time of payment. Logically, time can only run from the moment when the judgment is reversed or set aside.135 [page 964] We believe that the propositions stated above correctly represent the law as regards accrual of a cause of action in a limitation context, even though non-statutory interest may be awarded from the date of payment in particular situations.136 It must therefore follow that, in any case where a claim to recover money paid under contract depends on valid discharge or rescission of a contract, time cannot run until (at least) the time when the plaintiff is entitled to treat the contract as discharged or to rescind it. This is because the ability to claim in restitution depends on the actual discharge or rescission of the

contract.137 If there is a general rule it is that time begins to run from the time of discharge or rescission. Thus, a claim to recover a deposit cannot be made while the vendor, seller or stakeholder has the right to retain the deposit under the contract. It is recoverable only as a consequence of rescission or discharge of the contract. Accordingly, time runs from the time of election, even if (as in the case of rescission) it operates ab initio.138 Is there scope for saying that time ought to run from the moment when the plaintiff is aware of the facts which give rise to the right of discharge or rescission? Since there is no limitation period directly applicable to rights of discharge or rescission, such delay can in strict theory only be relevant to the availability of the right on which the ability to claim restitution depends. Accordingly, it must be wrong to say that, for the purpose of statutes of limitation, time always begins to run from the time of accrual of the right to elect. In Commonwealth Homes and Investment Co Ltd v Smith139 an allotment of shares to the plaintiff was voidable by reason of the omission of certain information in the prospectus. Latham CJ considered the relevant period to be that which had elapsed between the allotment and the bringing of the claim for restitution. However, the majority reasoned that, as the contract was merely voidable and not void, time could not begin to run until avoidance had occurred. As Dixon J said,140 ‘no right in the [plaintiff] to … repayment … arose until he repudiated the allotment of shares’. Since there was no evidence of an election to affirm the contract, and because the action for restitution consequent on rescission was brought within the limitation period, there was no relevant delay. In any event, in practice many claims are governed by equity’s approach to delay, as where restitution is sought following rescission for misrepresentation, or a claim for restitution is based on relief against forfeiture or restitutio in integrum. The discretionary factors of laches and acquiescence therefore apply.141 Moreover, any treatment of knowledge as the relevant event may be qualified by provisions in the [page 965]

limitation statutes relating to mistake, fraud and fraudulent concealment and acknowledgment of debt.142 This approach is also applicable to some categories of inherently ineffective contract, namely, those in which the plaintiff’s claim to restitution depends on a valid discharge or rescission. As a matter of logic and justice, time cannot run until there is (at least) a right of discharge or rescission. The South Australian case of Crombie v Crombie143 provides an illustration. A husband and wife orally agreed that if the wife paid £100 towards the cost of building a house on land belonging to the husband, the wife should have half of the land. The wife paid the money but the husband refused to recognise his wife’s claim to the half-interest. The wife failed to get specific performance because the payment was not a sufficient part performance to take the case out of the Statute of Frauds. However, she succeeded in her alternative claim, to recover the £100 as money had and received as on a total failure of consideration. Although her claim was not commenced until more than six years from the date of payment, her cause of action was held to have arisen when the husband refused to perform his part of the contract. Citing Cowper v Godmond,144 Way CJ held145 that: … the cause of action was not the receipt of the money, but the refusal of the defendant to fulfil his contract. It was not until he declared that he would not carry out his part of the agreement that the plaintiff had any right to bring an action against him to secure the return of the money.

Problems also arise with claims in relation to non-monetary benefits. In so far as acceptance of benefit is the basis for restitution in relation to such enrichments, time cannot run until acceptance has occurred. But in all cases where the benefit is conferred in discharge (or purported discharge) of a valid contractual obligation, no claim is available until there is an effective termination (or rescission) of the contract. It might seem more appropriate to say that time should begin to run against the plaintiff only from the time when the plaintiff is entitled to treat the contract as discharged. However, this could hardly apply to a claim which can arise only on the defendant’s election.146 Since it is convenient to have a simple rule applicable to all cases, the appropriate rule is for time to run from the moment when the plaintiff

is entitled to seek restitution,147 even though this may ultimately depend, in some cases, on the conduct of the defendant.148 [page 966] [2724] Frustrated contracts. The only three jurisdictions which have statutes which deal expressly with restitutionary claims consequent on frustration of a contract are New South Wales, South Australia and Victoria.149 New South Wales alone has a specific limitations provision. Section 14A of the Limitation Act 1969 (NSW) provides a six-year limitation period from the date of the frustration in relation to a cause of action arising under Part 3 of the Frustrated Contracts Act 1978 (NSW). In all other jurisdictions reliance is placed on the deemed nature of restitutionary claims. In Victoria, all actions and proceedings to recover money under Part 3.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) are deemed to be founded on simple contract, with the cause of action being deemed to have first accrued at the time of discharge.150 This is, in effect, also the position under the Frustrated Contracts Act 1988 (SA). Section 8 of that Act provides that an action for an adjustment under the Act, and for consequential orders to give effect to such an adjustment, may be commenced before a court as if it were an action under the contract that arose at the time of frustration of the contract. Accordingly, as in Victoria, the contractual limitation period applies. In other jurisdictions where the common law applies, the relevant limitation period is left to be determined by the general application of limitation statutes to actions in restitution.151 The period is therefore six years, except in the Northern Territory, where it is three years. In the Australian Capital Territory and Western Australia under the Limitation Act 2005 (WA) this is achieved by application of the standard six-year period.152 In other jurisdictions it is achieved by references to ‘contract’ as including ‘quasi-contract’,153 or contract ‘implied by law’.154 We therefore reach the position that there is a uniform approach to

the commencement of the limitation period, and also that a restitutionary claim made following frustration is not treated any differently from restitutionary claims which arise in the context of other types of ineffective contract. There is, however, one important difference. In New South Wales, South Australia and Victoria it is clear that time does not begin to run until frustration has occurred. This is consistent with the view expressed above.155 On the other hand, there is no indication of the time of commencement in the general provisions which fall to be applied in other jurisdictions. Nevertheless, in our view, the analogy of the New South Wales, South Australian and Victorian legislation is important, as indicating that the time at which the benefit is received is not the relevant time. Rather, the relevant time is the time of discharge by frustration. Thus, it was accepted in BP Exploration Co (Libya) Ltd v Hunt (No 2)156 that [page 967] the date on which the cause of action arose for restitution accrued was the date when the contract was frustrated by the expropriation of BP’s share in the concession. [2725] Relevant claims under the Australian Consumer Law. It has been explained that under the Australian Consumer Law, where a person engages in one of the classes of prohibited conduct, the plaintiff may have a statutory action for damages.157 Such action must be commenced within six years from the date on which the cause of action accrued.158 In so far as the statute operates in the context of conduct which also gives rise to a right of election, for example, to rescind a contract for misrepresentation, the statute does not affect general principles. Injunctive and discretionary orders may be sought in relation to breaches of the statutory prohibitions, and also those which do not enliven the statutory right to damages.159 Applications for them must

be made within six years after the day on which the cause of action that relates to the conduct accrued.160 Since the cause of action in these cases contains as an element the suffering of loss or damage (or the likelihood that loss or damage will be suffered), the period commences to run from the time when that occurs. Following much uncertainty, the High Court held in Wardley Australia Ltd v Western Australia161 that since a plaintiff can only recover compensation for actual loss or damage suffered (as distinct from potential loss or damage), time did not run in relation to a conditional indemnity given as a result of misleading or deceptive conduct until the indemnifier suffered loss as a result of the contingency occurring. [2726] Claims against the Crown to recover unauthorised imposts. In some jurisdictions there are special provisions dealing with claims against the Crown to recover unauthorised imposts. These are addressed elsewhere.162

(iv) Dependent claims [2727] Introduction. There is considerable academic debate about the application of limitation statutes to restitutionary claims based on torts. This reflects differing views about the concept of ‘waiver of tort’,163 especially questions about the extent to which restitution in this area is a remedy appendant to an existing wrong, or a cause of action in its own right. It is not without significance that the debate, and the limited case law, has focused on torts to proprietary interests, notably conversion.164 In the area of restitution for wrongs, the claim may be for restitution or for damages assessed on a restitutionary basis. [page 968] [2728] Context. The issue calls for resolution whenever a plaintiff seeks to evade the time bar applicable to a tortious cause of action by

framing the claim as a restitutionary cause of action in circumstances where the latter is alleged to commence at a later point in time, or attracts a longer limitation period. As we have seen,165 in the Australian limitation statutes, the standard time limit for causes of action founded on tort and on ‘quasi-contract’ (or ‘implied contract’ or contract ‘implied by law’) is the same, that is, six years (except in the Northern Territory where, for each, it is three years). Of course, a plaintiff may be able to avoid the problem entirely by framing a claim that attracts a specific limitation provision that is more generous than that for claims founded on tort or ‘quasi-contract’ (or its analogues).166 Thus, some causes of action may be characterised as seeking ‘relief from the consequences of a mistake’,167 or ‘based on fraud’.168 However, in Beaman v ARTS Ltd169 the English Court of Appeal emphasised that these words looked to the necessary and relevant allegations for the cause of action, and not the way in which the particular claim was pleaded. Thus, the framing of a specific claim in conversion by pleading that it occurred fraudulently was ‘so far as regards the cause of action, nothing more than an abusive epithet’.170 [2729] Issues. At one level, everyone agrees that restitution is available in respect of (at least some) torts. For example, in United Australia Ltd v Barclays Bank Ltd171 Lord Romer said:172 … a person whose goods have been wrongfully converted by another has the choice of remedies against the wrongdoer. He may sue for the proceeds of the conversion as money had and received to his use, or he may sue for the damages he has sustained by the conversion.

But is there in this example one cause of action, or two causes of action (as the old forms of action suggested)? In other words, are those who say that there are two causes of action, notwithstanding the garb of Judicature pleadings,173 trapped by the ghosts of the past, or clear thinkers? And to what extent does it matter in the context of limitation of actions? [2730] Two approaches contrasted. Professor Birks latterly saw restitution for wrongs as a group of cases where a (restitutionary) remedy is available to reverse the enrichment flowing from a wrong

which is established according to a body of substantive law outside restitution, for example, tort.174 This approach reinforced the way he viewed the application of limitation statutes to this category of case,175 because, to Birks, the cause of action remained [page 969] (solely) one that is based on tort. On this analysis, unless the plaintiff is entitled to frame an alternative (and independent) claim for restitution based on the defendant’s receipt, it is therefore inappropriate to apply provisions in limitation statutes that embrace more general categories that are capable of including restitutionary claims, such as ‘quasicontract’, contract ‘implied by law’ or ‘implied contract’.176 Birks regarded United Australia Ltd v Barclays Bank Ltd177 as a case where ‘the cause of action remained unchanged. The tort of conversion had two remedial strings’ (compensation and restitution).178 Professor Corbin wrote to similar effect in 1910,179 when he said that the: … cause of action is a tort, and the tort exists as the cause of action and must be proved as the cause of action from first to last … The assumpsit alleged in these cases is a mere fiction and is not the cause of action.

In the other camp are those who argue that most, if not all, situations of ‘restitution for wrongs’ involve a distinct restitutionary cause of action, reflected in the presence of an additional essential fact (receipt of benefit) and evidenced by its own historical form of action (money had and received). As Professor Keener put it:180 Since to maintain an action for money had and received in this class of cases the plaintiff must prove the receipt by the defendant as well as a wrongful conversion, his cause of action does not arise until the defendant has received the proceeds of sale.

Likewise, on the view of the ‘waiver of tort’ doctrine taken by Goff and Jones,181 the distinct restitutionary cause of action accrues only when the defendant has received a benefit.182 Goff and Jones therefore argue that the limitation period in restitution should in most cases not begin to run until the tortfeasor has received the proceeds of the tort.183

[2731] Overseas case law. Before addressing the issues of principle, we may note the guidance offered by case law in England and the United States as regards restitution based on receipt of benefit flowing from a tort. The case law parallels the academic debate, although it favours the position that there is a separate cause of action where restitution is sought to recover a benefit derived from a tort. The weight of authority permits a plaintiff who clearly invokes a restitutionary claim to escape a limitation period applicable to a cause of action for compensation flowing from the tort by [page 970] treating time as running from the date of receipt of the benefit, not the date of when the cause of action for the wrong accrued. In essence, this recognises the enduring impact of the historical framing of common law restitutionary remedies as based on implied contract and the fact that the relevant limitation statutes were first enacted when this was legal orthodoxy. The leading English case is Chesworth v Farrar,184 where a plaintiff evaded a limitation bar concerning claims against an estate ‘in respect of a cause of action in tort’ by suing for money had and received in relation to the sale of her goods. Edmund Davies J held that the quasicontractual claim to the proceeds of sale was a different cause of action from that based on the tort of conversion by sale; and that the plaintiff could elect to rely on the restitutionary cause of action that was not statute-barred. At one level, the case deals only with the characterisation of the term ‘cause of action in tort’ in a specific prohibition on stale proceedings which statute deemed to survive the death of the tortfeasor. But others, including Goff and Jones,185 have seen the case as favouring a plaintiff’s right to elect to sue on a restitutionary cause of action where a tortious one is barred by a general limitation provision. This is also the prevailing approach in the United States,186 although it has been criticised by some commentators.187 Our views are explained later.188

Before continuing to address the general issue of limitation statutes and dependent restitutionary claims, we need to identify (and probably quarantine) a specific category, that of tortious, contractual and restitutionary claims touching successive wrongs to goods. [2732] Successive wrongs to goods. Some of the academic and judicial debate is bedevilled by generalisations drawn from a special situation, which attracts a possibly unique response. Assume that the standard limitation period for tortious and restitutionary claims is six years. If D converts P’s goods in 1987, and refuses to return them in 1994, is P’s claim statute-barred? More relevantly, if D wrongfully takes P’s goods in 1987 and sells them in 1994, is P’s claim to the value of the proceeds of sale statute-barred? If the question had to be answered in a context where the limitation statute simply barred the tortious remedy against D,189 then one would have to ask whether there were one or two causes of action, and (if two) what guidance the limitation statute gives in that context. The modern statutes of limitation in Australia (with the exception of South Australia and Western Australia prior to the commencement of the [page 971] Limitation Act 2005 (WA)) deal specifically with successive wrongs to goods, and establish what is in effect a ‘prescriptive right to chattels’190 regardless of the cause or causes of action invoked. The effect of these provisions is to treat time as running from the accrual of the initial cause of action in conversion or detinue even if there is a later accrual of a fresh cause of action of whatever nature. Thus, s 21 of the Limitation Act 1969 (NSW) provides: Where: (a) a cause of action for the conversion or detention of goods accrues to a person; and (b) afterwards, possession of the goods not having been recovered by him or by a person claiming through him,

a further cause of action for the conversion or detention of the goods or a cause of action to recover the proceeds of sale of the goods accrues to him or to a person claiming through him, an action on the further cause of action for conversion or detention or on the cause of action to recover the proceeds of sale is not maintainable if brought after the expiration of a limitation period of six years running from the date when the first cause of action first accrues to the plaintiff or to a person through whom he claims.

Unless the limitation period is extended on the basis of mistake, fraud or fraudulent concealment,191 on the expiration of the limitation period, the plaintiff’s title is extinguished if proceedings have not commenced.192 Similar provisions are found in other jurisdictions,193 except South Australia. In some jurisdictions there are qualifications, variously expressed, as regards what may loosely be described as bona fide purchase for value.194 In fact, the same result applies in jurisdictions that do not have the special provision,195 except in relation to conversion by a bailee, because of the ‘general rule’ that:196 … where there has once been a complete cause of action arising out of contract or tort, the statute begins to run, and subsequent circumstances which would but for the prior wrongful act or default have constituted a cause of action are disregarded.

[page 972] It was in such a context that Denning J in Beaman v ARTS Ltd197 said that the English equivalent cannot ‘be evaded by a mere change in the form of remedy. An owner cannot escape the effect of the statute by assuming to waive the tort of conversion and sue for money had and received198 for otherwise the wrongdoer who waited till after the six years and then sold the goods would be better off than one who sold within the six years’.199 Some writers have suggested that Denning J’s remarks are critical of the use of waiver as a means of circumventing the limitation period appropriate to the tortious action.200 We disagree. Denning J was speaking of a narrow class of ‘waiver of tort’ case, that involving successive acts of conversion or wrongful detention of goods, being the particular situation addressed specifically in s 3 of the Limitation Act

1939 (UK).201 For other distinct causes of action, the judgment is supportive of the plaintiff’s right to rely on one distinct cause of action that is not statute-barred, even if another cause of action is barred. But what is a cause of action? [2733] Causes of action and forms of action. We referred above202 to the late Professor Birks’s analysis of United Australia Ltd v Barclays Bank Ltd203 as a case where a single cause of action (conversion) had two ‘remedial strings’ (compensation and restitution). Birks saw this as indicating how limitation statutes should be applied in this area, because he criticised Chesworth v Farrar.204 It is, of course, true that the successful plaintiff in United Australia was held entitled to elect between two alternative remedies. But it does not follow that there was a single cause of action. Rather, it may simply have happened that two alternative causes of action (reflected in the older forms of action) had a common factual element, the conversion of a cheque. The remedies which they respectively offered were incompatible, so the plaintiff was put to an election. If so, the case ceases to be a pointer to the way in which to apply limitation statutes to cases involving restitution for wrongs. This does not, of course, demonstrate that Birks was wrong in his ultimate conclusion, although we do conclude that the alternative approach of Goff and Jones is to be preferred.205 The death of the forms of action did not mean that we can ignore the significance of different causes of action. Sometimes ‘cause of action’ is used in a sense that is closely related to the old forms of action.206 But, usually, [page 973] a cause of action is defined as the factual situation which gives the plaintiff a remedy.207 To see distinct causes of action as having significance, especially in this context, is not (we believe) to fall into the trap of preferring form over substance.208 The modern limitation

statutes recognise the concept, because the standard limitation periods are expressed as referable to different ‘causes of action’.209 It is true that some of the statutes provide that where, under each of two or more provisions, an action is not maintainable if brought after a specified time, the action is not maintainable if brought after the earlier or earliest of those times.210 These opaque provisions appear to apply to situations where two (or more) causes of action accrue at the same time.211 The provisions do not appear to touch the situation where different facts give rise to different causes of action. Nor do they apply when, on the same set of facts, different causes of action accrue at different times.212 Ultimately, there is no guidance a priori in deciding whether a plaintiff who sues for the proceeds derived by the defendant from the conversion of the plaintiff’s land or goods is suing for a different remedy consequent on a single cause of action (in tort) or a distinct cause of action. The law is obviously paying greater attention to remedial distinctions now than formerly, but the fact remains that the statutes continue (perhaps necessarily) to express themselves in terms of causes of action. The real question comes down to whether they evince an intention that the plaintiff can, by choosing one cause of action, evade a bar appropriate to another. On one analysis,213 Chesworth v Farrar214 treats the choice as the plaintiff’s even where two causes of action proceed out of the same essential facts. Perhaps the particular result would have been reversed if the English statute had the equivalent of the provisions referred to above.215 But, on one analysis, the case remains authority for conceding the choice to the plaintiff. In the present context, the language of the limitation statutes216 clearly suggests that there may be a ‘cause of action’ in tort, and a ‘cause of action’ in ‘quasi-contract’ or under contracts ‘implied by law’ or under ‘implied [page 974]

contract’. More importantly, it does so without relevantly assigning any priority between one type of cause of action and another.217 The need to distinguish distinct causes of action in a limitation context is also critical in those jurisdictions which have not abrogated the rule in Weldon v Neal,218 although the learning on that principle suggests the chameleon-like character of the expression ‘cause of action’.219 [2734] Conclusion. We have indicated elsewhere our reasons for believing that restitution for wrongs is not necessarily parasitical upon proof of a tort.220 The type of ‘wrongs’ that will attract a restitutionary response in an appropriate situation include, as well as actionable torts, claims based on tort principles for which the defendant has a tort immunity,221 and wrongs of a purely equitable or statutory222 nature. If the whole area of restitution for wrongs can be seen as an interrelated field,223 this further supports our conclusion that a claim to a benefit accrued as the result of a tort involves a distinct cause of action, accruing when the benefit is received. It is a separate cause of action which, being derived from the money had and received form of action, not the actions for trespass, accrues upon the defendant’s receipt of benefit, not the wrong itself. This conclusion also has the firm support of overseas case law.224 [2735] When benefit received. If, therefore, the general rule for restitution for wrongs should also be that the cause of action accrues when the benefit is received, there will seldom be difficulty in locating this event. In the case of the defendant’s receipt of the proceeds of sale or other profit from selling or dealing with the plaintiff’s property, receipt will be the critical event, except in the special case of successive wrongs to goods.225 Sometimes, however, restitution will lie when property has been used rather than sold.226 Unless Phillips v Homfray227 stands in the way (which we doubt), the benefit may consist of a saving of expense. American case law also supports restitutionary claims concerning wrongs done to goods or land which do not involve sale.228 In

principle, the cause of action should accrue when the first unauthorised user takes place, but all user within the standard limitation period preceding commencement of proceedings ought to attract restitution. [page 975]

(v) Claims in equity [2736] Analogy in equity. Statutes of limitation do not generally apply to equitable claims except in so far as any provision thereof may be applied by the court by analogy.229 There are express provisions to this effect in some jurisdictions.230 As this was the position in equity, the same result applies by virtue of the fusion of law and equity in other jurisdictions.231 Western Australia appears to be unique in that, on and after 15 November 2005, the general six-year limitation period extends expressly to ‘actions’ in equity.232 Equity will apply by analogy the statutory barring of common law claims only where the suit in equity corresponds with an action at law, for example, where trust moneys have been paid over by mistake,233 or where equitable fraud is involved.234 In the case of purely equitable claims that are not the subject of a specific statute of limitations, no analogy will be drawn.235 However, the defence of laches may apply.236 [2737] Constructive trusts and proceedings in respect of trust property. The general limitation period of six years (three years, in the Northern Territory) applies to a beneficiary’s action against a trustee to recover trust property, or in respect of a breach of trust.237 In most jurisdictions ‘trust’ is defined to include an implied or constructive trust.238 [page 976]

A constructive trust remedy may be withheld on the ground of laches.239 Subject to this, in the case of a constructive trust time runs from the date of the transaction by reason of which the constructive trust arose,240 unless fraud concealed that event.241 This means that a beneficiary’s claim against a knowing recipient242 may not be barred even if the defaulting trustee who paid the money can no longer sue.243 The statutes vary the standard limitation period in actions in respect of any fraud or fraudulent breach of trust to which the trustee was party or privy, or to an action to recover from the trustee trust property or the proceeds thereof in the trustee’s possession, or previously received by the trustee and converted to his or her use.244 In the circumstances referred to in the last sentence there is no prescribed limitation period except in the Australian Capital Territory, the Northern Territory and New South Wales, where the period is at least 12 years.245 And since, in those jurisdictions, time runs from the date on which the plaintiff or a person through whom the plaintiff claims first discovered or could with reasonable diligence discover the facts giving rise to the cause of action, the beneficiary bringing a direct claim based on misappropriated trust funds may have a longer period to recover than the trustee has.246 Where, in Western Australia, a cause of action accrues on or after 15 November 2005 the general six-year limitation period applies, subject to a limited power of extension by the court.247 [2738] Contribution claims. Claims for contribution, other than those involving tortfeasors, are subject to limitation periods of six years (three years in the Northern Territory).248 This is an area where the equitable remedy follows [page 977] the limitation provision regarding the concurrent common law remedy.249 Where P has no right to contribution at law before payment, time does not begin to run until P pays more than the proper

share of the principal debt,250 even if the principal debt has in the meantime become statute-barred.251

(vi) Extension and postponement of limitation period [2739] Introduction. We do not intend to explain in detail the situations where the limitation period may be extended or its commencement postponed. It is beyond the scope of this work to deal with issues such as the plaintiff’s disability or minority which are common to all categories of claims. We therefore limit ourselves to the examples most relevant to claims in restitution, namely, acknowledgment of debt, mistake, and fraud and fraudulent concealment. The plaintiff bears the onus of pleading and proving such matters.252 [2740] Acknowledgment of debt and part payment. An acknowledgment of a debt the recovery of which would otherwise be barred by the statute of limitations,253 will have the effect of extending the limitation period, since it revives the cause of action. The limitation period then commences to run as from the time of the acknowledgment.254 In Queensland, Tasmania and Victoria, acknowledgment is limited to part payment or acknowledgment to the recovery of a debt or a claim for liquidated damages. And in the Australian Capital Territory, New South Wales and the Northern Territory, acknowledgment must precede the expiration of the initial period. Although generally an acknowledgment must be supported by consideration, the statutes dispense with this requirement, or deem the cause of action to have accrued on and not before the date of the acknowledgment.255 Generally, to be effective, the acknowledgment must be written and signed. [page 978]

[2741] Mistake. As regards mistake, the legislation of all jurisdictions except South Australia and Western Australia provides for postponement of the bar, subject to a saving in favour of a bona fide purchaser for value. Section 27(c) of the Limitation of Actions Act 1958 (Vic) provides that where, in the case of any action for which a period of limitation is prescribed by the Act: … the action is for relief from the consequences of a mistake the period of limitation shall not begin to run until the plaintiff has discovered the … mistake, … or could with reasonable diligence256 have discovered it …

The legislation in the other jurisdictions appears to be similar in effect.257 Common to all provisions is the reference to a cause of action for ‘relief from the consequences of a mistake’, words which repeat the model of s 26(c) of the Limitation Act 1939 (UK).258 In Phillip-Higgins v Harper,259 Pearson J held260 that the provision: … probably … applies only when the mistake is an essential ingredient of the cause of action, so that the statement of claim sets out, or should set out, the mistake and its consequences and pray for relief from those consequences.

The provisions thus apply to claims to recover money paid under mistake of law.261 Such a construction will seldom cause difficulty in a restitutionary context, because mistake is the unjust factor which creates a restitutionary right to recover a mistaken payment.262 Thus, against a person who pays money by mistake, time will not start to run until he or she discovered the mistake or could with reasonable diligence have discovered it.263 We nevertheless agree with Goff and Jones’s criticism264 of the unnecessary narrowness of Pearson J’s tentative stance in Phillip-Higgins v Harper. There is no reason why the plain words of the provision should not extend to cases where the [page 979] plaintiff’s mistake led to a payment or other transfer of benefit in respect of which restitution is available on other grounds.

For South Australia and Western Australia, which have no statutory provision applicable to claims other than to real property, it will be necessary to apply the general principles discussed above.265 There is a body of case law indicating that in a case of mistake time runs from the date of the defendant’s receipt of the money.266 If the claim relates to mistakenly paid taxes special statutory regimes may bar the plaintiff in any event.267 [2742] Fraud and fraudulent concealment. Section 55(1) of the Limitation Act 1969 (NSW) relevantly postpones time where: (a) there is a cause of action based on fraud or deceit; or (b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed.

This provision is also found in the Northern Territory, Queensland, Tasmania and Victoria.268 Queensland, Tasmania and Victoria differ slightly in not expressly extending the applicable provision to the fraudulent concealment of the identity of the defendant, but (even without such words) this meaning has been given to the provision by the Victorian Court of Appeal.269 In using ‘fraudulently concealed’, the provisions are modelled270 on the now repealed Limitation Act 1939 (UK). The impact of this as regards incorporation of equitable principles of concealment is discussed below. By contrast, the Australian Capital Territory reflects the Limitation Act 1980 (UK) in speaking of facts being ‘deliberately concealed’ as distinct from the stricter test of ‘fraudulently concealed’.271 In lieu of para (b) in the New South Wales provision, the Australian Capital Territory counterpart refers272 to ‘a fact relevant to a cause of action or the identity of a person against whom a cause of action is deliberately concealed’. [page 980] The Limitation of Actions Act 1936 (SA) and the Limitation Act 1935 (WA) have no provision outside the context of claims to recover land or rent. The Limitation Act 2005 (WA)273 allows the court to extend time

in limited circumstances if satisfied that the failure to commence the action was attributable to fraudulent or other improper conduct of the defendant or a person for whom the defendant is vicariously liable.274 In all jurisdictions, the running of the limitation period is postponed until the fraud has been discovered, or, with reasonable diligence, might have been discovered;275 and (in most jurisdictions) the position of a purchaser of property for valuable consideration without knowledge of the fraud, and with no reason to believe that fraud has occurred, is protected.276 The plaintiff is protected against the fraud or fraudulent (‘deliberate’ in the Australian Capital Territory) concealment of the defendant or the defendant’s agent.277 Persons who are the successor of another who (or whose agent) was fraudulent or who fraudulently/deliberately concealed the cause of action may also be subject to the enlargement of time.278 These provisions raise a number of issues relevant to restitutionary claims: first, the meaning of ‘cause of action based on fraud or deceit’; second, the meaning of ‘fraudulent concealment’; and, third, as to what is encompassed by the expression ‘discovered, or, with reasonable diligence, might have been discovered’. The expression ‘cause of action based on fraud or deceit’ is confined to claims in which fraud or deceit is a necessary and relevant allegation for the cause of action.279 However, it extends to claims based upon equitable fraud.280 While the second limb (‘cause of action … fraudulently concealed’) applies to any type of cause of action, legal or equitable, the provision was designed to bring equitable principles of concealment into play across the board.281 [page 981] If, in cases involving the surreptitious abstraction of minerals,282 the plaintiff could prove that the minerals were taken dishonestly from

under the plaintiff’s land, or if, in trespass cases, the crossing over or under the plaintiff’s land283 occurred with dishonest intent, then any restitutionary claim, including a claim to have (tortious) damages assessed according to the restitutionary measure, would have the time of its commencement postponed pursuant to these provisions. Likewise in title-based claims against a thief.284 There are differing overseas authorities as to whether a claim based on equitable fraud, including a breach of fiduciary duty, is encompassed by the expression ‘action … based upon … fraud’.285 Alternatively, the plaintiff may be able to prove in such like cases that the cause of action, or the defendant’s identity, was ‘fraudulently’ concealed.286 This is not to suggest that the only use of these provisions in the restitutionary context is the area formerly labelled ‘waiver of tort’. For example, restitutionary claims based on breach of fiduciary obligation, breach of confidence or infringement of intellectual property rights are capable of falling within these provisions, depending on proof of the relevant fraudulent concealment (or, in the Australian Capital Territory, deliberate concealment). Concealment need not be fraudulent in the common law sense involving dishonesty or moral turpitude; and the very failure of a thief to disclose his or her identity to the true owner may be fraudulent concealment.287 The duration of postponement, until the time when the fraud etc has been ‘discovered, or, with reasonable diligence, might have been discovered’, raises what is essentially an issue of fact.288 1.

See [2702].

2. 3.

For the policy basis see [2714]. Compare Chapter 28 (interest).

4. 5.

See [909]. On whether time runs from the time of discharge (or rescission) see [2719], [2723], [2724].

6.

See Sorrenti v Crown Corning Pty Ltd (1986) 7 NSWLR 77; Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27 (see N J Mullany (1993) 109 LQR 215); Humphrey v Fairweather [1993] 3 NZLR 91 (where the cases are reviewed in detail, and English authority to the contrary, including Cartledge v E Jopling & Sons Ltd [1962] 1 QB 189 at 202, 208; [1963] AC 758 at 784 and London Congregational Union Inc v Harriss [1988] 1 All ER 15, explained or not followed). There is express provision to this effect in s 79 of

7. 8.

the Limitation Act 2005 (WA). See also [2203], [2713]. See Cohen v Cohen (1929) 42 CLR 91; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464; Humphrey v Fairweather [1993] 3 NZLR 91. See [2316]. See also [2203], [2905].

9.

See [2528]. Cf Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 and Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 179 CLR 15 (impact of commencement of winding up of company). 10. See generally Chapter 24. 11. Sometimes ‘waiver’ is based on delay. Although we doubt whether waiver is an independent concept (see [2315]) it may be an appropriate description of the effect of delay in a particular case to say that a claim has been waived. 12. See the discussion in [2707]–[2710]. But see Restatement (Second) Contracts, §381. 13. For exceptions see [2718], [2732]. See also [2714]. 14. See [2308], [2712]. 15. See Restatement, Third, §70. 16. See [2308]. See also [2213] (role of estoppel). The position is in effect the same where laches is found, although, since the perspective is the refusal of the court to grant the plaintiff the relief claimed, the remedy is in effect barred. Cf [2530]. 17. See, eg [2517], [2530] and generally on the role of estoppel [2213]. 18. See [1311], [1318], [1433]. 19. That is, a requirement of substantial restitution. See generally [1320], [1329]–[1332], [1431]–[1434]. For restitutio as a defence see [2212] and generally [2324]–[2335]. 20. See Enonchong, §§28-003–28-006. 21. See further [2709], [2711]. See also [2212] (role of discretion as a defence). 22. The general principle in [2307] applies. See also [2318]. 23. See Carter on Contract §37-230. The basis for such a rule has been variously justified: by reference to a general requirement of exercise of rights within a reasonable time period; the nature of the right as a power; and an implied term of the contract. See Antaios Compania Naviera SA v Salen Rederierna AB [1983] 1 WLR 1362 (affirmed without reference to the point [1985] AC 191); Nichimen Corp v Gatoil Overseas Inc [1987] 2 Lloyd’s Rep 46 at 54. Cf China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama (The Mihalios Xilas) [1979] 1 WLR 1018 at 1023; Alleyn v Thurecht [1983] 2 Qd R 706 at 712–13. 24. Cf Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 where, there being no conduct amounting to election, no relevant delay was found in the exercise of a statutory right of avoidance. 25. In either case the clause may be qualified by statutory provisions, including those applicable to exclusion clauses. See [2206] (contracting out). 26. See W E Cox Toner (International) v Crook [1981] ICR 823 at 828; Bliss v Southeast Thames Regional Health Authority [1987] ICR 700 at 716; Nichimen Corp v Gatoil Overseas Inc [1987] 2 Lloyd’s Rep 46 at 54, 58. 27. Cf Alati v Kruger (1955) 94 CLR 216 at 223; Coastal Estates Pty Ltd v Melevende [1965]

VR 433 at 443, 452. But see Pennicott v Pennicott (1936) 30 Tas LR 111 at 116. Contrast Halkett v Earl of Dudley [1907] 1 Ch 590 (prompt election required in the exercise of equitable right of ‘rescission’ based on want of mutuality in the remedy of specific performance). 28. See, eg Carter v Scargill (1875) LR 10 QB 564; Civil Service Cooperative Society of Victoria Ltd v Blyth (1914) 17 CLR 601 at 610, 613; Champtaloup v Thomas [1976] 2 NSWLR 264 at 273; Majik Markets Pty Ltd v S & M Motor Repairs Pty Ltd (No 1) (1987) 10 NSWLR 49 at 54. 29. For discussion see, eg Carter, §§1091–2 (effect of delay on common law rights of discharge). See also [2213] (role of estoppel). 30. See Clough v London & NW Rly Co (1871) LR 7 Ex 26 at 34; Civil Service Co-operative Society of Victoria Ltd v Blyth (1914) 17 CLR 601 at 610; Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 at 476. 31. See further [2710]. 32. [1950] 2 KB 86. For an example in the context of discharge for breach see Kwei Tek Chao v British Traders and Shippers Ltd [1954] 2 QB 459 (delay by buyers under CIF contract). Cf Long v Lloyd [1958] 2 All ER 402. Contrast Shuman v Coober Pedy Tours Pty Ltd (1994) Unreported, SC(SA) (FC), 14 February (restitution of money paid under sale of goods contract validly rescinded for innocent misrepresentation after delay of four years). 33. Alternatively, but in our view (see [2323]) wrongly, the right of rescission was barred by acceptance of the goods. See further [2709]. 34. [1979] 1 QB 705. 35. For the provisions see [2323]. 36. For illustrations see Manifatture Tessile Laniera Wooltex v J B Ashley Ltd [1979] 2 Lloyd’s Rep 28; Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220; Footersville Pty Ltd v Miles (1988) 48 SASR 525. Cf Leaf v International Galleries [1950] 2 KB 86 (see [2708]). 37. See [226], [228], [1334]. 38. See [1334], [1403], [2212], [2334]. See also [2212] (role of discretion as a defence). 39. See [2713]. Cf Webb Distributors (Aust) Pty Ltd v State of Victoria (1993) 179 CLR 15 (commencement of winding up of company); and see generally on the relevance of general law concepts such as election and restitutio in integrum [2334]. 40. See [2322]. See also [2213] (role of estoppel). 41. If there is a representation, the principles stated in [2322] apply. For discussion see, eg Carter, §1092 (estoppel in context of common law rights of discharge). See further [2712] (estoppel in relation to remedies). 42. [1941] AC 1. For analysis of the case see [1517], [2304] and further [2730]. 43. See generally [2304]. 44. See further [2712]. 45. See further [2736]–[2738]. 46. But leave must be given to any amendment. See Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 456–7, 461, 464–5; Sali v SPC Ltd (1993) 116 ALR 625; 67 ALJR 841 (recent hardening of judicial attitude).

47. See [2308], [2517]. 48. See, eg Mulcahy v Hoyne (1925) 36 CLR 41; Orr v Ford (1989) 167 CLR 316 at 337–8; Vakauta v Kelly (1989) 167 CLR 568; Avtex Airservices Pty Ltd v Bartsch (1992) 107 ALR 539 at 567 and further [2713]. 49. However, it is now doubtful whether it should be seen as independent of general principles of estoppel. See generally Commonwealth of Australia v Verwayen (1990) 170 CLR 394. 50. For the relevant principles see Commonwealth of Australia v Verwayen (1990) 170 CLR 394, a case where restitution was not in issue. 51. (1881) 20 Ch D 1 at 13. See also Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443 at 463 per Dixon J (since there was no evidence of injustice, delay did not amount to unreasonable conduct so as to deprive plaintiff of restitution on avoidance of allotment of shares); Farmers’ Co-operative Executors & Trustees Ltd v Perks (1989) 52 SASR 399 at 417 (undue influence) and further [2736] (limitations statute applied by way of analogy). 52. See further on equity and statutes of limitation [2736]–[2738]. Cf P & O Nedlloyd BV v Arab Metals Co (No 2) [2007] 1 WLR 2288; [2006] EWCA Civ 1717 (the remedy of specific performance does not correspond with any common law action and so the statutes of limitation do not apply by way of analogy). 53. (1878) 3 App Cas 1218 at 1279. See also Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239–40; Civil Service Co-operative Society of Victoria Ltd v Blyth (1914) 17 CLR 601 at 608; O’Connor v S P Bray Ltd (1936) 36 SR (NSW) 248 at 261–2 (reversed on other grounds (1937) 56 CLR 464); Orr v Ford (1989) 167 CLR 316 at 341. 54. See also P & O Nedlloyd BV v Arab Metals Co (No 2) [2007] 1 WLR 2288 at 2309; [2006] EWCA Civ 1717 at [51] (‘delay may, in appropriate circumstances, give rise to the defence of laches before any limitation period has expired’). 55. See P & O Nedlloyd BV v Arab Metals Co (No 2) [2007] 1 WLR 2288 at 2312; [2006] EWCA Civ 1717 at [61]. 56. For the relationship between laches, estoppel and acquiescence see Orr v Ford (1989) 167 CLR 316 at 339ff. 57. Under the principle of substantial restitution; see [1305], [1330], [1331], [1401], [1437], [2328]. 58. See, eg Baburin v Baburin (No 2) [1991] 2 Qd R 240 (laches where contract obtained by unconscionable conduct). Contrast, eg Laurence v Lexcourt Holdings Ltd [1978] 1 WLR 1128; [1978] 2 All ER 810 (defence not established in a claim to set aside a contract for mistake). See also Orr v Ford (1989) 167 CLR 316 (claim for declaration of interest in property subject to express trust). 59. See, eg Ayerst v Jenkins (1873) LR 16 Eq 275 at 283 (long delay bars relief in equity where third party has acted in reliance); Fysh v Page (1956) 96 CLR 233 at 244 (restitutio in integrum not possible as rescission (based on unconscionable conduct) would have placed parties in an unequal situation due to the change in circumstances during the period of delay). See also Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279; Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1985] 1 WLR 173; Orr v Ford (1989) 167 CLR 316 per Deane J; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 388 and generally Meagher, Gummow and Lehane, Chapter 36.

60. See Orr v Ford (1989) 167 CLR 316 at 340 per Deane J whose judgment is the best recent general analysis of laches. 61. See generally Clough v London & NW Rly Co (1871) LR 7 Ex 26 at 34–5; Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239; Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1279; Brown v Smitt (1924) 34 CLR 160 at 167; Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443 at 463; Fysh v Page (1956) 96 CLR 233 at 243–4; Alati v Kruger (1955) 94 CLR 216 at 223–4. 62. Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1283. 63. See, eg Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 (no allegation of knowledge of fraud, and no change in parties’ positions); Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 (orders consequent on rescission of contract for sale of property); Brown v Smitt (1924) 34 CLR 160 at 167 (no alteration of position or other circumstances making rescission unconscientious); Commonwealth Homes and Investment Co Ltd v Smith (1937) 59 CLR 443 at 463 (restitution available following avoidance of voidable allotment of shares since there was no evidence of injustice); Orr v Ford (1989) 167 CLR 316 (declaration of interest in property subject to express trust). Cf Coastal Estates Pty Ltd v Melevende [1965] VR 433 at 444, 453. 64. See [226]–[228], [1315], [1318], [1333]–[1334]. 65. See [2725]. 66. Cf Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546; 79 ALR 83; Musca v Astle Corp Pty Ltd (1988) 80 ALR 251; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 708. Laches and acquiescence are more relevant if the statutory limitation period has expired and the claim is brought under the general law. 67. (1986) 5 NSWLR 109 at 118. On appeal see (1988) 164 CLR 539. See also Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551–3. 68. For the statutes see [2715]. 69. See, eg [2039] (restitution against the Revenue), [2725] (Australian Consumer Law). 70. See generally Handford, Limitation. 71. See [2739]–[2742]. 72. For the exceptions see [2718], [2732]. 73. See, eg [2727]–[2735] (problems associated with waiver of tort analysis). 74. See [2717]. This paragraph was cited in Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 at 593. 75. Compare the treatment of claims which have an equitable origin. See [2736]–[2738]. 76. That is, NSW: Limitation Act 1969; Qld: Limitation of Actions Act 1974; SA: Limitation of Actions Act 1936; Tas: Limitation Act 1974; Vic: Limitation of Actions Act 1958; WA: Limitation Act 2005 (replacing Limitation Act 1935 as regards causes of action accruing on and after 15 November 2005). 77. That is, ACT: Limitation Act 1985; NT: Limitation Act 1981. 78. See ACT: Limitation Act 1985, s 56; NSW: Choice of Law (Limitation Periods) Act 1993; NT: Choice of Law (Limitation Periods) Act 1994; Qld: Choice of Law (Limitation Periods) Act 1996; SA: Limitation of Actions Act 1936, s 38E; Tas: Limitation Act 1974, s 32C; Vic: Choice of Law (Limitation Periods) Act 1993; WA: Choice of Law (Limitation Periods) Act

1994. These statutes were enacted to reverse McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1. 79. Judiciary Act 1903 (Cth), ss 64 and 79. See Maguire v Simpson (1977) 139 CLR 362. 80. R v Oregan; Ex parte Oregan (1957) 97 CLR 323; Pederson v Young (1964) 110 CLR 162; Scotland v Bargen (1982) 41 ALR 65; 56 ALJR 603; Pozniak v Smith (1982) 151 CLR 38; Bowtell v Commonwealth (1989) 86 ALR 31. 81. See ACT: Commercial Arbitration Act 1986, s 46; NSW: Commercial Arbitration Act 2010, s 25; Qld: Commercial Arbitration Act 2013, s 25; SA: Commercial Arbitration Act 2011, s 25; Tas: Commercial Arbitration Act 2011, s 25; Vic: Commercial Arbitration Act 2011, s 25; WA: Commercial Arbitration Act 2012, s 25. 82. See ACT: Limitation Act 1985, s 11; NSW: Limitation Act 1969, s 14(1)(a); NT: Limitation Act 1981, s 12(1)(a); Qld: Limitation of Actions Act 1974, s 10(1)(a); SA: Limitation of Actions Act 1936, s 35(a); Tas: Limitation Act 1974, s 4(1)(a); Vic: Limitation of Actions Act 1958, s 5(1)(a); WA: Limitation Act 1935, s 38(1)(c)(v), Limitation Act 2005, s 13(1). 83. See ACT: Limitation Act 1985, s 11; NSW: Limitation Act 1969, s 14(1)(b); Qld: Limitation of Actions Act 1974, s 10(1)(a); SA: Limitation of Actions Act 1936, s 35(c); Tas: Limitation Act 1974, s 4(1)(a); Vic: Limitation of Actions Act 1958, s 5(1)(a); WA: Limitation Act 1935, s 38(1)(c)(vi), Limitation Act 2005, s 13(1). 84. See generally Handford, Limitation, §5.10. 85. See Limitation Act 1981 (NT), s 12(1)(b). 86. See Limitation Act 1985 (ACT), s 11. 87. See Limitation Act 2005 (WA), s 13. The Act applies to causes of action that accrue on or after 15 November 2005. 88. See NSW: Limitation Act 1969, s 14(1)(a); NT: Limitation Act 1981, s 12(1)(a); Qld: Limitation of Actions Act 1974, s 10(1)(a). 89. See Tas: Limitation Act 1974, s 4(1)(a); Vic: Limitation of Actions Act 1958, s 5(1)(a); WA: Limitation Act 1935, s 38(1)(c)(v). The Limitation Act 1935 (WA) applies to causes of action that accrued before 15 November 2005. As to contracts ‘implied by law’ see also Levi v Stirling Brass Founders Pty Ltd (1997) 36 ATR 290 at 296–7; Gott v Commonwealth [2000] TASSC 86. 90. See Limitation of Actions Act 1936 (SA), s 35(a). 91. [1948] Ch 465 at 514. See also Restatement, Third, §70 Comment c. 92. See generally [115]–[123]. 93. [1948] Ch 465 at 514 per the court (Lord Greene MR, Wrottesley and Evershed LJJ). See also Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890 at 942 (affirmed on other grounds [1994] 1 WLR 938; [1994] 4 All ER 890 at 957); Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 91; Aspect Contracts Ltd v Higgins Construction plc [2015] 1 WLR 2961; [2015] UKSC 38. 94. See Handford, Limitation, §§ 5.10.270, 5.10.730, 5.10.1870. As to account stated, see Lewis v Lamb [2011] NSWSC 873. 95. A late amendment to plead a limitation statute may be refused; see Alec Finlayson Pty Ltd

v Armidale City Council (1994) 51 FCR 378; 123 ALR 155. 96. See Limitation Act 1969 (NSW), ss 63, 68A. 97. See [235]. 98. See [2732]. 99. See Hawkins v Clayton (1988) 164 CLR 539. 100. See [2720]–[2735]. 101. But see H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472, who favours a flexible principle, that the running of time should be a defence to a restitutionary claim when its passing has sufficiently eroded the injustice of the defendant’s retention of the benefit gained at the plaintiff’s expense. This strikes us as too uncertain. 102. The right can, of course, be lost for delay: see [2708]. 103. See [2720]–[2735]. See also [2736]–[2738] (equitable claims). 104. Cf [2730], [2733]. 105. See [160], [162], [217], [219], [1509], [1517]. 106. As to the general principle that the plaintiff may rely on a cause of action that is not barred even though alternative ones are barred, see Winnote v Page (2006) 68 NSWLR 531 at [64]; Bird v Bird [2013] NSWCA 262. 107. See [2727]–[2735]. 108. See generally [2739]–[2742]. We do not deal with all such situations. 109. See generally [2724]–[2726]. We do not deal with all such statutes. See also [2039] (special limitation periods for claims against the Revenue). 110. See generally on the distinction between independent and dependent claims [160]–[161], [219], [1514]. 111. Cigna Insurance Asia Pacific Ltd v Packer (2000) 23 WAR 159 at 169 (and cases there cited). 112. See [2724]–[2726]. See also [2739]–[2742] (extension or postponement of limitation period). 113. Cf Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 257. See also [2808]. Despite the High Court’s recent flirtation with the idea that claims in money had and received are ‘equitable’ (see [123]) it is inconceivable that such claims would be treated as such for the purposes of statutes of limitation. 114. The time of accrual of the cause of action is also critical to the courts’ general power to award statutory interest. See [2810]. See also Alstom Ltd v Yokogawa Australia Pty Ltd [2012] SASC 49 at [1623]. 115. See H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 476–7; Burrows, p 704. 116. (1997) 72 FCR 581; 144 ALR 89; Alstom Ltd v Yokogawa Australia Pty Ltd [2012] SASC 49 at [1620]–[1624]. See also David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 389. In Aloha the court rejected the submission that time did not run during the period (pre-David Securities) before the Australian common law recognised a general right to recover money paid under mistake of law. 117. See [2722]–[2723]. See also [2724].

118. See, eg [905], [906], [2203]. 119. See Richardson v White (1891) 4 QLJ 80; Baker v Courage & Co [1910] 1 KB 56; Re Mason [1929] 1 Ch 1 at 9; Re Blake [1932] 1 Ch 54 at 60; Ministry of Health v Simpson [1951] AC 251 at 274; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 91; Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 at [118]. As to accrual of a cause of action to recover mistakenly paid money, see also [426]. But see [2741], [2742] as to postponement in cases of mistake, fraud or concealment. 120. Maskell v Horner [1915] 3 KB 106. Cf R & W Paul Ltd v Wheat Commission [1937] AC 139 at 161. 121. Schmierer v Taouk (2004) 207 ALR 301. See further [2737]. 122. For the concept of an ‘inherently ineffective contract’ see [903]. 123. Cf, however Kleinwort Benson Ltd v Sandwell Borough Council [1994] 4 All ER 890 at 941 and Kleinwort Benson Ltd v South Tyneside Metropolitan Borough Council [1994] 4 All ER 972, each discussed in Law Commission for England and Wales, Limitation of Actions, Consultation Paper No 151, 1998, §§5.9–5.11. 124. See generally Chapter 28. 125. [1993] AC 70. See also BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352 and Burrows, p 546. 126. See [2018]. See also Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581. 127. See Coshott v Lenin [2007] NSWCA 153; Alstom Ltd v Yokogawa Australia Pty Ltd [2012] SASC 49 at [1625]. See also Emery v Day (1834) 1 Cr M & R 245 at 248; 149 ER 1071 at 1073; Stinchcombe v Thomas [1957] VR 509. Cf Restatement, Third, § 70, Comment f. 128. (1987) 162 CLR 221 (see [1024]). However, in the unenforceable contract context, the plaintiff will often find that the issue of restitution crystallises on the occurrence of a later event, namely, discharge or rescission of the contract. See further [2723]. 129. See [1037]. 130. Walker v Bowry (1924) 35 CLR 48. Generally as to contribution and recoupment see Chapter 6. There are special statutory time limits for some contribution and recoupment claims (see [2738]). 131. See [215], [909]. 132. However, since a mistaken overpayment is immediately recoverable, time runs from the moment of payment subject to statutory powers of extension in particular circumstances (see [2739]–[2742]). 133. BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352. See further [2724] (statutory provisions to same effect). 134. See Huggins v Coates (1843) 5 QB 432; 114 ER 1313; Guardian Ocean Cargoes Ltd v Banco do Brasil SA (Nos 1 and 3) [1994] 2 Lloyd’s Rep 152 at 160; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 389; Alstom Ltd v Yokogawa Australia Pty Ltd [2012] SASC 49 at [1624]; Nu Line Construction Group Pty Ltd v Fowler (2012) 16 BPR 31,011; [2012] NSWSC 587; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [102]. Cf also R v Magistrates Court at Mount Isa [1951] St R Qd 14. However, interest may accrue from the date of payment. See [2824].

135. Accordingly, delay is more relevant to the ability to appeal the judgment, or to have it set aside. Cf Collector of Customs v Gaylor Pty Ltd (1995) 35 NSWLR 649 at 655–6; 127 ALR 641 at 646 per Handley JA. Again, interest accrues from the date of payment. See [2822]. 136. The award of interest may proceed on a different basis. See generally Chapter 28, especially [2807], [2808]. 137. See [215], [905], [906]. See also Portman Building Society v Hamlyn Taylor Neck (a firm) [1998] 4 All ER 202. 138. See [2702], [2719], [2724]. Cf [2736] (analogy in equity). As to interest in equity see [2813]–[2817]. 139. (1937) 59 CLR 443. 140. (1937) 59 CLR 443 at 463. See also at 466 per Evatt J. Latham CJ’s (dissenting) view is stated at 458. See also Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [102]. 141. See [2713]. See also [2712] (estoppel), [2736] (analogy in equity). 142. See [2739]–[2742]. In some jurisdictions, equitable claims are not directly regulated by the relevant limitation statute with the consequence that statutory powers of extension may not necessarily apply. 143. [1903] SALR 147. Cf also R v Magistrates Court at Mount Isa [1951] St R Qd 14. 144. (1833) 9 Bing 748; 131 ER 795. 145. [1903] SALR 147 at 150. 146. And in a case like Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 (see [2722]), where constructive acceptance was said to be the basis for the plaintiff’s claim, it is difficult to see how time can commence to run earlier than the completion of performance by the plaintiff. 147. This is presumably the position in relation to a claim derived from Planché v Colburn (1831) 8 Bing 14; 131 ER 305 (see [1168]), since the claim in restitution is perceived as simply an alternative to (loss of bargain) damages. Although it might be argued that the cause of action in damages is complete on breach, whereas that in restitution is complete only on discharge of the contract, this seems a distinction without a difference in cases where the ‘breach’ takes the form of a repudiation. 148. Cf Steele v Tardiani (1946) 72 CLR 386 (see [1165]). 149. See [1236]–[1268]. 150. Australian Consumer Law and Fair Trading Act 2012 (Vic), ss 43–44. The date of deemed accrual of the cause of action is subject to the provisions of Pt II of the Limitation of Actions Act 1958 (Vic) (extension of limitation periods on grounds which include disability, acknowledgment and part payment, fraud and mistake). 151. See [2717]. 152. ACT: Limitation Act 1985 (ACT), s 11; WA: Limitation Act 2005, s 13. This Act applies to causes of action that accrue on or after 15 November 2005. 153. See NT: Limitation Act 1981, s 12(1)(a); Qld: Limitation of Actions Act 1974, s 10(1)(a). 154. See Tas: Limitation Act 1974, s 4(1)(a); WA: Limitation Act 1935, s 38(1)(c)(v) (applicable to causes of action accruing before 15 November 2005).

155. See [2723]. 156. [1979] 1 WLR 783 at 826 (affirmed [1983] 2 AC 352). This was, however, in the context of a claim for interest, which may be a distinguishing feature. See [2824]. 157. For the provisions see [1047]. 158. See Australian Consumer Law, s 82(2). 159. For the provisions see [1047]. 160. Australian Consumer Law, s 87(1CA). See H P Mercantile Pty Ltd v Dierickx [2013] NSWCA 479. 161. (1992) 175 CLR 514. 162. See [2039]. 163. For our view, see [220], [1618]–[1622]. 164. See further [2731]. Strictly speaking, conversion involves a wrong to possession. 165. See [2717]. 166. See [1533]. See also Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558. 167. See [2741]. 168. See [2742]. 169. [1949] 1 KB 550. See further [2742]. 170. [1949] 1 KB 550 at 558 per Lord Greene MR. 171. [1941] AC 1. 172. [1941] AC 1 at 34. 173. See [2728]. See also [2905], [2918]. 174. See, eg Birks, Future, pp 10–16. 175. See Birks, Introduction, pp 348–9. 176. See [2717]. 177. [1941] AC 1. 178. Birks, Future, p 11. 179. A L Corbin, ‘Waiver of Tort and Suit in Assumpsit’ (1910) 19 Yale LJ 221 at 235. See also Handford, Limitation § 5.10.770, citing Denys v Shuckburgh (1840) 4 Y & C Ex 42; 160 ER 912. 180. Keener, p 175. See also V House, ‘Unjust Enrichment: The Applicable Statute of Limitations’ (1950) 35 Corn LQ 797; H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 483. 181. See Lord Goff and Gareth Jones, The Law of Restitution, 7th ed, 2007 §36-013. The eighth edition, under new editors, is confined to unjust enrichment and does not address restitution for wrongs. A later work on this topic is anticipated. 182. Identification of benefit in this area is not always easy. See [2734], [2735]. 183. Lord Goff and Gareth Jones, The Law of Restitution, 7th ed, 2007, §36-013. As to sales of converted goods after the expiry of a cause of action in conversion, see that same edition, §36-013 and [2732].

[1967] 1 QB 407. The defendant did not argue that the deceased had converted the 184. plaintiff’s goods when he had earlier taken possession of them. Cf [2732]. The only conversion relied upon was the sale, which also constituted the transaction giving rise to the restitutionary claim. See also John v Dodwell & Co [1918] AC 563. 185. Lord Goff and Gareth Jones, The Law of Restitution, 7th ed, 2007, §36-013. 186. Dentists Supply Co v Cornelius 119 NYS 2d 570, affirmed 116 NE 2d (NYCA, 1953); United States v P/B STCO 213 756 F 2d 364 (CA, 5th Cir, 1985); United States v Dae Rim Fishery Co Ltd 794 F 2d 1392 (CA, 9th Cir, 1986); FDIC v Bank One, Waukesha 881 F 2d 390 (CA, 7th Cir, 1989). See generally Restatement, Third, § 70, Comment e. 187. The American cases are consistent, yet critically reviewed by V House, ‘Unjust Enrichment: The Applicable Statute of Limitations’ (1950) 35 Corn LQ 797. 188. See [2732]–[2735]. 189. In New South Wales the right is also barred if the statute is pleaded: see [2718]. 190. Beaman v ARTS Ltd [1948] 2 All ER 89 at 92 per Denning J. See also St Vladimir College and Minor Seminary v Champs Take Home Ltd (1974) 51 DLR (3d) 155 at 157 per Nitikman J (the ‘basic purpose … is to quiet title to a wrongfully converted chattel’). 191. See [2741], [2742]. For a case where time was enlarged due to fraudulent concealment, see Levy v Watt (2014) 308 ALR 748; [2014] VCA 60. 192. See Limitation Act 1969 (NSW), s 65. Recaption may raise separate issues: see Lee Aitken, ‘The Attachment and Recaption of Chattels’ (1994) 68 ALJ 263 at 272–4. 193. See ACT: Limitation Act 1985, ss 18, 43; NT: Limitation Act 1981, s 19; Qld: Limitation of Actions Act 1974, s 12; Tas: Limitation Act 1974, s 6; Vic: Limitation of Actions Act 1958, s 6; WA: Limitation Act 2005, s 60 (applicable only to causes of action accruing on or after 15 November 2005). 194. See [2742]. 195. South Australia and Western Australia before the commencement of the Limitation Act 2005 (WA). 196. See Thomas Brown & Sons Ltd v Fazal Deen (1962) 108 CLR 391 at 412 per Kitto, Windeyer and Owen JJ (quoting Wilkinson v Verity (1871) LR 6 CP 206 at 209). See also Currier v Studley 159 Mass 17 at 22–3 (1893); Betts v Receiver for the Metropolitan Police District [1932] 2 KB 595 at 605–6; and H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 483–4. 197. [1948] 2 All ER 89 at 92–3 (on appeal [1949] 1 KB 550). 198. He cited United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 26–9 per Lord Atkin. 199. The final clause must not be misunderstood. Denning J was comparing two different wrongdoers each of whom was sued after, say, seven years, but within, say, two years of the sale of previously converted or detained goods. 200. See Lord Goff and Gareth Jones, The Law of Restitution, 7th ed, 2007, §36-013; H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 483. 201. See now Limitation Act 1980 (UK), s 3. Thomas Brown & Sons Ltd v Fazal Deen (1962) 108 CLR 391 at 411–12 suggests a similar position even in those jurisdictions (like South Australia and Western Australia, prior to 2005) that do not expressly address successive wrongs to goods in their limitation statutes.

202. See [2730]. 203. [1941] AC 1. 204. [1967] 1 QB 407 (see [2731]). See Birks, Introduction, p 348. Virgo, p 739 considers Chesworth to be wrongly decided. 205. See [2734]. 206. Thus, ‘the same facts and circumstances may give rise to a right to relief under more than one principle of law or equity and in such cases the causes of action are different, but if the same relief is claimed under two or more such causes of action they are alternative causes of action’: Papps v Mahon [1966] NZLR 288 at 292 per Wilson J. 207. See, eg Jackson v Spittall (1870) LR 5 CP 542 at 552; Letang v Cooper [1965] 1 QB 232 at 242; Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 466–7; Golski v Kirk (1987) 14 FCR 143 at 145–6; 72 ALR 443 at 446; Macquarie Bank Ltd v Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 558. See [206]. 208. See [1533]. Cf [1510]. 209. See ACT: Limitation Act 1985, s 11; NSW: Limitation Act 1969, s 14; NT: Limitation Act 1981, s 12; Qld: Limitation of Actions Act 1974, s 10; SA: Limitation Act 1936, s 35; Tas: Limitation Act 1974, s 4; Vic: Limitation of Actions Act 1958, s 5; WA: Limitation Act 1935, s 38, Limitation Act 2005, s 13. See also Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558. 210. See ACT: Limitation Act 1985, s 10; NSW: Limitation Act 1969, s 13; NT: Limitation Act 1981, s 11. 211. As in Chesworth v Farrar [1967] 1 QB 407 (see [2731]), where the sale of goods was eo instanti a conversion of the goods and an event that established a restitutionary claim to the sale proceeds. 212. See Hawkins v Clayton (1988) 164 CLR 539 at 561–2, 602. 213. See [2731] where we refer to an alternative, narrower interpretation of Chesworth. 214. [1967] 1 QB 407 (see [2731]). 215. That is, those described in the text as the ‘opaque provisions’. 216. See [2717]. 217. Except, perhaps, the primacy of time. See (again) the provisions described as ‘opaque’ in the text. 218. (1887) 19 QBD 394. Cf Horton v Jones (No 2) (1939) 39 SR (NSW) 305. 219. See S Campbell, ‘Amendments and Limitations: The Rule in Weldon v Neal’ (1980) 54 ALJ 643. 220. See [1526], [1620]–[1622], [1638]. 221. Brocklebank Ltd v R [1924] 1 KB 647 (on appeal [1925] 1 KB 52). 222. See [1702]. 223. See [1702]. 224. See [2731]. 225. See [2732]. 226. See [1625]–[1626], [1628]–1629].

227. (1883) 24 Ch D 429 (see [1617]). 228. See [1627]. 229. See, eg Cohen v Cohen (1929) 42 CLR 91; Clay v Clay (2001) 202 CLR 410 at 424; Goldie v Getley (No 3) [2011] WASC 132. 230. See NSW: Limitation Act 1969, s 23; NT: Limitation Act 1981, s 21; Qld: Limitation of Actions Act 1974, s 10(6)(b); Tas: Limitation Act 1974, s 9; Vic: Limitation of Actions Act 1958, s 5(8). 231. For a full account of the impact of statutes of limitation on equitable claims, see Meagher, Gummow and Lehane, Chapter 34. 232. See Limitation Act 2005 (WA), ss 13 and 27 and the definition of ‘action’ in s 3. With presently irrelevant exceptions, the Act applies to causes of action that accrue on or after 15 November 2005 (see s 4). 233. The court retains a discretion, according to The Duke Group Ltd (in liq) v Alamein Investments Ltd [2003] SCSA 415 at [135]–[142]; Williams v Minister, Aboriginal Land Rights Act 1983 (2005) 35 NSWLR 497 at 509–511. Cf Re Robinson [1911] 1 Ch 502; Re Mason [1928] Ch 385. Cf H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 499–501. 234. See also [2737], [2742]. 235. See, eg R v McNeil (1922) 31 CLR 76 at 100; Owners of Strata Plan 62930 v Kell and Rigby Holdings Pty Ltd [2010] NSWSC 612. 236. See [2713]. See also H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 489–93. 237. See ACT: Limitation Act 1985, s 11; NSW: Limitation Act 1969, s 48; NT: Limitation Act 1981, s 33; Qld: Limitation of Actions Act 1974, s 27(2); SA: Limitation of Actions Act 1936, s 32(1); Tas: Limitation Act 1974, s 24(2); Vic: Limitation of Actions Act 1958, s 21(2); WA: Limitation Act 1935, s 47(1); Limitation Act 2005 (WA), s 13(1). 238. See ACT: Limitation Act 1985, s 8(1); NSW: Limitation Act 1969, s 11(1); NT: Limitation Act 1981, s 4(1); Qld: Limitation of Actions Act 1974, s 5(1); Tas: Limitation Act 1974, s 2(1); Vic: Limitation of Actions Act 1958, 3(1); WA: Limitation Act 2005, s 13(1) (general limitation period). The situation is more complicated under the Limitation of Actions Act 1935 (SA) and the Limitation Act 1935 (WA) (which applies to causes of action in Western Australia accruing before 15 November 2005, s 47(3): see Handford, Limitation, §5.10.1730 and Edmunds v Pickering (2000) 77 SASR 381 at 395. See also The Bell Group Ltd (in liq) v Westpac banking Group (No 9) (2008) 39 WAR 1. As to the legislative history in England see Williams v Central Bank of Nigeria [2014] AC 1189. 239. Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291; [2011] WASCA 17. 240. Pirwinski v Corporate Trustees of the Diocese of Armidale [1977] 1 NSWLR 266 at 271; Bank of New Zealand v Spedley Securities Ltd (in liq) (1992) 27 NSWLR 91 at 100, 109; Payne v Roe [2012] NSWSC 685. Cf also Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 388; Muschinski v Dodds (1985) 160 CLR 583 at 614. Cf Cope, Constructive Trusts, pp 353–4. See Meagher, Gummow & Lehane, §36-045. 241. Cf The Metropolitan Bank v Heiron (1880) LR 5 Ex D 319. See [2742] as to fraud and fraudulent concealment.

242. See generally [1705]. 243. Rasmussen v Rassmussen [1995] 1 VR 613; Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 96 FLR 217; Levi v Stirling Brass Founders Pty Ltd (1997) 36 ATR 290 at 297, which suggests otherwise in relation to a knowing receipt constructive trustee, apparently overlooked s 47(3) of the Limitation Act 1935 (WA). 244. See Qld: Limitation of Actions Act 1974, s 27(1)(b); SA: Limitation of Actions Act 1936, s 32(1); Tas: Limitation Act 1974, s 24(1)(b); Vic: Limitation of Actions Act 1958, s 21(1) (b); WA: Limitation Act 1935, s 47(1) (applicable to causes of action accruing before 15 November 2005). 245. See ACT: Limitation Act 1985, s 27; NSW: Limitation Act 1969, s 47; NT: Limitation Act 1981, s 32. 246. Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 96 FCR 217. Cf Armitage v Nurse [1997] 2 All ER 705. 247. See Limitation Act 2005 (WA), s 13. As to extension for fraud or improper conduct, see [2742]. 248. The statutory rights of contribution and indemnity among tortfeasors are subject to express limitation periods, except in Western Australia as regards causes of action accruing there before 15 November 2005. See ACT: Limitation Act 1985, s 21; NSW: Limitation Act 1969, s 26; NT: Limitation Act 1981, s 24; Qld: Limitation of Actions Act 1974, s 40; SA: Wrongs Act 1936, s 25(3); Tas: Tortfeasors and Contributory Negligence Act 1964, s 3(5); Vic: Wrongs Act 1958, s 24(4); WA: Limitation Act 2005, s 17. Cf WA: Law Reform (Contributory Negligence & Tortfeasors’ Contribution) Act 1947, s 7. 249. See ACT: Limitation Act 1985, s 11; NSW: Limitation Act 1969, s 14; NT: Limitation Act 1981, s 12; Qld: Limitation of Actions Act 1974, s 10; SA: Limitation of Actions Act 1936, s 35; Tas: Limitation Act 1974, s 4; Vic: Limitation of Actions Act 1958, s 5; WA: Limitation Act 1935, s 38. See Lang v Le Boursicot (1993) 5 BPR 11,782. 250. Walker v Bowry (1924) 35 CLR 48. See [643], [2723]. Cf also Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 557–8 per Toohey J. See also Belan v Casey (2003) 57 NSWLR 670. 251. Wolmerhausen v Gullick [1893] 2 Ch 514 (co-sureties); Robinson v Harkin [1896] 2 Ch 415 (co-trustees); Gardner v Brooke [1897] 2 Ir R 6 (joint and several debtors). See Williams, Joint Obligations, pp 167–9. 252. See [2703]. 253. As to postponement by acknowledgment or part payment in the context of a quantum meruit claim, see also H M McLean, ‘Limitation of Actions in Restitution’ [1989] CLJ 472 at 477–9. 254. See ACT: Limitation Act 1985, s 32; NSW: Limitation Act 1969, s 54; NT: Limitation Act 1981, s 41; Qld: Limitation of Actions Act 1974, s 35; SA: Limitation of Actions Act 1936, s 42; Tas: Limitation Act 1974, s 29(4); Vic: Limitation of Actions Act 1958, s 24; WA: Limitation Act 1935, s 44; Limitation Act 2005, s 47. In the Australian Capital Territory, New South Wales, the Northern Territory and (on or after 15 November 2005) Western Australia, acknowledgement or part payment extends time for all causes of action: see Handford, Limitation, §5.10.2310. See Lewis v Lamb [2011] NSWSC 873. 255. Since acknowledgment generally includes a part-payment, the cause of action may be

deemed to have accrued on the date of the last payment. 256. See, eg ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at [140]–[152]. 257. See ACT: Limitation Act 1985, s 34(1); NSW: Limitation Act 1969, s 56(1); NT: Limitation Act 1981, s 43(1); Qld: Limitation of Actions Act 1974, s 38; Tas: Limitation Act 1974, s 32; Vic: Limitation of Actions Act 1958, s 27. The Australian Capital Territory, Queensland and Tasmanian provisions are phrased differently. For a discussion of the meaning of mistake in this context, and the possible distinction between mistake and ignorance (cf [430]) see D W McLauchlan and C E F Rickett, ‘Mistake and Ignorance Under the New Zealand Contractual Mistakes Act 1977’ (1995) 8 JCL 193. See also Handford, Limitation, §5.10.2410. 258. See now s 32(1)(c) of the Limitation Act 1980 (UK). 259. [1954] 1 QB 411, affirmed without reasons reported in [1954] 2 All ER 51n. Cf also Beaman v ARTS Ltd [1949] 1 KB 550 (see [2728]). See also Torrens Aloha Pty Ltd v Citibank NA (1997) 72 FCR 581 at 596; Sinclair v Registrar-General [2010] NSWSC 173 at [37]; Salib v Gakas [2010] NSWSC 505 at [336]; ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at [136]–[137]. In Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558, the House of Lords held back from endorsing the correctness of this test (see esp at 610 [146]–[147]). 260. [1954] 1 QB 411 at 419. 261. Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558. 262. See [2722]. 263. See also Richardson v White (1891) 4 QLJ 80. For a discussion as to what is required to show the exercise of reasonable diligence, see Peco Arts Inc v Hazlitt Gallery Ltd [1983] 1 WLR 1315. As to notice cf [2713]. 264. Lord Goff and Gareth Jones, The Law of Restitution, 7th ed, 2007, §36-013. 265. See [2720]–[2722]. See also Commonwealth Bank of Australia v Szczurek (2006) 45 SR (WA) 295 at 305. 266. See Baker v Courage & Co [1910] 1 KB 56 and the other cases referred to in [2722]. 267. See [2039]. 268. See NT: Limitation Act 1981, s 42; Qld: Limitation of Actions Act 1974, s 38; Tas: Limitation Act 1974, s 32; Vic: Limitation of Actions Act 1958, s 27. For a review of the origins of this provision in the Limitation Act 1939 (UK), see Levy v Watt (2014) 308 ALR 748; [2014] VCA 60 at [50]–[54]. 269. See Levy v Watt (2014) 308 ALR 748; [2014] VCA 60, disapproving of R B Policies at Lloyds v Butler [1950] 1 KB 76. 270. With minor variation: see New South Wales Law Reform Commission, Report on Limitation of Actions, LRC 3, 1967, para 269. See also Levy v Watt (2014) 308 ALR 748; [2014] VCA 60 at [40]. 271. There is an extended definition of ‘deliberate concealment’ in s 33(3). This would encompass the facts of Bulli Coal Mining Co v Osborne [1899] AC 351. See also Wagdy Hanna & Associates Pty Ltd v National Library of Australia [2012] ACTSC 126 at [252]– [266].

See Limitation Act 1985 (ACT), s 33. This includes deliberate concealment after the 272. accrual of the cause of action: see Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [1996] AC 102. 273. Which applies to causes of action that accrue on or after 15 November 2005. 274. Limitation Act 2005 (WA), s 38. See Handford, Limitation, §5.10.2400. 275. See the provisions cited in [2742]. 276. See ACT: Limitation Act 1985, s 33(5); NSW: Limitation Act 1969, s 55(4); NT: Limitation Act 1981, s 42(4); Qld; Limitation of Action Act 1974, s 38(2); SA: Limitation of Actions Act 1936, s 25; Tas: Limitation Act 1974, s 32(2); Vic: Limitation of Actions Act 1958, s 27; WA: Limitation Act 1935, s 27. There is no equivalent provision in the Limitation Act 2005 (WA). See generally on bona fide purchaser for value [2529]. 277. Liability for an agent’s fraud will require close attention to the language of the particular jurisdiction. See also Levy v Watt (2014) 308 ALR 748; [2014] VCA 60. 278. See ACT: Limitation Act 1985, ss 8, s 33(4); NSW: Limitation Act 1969, ss 11(2), 55(3); NT: Limitation Act 1981, s 42(4); Qld; Limitation of Action Act 1974, s 38(2); SA: Limitation of Actions Act 1936, s 25; Tas: Limitation Act 1974, s 32(2); Vic: Limitation of Actions Act 1958, s 27; WA: Limitation Act 1935, s 27. Cf Limitation Act 2005 (WA), s 38. 279. Beaman v ARTS Ltd [1949] 1 KB 550; Barnstaple Boat Co Ltd v Jones [2008] 1 All ER 1124 at 1133; Levy v Watt (2014) 308 ALR 748; [2014] VCA 60 at [55]. 280. Eddis v Chichester [1969] 2 Ch 345 (fraudulent breach of trust); Seymour v Seymour (1996) 40 NSWLR 358 at 372 (certain categories of equitable fraud); Levy v Watt (2014) 308 ALR 748; [2014] VCA 60 at [67]–[69]. An action in conversion is not based on fraud (Levy). 281. See Beaman v ARTS Ltd [1949] 1 KB 550; Levy v Watt (2014) 308 ALR 748; [2014] VCA 60 at [41]. There is an extended discussion of those principles in Levy at [43]–[49]. See also Meagher, Gummow and Lehane §§ 36-095–36-115. 282. See [1624]. 283. Cf Phillips v Homfray (1883) 24 Ch D 439, discussed [1617]. 284. See Levy v Watt (2014) 308 ALR 748; [2014] VCA 60 at [65] (as to the constructive trust imposed upon a thief, see [314] of this work). 285. Cf Official Assignee of Collier v Creighton [1993] 2 NZLR 534 (affirmed on another point in Collier v Creighton [1996] 2 NZLR 257 (PC)) and Mander v Evans [2001] 1 WLR 2378 at 2383. 286. This requires consciousness of wrongdoing but not necessarily rising to the level of dishonesty: Seymour v Seymour (1996) 40 NSWLR 358; Honey v McLennan (1997) 18 WAR 384. 287. Bulli Coal Mining Co v Osborne [1899] AC 351; Seymour v Seymour (1996) 40 NSWLR 358 at 372; Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515 at 537; Levy v Watt (2014) 308 ALR 748; [2014] VCA 60. See also Inca Ltd v Autoscript (New Zealand) Ltd [1979] 2 NZLR 700 at 711 (concealment need not be dishonest but must be wilful). Cf Hamilton v Kaljo (1989) 17 NSWLR 381; New South Wales v McCloy Hutcherson Pty Ltd (1993) 43 FCR 489 at 505; 116 ALR 363 at 380. Handford, Limitations §5.10.2390 notes considerable conflict amongst Australian cases. They need now to be viewed in the clear light of Levy v Watt (2014) 308 ALR 748; [2014] VCA 60.

288. See Official Assignee of Collier v Creighton [1993] 2 NZLR 534 at 538–40. Cf [2714]; ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at [140]–[152].

[page 983]

PART IX

Interest and Pleading Restitutionary Claims and Defences

[page 985]

Chapter Twenty Eight

Interest 1. 2.

3.

General …. Statutory, Common Law and Equitable Interest ….

[2801]

(a) Statutory Interest ….

[2809]

(b) Interest at Common Law ….

[2811]

(c) Equitable Interest ….

[2813] [2818]

Interest on Restitutionary Claims ….

[2809]

1. General [2801] Objects. An award of interest may serve either or both of a compensatory function and a restitutionary function. The subject of interest therefore requires consideration in its own right, regardless of the branch of law to which the principal obligation relates.1 This said, our main focus in this chapter is upon the award of interest in respect of restitutionary claims. It will be seen that statute, equity and common law provide distinct jurisdictional bases with differing consequences. Plaintiffs may choose one or more bases in some situations, but not invariably. We also argue that the unjust enrichment concept underpins and informs a ‘freestanding’ non-statutory right to interest. [2802] Historical. The early common law contains examples of non-statutory interest being awarded in relation to contractual and quasi-contractual claims.2 But the weight of authority was the other

way,3 and a deep torpor struck, following Lord Tenterden’s ruling in the contract case of Page v Newman.4 Out of concern for inconvenience to juries, he held that, absent contract or clear custom, interest was not due on a debt wrongfully withheld. The limited statutory redress Lord Tenterden procured by the enactment in 1833 of the Act which commonly bears his name5 was treated as confirming the ruling in the breathtakingly conservative House of Lords decision of London, Chatham and Dover Rly Co v South Eastern Rly Co.6 [page 986] The negative impact of Lord Tenterden’s ruling should have been confined to contractual claims, given its reasoning, but the baneful influence of the implied contract theory of quasi-contract7 was also seen to deny the right to interest at common law on restitutionary debts. For example, interest was refused in an action for money had and received in Fruhling v Schroeder8 in 1835. In 2007 the House of Lords struck out in a new direction. In Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners9 it overruled London, Chatham and Dover Rly Co v South Eastern Rly Co,10 declaring that actual interest losses caused by a breach of contract were in principle recoverable, subject to the standard rules about causation, remoteness and the obligation to mitigate loss. In a proper case, even damages assessed on the basis of compound interest were now available. In this regard, the House of Lords followed the lead of the High Court of Australia in Hungerfords v Walker.11 The House of Lords (by majority)12 applied these principles to a (common law) restitution claim to recover money paid under mistake. Indeed, it went further and declared that courts have power to award compound interest as a freestanding restitutionary remedy based on the principle of unjust enrichment in relation to the time value of mistakenly paid money. As Lord Walker put it, by way of summary of his colleague’s speech, ‘the thrust of Lord Nicholls’s observations on interest benefits

and restitution … might be encapsulated as being “not about interest on restitution but about interest as restitution”’.13 The second aspect of the decision demonstrates the openness of English law to the development of the general law by reference to the unjust enrichment concept. Most intermediate appellate courts in Australia have taken a similar position.14 So too courts in the United States.15 It remains to be seen whether the High Court of Australia will endorse this recent development.16 [2803] Jurisdictions to award interest. It will be explained that the jurisdiction (strictly speaking the power) of courts to award interest generally, including with respect to restitutionary claims, derives from three sources: [page 987] statute, common law and equity.17 None of these bases is exclusive of the other, and a plaintiff who can bring a claim within a particular jurisdictional base may elect to invoke it, provided that the principles relating to the award of interest for that jurisdiction are satisfied in the particular claim. One aspect of equity is its ‘jurisdiction’ in aid of rights enforceable at common law.18 There are also signs that ‘equitable’ ideas are permeating ‘common law’ rights to interest in this field as in some other areas of restitution. Such coherence is to be welcomed. At least until recently, the general law has produced an uneven patchwork, containing gaps and discordances. It is summarised here,19 before we examine whether the unjust enrichment principle might (as the House of Lords has held)20 serve as a unifying rationale obviating both the need for reliance on the deficient statutory jurisdiction, and purely historical regard to the separate contours of equity and common law.21 There are advantages and disadvantages with each of the three jurisdictions, standing alone. Putting the matter broadly, the situation is as follows.

First, under the general statutes relating to what is often termed interest by way of damages (but which we prefer to call statutory interest), interest may be claimed with respect to all claims that give rise to a monetary judgment.22 However, such interest cannot be claimed as a separate debt, with the consequence that a defendant who pays before any proceedings for recovery are brought cannot be sued for interest under the general statutes. Nor (save in New South Wales) can statutory interest be awarded if the plaintiff’s substantive claim is met or settled before judgment. Nor is compound interest available. More significant, from a peculiarly restitutionary point of view, is the fact that statutory interest may not accrue before the cause of action for the principal sum.23 There is also doubt as to the availability of statutory interest in an entirely non-compensatory context.24 Second, simple interest may be awarded at common law in relation to a number of restitutionary obligations. Nevertheless, in Australia, the general availability of interest is somewhat problematical. In relation to money paid it is almost certainly available from date of payment, even before accrual of the substantive cause of action. Compound interest is unavailable at common law in Australia unless there is a contractual obligation to pay it, although in Hungerfords v Walker25 compound interest was awarded as part [page 988] of a compensation award to reflect the loss of the use of the principal sum. Despite its current limitations, we consider the ‘common law’ of interest to be capable of development both as regards the capacity to back-date it and as to awarding it on a compound basis, in the light of the principles expounded in Hungerfords v Walker, Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners26 and the unjust enrichment principle itself.27 There is in Australia a strong argument, which we develop,28 that the common law has for many years treated as a general principle that restitution in favour of a payer

may include a back-dated interest component calculated from the date of payment to the payee. Third, if available, equitable interest may be awarded (at the court’s discretion) at simple or compound rates. This quality gives equitable interest a distinct advantage over statutory and common law interest in the field of restitution unless, as Lord Hope and Lord Nicholls have held,29 the common law itself recognises a restitutionary cause of action for compound interest.30 But the availability of equitable interest still depends on bringing the case within what used to be equity’s exclusive jurisdiction or its uncertain jurisdiction in aid of legal rights. In the present context, the former gateway effectively involves finding a fiduciary relationship. The latter gateway, though broad, may not (but in principle, should) encompass all restitutionary obligations recognised at common law. Where, however, equitable interest is available it may accrue from date of receipt by the defendant of the principal sum, even though the cause of action for restitution arises later. [2804] Separate proceedings for recovery of interest. Although interest is usually claimed in the same proceedings for a principal debt, this is not required. The defendant may pay the principal sum and then dispute proceedings for interest on the grounds that there was no obligation to have paid it,31 or that the debt did not carry interest. The independent nature of a claim for interest is reflected in its recoverability (in a narrow band of situations) by action at law as a debt separate from the principal. This substantive right was evidenced by a distinct indebitatus count for interest.32 Of course, there must be an obligation to pay interest. This chapter is concerned to explore when such an obligation arises outside contract or statute. Statutory interest33 can only be recovered in proceedings for payment of the principal sum; and (save in New South Wales) only if at least part of the principal sum remains outstanding at the time of final judgment.34 These limitations will ensure that the non-statutory powers remain significant.

[page 989] [2805] Simple and compound interest and the impact of taxation. Later in this chapter, we discuss the circumstances in which the law presently recognises35 and might conceivably recognise36 a right to compound interest in a restitutionary context. The present Australian law may be summarised by stating that a plaintiff who seeks compound interest must show one of three things: (1) a cause of action (outside restitution) that generates compensatory damages whose calculation includes compound interest, within the expanded view of the law in Hungerfords v Walker;37 (2) an equitable basis for the award, relevantly, against a fiduciary; or (3) where relevant an applicable contractual or statutory right. On the present state of the law in Australia, compound interest is unavailable with respect to restitutionary claims unless the equitable jurisdiction is engaged.38 The High Court’s recent rediscovery of the ‘equitable’ roots of the action for money had and received39 may turn out to be the fillip for some revision of this position.40 There have been suggestions that the incidence of taxation upon the verdict money in the plaintiff’s hands ought to be taken into account,41 so that the interest recoverable should be adjusted upwards to ensure that the plaintiff is not under-compensated. [2806] Functions of an award of interest. Interest has been defined as the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another.42 An award of interest may be designed to compensate the plaintiff, or to strip the defendant of the unjust enrichment of having had the benefit of money belonging to or owed to another, or to achieve both objects concurrently.43 The restitutionary function of interest is well established, and to the extent that the award of interest serves the purpose of reversing an unjust enrichment at the plaintiff’s expense the topic deserves treatment in this work, regardless of the nature of the substantive obligation to which the interest is appurtenant. In London,

[page 990] Chatham & Dover Rly Co v South Eastern Rly Co,44 where the House of Lords declined to overturn what was recognised as an unsatisfactory stream of earlier authority concerning the unavailability of interest for late payment of a debt at common law, Lord Herschell LC nevertheless acknowledged45 that ‘the party who is wrongfully withholding the money from the other ought not in justice to benefit by having that money in his possession and enjoying the use of it’. Another nineteenth-century authority on a different topic,46 asserted that: As interest may be considered as the mesne profits of money in the same way as rent is of land, it is not, perhaps, too much to consider it amenable to the same rules as regulate the repayment of mesne profits of land.

To view an award of interest as capable of serving, in part, the function of reversing the defendant’s unjust enrichment is not the same as saying that there is an independent restitutionary cause of action for interest, although the Australian law may continue to develop in this direction.47 While separate proceedings may be brought for the recovery of interest,48 there remains the necessity of showing: (1) A substantive debt, in the sense of an independently owed obligation, to which the interest award is appurtenant. (That debt may be the subject of a restitutionary cause of action, or it may be one recognised by other branches of the law of civil obligations.) (2) An obligation to pay interest. [2807] A restitutionary cause of action for (at least simple) interest? It will be seen from the balance of this chapter that the current law of interest in Australia (trifurcated into statutory, common law and equitable sections) leaves significant gaps, enabling those who owe money (whether under restitutionary causes of action or otherwise) to be enriched at the expense of the person owed the principal sum. In Commonwealth v SCI Operations Pty Ltd49 McHugh and Gummow JJ said that the existing state of authority ‘does not favour’ acceptance

of so broad a proposition as a ‘“freestanding” right to the recovery of interest where the defendant has had the use of the plaintiff’s money in circumstances which indicate an unjust enrichment at the expense of the plaintiff’. Their Honours did not discuss the case law, but proceeded to contrast the ampler powers of equity. Perhaps the key to their Honours’ reservation lies in what they understood by the words ‘freestanding’. There is, in our opinion, ample evidence of a general right to interest by way of perfecting substantive restitutionary claims, where delay has added to the defendant’s unjust enrichment. Many examples are provided in the case law discussed in this chapter. Recognition of the general proposition represents the necessary extrapolation of a large, almost [page 991] unbroken, line of case law that is referred to in detail below.50 The extrapolated general principle has been recognised in decisions of intermediate appellate courts in this country.51 The step has been taken by the House of Lords in its recent decision in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners.52 The right recognised in these cases is ‘freestanding’ in the sense that it may be asserted despite payment of the principal sum53 and in relation to periods before the accrual of the relevant cause of action.54 It is also restitutionary in the sense that it is a general law right informed by the unjust enrichment concept. It may also be ‘equitable’ in the sense that ‘both the awarding and the quantum of interest are dependent upon the circumstances of the case’.55 Such a conclusion does not offend whatever is left of the policy that underpins the common law’s refusal (save in England) to countenance interest on late payment of contractual damages,56 because implied contract is no longer the conceptual underpinning of restitutionary causes of action. In Hungerfords v Walker57 the High Court pointed to distinctions between claims in debt and for damages. Statements of

apparent generality in some nineteenth-century cases culminating in London Chatham & Dover Rly Co v South Eastern Rly Co,58 that rejected a common law basis for interest on contractual damages, simply ignored or implicitly distinguished a large stream of contrary authority in the then law of quasi-contract.59 The suggestion that continuing and principled application and development of the general law might be restricted by twentiethcentury legislative intervention that armed courts with the power to award statutory interest in limited circumstances60 should be firmly rejected. As Mason CJ and Wilson J said in Hungerfords v Walker:61 Where a legislative provision is designed to repair the failings of the common law and is not intended to be a comprehensive code, the existence of that provision is not a reason for [the High] Court refusing to give effect to the logical development of common law principle. It would be ironic if a

[page 992] legislative attempt to correct defects in the common law resulted in other flaws becoming ossified in the common law.

We consider that the unjust enrichment concept62 itself supports a freestanding cause of action to recover interest, recognising that at least some rights illustrating the concept are subject to ‘equitable’ principles63 that allow the parties to advance reasons justifying a particular starting point for calculating interest or a particular measure of interest (simple or compound). Entitlement to interest may be seen as a right, subject to qualifications and exceptions to meet the justice of the particular case. The argument is as follows.64 For the same reason as the law recognises that the receipt of money is an incontrovertible benefit,65 the law should recognise that the untrammelled capacity to use money over time is a distinct and additional benefit. Where it is unjust that the person who had the use should pocket the fruits (being the interest earned or capable of being earned), there should be an independent restitutionary right vested in the person at whose expense that enrichment occurred. This right

should not derive from a fictional or tortured fiduciary relationship between the payer on the one hand and the payee or some third party (such as the directors of the payee) on the other. It is independent in the sense that it is unaffected by the nature or legal origin of the socalled principal debt, and it exists whether or not the principal debt is repaid. The right is not subject to the limitations of statutory interest. The jurisprudential basis of the right ought correctly to be seen as the unjust enrichment principle, as distinct from an aspect of compensation. The principle is satisfied because the debtor’s use of the plaintiff’s money66 involves an independent enrichment at the plaintiff’s expense. The unjust factor is that which supports the debt to which the interest claim is necessarily appendant67 coupled with the absence of justification for the defendant keeping the benefit of the use of the plaintiff’s money. In most, if not all cases, this will also correspond with the principle that the plaintiff should be compensated for the loss of the use of what in one sense or another is the plaintiff’s money. In this way, in this context at least, the law of interest is freed from its confused and tangled state, where the historical vagaries of common law, equity and statute prevail, rather than underlying principle. In speaking of compensation for the delayed repayment of what may be a restitutionary debt, we recognise that, where there is a cause of action stemming from the defendant’s enrichment by subtraction from the plaintiff, no ‘wrong’ is necessarily involved. Indeed, it is precisely because the claim is for restitution rather than compensation that it has so frequently escaped the restrictive approach of the common law to the recovery of interest as compensation for the defendant’s failure to pay a sum of money due under [page 993] contract. Thus, with direct restitutionary claims such as for the recovery of money paid under mistake, or under a later reversed judgment, or as the result of improper pressure, the plaintiff’s sole claim upon the defendant may be a direct restitutionary claim that is

independent of fault.68 Still, the valuation of the plaintiff’s monetary recovery of interest necessarily presumes the defendant’s obligation to pay a capital sum (usually) as and from the date of receipt from the plaintiff. Even though that sum does not necessarily represent the extent of the plaintiff’s impoverishment,69 it is proper to treat the capital sum as ‘due’ to the plaintiff;70 and to regard the defendant’s gain (in respect of interest) as an unjust enrichment calling for an appropriate and distinct monetary remedy. Its calculation would seldom be affected by whether it is computed according to a compensatory or restitutionary measure. Often it will be just to value the benefit according to compound interest rates.71 Unless there is an independent right to restitution for interest, the defendant’s enrichment through the opportunity to use or enjoy the benefit conferred by the plaintiff may be unjust, even though (in the case of money) the money ‘belonged to’ the defendant from date of payment; and even where the obligation to ‘repay’ it only arose upon the later accrual of a substantive cause of action, whether in restitution or otherwise. There are, however, certain developments which await judicial approval in this country before such a right may be said incontrovertibly to exist. First, the High Court would need to confirm the rulings of several intermediate appellate courts72 that the ‘freestanding’ right exists. Second, developments should see the plaintiff’s loss/defendant’s gain valued according to the reality of modern financial conditions. This means that interest ought generally to be calculated at compound rates without the need to find an equitable basis such as a fiduciary relationship.73 Third, where there is evidence that the defendant’s actual profit was greater than that arrived at by calculating interest at commercial compound rates, then the actual profits should be handed over to the plaintiff if that is necessary to strip the defendant of an unjust enrichment made at the plaintiff’s expense.74 However, to recognise a general non-statutory right to strip a defendant of unjustly earned interest,75 the law would need to

[page 994] develop considerably, sloughing off the lingering ghosts of discarded forms of action. The Australian law would also have to focus out the confusing double vision of common law and equity, with its (sometimes) unprincipled distinctions in addressing the same fact situation. The freestanding right may be overridden or excluded by statute.76 [2808] Date of accrual of interest on money paid. For the reasons developed below, we suggest that the law is capable of treating interest with respect to restitutionary obligations relating to money paid by plaintiff to defendant as accruing from as early as the date of payment. It does not matter that the restitutionary cause of action to recover the principal arose at a later point of time, although sometimes the justice of the case will mean that interest will only be awarded from that later point of time. Many restitutionary causes of action accrue at the time of the defendant’s receipt of money. These include claims to recover money paid by mistake, or as the result of improper pressure, or pursuant to an ultra vires demand by the Revenue.77 Since receipt of payment by the defendant is the very event giving rise to the plaintiff’s cause of action for a principal sum, there is no difficulty in awarding even statutory interest from the accrual of the substantive cause of action in these situations.78 However, in some situations the defendant would be unjustly enriched if interest could only be recovered from the time of accrual of the substantive cause of action. Several claims discussed in this book involve unjust enrichment based on the happening of an event occurring after conferral of a benefit (usually payment of money). Indeed, most categories of ineffective transaction are of this nature.79 For example, a payment at the inception of a contract vitiated by misrepresentation will be recoverable on rescission by the innocent

party who paid it. The restitutionary cause of action arises upon rescission, which necessarily occurs after payment.80 But it does not follow that interest should run only from the date that an ineffective contract is abandoned or rescinded or when the basis upon which it was agreed fails. We are, of course, dealing with situations where there is no contractual arrangement covering the situation81 and where there is no exclusively statutory basis for interest which decrees otherwise.82 In the realm where the right to interest stems from the general law, the principles of both unjust enrichment and equity will require the justice of an interest award to be closely examined in its particular context, both as regards its starting point and its computation (eg simple or compound interest).83 [page 995] As a general rule, it would be quite unjust to allow a person whose misrepresentation led to the initial payment to pocket the benefit of having had the money as his or her own up to the date of rescission. It will be seen that there is a large body of case law taking this position in relation to payments under contracts which are ineffective for a variety of reasons.84 However, in other situations it may have been intended by the parties that an advance part-payment in anticipation of a contract for sale whose formalisation never eventuated was to be treated as the vendor’s up to the time when the negotiations were abandoned.85 Prolonged delay on the part of the ultimately successful plaintiff in formulating and prosecuting the constitutional basis that triggered recovery also led the court to decline pre-dating the time from which interest (awarded on the ‘freestanding’ basis) was to be calculated.86 These cases suggest that the ‘equitable’ aspects of money had and received that have been rediscovered by the High Court in recent times87 have play in this area as well, even though (as with the action for money had and received) the restitutionary basis for recovery is at ‘common law’. Such substantive fusion, in the interests of coherence, should be welcomed

by all but the most intransigent equity traditionalists. Presumably, and consistent with the ‘two-stage’ approach encountered elsewhere,88 there is an onus on the defendant to displace the general rule that interest may be backdated to the time when the money was first paid even though the restitutionary right of recovery arose later.89 It may be that particular conduct of the plaintiff removes or limits the ‘unjust’ element of the defendant’s interest enrichment.90 What is the conceptual basis for allowing interest to run from a time prior to the accrual of the cause of action for the principal sum? In Government Insurance Office of New South Wales v Healy (No 2),91 Kirby P demonstrated how, in at least some circumstances, an injustice would occur if interest accrued only from the time of the liability to pay the principal sum. That case involved restitution in respect of a judgment debt that was [page 996] paid before reversal on appeal.92 A plaintiff recovered a verdict in a personal injury claim. Pending an appeal as to quantum the defendant obtained a stay, but on condition that a substantial part of the verdict ($160,000) should be paid to the plaintiff. On appeal, the Court of Appeal reduced the verdict to $132,000 with the result that the defendant in the original action had a restitutionary claim to recover the $28,000 excess. Obviously that cause of action arose upon the setting aside of the order below. Nevertheless, the defendant sought and obtained interest on this sum, calculated from the date of original payment. Kirby P awarded interest at judgment rates from payment until recovery. He referred to the defendant’s obvious loss of the investment that would have accrued had the excess verdict money remained in its pocket and been invested at commercial rates. And, in the particular case, the fact that the plaintiff was a solicitor led to the inference that he was likely to have invested the excess money received by him. The need to compensate the defendant and to preclude the plaintiff’s unjust enrichment thus combined to make it just that interest

should accrue from the time of payment, even though the defendant’s restitutionary cause of action did not arise until the order made in its successful appeal. Kirby P suggested the court had a discretion to withhold interest in some circumstances.93 Unless the power to award interest from date of payment exists, the sum in relation to which restitution is awarded may be ‘fructifying in the wrong pocket’.94 Application of this principle has seen the triumph of the incipitur rule over the allocatur rule, meaning that an order for costs will generally carry interest from its making even though quantification of the sum payable, by agreement or taxation, occurs much later.95 This is because ‘interest is for this purpose treated as the fruit of money and he who has had the use of money will not be heard to say that there were no fruits’.96 As regards restitutionary claims to recover money paid, the general law appears universally to regard interest as capable of accruing from date of payment, even where the cause of action for the principal sum arises after payment.97 This result is justifiable by reference to the unjust enrichment concept, for reasons explained above.98 The application of the principle produces a just result, while explaining a miscellany of decisions which either came to this position sub silentio, or offered discordant or unacceptable reasons for it. Several explanations have been offered in the cases for ‘back-dating’ interest so that it accrued from time of payment by plaintiff to defendant. We address the least promising first, bearing in mind that the search is for the most general principle that explains what is happening and the range of choices open to the court. [page 997] First, the power invoked by Kirby P in Government Insurance Office of New South Wales v Healy (No 2),99 in the case of judgments reversed on appeal, to order the date from which the new order should take effect.100 One difficulty with this analysis is that it should have led to

the conclusion that interest was payable as from the date of the original judgment, whereas it was payable on the overpaid amount as from the date of payment by the judgment debtor.101 Another difficulty is that it does not explain the presence of the back-dating phenomenon in many other situations. Second, the back-dating power has sometimes been attributed to the statutory jurisdiction conferred on equity courts to decide vendor– purchaser disputes.102 It is doubtful that this provision was intended to provide a basis for changing substantive rules. And once again, such a source of power hardly explains the many situations in which orders have been made that did not or could not have invoked this jurisdictional basis. Third, back-dating has been viewed as the consequence of treating the defendant’s title to the money originally paid under a contract as conditional upon subsequent completion of that contract.103 This ground, at least if put forward as a general justification, appears to reflect a proprietary-based approach to restitution which did not survive Pavey & Matthews Pty Ltd v Paul.104 Fourth, and most promisingly, the power has been explained as an aspect of the equitable doctrine of restitutio in integrum where a contract is rescinded.105 There are doubtless some who are fearful that a ‘fusion fallacy’ would occur if such an explanation were transported into areas where restitution is awarded as of right, pursuant to the common law principles of total failure of agreed return. But it must be remembered that equity has always been available to supplement and modify common law principles and that substantive fusion in the heartland of restitution has been sanctioned by the High Court very recently.106 Indeed, there is very early authority in the High Court recognising the interplay of equitable notions regarding interest in common law fields of restitution.107 As we demonstrate elsewhere,108 restitutio in integrum is encountered both at common law and in equity and it is illustrative of the unjust enrichment concept. In limited classes of cases, statute provides a specific and sometimes qualified right to interest from payment in a restitutionary context. These

[page 998] include recovery of overpaid taxes,109 international sale of goods transactions governed by the United Nations Convention on Contracts for the International Sale of Goods 1980,110 and interest awarded under the frustrated contracts legislation.111 The statutory rights may function as a code that squeezes out aspects of the freestanding right we have identified.

2. Statutory, Common Law and Equitable Interest (a) Statutory Interest [2809] General power to award interest. In each of the States and the mainland Territories,112 and with respect to the High Court113 and the Federal Court,114 there are statutory provisions which permit or require a court, on entering judgment for the plaintiff in proceedings for the recovery of money, to include an amount by way of interest. The award which may be made under these provisions is frequently referred to as interest by way of damages, although it would be wrong to see this description as confining statutory interest to a compensatory role.115 We prefer to use the expression ‘statutory interest’. The Tasmanian provision116 is based on the English statute of 1833 commonly known as Lord Tenterden’s Act.117 This provision, which used to be in force in various forms in all Australian jurisdictions, is narrower in scope than the general provisions in other jurisdictions; and is inapplicable to restitutionary claims unless at least there has been a written demand for interest.118 The Victorian provision119 only permits interest from the commencement of proceedings.

[page 999] This is not the place to discuss the general scope of these statutory provisions.120 An award can be made without proof that any loss of interest has been suffered. The legislation in force in courts apart from the Tasmanian courts confers a discretion121 as to: (1) whether or not to grant interest; (2) rate; (3) the part or parts of the award which are to bear interest; (4) the length of time, between the accrual of the cause of action and the entry of judgment, for which the interest is to run; and (5) whether to calculate the interest or award a lump sum in lieu. Any money judgment on a restitutionary claim may carry statutory interest,122 subject to the proper exercise of judicial discretion, and the limitations we note below.123 In relation to restitution for services, statutory interest should in principle run from the time of accrual of the cause of action.124 The statutory discretion does not exclude other available bases for claiming interest.125 The impact of taxation upon an award of interest may affect its quantum.126 [2810] Limitations of statutory interest. There are shortcomings in the legislation, even in its modern form outside Tasmania. Their application may encourage a plaintiff to seek interest under the general law. Like the statutes’ common predecessor, Lord Tenterden’s Act, the general provisions are not available to support a claim for interest independently of a substantive claim.127 Nor is the legislation applicable (save in New South Wales) where the plaintiff’s substantive claim is met or settled before judgment.128 Furthermore, the preclusion of an award of ‘interest upon interest’ in the various statutes129 has been accepted as preventing an [page 1000]

award of compound interest,130 even though it is now recognised that this may serve to undercompensate plaintiffs in many circumstances.131 With the exception of the Northern Territory, the statutes are confined to proceedings for the recovery of money, and this would appear to exclude a claim for principal relief in the nature of mandamus.132 Statutory interest is not payable in relation to the period before accrual of the plaintiff’s cause of action.133 This limitation means that the general statutory provisions are unavailable for claiming interest in relation to restitutionary obligations where payment to the defendant (and consequential enrichment) precedes the accrual of the plaintiff’s restitutionary cause of action.134 Indeed, doubts have been raised as to whether statutory interest is available other than for compensatory purposes.135 Statutory interest has been awarded from date of demand for repayment upon restitution following the avoidance of a preference.136 Despite the high authority of a ‘quaere’ by Sir Owen Dixon,137 it is likely that the Crown is in no preferred position over the citizen as regards statutory interest. The Crown Proceedings Acts in some jurisdictions expressly so provide.138

(b) Interest at Common Law [2811] Common law simple interest on restitutionary claims. The common law did not countenance an award of interest to compensate for [page 1001] the delayed payment of contractual or tortious damages.139 In 2007 this ceased to be the situation in England,140 and the response of the High Court of Australia is awaited. The old common law principle ceased to have direct application to restitutionary claims once the implied contract theory was exploded.141 Nevertheless, there were

general statements suggesting that quasi-contractual claims did not carry even simple interest at common law.142 Prior to Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners143 it was well established that the common law claimed no power to award compound interest.144 However, the common law was not as hostile to claims to have simple interest added to restitutionary debts and analogous contractual obligations as the general statements seemed to imply.145 For example, in Petra v Duncombe,146 a surety who was required to meet the principal debtor’s obligations was held entitled, as part of damages at common law for breach of covenant, to be recouped with interest the award paid to the creditor. And in Johnson v R,147 the Privy Council was prepared to countenance interest in a common law action to recover money paid as a result of the defendant’s deceit. (However, the same did not apply to a claim to recover money paid under mistake, although the judgment suggests no reason for the distinction.)148 Similarly, the common law has long awarded restitution with interest with respect to moneys paid under judgments later reversed or set aside.149 [page 1002] There is a long stream of authority recognising that moneys paid pursuant to a contract discharged for breach are recoverable at common law with interest. Thus, the rule in Bain v Fothergill,150 which restricted damages recoverable by a purchaser of land for the vendor’s breach through inability to make good title, nevertheless contemplated the return of the deposit plus interest.151 These awards were made as part of damages for breach of contract, but that is only the more remarkable given the generally accepted view about the restricted availability of interest on contractual damages. However, the largest group of ‘exceptions’ to any general rule at common law precluding the award of interest upon restitutionary

claims are encountered in the field of ineffective contracts. And in many of the cases interest was calculated from as early as the time the money was paid even though the right to restitution of the capital sum occurred at a later point in time.152 [2812] Interest and ineffective contracts. Whenever there is restitution of money paid under an ineffective contract,153 the payer will, as a general rule, be awarded interest on the money from the date of payment154 despite the accrual of the relevant cause of action occurring at a later point of time. This approach applies to claims based on total failure of the agreed return, as well as to restitutionary orders made to give effect to the principle of substantial restitution.155 A common example occurs when, following discharge of a contract for breach or repudiation, or in exercise of a contractual right or on frustration, money paid under the contract is recovered.156 This money may be a deposit or other moneys, and restitution may result from equitable relief against forfeiture. Restitution in those circumstances will usually carry interest from date of payment. Where there is relief against forfeiture, equity’s jurisdiction is apparent, but in other cases, where the plaintiff has a legal right to recover moneys paid prior to discharge,157 the equitable basis for an award of interest must be the auxiliary jurisdiction and its limits are more debatable.158 Nevertheless, courts have consistently awarded interest from date of payment in relation to the restitution of moneys paid pursuant to an ineffective contract, even where restitution results from the legal right which we describe elsewhere159 as total failure of agreed return.160 [page 1003] This line of cases reinforces our argument as to the existence of a general restitutionary cause of action for interest, based on the unjust enrichment concept and subject to modification if the defendant can show that full restitution would be unjust.161 They certainly support

the proposition that interest is generally available, whether claimed in proceedings to enforce a substantive restitutionary claim or independently, as an aspect of reversing unjust enrichment at common law. In this sense, the award of interest perfects the award of restitution on the substantive claim.162

(c) Equitable Interest [2813] Function. Equity has always awarded interest in a range of circumstances, including interest on substantive claims which are within the scope of this work.163 The judicial torpor that beset the common law of interest164 did not touch equity, where awards were made by judges, not juries. The equitable jurisdiction to award interest, independently of statute, is broad,165 and extends well beyond claims discussed in this work. Equity’s purpose in awarding interest is avowedly to prevent the defendant’s profit (in other words, to prevent unjust enrichment).166 Equity responded to the self-imposed limitations of the common law, both as regards substantive claims and interest itself, and asserted an expansive power to grant interest in order to give full restitutio in integrum and thereby prevent unjust enrichment. The ‘practice of the Court of Chancery in such cases to decree repayment with interest arose from the desire of the Court to effect a complete restitutio in integrum’.167 The jurisdiction is not limited to proprietary claims.168 [page 1004] Latter day suggestions that this equity jurisdiction may also have a compensatory function169 have been branded as ‘incorrect’170 and ‘heretical’,171 but (while the restitutionary basis is, in our view, a preferable general explanation) the dual function is well established and this controversy does not affect the subject matter of this work. Equity aims to strip any profit which a defaulting fiduciary or other

person subject to equitable relief is presumed to have made out of the use of money belonging to or owed to others. This is the basis of its readiness to award interest, even compound interest.172 This recognises that the temporary control of money that is due to another generates an opportunity (of which most defendants avail themselves) to earn profit or, at least, save expense by avoiding the need to borrow.173 Equity generally perceived this reality, and was not hampered with the common law’s concern for the difficulties of juries in assessing and calculating interest.174 The historical and doctrinal mess of the common law in relation to interest,175 the obvious injustice of refusing to recognise the time value of money, the longevity of equity’s jurisdiction to act in aid of the common law and the developmental capacity of the unjust enrichment principle itself all point in favour of a fundamental reassessment of both law and equity’s approach to interest in this field. The House of Lords embarked on such a task in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners.176 It is to be hoped that the High Court of Australia will follow suit, recognising that coherence in legal reasoning is more significant than adherence to distinctions between law and equity deriving from jurisdictional divides that ceased well over a century ago.177 In two respects the traditional understanding of the equitable jurisdiction to award interest provides a more appropriate measure of nuanced restitution for unjust enrichment than the statutory and common law jurisdictions to award interest. One is in relation to a clear power to adjust the timing from which interest is to be calculated so as to trigger the entitlement from when ‘retention’ by the defendant became unjust.178 The other is in relation to compound interest.179 A critical issue is whether this power is available [page 1005] to be exercised with respect to ‘common law’ causes of action such as those derived from the common money counts.180

[2814] Rate of interest and compound interest. Before and after the Great Depression, equity adhered firmly to a rate of 4 or 5 per cent when awarding simple interest, awarding the higher rate in commercial or ‘mercantile’ contracts, including the repayment of moneys paid under rescinded or discharged contracts.181 The ‘trustee rate’ remained 4 per cent,182 despite ‘changes in monetary conditions’183 after the Depression. However, in recent years equity has proved more flexible in selecting the precise rate of (simple) interest which will be applied. In New South Wales and Western Australia at least, the ‘trustee rate’ has been 8 per cent for a number of years.184 Under the situation prevailing in England prior to Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners185 and still applicable in Australia, courts award a commercial or ‘mercantile rate’ where profit is received or presumed to have been received, especially if this is also necessary to compensate a plaintiff for losses. The ‘mercantile rate’ used to be fixed, as a matter of policy, at 5 per cent, but latterly has in proper cases reflected the bank overdraft rate, or followed the rate for interest in judgments.186 Equity will award compound interest if it finds or presumes that the party liable engaged in financial dealings with the money,187 but its jurisdiction is not confined to such cases.188 [page 1006] [2815] Interest in equity’s exclusive jurisdiction. Amongst the categories of equitable claims falling within the scope of this work, and in relation to which interest has been awarded in equity, are claims against a misappropriating or defaulting fiduciary.189 Equity may also add interest to equitable compensation, although the exercise of that jurisdiction appears to be designed as much to compensate the plaintiff as to strip the defendant of the profit earned by the wrongdoing.190 [2816] Interest and rescinded contracts. A contract may be rescinded or set aside because of a number of vitiating factors. These

include misrepresentation, mistake, duress, undue influence, unconscientious conduct and certain statutory grounds. Sometimes rescission is available as of right, in other cases the plaintiff must submit to the terms imposed by equity as the price of relief. Where exercisable, these rights avoid the contract ab initio.191 Whereas misrepresentation, mistake and duress are all (historically) common law concepts, relief for undue influence or unconscientious conduct has its origin in equity. In relation to misrepresentation and mistake the courts of equity also exercised a concurrent jurisdiction which was available on a much more liberal basis than at common law. The fusion of the administration of law and equity has made the distinction largely of historical interest,192 since claims based on any of the concepts of misrepresentation, mistake, duress, undue influence or unconscientious conduct may be raised in the same proceedings as proceedings for damages or declaratory relief, and in cases of variance between common law and equity the rules of equity prevail. We are not, in this part of the work, concerned with the details of equity’s jurisdiction in these fields. It is sufficient to draw attention to the restriction upon rescission that applies when it is impossible to give substantial restitutio in integrum, that is, the requirement of substantial restitution. This principle is discussed elsewhere in this work.193 Of present relevance is equity’s requirement that, in giving substantial restitution by the repayment of money received, payment includes interest on that money from date of receipt.194 By this means equitable interest may accrue from the date when money was paid, even though the cause of action arises later.195 Rescission, whether by act of the innocent party or decree in equity, operates to dissolve a contract ab initio. Equity’s role, as explained in Alati v Kruger,196 is to ‘do what is practically just between the parties, [page 1007] and by so doing to restore them to the status quo’. Part of the working out of restitutio in integrum involves the repayment of money already

paid (subject to appropriate offsets), and equity’s concern to avoid the retention of profit accruing from the capacity to invest money is the basis of orders to repay money plus interest from date of payment until the date of repayment. Thus, if a person enters into a contract as the result of fraudulent197 or innocent198 misrepresentation, or as the result of coercion,199 or in consequence of breach of fiduciary duty,200 the rescission of the contract will involve not only the repayment of any money paid in pursuance of it but also the award of interest on that money. Speaking of rescission in Skinner v James Syphonic Visible Measures Ltd,201 Harvey CJ in Eq said that:202 … where it is giving purely equitable relief, as it is in cases of rescission, the proper remedy is that the Court by way of restitutio ad integrum gives the party back his money together with interest until he gets his money.

There would appear to be no reason why these principles do not extend to restitution following rescission under statutory provisions.203 [2817] Equitable interest in relation to common law claims? The High Court has rejected the proposition that compound interest could ever by awarded at common law with respect to a common law claim for damages for breach of contract.204 In Commonwealth v SCI Operations Pty Ltd205 McHugh and Gummow JJ also said that the existing state of authority ‘does not favour’ acceptance of so broad a proposition as a ‘“freestanding” right to recovery of interest where the defendant has had the use of the plaintiff’s money in circumstances which indicate an unjust enrichment at the expense of the plaintiff’. Westdeutsche Landesbank Girozentrale v Islington London Borough Council206 was noted as English authority rejecting the proposition that equity might supplement statutory interest by providing for an award of compound interest. According to an early High Court decision, the fusion of equitable and common law principles means that equitable interest may be awarded even if the plaintiff sues in a common law action, so long as the facts proved would support a corresponding equitable claim.207 Whether or not this may

[page 1008] shock the purists as a ‘fusion fallacy’,208 the proposition is amply supported by the decided cases, which show courts awarding interest on a wide range of common law obligations. Some of these fall squarely within equity’s concurrent jurisdiction.209 But other awards by equity courts (such as interest on moneys repayable following the discharge of a contract for breach) are less clear as to whether they represent a common law approach to interest on restitutionary debts that is at variance with its approach to contractual obligations,210 or an expansive equitable jurisdiction. However expansive, equity’s jurisdiction to award interest in respect of common law claims is not universal.211 Nevertheless, there is in principle no reason why equity should refuse this remedy merely because the appurtenant right is a ‘common law’ one.212 In Westdeusche, the majority felt constrained by the English legislative history relating to statutory interest,213 but such a fetter on equitable jurisdiction is contrary to principle214 and the trend of Australian High Court authority, including Hungerfords v Walker.215 In Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners216 the majority of the House of Lords recognised a right to recover compound interest with respect to the value to the defendant of having the use of mistakenly paid money. Lord Hope and Lord Nicholls located that right in the common law and expressed themselves in differing terms as to the circumstances in which the award would be on a compound interest basis and was to be calculated.217 Lord Walker located the right within equity’s discretionary jurisdiction, thereby ensuring a clear doctrinal basis for necessary flexibility.218 Given recent developments in the High Court of Australia219 it is likely that Lord Walker’s position would be preferred in this country. Equity believed that it was not following the law, but it nevertheless awarded interest whenever its jurisdiction was engaged. This created no theoretical difficulty in the exercise of equity’s exclusive or concurrent

jurisdictions, because in them no question of being required to follow the common law could arise.220 But if, as equity courts acknowledged, the common law had set its face against interest, how could equity in conscience decline to [page 1009] follow the law when exercising its auxiliary jurisdiction? The precise bases upon which courts assumed non-statutory jurisdiction to award interest is sometimes unclear,221 but nevertheless correct in principle, in our view. If Australian law follows the recent trend in England, then Australian equity should perceive a corresponding impetus to follow the common law in a direction that is no longer blinkered by the nineteenth-century attitude to interest claims at common law.222 Whatever the source, the equitable jurisdiction is so well established in the area of discharged contracts that it seems captious now to debate it. Nevertheless the search for an equitable basis of an interest award remains critical, so long as the common law spurns compound interest. We have already illustrated the jurisdiction to award interest (from date of payment) in respect of contracts that are discharged on common law grounds.223 The cases show that judges seldom concerned themselves about the jurisdictional bases of the interest award, so that it may be that many of them illustrate an appropriately modern and coherent approach to the fusion of law and equity rather than equitable subvention of a deficient common law jurisdiction. Earlier in this chapter, we have argued that these decisions should also be seen as a contribution to the recognition of a general non-statutory cause of action for interest, based on the unjust enrichment principle.224

3. Interest on Restitutionary Claims [2818] Introduction. In this section, we illustrate the availability of interest in relation to restitutionary claims. This necessarily involves a

drawing together of principles summarised earlier in the chapter. We seek to illustrate the availability of what we shall term the traditional jurisdictional bases of statute, common law and equity for an award of interest, although we have argued that the law of restitution itself offers a principled ground for a freestanding cause of action for interest.225 We have already demonstrated why, in this area, the date of accrual of a restitutionary cause of action for interest may precede the event giving rise to the right to recover the ‘principal’ sum.226 [2819] Mistaken payments. Simple interest is recoverable from date of payment in relation to mistaken payments.227 For these, the restitutionary cause of action accrues upon the defendant’s receipt of the plaintiff’s money. The unavailability of compound interest at common law in Australia or under the general statutory power228 appears to create an impediment to such a measure of interest in relation to restitution of mistaken payments, so long [page 1010] as the law clings to the need to show an antecedent fiduciary obligation. This is anomalous, given the availability of the more generous constructive trust in relation to some categories of mistaken payments,229 the willingness of the common law to countenance recovery of actual profits in some restitutionary contexts,230 and some of the discussion in Hungerfords v Walker.231 Little wonder that the overworked concept of a fiduciary relationship has been both stretched to breaking point in this area232 and directly questioned.233 English law now permits the recovery of compound interest in relation to a mistaken payment.234 [2820] Improper pressure. Payments as the result of improper pressure are recoverable with interest from date of payment.235 Equitable, and therefore compound, interest may be recoverable, albeit

on debatable conceptual grounds, at least where the pressure tainted a contract under which the money was initially paid.236 A transfer of benefit as the result of deception or force is scarcely capable of creating a (true) fiduciary relationship, and it is in such cases that the guidance of Re Diplock237 is least defensible and most vulnerable.238 Once again, these possible restrictions are no longer part of the English law.239 [2821] Contribution and recoupment. Restitutionary claims for contribution or recoupment carry interest, although the authorities are divided as to whether this is at the rate recoverable for breach of trust or at commercial rates.240 [2822] Judgments reversed or set aside. A well-established head of common law interest, accruing from date of payment even though the restitutionary cause of action arises later,241 is where there is restitution of moneys paid pursuant to judgments later reversed or set aside.242 [page 1011] [2823] Necessitous intervention. In principle, interest should be recoverable under the general law because of the analogy with other forms of lawful and unlawful pressure and because the defendant will usually have been enriched at the plaintiff’s expense. Statutory interest is available subject to its limitations.243 [2824] Ineffective contracts. Interest is recoverable from the date of initial payment, on money paid under contract, even though the restitutionary cause of action for the principal arises later.244 Interest has been awarded from the date of the initial payment following rescission of a contract: (1) for fraudulent misrepresentation;245 (2) for innocent misrepresentation;246 (3) for coercion;247 and

(4) pursuant to a statutory right of avoidance.248 Similarly, interest has been awarded from the date of initial payment following discharge of a contract: (1) by the plaintiff, for breach or repudiation, or in exercise of a contractual right;249 (2) by the defendant, for breach or repudiation, or in exercise of a contractual right;250 [page 1012] (3) without breach by either party;251 and (4) where the plaintiff has been granted relief against forfeiture.252 What is significant is that many of these cases involve restitution of money paid upon the basis of what we term total failure of agreed return,253 where the right exists at common law against an innocent party.254 Some at least of these restitutionary claims attract equitable, and therefore access to compound, interest.255 But for those claims that are held to attract only rights to statutory or common law interest, access to compound interest must await the development of an Australian law of interest under the general law that is more responsive to the unjust enrichment concept.256 [2825] Restitution for wrongs. This will attract interest, calculated from the date of receipt of the unjust enrichment. Some wrongs are clearly equitable,257 and for them equitable compound interest is therefore obviously accessible under equity’s exclusive jurisdiction. Other categories of restitution for wrongs are common law in derivation. Access to equitable, and therefore, compound interest will depend on the same considerations as those discussed above in relation to mistaken payments.258 [2826]

Restitution to and from the Crown. Interest has been

awarded on restitution of payments in response to unauthorised demands by the [page 1013] Revenue, calculated from date of payment.259 Likewise with restitution to the Revenue of moneys disbursed without authority.260 Since these categories of restitution are intractably common law in derivation, claims solely based on them will only attract equitable (compound) interest if the law were to develop in the way we have suggested concerning mistaken payments.261 In some situations statutory remedies may provide an exclusive regime of recovery which attracts only simple interest.262 1.

See generally Edelman and Cassidy, Interest Awards in Australia; F D Rose, ‘Interest’ in Birks and Rose, Lessons of the Swaps Litigation.

2.

As to quasi-contract, see Walker v Constable (1798) 1 B & P 306; 126 ER 919; Chalie v Duke of York (1806) 6 Esp 46; 170 ER 826. See also De Bernales v Wood (1812) 3 Camp 259; 170 ER 1375 (contractual claim for deposit and interest upon rescission for failure to make title). See De Havilland v Bowerbank (1807) 1 Camp 50; 170 ER 872; De Bernales v Fuller (1810) 2 Camp 426; 170 ER 1206.

3. 4.

5. 6.

7. 8. 9.

(1829) 9 B & C 378; 109 ER 140. See the historical reviews in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [74]–[89], [105]–[109] (Lord Nicholls) and [167]–[179] (Lord Walker); [2007] UKHL 34. Civil Procedure Act 1833 (UK), 3 & 4 Will 4, c 42, s 28 (see further [2809]). [1893] AC 429. For a fuller review of ‘the tortuous path by which the common law of England arrived at the position that interest will not be awarded for the late payment of damages’ (Hungerfords v Walker (1989) 171 CLR 125 at 137 per Mason CJ and Wilson J) see Tehno-Impex v Gebr Van Weelde Scheepvaartkantoor BV [1981] QB 648 at 660ff. See also President of India v La Pintada Compania Navigacion SA [1985] AC 104. As to this, see [115]–[123]. (1835) 2 Bing NC 77; 132 ER 31. However, there were exceptions in the area of ineffective contracts (see [2824]). [2008] 1 AC 561; [2007] UKHL 34.

10. [1893] AC 429. 11. (1989) 171 CLR 125. 12. Lord Hope, Lord Nicholls and Lord Walker. Lord Hope ([2008] 1 AC 561 at [26], [35]–

[36]) and Lord Nicholls (at [111]–[[113]) located the power in the common law. Lord Walker (at [187]) preferred the more flexible equity jurisdiction. Lord Scott and Lord Mance would have allowed a restitutionary claim for interest only if it were shown that the defendant actually earned interest (see at [151], [231]). 13. [2008] 1 AC 561 at [164]. 14. See [2807]. 15. See Restatement, Third, § 53. 16. See further [2817]. 17. As to the admiralty jurisdiction to award interest, see Admiralty Act 1988 (Cth), s 4(2) (d), (3)(w); Shaw Savill and Albion Co Ltd v Commonwealth (1953) 88 CLR 164 at 166; R W Miller & Co Pty Ltd v The Ship Patris [1975] 1 NSWLR 704 at 723; Hungerfords v Walker (1989) 171 CLR 125 at 145, 148. 18. See Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [4] per Lord Hope; [2007] UKHL 34. 19. A more detailed analysis appears at [2809]–[2817]. 20. Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 21. See [2807]. 22. And to wider classes of judgment in the Northern Territory: see [2809]. 23. As to when restitutionary causes of action arise see [2721]–[2725]. 24. See State Bank of New South Wales Ltd v Swiss Bank Corp (1995) 39 NSWLR 350 at 360– 1. But cf Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342 at [187]–[190]. 25. (1989) 171 CLR 125 esp at 142–3. 26. [2008] 1 AC 561; [2007] UKHL 34. 27. See [2806]–[2808]. 28. See [2807]. 29. Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [22]–[23], [26], [35], [50] per Lord Hope; at [111]–[112], [118]–[119], [130] per Lord Nicholls; [2007] UKHL 34. 30. In Sempra, Lord Walker (at [185]–[187]) located the power in equity’s auxiliary jurisdiction, thereby ensuring that its exercise was discretionary. 31. See, eg Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. 32. See Nordenstrom v Pitt (1845) 13 M & W 723; 153 ER 303; Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 38; South Australia v Commonwealth (1992) 174 CLR 235 at 253. See [2924]. 33. See [2809]. 34. See [2810]. 35. See [2814]. 36. See [2807], [2817]. 37. (1989) 171 CLR 125. See also Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland

Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 38. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 370–1; Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 316, 328; Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 19 at 36; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520; [2001] HCA 53 at [23]. Cf Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561. 39. See [123]. 40. See further [2808]. 41. Koutsonicolis v Principe (No 2) (1987) 48 SASR 328 at 335; cf also New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68. 42. Halsbury’s Laws of England, 4th ed, vol 32, ‘Money’, §127. See also Consolidated Fertilisers Ltd v Commissioner of Taxation (1992) 36 FCR 1 at 6; 107 ALR 456 at 462; GFT Australia Pty Ltd v Collector of Customs (1995) 56 FCR 30 at 49; 128 ALR 219 at 236; Andjelic v Marsland (1996) 186 CLR 20 at 28. 43. See, eg Harbutt’s ‘Plasticine’ Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447 at 468 (overruled on other grounds in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827); Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342. See also MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663, 666. 44. [1893] AC 429. 45. [1893] AC 429 at 437. See further Restatement, Third, § 53. 46. Clode, Law and Practice of Petition of Right, p 96. As to mesne profits, see [1622]. 47. See [2807], [2817]. 48. See [2804]. 49. (1998) 192 CLR 285 at 316. Gaudron J held (at 306) that the statutory right to the refund involved in the case did not allow for an interest component (see also [215]). Kirby J reserved the point at 328. This and later cases are surveyed by Sloss J in ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [2015] VSC 76 at [228]–[245]. 50. See [2807]–[2808], [2824]. 51. State Bank of New South Wales v Federal Commissioner of Taxation (1995) 62 FCR 371; 132 ALR 653; SCI Operations Pty Ltd v Commonwealth (1996) 69 FCR 346; Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600; Chow v Yang [2010] SASC 96. There is an extensive review of the authorities in Lahoud v Lahoud [2010] NSWSC 1297 (Ward J). In Peet Ltd v Richmond (2011) 33 VR 465; [2011] VSCA 343 the Victorian Court of Appeal reserved its position on the correctness of this line and on whether it would be bound by it. 52. [2008] 1 AC 561; [2007] UKHL 34. Among the supporting authorities cited by Lord Walker (at [179]) was Heydon v NRMA (No 2) (2001) 53 NSWLR 600. 53. As occurred in Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. See [2018]. 54. See [2808]. 55. State Bank of New South Wales v Federal Commissioner of Taxation (1995) 62 FCR 371 at 382 per Wilcox J. The reasons for our ‘may’ are developed below.

56. See [2802]. 57. (1989) 171 CLR 125 at 139, 159. 58. [1893] AC 429. 59. See Heydon v NRMA (No 2) (2001) 53 NSWLR 600 at 604–6. See further [2808]. 60. See [2809]–[2810]. In Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 this argument appealed to the majority of the House of Lords in the arguably different context of compound interest on common law claims. See now Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 61. (1989) 171 CLR 125 at 148. 62. See Chapter 1. 63. See [123]. 64. This is developed at greater length in National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd, New South Wales Court of Appeal, unreported, 23 April 1997 (passage quoted in Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445 at [15]). 65. See [152], [807]. The benefit is at least realisable, a feature reflected in the valuation which, generally, does not take account of the amount of interest (if any) in fact earned by the defendant. 66. In the sense of what is owed to the plaintiff. 67. See [2806]. 68. See Birks, Future, pp 1–10. 69. See Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 74 per Mason CJ. 70. At least from the time when the plaintiff’s cause of action arose. As to interest accruing earlier, even from date of payment see [2806], [2808], [2822], [2824]. 71. Since, however a claim for compound interest raises additional issues it is dealt with separately below: see [2814], [2817]. 72. See above. 73. See [2817] and generally Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 74. Cf [1639], [1727]–[1732], [2815]. 75. Of course, an award of interest ignores the actual benefit earned by the defendant with ‘the plaintiff’s money’. This may disadvantage the defendant who did not actually earn the same amount of interest as is awarded (as the minority argued in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. Cf Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600), or advantage the defendant who actually earned more. There are obvious pragmatic considerations favouring this global approach. Cf [2814] (equitable interest calculated at ‘mercantile’ or compound rates in appropriate cases). See also [710]. 76. As was found to be the position in Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285.

77. See [2722]. 78. Of course, if the defendant makes restitution before proceedings commence, statutory interest will not be available. 79. See [2816], [2824] and generally Part V. 80. See [2723]. 81. Such as a special condition in a contract for the sale of land as to the investment of the deposit and the disposition of interest earned if the contract goes off on various bases. See generally [215]. 82. As in Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285. 83. See State Bank of New South Wales v Federal Commissioner of Taxation (1995) 62 FCR 371 at 387, 132 ALR 653; Helou v Nguyen [2014] NSWSC 22 at [138]–[144]. See generally [123]. 84. See [2824]. 85. See, eg Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 587 at [263], [326] (Ward J). The Court of Appeal (by majority) disagreed as to when the contract had failed to materialise, and overturned the trial judge’s finding that the claim was statute-barred: see Nu Line Construction Group Pty Ltd v Fowler [2014] NSWCA 51. Barrett JA (diss) (at [181]) approved the approach of Ward J observing that her decision ‘as to the point at which retention became unjust’ was open on the authorities. When the issue of the commencing point for interest calculation was addressed, the Court saw the claim as one for statutory interest (presumably because that was the way it was argued) and followed the trial judge who awarded interest as and from the date on which the project was abandoned: see Nu Line Construction Group Pty Ltd v Fowler (No 3) [2014] NSWCA 229. As to injustice in ‘retention’, see [123]. 86. See State Bank of New South Wales v Federal Commissioner of Taxation (1995) 62 FCR 371 at 387, 132 ALR 653. 87. See [123]. See further [2817]. 88. See [123]. 89. See [2824]. See also Peet Ltd v Richmond (2011) 33 VR 465; [2011] VSCA 343 at [127]. 90. Cf Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd (1996) 136 ALR 166 at 198– 200 (revd on other grounds [1999] 1 VR 188); cf National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 597; MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663, 666. Cf also the approach of equity to defaulting fiduciaries: see [2813], [2815]. 91. (1991) 22 NSWLR 380. 92. See generally Chapter 7. 93. (1991) 22 NSWLR 380 at 383. See also Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [187] per Lord Walker; [2007] UKHL 34. 94. Newton v Grand Junction Railway Co (1846) 16 M & W 139 at 141; 153 ER 1133 at 1134 per Alderson B. 95. Tarlington v Hall (1981) 51 FLR 282; Zabic v Nabalco Co Pty Ltd (1983) 72 FLR 255; Hunt v R M Douglas (Roofing) Ltd [1990] 1 AC 398; Minister Administering the

Environmental Planning & Assessment Act 1979 v Carson (1994) 35 NSWLR 342; Rambal v The Griffin Coal Mining Co NL [2015] WASCA 197. 96. National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 597 per Brooking J. 97. See [2824]. 98. See [2807]. 99. (1991) 22 NSWLR 380. 100. Government Insurance Office of New South Wales v Healy (No 2) (1991) 22 NSWLR 380. 101. See [710]. 102. See Nixon v Furphy (1925) 25 SR (NSW) 151 at 156–7 (affirmed sub nom Furphy v Nixon (1925) 37 CLR 161) and subsequent proceedings reported (1926) 26 SR (NSW) 409. 103. McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 477; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 462. 104. (1987) 162 CLR 221. 105. Skinner v James Syphonic Visible Measures Ltd (1927) 28 SR (NSW) 20 at 21 per Harvey CJ in Eq (‘where it is giving purely equitable relief, as it is in cases of rescission, the proper remedy is that the Court by way of restitutio in integrum gives the party back his money together with interest until he gets his money’). See further [1433]–[1434], [2816]. 106. See Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. See further [123]. 107. See Bayne v Stephens (1908) 8 CLR 1 (interest awarded in common law claim for money had and received, because facts proved also supported equitable claim for account). Further as to principled substantive fusion in restitution, see [222], [1724]. 108. See [1433]–[1434], [2816]. 109. See Taxation (Interest on Overpayments) Act 1983 (Cth). See Consolidated Fertilisers Ltd v Commissioner of Taxation (1992) 36 FCR 1; 107 ALR 456; Collector of Customs v Gaylor Pty Ltd (1995) 35 NSWLR 649; 127 ALR 641; Qantas Airways Ltd v Commissioner of Taxation (2001) 115 FCR 288. See further [2039]. 110. See CISG, Art 84(1) (a seller who is bound to refund the price must also pay interest on it, from the date on which the price was paid). For adoption and application of the Convention see [333]. 111. See Frustrated Contracts Act 1978 (NSW), s 15(2)(a) (see [1252]); Frustrated Contracts Act 1988 (SA), s 7(5)(a) (see [1257]). See also [1264]. 112. See ACT: Supreme Court Act 1933, s 69; NSW: Civil Procedure Act 2005, s 100; NT: Supreme Court Act 1979, s 84 (in ‘any proceeding in respect of a cause of action’); Qld: Common Law Practice Act 1867, s 72; SA: Supreme Court Act 1935, s 30C; Tas: Supreme Court Civil Procedure Act 1932, s 34; Vic: Supreme Court Act 1986, s 58 (if in a ‘proceeding a debt or sum certain is recovered’ (see [2922]), s 60 (‘any proceeding for the recovery of debt or damages’) (see BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352); WA: Supreme Court Act 1935, s 32. Statutes establishing inferior courts may make similar provision in the various territorial jurisdictions. 113. See Judiciary Act 1903 (Cth), s 77MA.

114. Federal Court of Australia Act 1976 (Cth), s 51A. 115. For examples of awards of statutory interest in restitutionary contexts, see [2818]–[2826]. See also Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342 at [187]–[190]. 116. Supreme Court Civil Procedure Act 1932 (Tas), s 34. 117. Civil Procedure Act 1833 (UK), s 28. For a (contractual) claim to recover a deposit plus interest following discharge due to vendor’s breach see Prell v Burrell [1975] Tas SR 150. See further [2811], [2817]. 118. Bayne v Stephens (1908) 8 CLR 1 at 31; Nixon v Furphy (1926) 26 SR (NSW) 409 at 414. 119. Supreme Court Act 1986 (Vic), s 60(1). 120. See, eg J L R Davis, ‘Interest as Compensation’ in Finn, Essays on Damages, pp 149–52. See generally Grincelis v House (2000) 201 CLR 321; Dome Resources NL v Silver (2008) 72 NSWLR 693. 121. To be exercised in accordance with legal principle: Cullen v Trapell (1980) 146 CLR 1 at 17; Falkner v Bourke (1990) 19 NSWLR 574. In South Australia there is an obligation affecting the period for which interest is payable on a ‘liquidated claim’. In Victoria, statutory interest is to be awarded ‘unless good cause is shown to the contrary’. As to liquidated claims, see [2922]. 122. See Riches v Westminster Bank Ltd [1947] AC 390 at 400. See also Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 536–7. 123. See [2810]. 124. Cf [2719], [2722]. 125. Hungerfords v Walker (1989) 171 CLR 125 at 147–8; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 126. See [2805]. 127. See Mathew v T M Sutton Ltd [1994] 1 WLR 1455. Cf Re Australian Metal Co Ltd (1923) 33 CLR 329 at 346. 128. This deficiency, which led to amendment in New South Wales by the Supreme Court (Interest) Amendment Act 1983 (NSW), is discussed by the New South Wales Law Reform Commission, Report on Interest on Certain Debts, LRC 35, 1983. Cf State Bank of New South Wales v Federal Commissioner of Taxation (1995) 62 FCR 371 at 385 where the fact that part of the principal debt was outstanding when proceedings were commenced was held sufficient to allow the court to award interest relating to the delayed payment of the portion paid before. 129. This expression is in all but one of the statutes dealing with interest (see [2809]). The exception is the Supreme Court Civil Procedure Act 1932 (Tas), which is, however, also confined to simple interest. 130. Miliangos v George Frank (Textiles) Ltd (No 2) [1977] QB 489 at 496; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 370–1, 392; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. Outside contract, compound interest may be available if the claim to interest can be based on equitable grounds: see [2814], [2817].

Hungerfords v Walker (1989) 171 CLR 125 at 149; Sempra Metals Ltd (formerly 131. Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 132. Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 92 per Brennan J (Toohey and McHugh JJ concurring). Cf, however, Smith v In Shoppe Pty Ltd (1976) 33 FLR 107 (affirmed on other grounds (1976) 7 ATR 13); Bloch v Bloch (1981) 180 CLR 390 at 398–9; Collector of Customs v Gaylor Pty Ltd (1995) 35 NSWLR 649 at 653; 127 ALR 641 at 644. See also Elsinora Global Ltd v Commissioner of Taxation (2006) 155 FCR 413; [2006] FCFCA 156. 133. See, eg BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352 at 373–4; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 369. 134. As to non-statutory interest before accrual of cause of action, see [2808], [2822], [2824]. In some cases the cause of action may accrue on payment, although a procedural barrier must be dispensed with before trial: see General Tire & Rubber Co Ltd v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819; [1975] 2 All ER 173; Collector of Customs v Gaylor Pty Ltd (1995) 127 ALR 641 at 646 per Handley JA (procedural defences do not postpone the accrual of causes of action). 135. State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 at 360–1. Cf Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420, [2011] NSWCA 342 at [187]–[190]. 136. Ferrier v Civil Aviation Authority (1994) 55 FCR 28; 127 ALR 472; Star v O’Brien (1996) 40 NSWLR 695. 137. See Bonython v Commonwealth (1948) 75 CLR 589 at 627 in which Dixon J noted that ‘it is a question whether the Crown in right of the Commonwealth would be under a liability for interest’. Cf now Bropho v Western Australia (1990) 171 CLR 1. 138. See, eg Crown Proceedings Act 1988 (NSW), s 5(2). 139. Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149 at 162; Hungerfords v Walker (1989) 171 CLR 125 at 138–9, 152; Andjelic v Marsland (1996) 186 CLR 20 at 36; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520; [2001] HCA 53 at [23]. 140. See Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 141. See generally [124]–[132]. 142. See, eg Fruhling v Schroeder (1835) 2 Bing NC 77; 132 ER 31; London, Chatham and Dover Rly Co v South Eastern Rly Co [1893] AC 429 at 438 (doubting De Havilland v Bowerbank (1807) 1 Camp 50; 170 ER 872); Bayne v Stephens (1908) 8 CLR 1 at 23; Nixon v Furphy (1926) 26 SR (NSW) 406 at 414; Re Brennan (1930) 2 ABC 120 at 121; Marine Board of Launceston v Minister for the Navy (1945) 70 CLR 518 at 525, 529; Mathew v T M Sutton Ltd [1994] 1 WLR 1455. See [2802]. All of these cases predate the repudiation of the implied contract theory. 143. [2008] 1 AC 561; [2007] UKHL 34 (discussed [2802]). 144. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Westdeusche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (on this point the House of Lords was unanimous); Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 31 at 36. Equity’s broader jurisdiction was noted in Hungerfords v

Walker (1989) 171 CLR 125 at 148 and Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 316. See also Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 365–9. 145. See generally Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [7], [166]–[179]; [2007] UKHL 34. See further [2812]. 146. (1851) 20 LJQB 242. As to contribution at common law see [609]. 147. [1904] AC 817 at 822. 148. Halsbury’s Laws of England, 4th ed, vol 32, para 109 (repeating earlier editions) misreads the passage cited, in stating that it supports the recovery in equity of interest in the case of money obtained or retained by fraud. In fact Lord Macnaghten was emphasising that interest was recoverable at common law, even if the proceedings were brought in equity or in a fused jurisdiction. 149. See [710], [2808], [2822]. 150. (1874) LR 7 HL 158. 151. An early case is De Bernales v Wood (1812) 3 Camp 259; 170 ER 1375. See also Day v Singleton [1899] 2 Ch 320; Keen v Mear [1920] 2 Ch 574; Ashok Trading Pty Ltd v Kintay Pty Ltd [1983] 1 Qd R 273. 152. See [2812], [2824]. 153. See Part V. 154. See [2824] as to the time of accrual of interest, and for reference to the cases. See also [1402]. As to exceptions to this general rule, in the interests of justice, see [2808]. 155. As to this principle see [1331]. 156. See generally Chapters 11 and 12. As to interest on restitution of payments under a frustrated contract, see Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at 536–7. 157. See McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 470, 478–9. 158. See [2817]. 159. See Chapter 9. 160. See, eg Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 (see [2723]); Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 461–2 (discharge for payer’s breach); Delbridge v Low [1990] 2 Qd R 317 at 335 (discharge for payer’s breach); British Columbia v Cressey Development Corp (1992) 97 DLR (4th) 380 (frustrated contract); Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938 at 947; [1994] 4 All ER 890 at 962–3 (void contract). See further [2817]. 161. See [2807]. 162. See generally Edelman and Cassidy, Interest Awards in Australia; Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600. 163. As to restitution with respect to equitable wrongs, see Chapter 17. Cf also [451]–[454] (proprietary remedy for mistaken payments). 164. See [2802].

Hungerfords v Walker (1989) 171 CLR 125 at 148. For reviews of the English authorities 165. see Guardian Ocean Cargoes Ltd v Banco do Brasil SA (No 3) [1992] 2 Lloyd’s Rep 193; Westdeusche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561 at [176]; [2007] UKHL 34. 166. See Docker v Somes (1834) 2 My & K 655 at 664–6; 39 ER 1095 at 1098–9; Wallersteiner v Moir (No 2) [1975] QB 373; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; Cureton v Blackshaw Services Pty Ltd [2002] NSWCA 187 (equitable interest never awarded as punishment). See generally, Finn, Fiduciary Obligations, 1977, pp 248–55. 167. Nixon v Furphy (1926) 26 SR (NSW) 409 at 414–15 per Long Innes J (previous proceedings Nixon v Furphy (1925) 25 SR (NSW) 155, affirmed sub nom Furphy v Nixon (1925) 37 CLR 161). See also Skinner v James Syphonic Visible Measures Ltd (1927) 28 SR (NSW) 20 at 21. 168. Westdeusche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 169. See, eg Wallersteiner v Moir (No 2) [1975] QB 373 at 388 per Lord Denning MR; Re Dawson (dec’d) [1966] 2 NSWR 211 at 218; (1966) 84 WN (Pt 1) (NSW) 399 at 408–9 per Street J. See also JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 392. 170. Finn, Fiduciary Obligations, p 248. 171. J L R Davis, ‘Interest as Compensation’ in Finn, Essays on Damages, p 134. 172. Docker v Somes (1834) 2 My & K 655 at 664–6; 39 ER 1095 at 1098–9; General Communications Ltd v Development Finance Corp of New Zealand Ltd [1990] 3 NZLR 406 at 436. As to compound interest, see [2814]. 173. As to saving of necessary expenditure as a benefit in restitution, see [215], [932], [1620]. 174. However, one area where equity lagged behind the common law was in its preference for the allocator rule, over the incipitur rule, as regards interest on costs: see [2808]. 175. See [2802], [2811]. 176. [2008] 1 AC 561; [2007] UKHL 34 (discussed [2802]). 177. Cf Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; 307 ALR 512; [2014] HCA 14. Cf Andrews v Australia & New Zealand Banking Group Ltd (2012) 247 CLR 205; 290 ALR 595. 178. See [2808]. 179. See [2814]. 180. See [2817]. 181. Re Davis; Davis v Davis [1902] 2 Ch 314; Skinner v James Syphonic Visible Measures Ltd (1927) 28 SR (NSW) 20. Gross negligence alone did not justify an award at the commercial rate: Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45. Cf Wilkinson v Feldworth (1998) 29 ACSR 642 at 705–8. 182. Re Tennant; Mortlock v Hawker (1942) 65 CLR 473 at 507; Re Dawson (dec’d) [1966] 2 NSWR 211; (1966) 84 WN (Pt 1) (NSW) 399.

183. Re Tennant; Mortlock v Hawker (1942) 65 CLR 473 at 507–8 per Dixon J. 184. Re Boyagarra Pty Ltd (1983) 7 ACLR 612; 1 ACLC 858; Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467 at 486; Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45. 185. [2008] 1 AC 561; [2007] UKHL 34 (discussed [2802]). 186. Re Dawson (dec’d) [1966] 2 NSWR 211 at 218–19; (1966) 84 WN (Pt 1) (NSW) 399 at 410; Delbridge v Low [1990] 2 Qd R 317 at 335; Hagan v Waterhouse (1991) 34 NSWLR 308 at 392; Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467 at 487; Mathew v T M Sutton Ltd [1994] 1 WLR 1455; Maguire v Makaronis (1997) 188 CLR 449 at 477. 187. Southern Cross Commodities Pty Ltd v Ewing (1988) 91 FLR 271 at 284–6, 298, 307; Ninety Five Pty Ltd v Banque Nationale de Paris [1988] WAR 132; Ledger v Petagna Nominees Pty Ltd (1989) 1 WAR 300; General Communications Ltd v Development Finance Corp of New Zealand Ltd [1990] 3 NZLR 406 at 436; Re Gould [1992] 2 Qd R 377 at 382–3; Biala Pty Ltd v Mallina Holdings Ltd (1993) 13 WAR 11; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 392; Youyang Pty Ltd v Minter Ellison (2003) 212 CLR 484 at 498; Grimaldi v Chameleon Mining NL (2012) 200 FCR 296 at [547]– [552]. See also Guardian Ocean Cargoes Ltd v Banco do Brasil SA (No 3) [1992] 2 Lloyd’s Rep 193 (compound interest on conditional payment from date of failure of condition); Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. See also President of India v La Pintada Compania Navigacion SA [1985] AC 104 at 116; Hungerfords v Walker (1989) 171 CLR 125 at 148. 188. See JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 392; Harrison v Schipp [2001] NSWCA 13, discussed by Edelman and Cassidy, Interest Awards in Australia, p 64; Maguire v Makaronis (1997) 188 CLR 449 at 477; Herrod v Johnston [2013] 2 Qd R 102. 189. Docker v Somes (1834) 2 My & K 655 at 664–6; 39 ER 1095 at 1098–9; Bayne v Stephens (1908) 8 CLR 1 especially at 24; Wallersteiner v Moir (No 2) [1975] QB 373; Ninety Five Pty Ltd v Banque Nationale de Paris [1988] WAR 132; Harrison v Schipp [2001] NSWCA 13. 190. See Biala Pty Ltd v Mallina Holdings Ltd (1993) 13 WAR 11 and generally [1722]–[1726]. In Bell Group Ltd v Westpac Banking Corp (No 9) (2012) 270 FLR 1 at [1231], [2678] compound interest was added to an award of equitable compensation. 191. The term ‘rescission’ is occasionally also used with reference to the discharge or termination of a contract, for causes such as breach, repudiation and frustration, but this is misleading if it suggests rescission ab initio for all purposes. 192. Except perhaps in the area of sale of goods: see [1336]–[1339]. 193. See [1331]. 194. See also [2808]. 195. As to when it accrues, see [2723], [2812]. 196. (1955) 95 CLR 216 at 223–4. See generally [1331]. 197. Brown v Smitt (1924) 34 CLR 160 at 173; Alati v Kruger (1955) 94 CLR 216 at 230. 198. Sibley v Grosvenor (1916) 21 CLR 469 at 475; Simons v Zartom Investments Pty Ltd [1975] 2 NSWLR 30 at 37; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 392. 199. Nixon v Furphy (1926) 26 SR (NSW) 409 (previous proceedings Nixon v Furphy (1925)

25 SR (NSW) 155, affirmed sub nom Furphy v Nixon (1925) 37 CLR 161). 200. Maguire v Makaronis (1997) 188 CLR 449. 201. (1927) 28 SR (NSW) 20 at 21. Further as to restitutio in integrum see [1433]–[1434]. 202. As to the rate of interest, see [2814]. 203. See [1333]–[1335]. 204. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. 205. (1998) 192 CLR 285 at 316. Kirby J found it unnecessary to address this issue (see at 328). See further [2807]. 206. [1996] AC 669, subsequently overturned on this point in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 207. Bayne v Stephens (1908) 8 CLR 1 (common law claim for money had and received, because facts proved also supported equitable claim for account). 208. See [1724]. 209. As to the exclusive, concurrent and auxiliary jurisdictions of equity, see Meagher, Gummow and Lehane, [1-090]–[1-110]. 210. See [2812]. 211. See Guardian Ocean Cargoes Ltd v Banco do Brasil SA (Nos 1 and 3) [1994] 2 Lloyd’s Rep 152 at 160. 212. Cf Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298. See also Westdeutsche Landesbank Girozentrale v Islington London LBC [1996] AC 669 at 695–7 (Lord Goff), 735–6 (Lord Woolf); Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561. 213. See [2809]. 214. See Minister for Lands and Forests v McPherson (1991) 22 NSWLR 687; Hungerfords v Walker (1989) 171 CLR 125 at 148. 215. (1989) 171 CLR 125. See also [2816]. 216. [2007] 4 All ER 657; [2007] UKHL 34. 217. See [2007] 4 All ER 657 at [42]–[49] (Lord Hope) and [116]–[119] (Lord Nicholls); [2007] UKHL 34. 218. See [2007] 4 All ER 657 at [184]–[187]; [2007] UKHL 34. See also per Lord Mance (dissenting) at [236]. 219. See [123]. 220. See Nixon v Furphy (1926) 26 SR (NSW) 409 (previous proceedings Nixon v Furphy (1925) 25 SR (NSW) 155, affirmed sub nom Furphy v Nixon (1925) 37 CLR 161). 221. See [2808]. 222. See [2802], [2807]. 223. See [2812]. This is not to deny the power of the court to choose a later date if it is just to do so. See [2808]. 224. See [2807]. 225. See [2807].

226. See [2808]. See further [2824]. 227. Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662. Generally as to mistaken payments, see Chapter 4. 228. See Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 370–1 (power to award compound interest confined to equity and admiralty). 229. See [444]–[447]. 230. See [1630]. 231. (1989) 171 CLR 125 at 149–50. 232. Cf Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (compound interest on money paid under void contract). 233. Cf Puma Australia Pty Ltd v Sportsman’s Australia Ltd (No 2) (1991) [1994] 2 Qd R 159 at 163–4. See also [445], [1633], [2820]. 234. See [2802]. 235. Collector of Customs v Gaylor Pty Ltd (1995) 127 ALR 641 (affirming Dahlia Mining Co Ltd v Collector of Customs (1989) 17 NSWLR 688). Generally as to improper pressure, see Chapter 5. 236. Nixon v Furphy (1926) 26 SR (NSW) 409 (previous proceedings Nixon v Furphy (1925) 25 SR (NSW) 155, affirmed sub nom Furphy v Nixon (1925) 37 CLR 161). See also Nattrass v Nattrass [1999] WASC 77 (compound interest awarded when gifts set aside for undue influence). Cf also Bayne v Stephens (1908) 8 CLR 1 (equitable interest available because of availability of concurrent equitable claim). 237. [1948] Ch 465. 238. See Puma Australia Pty Ltd v Sportsman’s Australia Ltd (No 2) [1994] 2 Qd R 159 at 163– 4. See also Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 426 at 432; Black v S Freedman & Co (1910) 12 CLR 105. See also [447], [1633]. 239. See [2802]. 240. See [648]. See also [2814]. 241. See [710], [2808]. Generally as to judgments reversed or set aside, see Chapter 7. 242. See Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600, and the other cases cited at [710]. 243. See [2809]–[2810]. 244. See generally Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 316–17. See also [2808], [2812]. Interest on money paid under a void contract is recoverable from the date of payment. See Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938 at 947; [1994] 4 All ER 890 at 963 (ultra vires contract) (revd on other grounds: [1996] AC 669). But cf Guardian Ocean Cargoes Ltd v Banco do Brasil SA (Nos 1 and 3) [1994] 2 Lloyd’s Rep 152 (since an advance payment was a conditional payment, interest was payable from the date of failure of condition). 245. Brown v Smitt (1924) 34 CLR 160 at 173; Alati v Kruger (1955) 94 CLR 216 at 230. 246. Sibley v Grosvenor (1916) 21 CLR 469 at 475; Simons v Zartom Investments Pty Ltd [1975] 2 NSWLR 30 at 37; JAD International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 392. But see Shuman v Coober Pedy Tours Pty Ltd (1994) Unreported, SC(SA) FC, 14 February where the trial judge’s award of interest from the time of

rescission was upheld without discussion. 247. Nixon v Furphy (1926) 26 SR (NSW) 409 (previous proceedings Nixon v Furphy (1925) 25 SR (NSW) 155, affirmed sub nom Furphy v Nixon (1925) 37 CLR 161). 248. See, eg Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 (see [2723]), where money paid under share purchase contracts was recovered with interest from the date of payment. (Interest on money paid by a promissory note for £950 was ordered from the time the note fell due.) 249. See, eg Sandeman v Wilson (1880) 1 LR (NSW) Eq 1 (interest on purchase money when vendor repudiated by resale). But cf Ashok Trading Pty Ltd v Kintay Pty Ltd [1983] 1 Qd R 273, where (without discussion) interest on a deposit payment was awarded from the time of discharge. 250. See, eg Chard v Willett [1933] St R Qd 182 (discharge for payer’s breach, interest on instalment ordered to be returned); Delbridge v Low [1990] 2 Qd R 317 at 335 (discharge for payer’s breach). 251. In principle interest is recoverable from the time of payment where the money was paid under a contract discharged by frustration. See British Columbia v Cressey Development Corp (1992) 97 DLR (4th) 380, which suggests a contrast between money and benefits recoverable as on a quantum meruit. The court applied Cassidy v Canada Publishing (1989) 41 BLR 223. However, in many cases the issue turns on the interpretation of the frustrated contracts legislation. See [2808]. 252. See, eg Pitt v Curotta (1931) 31 SR (NSW) 477 (recovery of instalments other than deposit, plus interest, following relief against forfeiture); and note the full discussion by McPherson J in Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 461–2. In Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573 (see [1140]) the Privy Council held that the award should be for interest calculated from the date of discharge. However, since the conclusion of the court was that relief was available because the payee had not contracted for a true deposit at all, the payment was in effect held to be no more than an advance payment towards the contract price. It would, therefore, have been more logical to award interest from the date of payment. Where interest is stipulated to be payable (on unpaid purchase money) pending completion of a contract of sale, but interest is recoverable by the purchaser up to the time of termination on the basis of relief against forfeiture, interest in arrear is an element of the vendor’s damages. See Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 56; Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 455. 253. See Chapter 9. 254. See Chard v Willett [1933] St R Qd 182 (discharge for payer’s breach); Terra Nova Pty Ltd v Nalanda Pty Ltd [1977] Qd R 296 (discharge following purchaser’s notice of termination); Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 (exercise of statutory right of avoidance); Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 at 461–2 (discharge for payer’s breach); Delbridge v Low [1990] 2 Qd R 317 at 335 (discharge for payer’s breach); British Columbia v Cressey Development Corp (1992) 97 DLR (4th) 380 (frustrated contract). On the award of interest in a foreign currency see Swiss Bank Corp v State Bank of New South Wales (1993) 33 NSWLR 63. 255. See [2816]–[2817].

256. See [2807], [2817]. 257. See [2815] and generally Chapter 17. 258. See [2819]. 259. Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70; Texaco (Ireland) Ltd v Murphy (No 2) [1992] IR 399. Generally as to restitution against the Crown see Chapter 20. 260. Generally as to restitution of ultra vires disbursements see Chapter 21. 261. See [2819]. And see Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2008] 1 AC 561; [2007] UKHL 34. 262. See, eg Qantas Airways Ltd v Commissioner of Taxation (2001) 115 FCR 288. Cf [2110].

[page 1015]

Chapter Twenty Nine

Pleading Restitutionary Claims and Defences 1. 2. 3. 4. 5.

General …. Claims for Money Paid …. Claims for Remuneration …. Restitution for Wrongs …. Pre-Judicature Relics ….

[2901] [2908] [2913] [2917] [2921]

1. General [2901] Objects. In this chapter we outline the principles of pleading in their application to restitutionary claims and defences. These naturally reflect the substantive rules as to cause of action, defences and onus of proof discussed earlier in this work. It will be seen that the courts have tended to reject attempts to frame claims as if they were based solely on unjust enrichment, requiring pleaders to bring their claims and defences within more specific categories. At the conclusion of this chapter we draw attention to some relics from the pre-history of restitution which remain part of the pleading and procedural rules in some jurisdictions. [2902] Judicature pleadings. In all Australian jurisdictions, pleadings are required to ‘contain, and contain only, a statement in a summary form of the material facts on which the party relies … but not the evidence by which they are to be proved’.1 This rule is the foundation of Judicature pleading that is now universal save for the optional residue of ‘common money counts’ in New South Wales.2

Since the elements of a cause of action3 determine the ‘material facts’, readers must refer elsewhere in this work for the principles governing particular claims and defences in restitution. These principles allocate the burden of proof (and therefore pleading) as well as define what is and is not essential to a particular restitutionary claim or defence. Having said that, we shall offer some brief guidance about pleading the commonly encountered causes of action.4 [page 1016] [2903] Implied contract not to be pleaded. In Dart Industries Inc v Decor Corp Pty Ltd,5 we were reminded by the High Court of restitution’s concern for ‘matters of substance rather than technical form’. This should be reflected in pleadings. The rejection of the implied contractual basis of restitution6 means that the language of agreement should be left to truly contractual claims. In other words, any implied contract that is pleaded must be a real one. In those circumstances the plaintiff’s claim is contractual.7 [2904] Pleading mere ‘unjust enrichment’. A pleading that asserts in the abstract that P was unjustly enriched at D’s expense will usually be struck out. The authorities require the basis of such an allegation to be explained in the pleading.8 In the light of general statements in David Securities Pty Ltd v Commonwealth Bank of Australia,9 courts have been averse to pleadings which simply appeal to ‘idiosyncratic notions of what is fair and just’,10 or which plead generalised claims based on unjust enrichment.11 We explain elsewhere why it is legitimate to say that causes of action arise in restitution.12 Nevertheless, we are not advocating pleadings which rely merely on ‘unjust enrichment’, unless the essential facts are set out. Since a cause of action is ‘simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person’,13 the pleader must fix on facts which (1) were

previously established under the law of quasi-contract, or (2) have been recognised as generating a claim based on unjust enrichment or some other recognised basis for restitution. But we doubt whether it is, even in relation to claims previously established under the law of quasicontract, still necessary to use the language of quasi-contract.14 Moreover, one important feature of unjust [page 1017] enrichment,15 recognised by Deane J in Pavey & Matthews Pty Ltd v Paul,16 is that it ‘assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such obligation in a new or developing category of case …’. Accordingly, as in fact happened in David Securities, pleaders should recognise the importance of the unjust enrichment concept as a way of giving substance to a novel claim. Pleaders are unlikely to allege unjust enrichment in a context devoid of any facts, and the likelihood that the facts pleaded might attract some novel restitutionary claim in this fast-developing area of the law, saw Gummow J refusing to strike out such a pleading in Winterton Constructions Pty Ltd v Hambros Australia Ltd.17 [2905] Alternative claims. Since there are areas in which contract, tort and restitution overlap in providing alternative rights, and also areas in which alternative restitutionary claims can be made in relation to the same facts, brief mention may be made here of the requirement of election between remedies.18 Some alternative restitutionary claims may lead to identical results. For example, a fiduciary who receives a bribe may be sued on a claim derived from the common law count for money had and received, and also on a claim seeking the equitable remedy of account of profits.19 The latter is a discretionary remedy but that fact need not unduly trouble the plaintiff’s pleader. Choice between alternative remedies is governed by the principles established in United Australia Ltd v Barclays Bank Ltd.20 As the House

of Lords explained, the plaintiff may postpone the choice until immediately before the court delivers judgment in the plaintiff’s favour. The principal use of election in restitution is, as the United Australia case itself illustrates, where the defendant has benefited from the commission of a wrong. The plaintiff may have a choice between compensation for the plaintiff’s loss or restitution of the benefit received by the defendant. But the plaintiff cannot recover both.21 However, United Australia also illustrates that the mere pleading of one claim rather than the other does not itself amount to a final election. Inconsistent claims and claims against alternative defendants may be pleaded in the alternative, either initially, or by amendment. To the extent that amendments to pleadings are permitted,22 the claim may be abandoned and replaced by another (inconsistent) claim. [2906] Cumulative and double recovery. The requirement of election aims to ensure that the plaintiff does not receive double recovery or [page 1018] receive inconsistent relief. But (subject to this) there is no reason why a claim for restitution may not be combined with a claim for damages.23 Thus, on termination of a sale of goods contract for the seller’s failure to deliver, the buyer may seek contractual damages in respect of the loss caused by non-delivery, as well as restitution of moneys paid to the vendor.24 However, the compensation recovered must be brought into account.25 Claims may be legitimately combined, but it will be necessary ultimately to set one off against the other, or at least take it into account.26 In cases where the plaintiff’s claim is in relation to a non-monetary benefit conferred under a contract subsequently discharged on the basis of the defendant’s breach, the plaintiff is, it would seem, entitled to elect between restitution and compensation.27 These claims may therefore be pleaded in the alternative.28

[2907] Adding claim for interest. It will usually be appropriate to add a claim for interest. This topic is dealt with in Chapter 28. Generally, interest on money paid may be claimed from the date of the defendant’s receipt of money, even if the restitutionary cause of action arose later.29

2. Claims for Money Paid [2908] General. The shift from implied contract to unjust enrichment as the conceptual basis of most restitutionary causes of action means that the general structure of a pleading in such a claim for restitution of money paid should be: (1) the payment (or other benefit) provided by the plaintiff (at the plaintiff’s expense); (2) the basis for the claim, such as a request by the defendant,30 the plaintiff’s title31 or an operative unjust factor (for example, mistake);32 and (3) the causal link between (1) and (2). In David Securities Pty Ltd v Commonwealth Bank of Australia33 the High Court rejected the proposition that a plaintiff who relies on a cause of action falling within an accepted category, such as restitution for mistaken payments, need show superadded injustice of retention or unfairness. However, this may need to be addressed if proprietary relief is sought. [page 1019] Where benefit is conferred under a contract, it will be seen that the pleading must assert a basis for regarding the contract as ineffective, except where the claim is that mistake or improper pressure led to more being paid or provided under the contract than was due.34 Where the plaintiff’s title to money is the basis of a claim against a

third party ‘volunteer’ receiving the money from a thief or other person with no title, the plaintiff must plead and prove that the person acquired knowledge of the defect of title before receipt or before parting with control of the money.35 [2909] Mistaken payments. It is sufficient for the plaintiff to allege the payment, the mistake, and a causal connection between the two. In the light of the principles stated in our discussion on mistaken payments,36 it is not necessary to plead: (1) the legal character of the mistake (fact or law); (2) that the mistake was fundamental or the sole basis for the payment;37 (3) the plaintiff’s discovery of the mistake; (4) notice before action;38 (5) that the mistake was as to a liability to pay; or (6) that the mistake caused ‘unjustness’.39 Sometimes a proprietary remedy may be claimed40 in which event the basis for this remedy should be pleaded specifically. The defendant should consider whether the plaintiff has pleaded the matters which are the plaintiff’s to plead and prove, and whether the defendant disputes or does not admit any of those matters. Subject to this, the defendant should consider whether to plead any true defences whose onus of proof rests on the defendant, including: (1) repayment; (2) change of position;41 (3) estoppel;42 (4) consideration;43 (5) money due anyway;44 (6) limitation of actions;45 and (7) other ‘equitable’ bases.46

[page 1020] A defendant who wishes to raise change of position must put it forward ‘fairly and squarely’ so that ‘its factual merits can be explored at the trial’.47 Some special defences may call for a reply which itself requires specific pleading. Thus, a defence of consideration may adduce a reply that the contract was void.48 And in answer to the defendant’s plea of limitation of actions, the plaintiff may be able to plead in reply facts extending or postponing the limitation period on specific grounds.49 [2910] Money paid as the result of improper pressure. In Chapter 5 we discussed the categories of pressure which, if applied unlawfully or improperly, would give rise to a prima facie obligation to give restitution. That obligation may arise from one or more of a claim derived historically from the common law counts for money had and received or money paid; an equitable claim based on actual undue influence; and various statutory remedies. Proper pleading requires the plaintiff to identify the material facts demonstrating a recognised category of pressure50 together with the factor making that pressure ‘improper’, plus a causal link between the improper pressure and the payment or other enrichment.51 The need for specificity in such matters is stressed in rules of court.52 In considering defences, it should be borne in mind that the defences of payment over by an agent, change of position and illegality are not generally available to a ‘wrongdoer’, a category that includes the person whose improper pressure gave rise to the plaintiff’s prima facie entitlement to restitution.53 If the defence is raised by such a person, the plaintiff may need to reply to the effect that the defendant was a ‘wrongdoer’ within these principles. [2911] Payment of another’s debt. A person (P) may pay money to a third party (X) in respect of another’s (D’s) debt. Absence of a contractual right of recoupment will not necessarily be fatal to P’s rights against D. We have discussed P’s restitutionary causes of action

in Chapters 6 (contribution, recoupment and subrogation) and 8 (necessitous intervention), the distinction between the two chapters turning upon whether P was under a legal obligation to X. According to our analysis of P’s rights, P should plead: (1) the payment to D; (2) facts giving rise to a restitutionary obligation, including: (a) request to pay or adoption of the payment by D;54 or [page 1021] (b) legal or moral compulsion upon P, coupled with circumstances which make it just as between P and D that D should recoup P or at least contribute to P’s outlay;55 and (3) a causal link between (1) and (2). P need not plead a common demand upon P and D,56 nor that P’s payment discharged D’s liability.57 Since, however, this is a controversial proposition,58 it may be appropriate to plead discharge where it has occurred. By way of defence, D may seek to plead that P officiously exposed himself or herself to the liability (legal or moral) subsequently met by the payment to X.59 [2912] Recovery of money previously paid under contract. Where the payment was equal to or less than the amount required under a contractual obligation, it is not sufficient to plead the payment under the contract and a causative unjust factor such as mistake or duress. The ineffective nature of the contract itself must also be identified.60 This means that there are three elements in such claims: (1) the payment; (2) the ineffective nature of the contract; and (3) the basis upon which restitution is claimed. The first element requires no explanation. Pleading the second

element requires a statement of the facts why the contract is ineffective.61 Reference must be made to the character of the ineffectiveness: that the contract was void62 when the payment was made, or discharged or rescinded after the payment was made. Of course, this requires reference to the facts relied upon that lead to the conclusion of law that the contract was ineffective. Particulars must be given. The third element looks to matters such as a total failure of the agreed return, or the presence of mistake, improper pressure, fraud or illegality, or the exercise of a judicial (usually statutory) discretion in favour of the plaintiff, such as the basis for relief against forfeiture. Apart from mere denial, the defendant may challenge the ground of the alleged ineffectiveness, for example by pleading that the ineffective contract was affirmed. If the plaintiff’s capacity to give counterrestitution63 is disputed, it must be put in issue in the pleading. Likewise, the defendant will need to plead any claim for restitution in the defendant’s favour. [page 1022]

3. Claims for Remuneration [2913] General. The restitutionary cause of action for remuneration is based on the failure of the defendant to pay for work done.64 Usually, the work will have been done at the defendant’s request and accepted by the defendant.65 The concept of ‘acceptance’ in this context is difficult and elusive.66 Exceptionally there may be restitution even if there is no request. [2914] Historical. In Pavey & Matthews Pty Ltd v Paul,67 Deane J traced the development of the pleading rules concerning noncontractual claims for reasonable remuneration. Originally action was brought on an express quantum meruit count. Subsequently it became settled law that such an action lay on a common indebitatus count, to recover the amount payable as a liquidated amount or debt.68 In each

case the form of the pleading of a claim for a liquidated sum cloaked contractual and quasi-contractual claims.69 For both categories of claim the pleader sought a nominated (liquidated) sum, but for the quasi-contractual claim the sum was a nominated sum being ‘so much money as [the plaintiff] therefore reasonably deserved to have’.70 Indebitatus was made available on the basis that the completion of the work gave rise to a debt which the defendant impliedly promised to pay.71 In BP Exploration Co (Libya) Ltd v Hunt (No 2)72 Robert Goff J said:73 Now the old quantum valebat and quantum meruit counts were superseded by the indebitatus counts they too were actions for the recovery of a debt the amount of the debt being deemed to be certain, on the ground that it was capable of being ascertained.

[2915] Requested work. Where the plaintiff seeks remuneration for work done at the defendant’s request, whether or not that request originated in contract, a non-contractual claim must plead: (1) the request; (2) acceptance; and (3) a basis for suing ‘off the contract’ (where the defendant’s request originated in contract).74 ‘Acceptance’ is addressed in detail in the chapters on ineffective contracts.75 [page 1023] The need to plead grounds of contractual ineffectiveness, where benefit is conferred under contract but the plaintiff wishes to ignore its regime, reflects the principles noted above in relation to money paid.76 The pleading must state facts showing that the contract was void,77 discharged or rescinded; or, in the case of a void or unenforceable contract, fully performed. In the case of void contracts, there may also be scope for bringing a restitutionary claim based on mistake78 or improper pressure79 depending on the facts.

[2916] Unrequested work. Where there was no request by the defendant that the work be done, the claim for reasonable remuneration will generally fail. There are, however, at least four exceptional cases: (1) the defendant may accept the benefit;80 (2) the defendant’s unconscionable conduct may ultimately provide a basis for restitution under Australian law;81 (3) some cases have recognised a right to restitution on the basis of incontrovertible benefit;82 and (4) the principles of necessitous intervention discussed in Chapter 8 may apply. The exceptional and controversial nature of these bases for restitution indicates the need for specific pleading designed to highlight the facts critical to relief.83

4. Restitution for Wrongs [2917] General. Our analysis of restitution for wrongs showed the availability of remedies designed to reverse unjust enrichment derived by the defendant as the result of most categories of civil or criminal wrong.84 Restitution is certainly available where the defendant’s enrichment occurred as the result of many torts, crimes or breaches of equitable obligation, such as a duty of confidence or a fiduciary duty. The list is not intended to be definitive. Restitution of benefits received as the result of a breach of contract is probably available only in limited circumstances.85 [2918] Claims where a wrong is the unjust factor in restitution. Elsewhere we have discussed the critical distinction between dependent and independent claims for restitution based on wrongs.86 Dependent claims [page 1024]

involve an established category of wrong, such as tort, crime, breach of fiduciary duty; reference to a benefit acquired thereby by the defendant; leading to an appropriate remedy designed to reverse the defendant’s enrichment flowing from the wrong. Instead of seeking compensatory damages, the plaintiff seeks remedies that focus on the benefit acquired by the defendant in consequence of the wrong. These remedies include damages or equitable compensation according to the restitutionary measure, mesne profits, account of profits and proprietary remedies such as constructive trust and equitable lien. Pleading by plaintiffs involves: (1) a specific allegation of the defendant’s wrong; (2) identifying the benefit derived from the wrong; (3) asserting a causal link between the two;87 and (4) claiming the appropriate relief. In claims for damages for breach of contract it is not open to the plaintiff to plead that damage must be assessed on a particular basis.88 Nevertheless, some benefits obtained from breach can be the subject of a claim for their disgorgement.89 [2919] Benefit derived at plaintiff’s expense not always essential. Restitution is generally concerned with unjust enrichment at the plaintiff’s expense.90 However, for at least two types of restitutionyielding wrongs, the law allows the plaintiff to recover the defendant’s enrichment, even though that enrichment did not come about directly at the plaintiff’s expense. An agent who receives a bribe may be sued by his or her principal both at common law and in equity91 even though the bribe came from a third party. And, ‘restitution for wrongful death’ necessarily enures in favour of someone other than the victim.92 [2920] Independent claims involving a wrong. Some independent claims may involve a wrong. For example, a claim to recover money paid as the result of improper pressure may be (but need not be) based on conduct that constitutes a crime or tort, such as blackmail, robbery or deceit. For such independent claims, derived

from the count for money had and received, the unjust factor (in the unjust enrichment equation) is itself a wrong that causes the plaintiff to transfer a benefit (usually monetary) to the defendant.93 In such actions the plaintiff relies on the causal connection between the receipt of the money and the (wrongful) dealing with the plaintiff’s [page 1025] property. It is not, however, a claim for compensation, but an independent restitutionary remedy. Accordingly, it is sufficient in those cases to plead: (1) the payment of the money; (2) the conduct which amounted to the wrong; and (3) a causal connection. The plaintiff who sues a third party should consider carefully whether there has been a mixing of moneys, because in that event, the defendant may dispute that the money received was the plaintiff’s money.94

5. Pre-Judicature Relics [2921] Traces of the past. In some jurisdictions there remain aspects of procedure and pleading rules which continue to reflect restitution’s quasi-contractual pre-history. Though anachronistic, these are not necessarily unhelpful, although they require understanding of concepts that are seldom encountered in modern times.95 [2922] ‘Debts’ and ‘liquidated demands’. In some jurisdictions, a plaintiff who seeks recovery of a ‘debt or liquidated demand’ must comply with special procedures or enjoy procedural advantages. For example, it may be possible to enter default judgment for the sum claimed in certain circumstances.96 In New South Wales a statement of

claim is required in proceedings on a claim for relief to a debt or other liquidated claim.97 In South Australia the principles relating to an award of statutory interest vary according to whether the judgment is given on a liquidated claim.98 The meaning of the expression ‘debt or liquidated demand’ demands a knowledge of pre-Judicature pleading rules, especially those relating to the common (money) counts.99 There is a distinction between debt and mere breach of contract.100 As explained by Sholl J in Alexander v Ajax Insurance Co Ltd,101 the expression ‘debt or liquidated demand’ includes (amongst other things) any claim:102 … for which an indebitatus (or ‘common’) count would lie including those cases formerly covered by the quantum meruit or quantum valebat counts,

[page 1026] notwithstanding that the only agreement implied between the parties in such cases was for payment at a ‘reasonable’ rate.

Somewhat surprisingly, the Full Court of the Supreme Court of Western Australia has held that a claim on a quantum meruit is not a claim for a ‘debt or sum certain’ within a (now repealed) power to allow statutory interest.103 The decision seems to be at odds with the uncited High Court decision in Spain v Union Steamship Co of New Zealand Ltd,104 albeit that the High Court case did not deal with a claim for statutory interest. [2923] Common money counts. Before the judicature reforms, certain claims could be pleaded by short form pleadings (or counts).105 These were known as the common (money) counts or indebitatus counts.106 The counts, which are set out below,107 were available for both contractual and restitutionary (quasi-contractual) claims.108 The common counts were once described as a ‘flagrant violation of the theory that the pleadings in a cause should be framed to give the opponent particular information’.109

[2924] ‘Money claims’ in New South Wales. In New South Wales a plaintiff may still use a short form of pleading in relation to ‘money claims’. Subject to the defendant’s right to require the plaintiff to plead the facts upon which it is based, or to require the plaintiff to provide particulars, a plaintiff may plead the facts in the manner indicated in relation to the ‘money claims’ referred to in the opening sub-rule:110 (a) goods sold and delivered by the plaintiff to the defendant;111 (b) goods bargained and sold by the plaintiff to the defendant;112 (c) work done and materials provided by the plaintiff for the defendant at the defendant’s request;113 (d) money lent by the plaintiff to the defendant; (e) money paid by the plaintiff for the defendant at the defendant’s request;114 (f) money had and received by the defendant for the use of the plaintiff;115

[page 1027] (g) interest upon money due from the defendant to the plaintiff, and forborne at interest by the plaintiff to the defendant at the defendant’s request;116 or (h) money found to be due from the defendant to the plaintiff on accounts stated between them.117

These rules, now peculiar to New South Wales, allow the old common money counts to be used as such. Most, if not all, of the independent common law claims discussed in this book fall within one or other of these counts. The nature of most counts is self-evident from their terms, although they are objectionable because they do not distinguish contract from restitution. However, we add a little about the money paid and account stated counts.118 [2925] Money paid at defendant’s request. One of the common indebitatus or money counts was for ‘money payable by the defendant to the plaintiff for money paid by the plaintiff for the defendant at his request’.119 Like the other common indebitatus counts, which spanned contractual and quasi-contractual claims,120 this particular count encompassed claims relating to money paid: (1) accompanied by an express promise to repay;

(2) based on a fictional ‘implied’ request; or (3) based on an express request unaccompanied by any promise to repay. Category (1) is a contract, and is therefore outside the scope of this work. Category (2) includes claims based on compulsion of law or, in limited circumstances, in the course of intervention in some emergency on the defendant’s behalf.121 Category (3) tends to get overlooked in works on restitution. Yet it deserves mention, because it is a noncontractual claim encompassed in the money count. We have already drawn attention to the truly restitutionary uses to which this count could be put.122 [2926] Account stated. An account stated is an admission of a sum of money being due from the defendant to the plaintiff. In some circumstances it may be sued upon as a distinct cause of action.123 A debt arising out of a contract that was unenforceable by reason of the Statute of Frauds 1677 (Imp) could be recovered on an account stated,124 but not one that was based on a void or illegal contract. It was accepted as far back as 1789 that indebitatus assumpsit lay in some circumstances when a person transferred to a creditor on account of a debt, whether due or not, a fund actually existing [page 1028] or accruing in the hands of a third person.125 Despite the later development of the doctrines of privity of contract and contractual consideration, this old law probably survives. However, the better view is that, unless there is a promise to pay supported by consideration, there must be a fund in existence at the time of transfer.126 For the purpose of limitation of actions, in the case of an account stated based on a mere admission time runs from when the underlying causes of action first accrued.127 1.

References to the Rules of Court that uniformly contain this requirement may be found in

Cairns, Australian Civil Procedure, 7th ed, p 158. Of course, particulars are required to avoid the opposite party being taken by surprise. 2. 3.

See [2924]. As to the meaning of cause of action and the application of the concept in restitution see [205]–[209], [2733].

4.

Some precedents may be found in Butterworths’ Court Forms, Precedents and Pleadings, 1989, ‘Money Claims’, §3642. (1993) 179 CLR 101 at 111 per Mason CJ, Deane, Dawson and Toohey JJ; 116 ALR 385 at 387. See also [135].

5. 6. 7.

See [109], [131], [132]. Unless of course that contract is itself ineffective, in which case the basis of ineffectiveness is what is critical. See [215].

8.

This paragraph was quoted with approval by Weinberg J in Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748 at [111]. (1992) 175 CLR 353 at 378–9, 406; 109 ALR 57 at 74–6, 97–8. Cf Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 at 379; 111 ALR 289 at 313 (reference by Deane and Dawson JJ to ‘an action in unjust enrichment’).

9.

10. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256; 69 ALR 577 at 603–4 per Deane J. See also Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; 247 ALR 412; [2008] HCA 27 at [67]. 11. See, eg Shell Co of Australia Ltd v Esso Australia Ltd [1987] VR 317 especially at 342, 345– 6 (cf at 329–30); New South Wales v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363 at 381–2; Marriott Industries Pty Ltd v Mercantile Credits Ltd (1990) 55 SASR 228 at 237–8; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 117; 111 ALR 649 at 669; Bryson v Bryant (1992) 29 NSWLR 188 at 222–3; Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122 at 131–2, 171–2; Coshott v Lenin [2007] NSWCA 153 at [8]–[11]; Chidiac v Maatouk [2010] NSWSC 386 at [216]ff; Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295. 12. See [135]. 13. Letang v Cooper [1965] 1 QB 232 at 242–3 per Diplock LJ. 14. See [2903]. 15. See [135]. 16. (1987) 162 CLR 221 at 257; 69 ALR 577 at 664–5: Equuscorp Pty Ltd v Haxton (2011) 246 CLR 498 at [30]. 17. (1991) 101 ALR 363 at 373–5. 18. See [1405], [1408], [1515], [1517], [1737]–[1738]. The topic is discussed more fully in Chapter 23. 19. See [1714]. 20. [1941] AC 1 (discussed [1517]). 21. See [2906]. 22. See generally Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.

23. See [1414], [1515], [1738], [1811]. 24. See [1411]. 25. See English, Scottish and Australian Bank Ltd v Beatty [1931] St R Qd 291. See also [1410]. 26. See, eg Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344; 111 ALR 289. See also [1410]–[1411], [1515], [1819]. 27. See [118], [1168], [1405], [1408], [1409]. 28. But see [1430]. 29. See [2807]. 30. See [842]. 31. See generally Chapter 3, esp [311]. 32. As to the need to plead a recognised qualifying or vitiating factor, see Hightime Investments Pty Ltd v Adamus Resources Ltd [2012] WASC 295; Alexiadis v Zirpiadis [2013] SASCFC 64. 33. (1992) 175 CLR 353 at 378–9; 109 ALR 57 at 74–6. 34. For the categories of ineffective contract, and the need for ‘ineffectiveness’ see Chapter 9. See also [215]. 35. See [311]. 36. Chapter 4. 37. See [425]–[426]. 38. See [423]. 39. See [2908]. 40. See [451]–[454]. Generally as to proprietary remedies see [247]–[257]. 41. See generally Chapter 24. 42. As to the relation between estoppel and change of position, see [2409], [2413]. 43. See [439]–[440] and Chapter 25. 44. See [438]. 45. As to onus see [2703]. 46. See [123]. 47. Adrian Alan Ltd v Fuglers (a firm) [2002] EWCA Civ 1655 at [16] (Brooke LJ). 48. See, eg David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 384; 109 ALR 57 at 79–80. See also Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. 49. See [2739]–[2742]. 50. For example, to goods, to the person, by way of duress colore officii or other infringement of a legal right. 51. As to causation see [522]. 52. See, eg Uniform Civil Procedure Rules 2005 (NSW), r 14.14. 53. See [505], [2419]. 54. See [116], [841], [2925]. 55. See Chapter 6 and [842]–[845].

56. See [620]–[623]. 57. See [636], [847]. 58. See [636], [847]. 59. See [635]. 60. For the reason for this, see [215], [909], [1322]. 61. Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 260–1; Coshott v Lenin [2007] NSWCA 153. 62. Unenforceability alone is generally insufficient. See [1003], [1019]. 63. See generally [918], [1305], [1331], [1431]–[1439], [2324]–[2335]. 64. We use the expression ‘work done’ to include all claims for reasonable remuneration including those in which services are rendered with or without the supply of materials. 65. See generally [154]–[158]. Cf Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 33–4. 66. See generally [157]–[158], [933], [934]. 67. (1987) 162 CLR 221, especially at 250–1; 69 ALR 577 at 599–601. 68. See generally Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 316ff. See also [113]. As to the common counts see [2923]–[2924]. 69. See Coleman v Seaborne Pty Ltd [2007] NSWCA 60 at [39]–[40]. 70. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251; 69 ALR 577 at 600–1 per Deane J (quoting Chitty’s Treatise on Pleading, 7th ed, 1844, vol 1, p 351). Cf Birks, Introduction, pp 448–9. 71. See [118]. 72. [1979] 1 WLR 783 (affirmed [1981] 1 WLR 232; [1983] 2 AC 352). 73. [1979] 1 WLR 783 at 836. 74. See Coshott v Lenin [2007] NSWCA 60 at [10]–[11]. 75. See especially [933], [934], [1025], [1031], [1032], [1162], [1163], [1167], [1227], [1228]. See also [157]–[158]. 76. See [2912]. See also Christiani & Nielsen Pty Ltd v Goliath Portland Cement Co Ltd (1993) 2 Tas R 122. 77. Unenforceability is generally insufficient. See [1003], [1032]. 78. See [448], [1026]. 79. See [519]. 80. See [157]–[158]. 81. See [175]. 82. See [151]–[153]. 83. Coshott v Sakic (1998) 44 NSWLR 667 at 671; Gray v Gray (2004) 12 BPR 22,755; [2004] NSWCA 408; Alexiadis v Zirpiadis (2013) 302 ALR 148; [2013] SASCFC 64. 84. See Part VI. 85. See Chapter 18. 86. See [1514].

87. As to causation in claims based on breach of fiduciary duty, see Target Holdings Ltd v Redferns [1996] AC 421. 88. See [1812]. 89. See generally Chapter 18. 90. See Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51; 126 ALR 1 and [159]–[163]. 91. See [1714]. 92. See Chapter 17. 93. Sometimes the wrong is done by a third party: see [503], [1635]–[1638]. 94. See [303], [443]. This point was conceded in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, to the surprise of many commentators: see [1634]. 95. See also Earthworks & Quarries Ltd v F T Eastment & Sons Pty Ltd [1966] VR 24 (claim in quantum meruit was in respect of a ‘breach … of a contract’ within Service and Execution of Process Act 1951 (Cth), s 11(1)(c)); McFee Engineering Pty Ltd v CBS Constructions Pty Ltd (1980) 44 FLR 340. 96. See Cairns, Australian Civil Procedure, 7th ed, p 362. 97. Uniform Civil Procedure Rules 2005 (NSW), r 6.3. 98. See Supreme Court Act 1935 (SA), s 30C(2)(b). Generally as to interest see Chapter 28. 99. See [2923]. 100. See Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567–8; Hungerfords v Walker (1989) 171 CLR 125 at 139, 159; 84 ALR 119 at 125–6, 140–1. 101. [1956] VLR 436. See also Lagos v Grunwaldt [1910] 1 KB 41 at 48; Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138; Secretary of the State Advances Recovery Office of the Republic of South Africa v Fine [1968] 1 NSWR 702 at 703; Coast Securities No 9 Pty Ltd v Alabac Pty Ltd [1984] 2 Qd R 25; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251; 69 ALR 577 at 600–1. 102. [1956] VLR 436 at 445. 103. Waldron-Brown v Geraldton Fishermen’s Co-operative [1983] WAR 83. The statute was the Supreme Court Act 1935 (WA), s 32 which (in its then form) re-enacted Lord Tenterden’s Act 1833 (UK), s 28 (see [2809]). 104. (1923) 32 CLR 138. See also Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64 at 68. 105. For the elements of particular counts, see Bullen and Leake, pp 35–57; Rath, Principles and Precedents of Pleading in the Supreme Court of New South Wales at Common Law, pp 26–30. See also [111]–[114]. The history of the common counts is discussed in Pavey & Matthews Pty Ltd (1985) 3 NSWLR 114 (CA); (1987) 162 CLR 221; 68 ALR 577 (HC); Schwarstein v Watson (1985) 3 NSWLR 134. 106. See [114]–[119]. 107. See [2924]. 108. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 255–6; 69 ALR 577 at 603– 4. 109. 6 Law Magazine and Review (2nd ser) 248, cited in H K Lucke, ‘Slade’s Case and the

Origin of the Common Counts Part 3’ (1966) 82 LQR 81 at 87. 110. Uniform Civil Procedure Rules 2005 (NSW), r 14.12(1). 111. See [119]. 112. See [119]. 113. See [118]. 114. See [116] and [2925]. 115. See [117]. A claim arising from a total failure of consideration is a money claim that may be brought under the Local Court Act 2007 (NSW): Albanis v Eleftheriou [2014] NSWSC 416. 116. See [2804]. 117. See [2926]. 118. See [2925]–[2926]. 119. Bullen and Leake, p 42. Plaintiffs in New South Wales may still plead in this form: see [2924]. As to this count, see also [116]. 120. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 255–6; 69 ALR 577 at 603–4. 121. These are addressed in Chapters 6 (contribution, recoupment and subrogation) and 8 (necessitous intervention). 122. See [116], [842]. See also Israel v Foreshore Properties Pty Ltd (in liq) (1980) 54 ALJR 421 at 423; 30 ALR 631 at 636. 123. Joseph Evans & Co Ltd v Heathcote [1918] 1 KB 418; Equalisation Committee Ltd v McCabe (1938) 38 SR (NSW) 397 at 401. 124. Cocking v Ward (1845) 1 CB 858; 135 ER 781. See also Fruhling v Schroeder (1835) 2 Bing NC 77; 132 ER 31 (see [2802]). 125. Israel v Douglas (1789) 1 H Bl 239; 126 ER 139. See also Griffin v Wetherby (1868) LR 3 QB 753 at 758–9. 126. Harris v Russell (1868) 2 QSCR 15; Rothwells Ltd v Nommack (No 100) Pty Ltd [1990] 2 Qd R 85. See J D Davies, ‘Shamia v Joory: A Forgotten Chapter in Quasi-Contract’ (1959) 75 LQR 220 (criticising Shamia v Joory [1958] 1 QB 448). 127. Executor Trustee & Agency Co of South Australia Ltd v Thompson (1919) 27 CLR 162 at 169; Lewis v Lamb [2011] NSWSC 873.

Bibliography Books Addison, C G, A Treatise on the Law of Contracts and Rights and Liabilities Ex Contractu, 1st ed, Stevens, London, 1847. American Law Institute, Restatement of the Law of Restitution Quasi Contracts and Constructive Trusts, as adopted and promulgated in May 1936, American Law Institute Publishers, St Paul, 1962 Reprint. American Law Institute, Restatement of the Law Second, Contracts 2d, as adopted and promulgated in May 1979, American Law Institute Publishers, St Paul, 1981. American Law Institute, Restatement of the Law Third, Restitution and Unjust Enrichment, as adopted and promulgated on May 19, 2010, American Law Institute Publishers, St Paul, 2011. Atiyah, P S, Essays on Contract, Clarendon Press, Oxford, 1986. Atiyah, P S, The Rise and Fall of Freedom of Contract, Clarendon Press, Oxford, 1979. Austin, R P, and Vann, R (eds), Law of Public Company Finance, Law Book Co Ltd, Sydney, 1986. Balkin, R P, and Davis, J L R, Law of Torts, 3rd ed, Butterworths, Sydney, 2004. Bant, E, The Change of Position Defence, Hart Publishing, Oxford, 2009. Bant, E, and Bryan, M (eds), Principles of Proprietary Remedies, Thomson Reuters, Sydney, 2013. Barker, Kit, and Grantham, Ross, Unjust Enrichment, LexisNexis Butterworths, Sydney, 2008. Beale, Hugh, Remedies for Breach of Contract, Sweet & Maxwell,

London, 1980. Beatson, Jack, The Use and Abuse of Unjust Enrichment, Clarendon Press, Oxford, 1991. Beatson, J, and Friedmann, D (eds), Good Faith and Fault in Contract Law, Clarendon Press, Oxford, 1995. Benjamin’s Sale of Goods, 7th ed, Sweet & Maxwell, London, 2006. Bennion, F A R, Statutory Interpretation, 2nd ed, Butterworths, London, 1992. Birks, P B H, The Frontiers of Liability, vol 2, OUP, Oxford, 1994. Birks, Peter, An Introduction to the Law of Restitution, Clarendon Press, Oxford, 1985, paperback edition revised 1989. Birks, P (ed), Laundering and Tracing, Oxford University Press, New York, 1995. Birks, P D, and Rose, F D (eds), Lessons of the Swaps Litigation, Mansfield Press, London, 2000. Birks, Peter, Restitution The Future, Federation Press, Sydney, 1992. Birks, P, Unjust Enrichment, 1st ed, Oxford University Press, New York, 2003. Birks, P, Unjust Enrichment, 2nd ed, Oxford University Press, New York, 2005. Broom’s Legal Maxims, 10th ed, by Kersley, R H, Sweet & Maxwell, London, 1939. Bullen, H, and Leake, S M, Precedents of Pleadings, 3rd ed, Stevens & Sons, London, 1868. Burrows, Andrew (ed), Essays on the Law of Restitution, Clarendon Press, Oxford, 1991. Burrows, Andrew, and Peel, Edwin (eds), Commercial Remedies: Current Issues and Problems, Oxford University Press, Oxford, 2003. Butler, D A, and Duncan, W D, Maritime Law in Australia, Legal Books, Sydney, 1992. Butt, P, Land Law, 5th ed, Law Book Co Ltd, Sydney, 2006.

Butterworths Lectures 1989–90, Butterworths, London, 1990. Butterworths Lectures 1990–91, Butterworths, London, 1992. Cairns, B C, Australian Civil Procedure, 3rd ed, Law Book Co Ltd, Sydney, 1992. Cairns, B C, Australian Civil Procedure, 7th ed, Law Book Co Ltd, Sydney, 2007. Cane, P, Tort Law and Economic Interests, Clarendon Press, Oxford, 1991. Carter, J W, Carter’s Breach of Contract, LexisNexis Butterworths, Sydney, 2011 and Hart Publishing, Oxford, 2012 (Hart Edition). Carter, J W, The Construction of Commercial Contracts, Hart Publishing, Oxford, 2013. Carter, J W, Contract Law in Australia, 6th ed, LexisNexis Butterworths, Sydney, 2013. Carter, J W, and Harland, D J, Contract Law in Australia, 3rd ed, Butterworths, Sydney, 1996. Carter, J W, Peden, Elisabeth and Tolhurst, G J, Contract Law in Australia, 5th ed, LexisNexis Butterworths, Sydney, 2007. Chalmers, Robert, Resulting Trusts, Clarendon Press, Oxford, 1997. Chitty on Contracts, 28th ed, Sweet & Maxwell, London, 2 vols, 1999. Clode, W, Law and Practice of Petition of Right, Clowes, London, 1887. Cope, M, Constructive Trusts, Law Book Co Ltd, Sydney, 1992. Cope, M, Equitable Obligations: Duties, Defences and Remedies, Law Book Co, Sydney, 2007. Cope, M, Proprietary Claims and Remedies, Federation Press, Sydney, 1997. Corbin, A L, Corbin on Contracts, West Publishing Co, St Paul, 12 vols, 1951–1964. Courtney, Wayne, Contractual Indemnities, Hart Publishing, Oxford, 2014. Current Developments in International Transfers of Goods and Services,

Butterworths, Singapore, 1994. Davies, M, and Dickey, A, Shipping Law, 3rd ed, Law Book Co Ltd, Sydney, 2004. Dawson, Francis, and McLauchlan, D W, The Contractual Remedies Act 1979, Sweet & Maxwell (NZ) Ltd, Auckland, 1981. Dawson, J P, Unjust Enrichment: A Comparative Analysis, Little Brown & Co, Boston, 1951. Dean, R, The Law of Trade Secrets and Personal Secrets, 2nd ed, Law Book Co, Sydney, 2002. Degeling, Simone and Edelman, James (eds), Equity in Commercial Law, Law Book Co, Sydney, 2005. Degeling, Simone and Edelman, James (eds), Unjust Enrichment in Commercial Law, Law Book Co, Sydney 2008. Dietrich, J, Restitution: A New Perspective, Federation Press, Sydney, 1998. Dix, Andrew, Errington, M, Nicholson, K, and Rowe, P, Law for the Medical Profession, 2nd ed, Butterworths, Sydney, 1996. Edelman, J, and Bant, E, Unjust Enrichment in Australia, Oxford University Press, Hong Kong, 2006. Edelman, J, and Cassidy, D, Interest Awards in Australia, LexisNexis Butterworths, Sydney, 2003. Elias, G, Explaining Constructive Trusts, Clarendon Press, Oxford, 1990. Ellinger, E P, Lomnicka, E and Hare, C V M, Ellinger’s Modern Banking Law, 5th ed, OUP, Oxford, 2011. Elliott, Steven, Mitchell, Charles and Haecker, Birke (eds), Restitution of Overpaid Tax, Hart Publishing, Oxford, 2013. Field, O P, The Effect of an Unconstitutional Statute, Da Capo Press, New York, 1971. Fifoot, C H S, History and Sources of the Common Law, Stevens & Sons, London, 1949. Finn, P D (ed), Equity and Commercial Relationships, Law Book Co Ltd, 1987.

Finn, P D (ed), Essays in Equity, Law Book Co Ltd, 1985. Finn, P D (ed), Essays on Contract, Law Book Co Ltd, Sydney, 1987. Finn, P D (ed), Essays on Damages, Law Book Co Ltd, Sydney, 1992. Finn, P D (ed), Essays on Restitution, Law Book Co Ltd, Sydney, 1990. Finn, P D (ed), Essays on Torts, Law Book Co Ltd, Sydney, 1989. Finn, P D, Fiduciary Obligations, Law Book Co Ltd, Sydney, 1977. Fleming, J G, The Law of Torts, 8th ed, Law Book Co Ltd, Sydney, 1992. Ford, H A J, and Lee, W A, Principles of the Law of Trusts, 2nd ed, Law Book Co Ltd, Sydney, 1990. Ford, H A J, and Lee, W A, Principles of the Law of Trusts, Thomson LBC Info Services, Sydney, looseleaf. Fox, D, Property Rights in Money, Oxford University Press, Oxford, 2008. Fried, Charles, Contract as Promise, Harvard University Press, Cambridge Massachusetts, 1981. Gillies, P, Law of Evidence in Australia, 2nd ed, Legal Books, Sydney, 1991. Gilmore, Grant, The Death of Contract, Ohio State University Press, Ohio, 1974. Gleeson, J T, Watson J A, and Peden, E, Historical Foundations of Australian Law, Vol II, The Federation Press, Sydney, 2013. Goff, R L, and Jones, Gareth, The Law of Restitution, 1st ed, Sweet & Maxwell, London, 1966. Goff, Lord, and Jones, Gareth, The Law of Restitution, 3rd ed, Sweet & Maxwell, London, 1986. Goff, Lord, and Jones, Gareth, The Law of Restitution, 4th ed, Sweet & Maxwell, London, 1993. Goff, Lord, and Jones, Gareth, The Law of Restitution, 5th ed, Sweet & Maxwell, London, 1998. Green, L, The Authority of the State, OUP, Oxford, 1988.

Greig, D W, and Davis, J L R, The Law of Contract, Law Book Co Ltd, Sydney, 1987. Gurry, F, Breach of Confidence, 2nd ed, OUP, Oxford, 2012. Hall, P M, Unconscionable Contracts and Economic Duress, CCH Australia Ltd, Sydney, 1985. Halsbury’s Laws of England, 4th ed, vol 17, ‘Execution’, 1989. Handford, Peter, Limitation of Actions, 3rd ed, Thomson Reuters, Sydney, 2012. Handley, K R, Estoppel by Conduct and Election, Sweet & Maxwell, London, 2006. Handley, K R, and Spencer Bower, Turner and Handley: The Doctrine of Res Judicata, 3rd ed, Butterworths, London, 1996. Hanks, P J, Constitutional Law in Australia, Butterworths, Sydney, 1991. Harland, D J, Law of Minors in Relation to Contracts and Property, Butterworths, Sydney, 1974. Helmore, B A, Law of Real Property in New South Wales, 2nd ed, Law Book Co Ltd, 1966. Heydon, J D, Cross on Evidence, 6th Aust ed, Butterworths, Sydney, 2000. Heydon, J D, and Leeming, M J, Jacobs’ Law of Trusts in Australia, 7th ed, Butterworths, Sydney, 2006. Heydon, J D, Leeming, M J, and Turner, P, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 5th ed, LexisNexis Butterworths, Sydney, 2015. Higgins, P F P, and Fletcher, K L, Law of Partnership in Australia and New Zealand, 9th ed, Law Book Co, Sydney, 2007. Hogg, P W, Liability of the Crown, 2nd ed, Law Book Co Ltd, Sydney, 1989. Holmes, O W, The Common Law, ed M de W Howe, Little Brown & Co, Boston, 1963. Jackman, Ian, The Varieties of Restitution, Federation Press, Leichhardt,

1998. Jackson, R M, History of Quasi-Contract in English Law, Cambridge University Press, Cambridge, 1936. Jones, Gareth, Anglo-American Trends in Restitution, Kluwer, Deventer, 1978. Jones, Gareth, Restitution in Public and Private Law, Sweet & Maxwell, London and N M Tripathi Pte Ltd, Bombay, 1991. Jones, Oliver, Bennion on Statutory Interpretation, 6th ed, LexisNexis UK, 2013. Kearney, J, The Action for Breach of Confidence in Australia, Legal Books, Sydney, 1985. Keay, A, McPherson, The Law of Company Liquidation, 4th ed, LBC, Sydney, 2000. Keener, W A, A Treatise on the Law of Quasi-Contracts, Baker Voorhis & Co, New York, 1893. Keeton, W P, Dobbs, D B, Keeton, R E, and Owen, D G, Prosser and Keeton on Torts, 5th ed, West Publishing Co, St Paul, 1984. Kelly, D St L, and Ball, M L, Principles of Insurance Law in Australia and New Zealand, Butterworths, Sydney, 1991. MacCormack, Neil, and Birks, Peter (eds), The Legal Mind: Essays for Tony Honore, Clarendon Press, Oxford, 1986. McDermott, P M, Equitable Damages, Butterworths, Sydney, 1994. McElroy, R G, and Williams, G L, Impossibility of Performance, Cambridge University Press, Cambridge, 1941. McGregor, Harvey, McGregor on Damages, 15th ed, Sweet & Maxwell, London, 1988. McInnes, Mitchell, The Canadian Law of Unjust Enrichment and Restitution, LexisNexis, Markham, 2014. McKendrick, E (ed), Commercial Aspects of Trusts and Fiduciary Obligations, Clarendon Press, Oxford, 1992. McKendrick, Ewan (ed), Force Majeure and Frustration of Contract, 2nd ed, Lloyd’s of London Press Ltd, London, 1995.

Maddaugh, P D, and McCamus, J D, The Law of Restitution, Canada Law Book, Ontario, 1990. Maitland, F W, The Forms of Action at Common Law, ed A H Chaytor and W J Whittaker, Cambridge University Press, Cambridge, 1936. Mason, Keith, Constancy and Change, Federation Press, Sydney, 1990. Mitchell, Charles, The Law of Subrogation, Clarendon Press, Oxford, 1994. Mitchell, Charles, and Mitchell, Paul (eds), Landmark Cases in the Law of Restitution, Hart Publishing, Oxford, 2006. Mitchell, Charles, Mitchell, Paul and Watterson, Stephen, Goff & Jones The Law of Unjust Enrichment, 8th ed, Sweet & Maxwell, London, 2011. Neyers, Jason W, McInnes, Mitchell and Pitel, Stephen G A (eds), Understanding Unjust Enrichment, Hart Publishing, Oxford, 2004. Ong, Denis S K, Ong on Subrogation, The Federation Press, Sydney, 2014. Palmer, G E, The Law of Restitution, Little, Brown & Co, Boston, 4 vols, 1978. Palmer, N E, Bailment, 2nd ed, Law Book Co Ltd, Sydney, 1991. Palmer, N E, Bailment, 3rd ed, Sweet & Maxwell, United Kingdom, 2009. Palmer, Norman, and McKendrick, Ewan (eds), Interests in Goods, 2nd ed, Lloyd’s of London Press Ltd, London, 1998. Peden, Elisabeth, Good Faith in the Performance of Contracts, LexisNexis Butterworths, Sydney, 2003. Peel, Edwin (ed), Treitel, The Law of Contract, 12th ed, Thomson Sweet & Maxwell, London, 2007. Phang, A B L, Cheshire, Fifoot and Furmston’s The Law of Contract, Singapore and Malaysian Edition, Butterworths Asia, Singapore, 1994. Phillips, J C, and O’Donovan, J, The Modern Contract of Guarantee, 2nd ed, Law Book Co Ltd, Sydney, 1992.

Pollock, F, and Maitland, F W, The History of English Law Before the Time of Edward I, 2nd ed, Cambridge University Press, Cambridge, 2 vols, 1899. Ratcliffe, J M (ed), The Good Samaritan and the Law, Anchor Books, New York, 1966. Rath, A F, Principles and Precedents of Pleading in the Supreme Court of New South Wales at Common Law, 1961. Rawls, John, A Theory of Justice, Revised ed, OUP, Oxford, 1999. Recent Developments in the Law of Damages, The 1991 Isaac Pitblado Lectures, Winnipeg Manitoba, 1994. Reiter, B J, and Swan, John, Studies in Contract Law, Butterworth & Co (Canada) Ltd, Toronto, 1980. Reynolds, F M B, Bowstead and Reynolds on Agency, 17th ed, Sweet & Maxwell, London, 2001. Rickett, Charles E F (ed), Justifying Private Law Remedies, Hart Publishing, Oxford, 2008. Rossiter, C J, Penalties and Forfeiture, Law Book Co Ltd, Sydney, 1992. Saidov, D, and Cunnington, R (eds), Contract Damages: Domestic and International Perspectives, Hart, Oxford, 2008. Salmond, Sir John, and Williams, James, Principles of the Law of Contracts, 2nd ed, Sweet & Maxwell, London, 1945. Sappideen, C, and Vines, P, Fleming’s The Law of Torts, 10th ed, Lawbook Co, Sydney, 2011. Scott, A W, Scott on Trusts, 4th ed, Little Brown & Co, Boston, 1989. Schrage, E J H (ed), Unjust Enrichment and the Law of Contract, Kluwer Law International, The Hague, London, 2001 Schrage, E J H (ed), Unjust Enrichment: The Comparative Legal History of the Law of Restitution, 2nd ed, Duncker & Humblot, Berlin, 1999. Simpson, A W B, A History of the Common Law of Contract: the Rise of the Action of Assumpsit, Clarendon Press, Oxford, 1975. Smith, J W, Smith’s Leading Cases, 13th ed (eds), Chitty, T W,

Denning, A T, and Harvey, C P, 2 vols, Sweet & Maxwell, London, 1929. Smith, L, The Law of Tracing, Clarendon Press, Oxford, 1997. Stoljar, S J, A History of Contract at Common Law, ANU Press, Canberra, 1975. Stoljar, S J, The Law of Quasi-Contract, 1st ed, Law Book Co Ltd, Sydney, 1964. Stoljar, S J, The Law of Quasi-Contract, 2nd ed, Law Book Co Ltd, Sydney, 1989. Stoljar, S J, ‘Negotiorum Gestio’, in International Encyclopaedia of Comparative Law, vol X, Chapter 17, Tobingen Martinus Nijhoff, The Hague, 1984. Sutton, K C T, Insurance Law in Australia, 3rd ed, LBC Information Services, Sydney, 1999. Sutton, K C T, Sales and Consumer Law in Australia and New Zealand, 4th ed, Law Book Co Ltd, Sydney, 1995. Swan, John, and Reiter, B J, Contracts: Cases, Notes and Materials, 4th ed, Emond Montgomery Publications Ltd, Toronto, 1991. Sykes, E, and Walker, S, Law of Securities, 5th ed, Law Book Co Ltd, Sydney, 1993. Tarr, A A, Liew, Kwai-Lian, and Holligan, W, Australian Insurance Law, 2nd ed, Law Book Co Ltd, Sydney, 1991. Tilbury, M J, Civil Remedies, Butterworths, Sydney, 2 vols, 1990, 1993. Treitel, G H, Doctrine and Discretion in the Law of Contract, Clarendon Press, Oxford, 1981. Treitel, G H, Remedies for Breach of Contract, Clarendon Press, Oxford, 1988. Tyree, A L, Banking Law in Australia, 4th ed, Butterworths, Sydney, 2002. Virgo, Graham, The Principles of the Law of Restitution, 2nd ed, Oxford University Press, New York, 2006. Virgo, Graham, The Principles of the Law of Restitution, 3rd ed, Oxford

University Press, Oxford, 2015. Waddams, Stephen, Dimensions of Private Law, Cambridge University Press, Cambridge, 2003. Waters, D W M, The Constructive Trust, Athalone Press, London, 1964. Waters, D W M (ed), Equity, Fiduciaries and Trusts 1993, Carswell, Ontario, 1993. White, M W D (ed), Australian Maritime Law, 2nd ed, Federation Press, Sydney, 2000. Williams, G L, Joint Obligations, Butterworths, London, 1949. Williams, G L, The Law Reform (Frustrated Contracts) Act 1943, Stevens & Sons Ltd, London, 1944. Woodward, F C, The Law of Quasi-Contracts, Little Brown & Co, Boston, 1913. Wright, D, The Remedial Constructive Trust, Butterworths, Sydney, 1998. Youdan, T G (ed), Equity, Fiduciaries and Trusts, Carswell, Toronto, 1989.

Law Reform Reports Law Commission for England and Wales, Penalty Clauses and Forfeiture of Monies Paid, WP 61, HMSO, London, 1975. Law Commission for England and Wales, Report on Contribution, Report No 79, HMSO, London, 1977. Law Commission for England and Wales, Pecuniary Restitution on Breach of Contract, Law Com No 121, HMSO, London, 1983. Law Commission for England and Wales, Sale and Supply of Goods, Law Com No 160, Cm 137, HMSO, London, 1987. Law Commission for England and Wales, Restitution of Payments Made Under a Mistake of Law, Consultation Paper No 120, HMSO, London, 1991. Law Commission for England and Wales, Privity of Contract: Contracts

for the Benefit of Third Parties, Consultation Paper No 121, HMSO, London, 1991. Law Commission for England and Wales, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 132, HMSO, London, 1993. Law Commission for England and Wales, Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227, HMSO, London, 1994. Law Commission for England and Wales, Aggravated, Exemplary and Restitutionary Damages, Consultation Paper No 247, HMSO, London, 1997. Law Commission for England and Wales, Limitation of Actions, Consultation Paper No 151, 1998. Law Commission of New Zealand, Contract Statutes Review, Report No 25, Wellington, 1993. Law Reform Commission of British Columbia, Report on the Need For Frustrated Contracts Legislation in British Columbia, Dept of the Attorney-General, Victoria, BC, 1971. Law Reform Commission of British Columbia, Report on the Recovery of Unauthorised Disbursements of Public Funds, LRC 48, The Commission, Vancouver, 1980. Law Reform Committee of South Australia, Thirty-Seventh Report, Relating to the Doctrines of Frustration and Illegality in the Law of Contract, Govt Printer, South Australia, 1976. Law Reform Committee of South Australia, Report Relating to Proceedings Against and Contribution Between Tortfeasors and Other Defendants, Forty-second Report, Govt Printer, South Australia, 1977. Law Reform Committee of South Australia, Seventy-First Report, Relating to the Doctrine of Frustration in the Law of Contract, Govt Printer, South Australia, 1983. Law Reform Committee of South Australia, Nineteenth Report, Relating to the Reform of the Law Regarding Entire Contracts and the

Rule Usually Known as the Rule in Cutter v Powell, Govt Printer, South Australia, 1986. Law Reform Institute of Tasmania, The Forfeiture Rule, Final Report No 6, December 2004. New South Wales Law Reform Commission, Report on Limitation of Actions, LRC 3, Govt Printer, New South Wales, Sydney, 1967. New South Wales Law Reform Commission, Report on Frustrated Contracts, LRC 25, Govt Printer, New South Wales, Sydney, 1976. New South Wales Law Reform Commission, Report on Interest on Certain Debts, LRC 35, 1983. New South Wales Law Reform Commission, Sale of Goods, Second Report, LRC 51, Govt Printer, New South Wales, Sydney, 1987. New South Wales Law Reform Commission, Issues Paper on Sale of Goods, IP 5, Govt Printer, New South Wales, Sydney, 1988. New South Wales Law Reform Commission, Restitution of Benefits Conferred Under Mistake of Law, LRC 53, Govt Printer, New South Wales, Sydney, 1987. Victorian Chief Justice’s Law Reform Committee, Contribution, The Committee, Melbourne, 1979.

Index References are to paragraph numbers Absence of cause, 107, 139 Acceptance see Benefit; Free acceptance; Unjust enrichment Accord and satisfaction see Compromise Account see also Quasi-contract generally …. 112, 113 Account of profits breach of confidence …. 1707, 1710, 1713, 1717, 1736 breach of contract …. 1509, 1831 calculation of profits …. 1716 ‘just allowances’ …. 1717, 1736 conduct of plaintiff …. 1715 corporations legislation …. 1721 Crown, restitutionary right …. 1714 defences …. 1715 deterrent function …. 1711, 1713 discretion …. 1715 equitable compensation, and …. 1726 fiduciary breach …. 1509, 1704, 1706, 1710, 1711, 1712, 1715, 1716, 1717, 1736 concurrent remedies …. 1718 functions …. 1711 generally …. 1504, 1509, 1710, 1735

illustrations …. 1714 intellectual property infringements …. 1509, 1708, 1710, 1713, 1717 plaintiff’s loss, irrelevance …. 1712 purpose of account …. 1711 statutory conferral …. 1512 tort …. 1616, 1617, 1637, 1639 unjust enrichment, and …. 1509, 1711 wrongs …. 1509 Account stated generally …. 2926 pleading …. 115, 2926 Admiralty contribution …. 609 maritime salvage …. 221 Agency of necessity contractual relationship …. 823 generally …. 128, 821, 823 necessitous intervention, and …. 812, 819, 821, 822, 823 support of spouse …. 849 Agent contract damages …. 1828 mistaken payments …. 433–436 payment over …. 435, 436, 524, 2910 ratification of wrong …. 1521 recoupment …. 629 unauthorised disbursal of money …. 305 Agreed return, failure see Failure of consideration Arbitration

delay, and …. 2716 discharge of contract, and …. 1212, 1430 quantum meruit, and …. 1167 Assignment contribution …. 620 debt …. 635, 846 improper pressure …. 516 necessitous intervention …. 840, 845 recoupment …. 627, 632, 635 restitutionary claim …. 109, 1534 subrogation …. 639 tort, actions in …. 1534 wrongful killing, and …. 1926 Assumpsit see also Quasi-contract common counts …. 114 pleading devices, as …. 115 historical development …. 113 implied obligation …. 124, 125, 129 indebitatus assumpsit …. 113, 125, 129, 132 quasi-contract, and …. 112, 113 special assumpsit …. 113 Australian Consumer Law contribution …. 609 duress …. 504 improper pressure …. 504 limitation periods …. 2725 restitutionary claims discretionary powers …. 229

unjust enrichment, and …. 229 right to compensation …. 226 unconscionable conduct …. 504 Bailment breach of contract …. 1841 conversion, and …. 1608 damages …. 1611 ownership of goods …. 1611 detinue, and …. 1609 fiduciary, whether …. 1169 illegality, and …. 2616, 2619, 2623 minor, liability of …. 1043 necessitous intervention …. 821, 822, 838, 839 Romalpa clause, and …. 1169 sale of goods, and …. 1169 tort, and …. 1043, 1611, 2616, 2619, 2623 conversion …. 1608 detinue …. 1609 Banking see Mistaken payments Bankruptcy see also Insolvency; Liquidation damages claims, and …. 1532 proprietary remedies …. 257 wrongs, and …. 1532 Benefit see also Necessitous intervention; Quantum meruit; Unjust enrichment; Valuation of claims acceptance …. 150, 156, 174, 931, 934 contracts which fail to materialise …. 1036 deemed …. 934, 1167

free acceptance …. 150, 157, 158, 173, 174, 934, 1161 goods …. 1037–1041, 1174, 1415, 2323 non-requested benefit …. 157–158, 174 reasonable remuneration …. 934, 1025 voluntary …. 934, 1163 waiver, and …. 1163, 1164, 1174 breach of contract, and …. 1168 conferral of benefit …. 108, 217 deemed …. 1168 ‘exchange value’ approach …. 148 failure of consideration, and …. 928 freely accepted …. 157–158 generally …. 141, 146, 147, 931 improper pressure …. 503, 508 types of benefit …. 519 incontrovertible benefit …. 151, 932 money benefit …. 152, 932 non-monetary benefit …. 153, 932, 1036, 1416, 1418, 1437, 1438, 1439 realisable benefit, distinction …. 151 saving of necessary expense …. 153, 932 intangible benefit …. 148 interest, and …. 2806 non-monetary benefits …. 153, 932, 933 free acceptance …. 157, 158, 174, 934 mistaken conferral …. 448–451 personal remedies …. 240 unconscionable conduct …. 153 objective …. 928

officiousness, and …. 147, 156, 635 policy, and …. 147 realisable benefit …. 151, 153, 932, 1035, 1036 reliance, and …. 149, 938 requested benefit …. 154–156, 933, 935 other remedies …. 156 restitutionary remedy …. 155 retention …. 123, 245 saving of necessary expense …. 148, 153, 932 services …. 148, 448, 450, 935 non-requested but accepted …. 157, 158, 174 personal remedies …. 240 ‘pure services’ …. 148, 935 tangible benefit …. 148 tort …. 217 unjust enrichment, and …. 141, 146 Bill of exchange acceptor for honour …. 843 bona fide purchase, and …. 2527 contribution …. 612, 2527 Blackmail improper pressure, as …. 503, 504, 509 Bona fide purchase bona fides, requirement of …. 2505 change of position defence, and …. 2524 consideration, and …. 2503 equities, where title subject to …. 2529 estoppel, and …. 2530 generally …. 2523–2524

good faith, requirement of …. 2505 nemo dat rule, and …. 2525 bill of exchange, and …. 2527 exceptions to …. 232, 2527 notice, absence of …. 2506 policy, and …. 2502 proof, onus of …. 2504 sale of goods legislation, relevance of …. 2527, 2528, 2530 situations, relevant …. 2526 transaction, avoidance of, and …. 2528 want of title …. 321 Breach of confidence account of profits …. 1707, 1710, 1713 ‘just allowances’ …. 1717, 1736 alternative claims …. 1709, 1738, 1739 compensation …. 1707, 1719, 1722, 1726 constructive trust …. 1707, 1728, 1730, 1737 counter-restitution …. 1737 damages …. 1707, 1719, 1726 duty of confidence …. 1707 generally …. 1501, 1701, 1707 remedies …. 1707 unjust enrichment …. 1702 Breach of contract see Contract; Contract damages; Contract discharged for breach Breach of fiduciary duty see Fiduciary breach Bribe account of profits …. 1718

concurrent remedies …. 1718 dependent claims …. 1517 double recovery, and …. 1536 fiduciary breach …. 1524, 1731 money had and received …. 1718 waiver of tort, and …. 1517 Building contract collateral contract, and …. 1044 condition precedent to recovery under …. 920 damages …. 1152, 1403, 1428, 1820 discharged for breach …. 1130, 1155, 1167, 1428 entire contract as …. 1153 failure of consideration, and …. 928 intention, and …. 1130 shipbuilding where …. 1130, 1133 frustrated …. 1227, 1231, 1232 preliminary agreement, and …. 1044 quantum meruit …. 913 acceptance, deemed …. 1167 discharged for breach, where …. 1155, 1167 failure of consideration, and …. 928 frustrated, where …. 1227, 1231, 1232 unenforceable, where …. 1024 valuation of …. 1428 void, where …. 1035 severable contract, not …. 1153 shipbuilding …. 1130 guarantor, claim against …. 1135 overdue payment …. 1130, 1133

substantial performance of …. 1044 Sumpter v Hedges, rule in …. 1155 unenforceable …. 1024, 1403 void …. 1035 Carriage acceptance of benefit of …. 1164 contract damages …. 1411 economic duress, and …. 1327 entire contract, and …. 1123 failure of consideration, and …. 1123, 1411 frustrated contracts legislation, and …. 1240 necessitous intervention …. 829 severable contract, as …. 1132 Causation improper pressure, and …. 521–522 mistake, and …. 421, 429 wrongs …. 1528 Change of position application of defence …. 2409 pro tanto …. 2413 relevant claims …. 2410 availability …. 2410 causation requirement …. 2416 detriment …. 2415 enrichment-related rationale …. 2415 ‘equities’, relevance …. 2423 faith of receipt …. 2417, 2420 good faith …. 2417

hardship, mere …. 2414 illegality …. 2420 irreversibility …. 2416 knowledge …. 2421 living expenses …. 2419 mere expenditure …. 2416 reliance …. 2415, 2416, 2417, 2418, 2420 Crown, restitution against …. 2040 Crown, restitutionary right …. 2107, 2403 delay, and …. 2703 disenrichment …. 2415 equitable principles …. 2406, 2407, 2421 estoppel, and …. 2213, 2401, 2408, 2409 generally …. 144, 2205, 2208, 2209, 2401, 2410 history …. 2403 illegality as bar …. 2420 improper pressure, and …. 524 mistaken payments …. 408, 412, 439, 2410, 2411, 2416 knowledge and notice …. 2417 negligence …. 2421 onus of proof …. 2412 operation of defence …. 2405, 2406, 2411 payment over, and …. 2408 principles of defence …. 2407 rationale …. 2406 recognition …. 2404 reliance …. 2415, 2416 detrimental conduct …. 2415

induced by plaintiff …. 2418 money spent …. 2417 statute, and …. 232, 2405 unauthorised disbursal of money …. 319 want of title …. 319 wrongdoing a bar …. 2419 Cheques see Bills of exchange; Mistaken payments Classification of claims and remedies …. 201–257 Co-owner see also Contribution; Recoupment equitable liens …. 1734, 1737 Commission contract damages …. 1828 quantum meruit claim, valuation as …. 1416, 1417, 1419 Common counts see Quasi-contract Compensation see also Damages breach of confidence …. 1707, 1719, 1722, 1726 equitable compensation …. 1511, 1719, 1722 account of profits, and …. 1726 common law damages, distinction …. 1723 damages, as …. 1724 interest …. 2815 measure of compensation …. 1726 principles …. 1723 restitution, as …. 1725 fiduciary breach …. 1706, 1719, 1722, 1723, 1724, 1726 generally …. 1508 restitution, and …. 209, 1725, 1804 statute …. 226

discretionary powers …. 228, 229 Compromise see also Consideration Crown …. 2038 defence …. 507, 2507, 2511–2522 abandonment, of claim, and …. 2517 accord and satisfaction as …. 2516 Crown, restitution against …. 2038 disputed claim, of …. 2514 improper pressure …. 507 mistake, and …. 2515 improper pressure, and …. 507 ineffective contract, compromise as …. 1312, 1328, 2515 mistake, where subject to …. 2515 Compulsion see also Duress; Improper pressure; Undue influence payment of another’s debt, and …. 844 recoupment, and …. 622, 633, 636 unjust enrichment …. 166, 168 Condition precedent acceptance of benefit, and …. 1159 condition subsequent, and …. 1207 enforcement, to …. 1012, 1207, 1219 failure of discharge of contract by …. 1209, 1233 entire contract, and …. 1151 formation, to …. 1004, 1006, 1018 fulfilment of dispensed with …. 1158 full performance as …. 920, 1105, 1151, 1158, 1159

substantial performance as …. 1151, 1158, 1159 waiver of …. 1006, 1012 restitutionary claim, and …. 1018, 1155, 1219, 1233 contract discharged for breach …. 1151 dependent promise and …. 919 failure of consideration and …. 926 intention, and …. 1130 quantum meruit, and …. 1155, 1233 unenforceable contract, and …. 1031 Consideration absence of …. 1003, 1015, 1027, 1042, 2508, 2510 bill of exchange, and …. 2527 concept …. 916, 2503 defence, as …. 2507–2510 absence of, not …. 2508, 2510 components of …. 2504 compromise, as …. 2511–2522 debt, discharge of existing, as …. 2518–2522 consideration, other than payments …. 2521 generally …. 2518, 2520 limitations on defence …. 2522 proof, elements of …. 2519 failure of, not …. 2508 good faith, and …. 2505 generally …. 2511 effect of …. 2512 limitations, on compromise …. 2513 notice, absence of …. 2506 proof, onus of …. 2504

release …. 2516 value, as …. 2503 given …. 2208, 2505, 2509, 2528 received …. 2503, 2507, 2208, 2510, 2511, 2523 failure see Failure of consideration presence of …. 2208, 2503, 2509 Constitution control of disbursements …. 2102 restitution against Crown …. 2004, 2027 invalidity of statute …. 2028, 2036 States’ position …. 2029 statutory shields …. 2029 Constructive trusts advantages …. 1727 breach of confidence …. 1707, 1728, 1730, 1737 definition …. 1727 director, as …. 1020 examples …. 251 fiduciary breach …. 250, 251, 315, 1704, 1706, 1728, 1731, 1737 fiduciary relationship, and …. 250 functions …. 1728 generally …. 249, 250, 1727, 1729 inherently ineffective contract, and …. 1020 limitation periods …. 2737 mistaken payments …. 447, 2819 pleading, and …. 2918 proprietary remedy, as …. 242, 244, 246, 248, 249, 250, 251, 256, 257, 316, 1504

recognition of remedial …. 249, 315 remedial institution, as …. 1727 statutes of limitation …. 2737 theft …. 250, 251, 314, 316 unjust enrichment, and …. 249, 250, 256, 1728 unsecured creditors …. 257 wrongful killing …. 1910, 1927 Consumer protection acceptance of goods, and …. 2323 defences and …. 2206, 2323, 2333, 2709 delay …. 2709 duress, and …. 1315 failure of consideration, and …. 1147, 1175, 1338 freedom of contract, and …. 2206 prohibited conduct, and …. 1315 rescission of contact …. 1338, 2709 restitutio in integrum, and …. 1175, 1436, 2333 statutory discretion, and …. 1139 termination of contact …. 2709 unsolicited goods, and …. 1038 Contract bases of liability …. 210 breach of contract …. 214, 1815 account of profits …. 1509, 1831 damages see Contract damages; Restitutionary damages discharge see Contract discharged for breach efficient breach …. 1815 fiduciary duties …. 1825, 1827

limitation periods …. 2719 term of contract …. 1826 tortious breach …. 1840 waiver of tort, and …. 1801, 1806 wrongs, and …. 1506 Crown obligations …. 2109 Crown, restitution against …. 2006, 2012 Crown, restitutionary right …. 2109 goods or services …. 2104, 2105 damages see Contract damages discharge see Contract discharged for breach; Contract discharged without breach duress …. 506, 518, 1312 fiduciary duties …. 1825, 1826, 1827 fraudulent inducement …. 213, 1635 freedom to contract …. 516, 1824 function of law …. 211 implied terms …. 216 improper pressure, and …. 506, 518, 1313, 1326, 1328 compromise defence …. 507, 528 existing duty rule …. 506, 517 future business, refusal …. 516 threats to repudiate contract …. 506, 531 vitiating factors …. 506 ineffective see Ineffective contract mistake …. 404 mistaken payments …. 404 performance …. 1150–1153 duty of good faith …. 1825, 1829, 1834, 1835

entire contract …. 1151 generally …. 1150 severable contracts …. 1153 substantial …. 1152 privity of contract …. 214 quantification of relief …. 213 remedies …. 212, 213, 215 rescinded see Contract rescinded or set aside rescission of …. 506, 1306–1319 consensual …. 1308, 1309 consequences of …. 1317–1318 consensual, where …. 1317 equity, in …. 1318 duress …. 506, 1312 generally …. 1301–1307 misrepresentation, for …. 1311 mistake, for …. 1311 sale of goods …. 1336–1339 equity, application of …. 1337, 1338 generally …. 1336 statute, role of …. 1338 statute, under …. 1315 unconscionable conduct …. 1314 undue influence, for …. 1313 unjust contracts, relief from …. 1316 restitution, and …. 210, 212, 213 gap-filling …. 216, 909 overlap …. 215

set aside see Contract rescinded or set aside threats to breach …. 506, 531, 1312, 1321 tort, and …. 211, 213, 214 unenforceable or void see Inherently ineffective contract wrongful killing, and …. 1926 Contract damages advantages of …. 1407 anticipatory breach …. 1808 assessment of damages …. 213, 215, 1807, 1808, 1830 bases for assessment …. 1810 combined bases …. 1811 election between …. 1812 benefit equal to loss …. 1817–1823 benefit without loss …. 1830, 1831 defendant’s gain …. 1807 efficient breach, and …. 1815 English developments …. 1831 expectation interest …. 1810, 1811 general criterion …. 1809, 1810 loss of bargain …. 1810, 1823 reliance interest …. 1810, 1811 restitution interest …. 1810, 1811, 1817 terms of contract …. 1824 benefit equal to loss …. 1817 expense saved …. 1820 failure to confer benefit …. 1823 loss of bargain …. 1821 money retained …. 1819

profit lost …. 1822 services rendered …. 1818 work done …. 1818 breach of contract term …. 1826 contract to obtain benefit …. 1828 duty to act in plaintiff’s interest …. 1829 fiduciary duties …. 1826, 1827 causation …. 1404, 1808 combining claims …. 1811, 2906 compensatory nature …. 1803, 1807, 1817, 1821, 1830, 1831 discharge of contract …. 1808 enforcement of contracts, and …. 1814 efficient breach …. 1815 specific performance …. 1816 equity …. 1720, 1836, 1837 evidential function …. 1809 expectation damages …. 1802, 1810 generally …. 1412, 1805, 1808 ineffective contracts, and …. 1805 interest …. 2817 Lord Cairns’ Act …. 1720, 1836, 1837 loss of bargain …. 1808, 1810, 1821, 1823 mitigation …. 1404 object of damages …. 1808, 1809 quantification of relief …. 213 remoteness of damage …. 1404, 1808 restitution, and …. 1408, 1409 restitution, entitlement to, and …. 1413, 1414 restitution interest …. 1803, 1810, 1811, 1817

right to …. 1403 specific performance, and …. 1816, 1836, 1837 terms of contract …. 1824 breach of term …. 1826 express terms …. 1825 implied terms …. 1825 Contract discharged for breach bases for …. 1107–1109 breach of a term, as …. 1108 generally …. 1102, 1107 repudiation, as …. 1109 consequences, of …. 1110–1111 effect of …. 1111 generally …. 1110 damages …. 1805, 1808 agreed damages …. 1137 forfeiture, agreement for, and …. 1137, 1138 generally …. 1101–1111, 1150–1153 history …. 1105, 1106 interest …. 2811 money paid, recovery of …. 1112–1149 bases for …. 1112 entire contract, where …. 1113 failure of consideration as basis for …. 1116–1135 agreed return …. 1119 collateral benefits …. 1122 effect of discharge …. 1118 entire contract, breach of …. 1123

fault, and …. 1125 generally …. 1116, 1117 partial failure, and …. 1124, 1127, 1147 performance, lack of …. 1120 prospective …. 1131 quasi-contract, and …. 1101, 1116 receipt mere, and …. 1121 retention of payment, terms governing …. 1126 total, must be …. 1101 unjust enrichment, and …. 1114 forfeiture relief against, based on …. 1136–1145 generally …. 1136–1138 jurisdiction …. 1139–1140 generally …. 1136, 1139 money in relation to …. 1140 specific performance, and …. 1139, 1148 relief granted …. 1141–1145 deposit …. 1144 generally …. 1141, 1142 part payments, for …. 1143 prospective relief …. 1145 specific performance, by …. 1139, 1141, 1143 unjust enrichment as basis for …. 1142 guarantors, claims against …. 1135 reliance, impact of …. 1134 severable payments …. 1132 unconditional promise, where …. 1133 intention, contractual, and …. 1113 restitutionary analysis …. 1114

severable contract, where …. 1113 statute, based on …. 1146–1149 discretionary orders …. 1148 failure of consideration, and …. 1147 generally …. 1146 international sale of goods …. 1149 overdue payments, recovery of …. 1115 forfeiture, relief against, and …. 1128, 1129 intention of parties, and …. 1130 penalty clause, and …. 1137 reasonable remuneration …. 1150, 1154–1168 acceptance of benefit, and …. 1157–1160 alternatives to …. 1160 effect of …. 1159 forms of …. 1158 generally …. 1157 analogous claims …. 1169–1171 generally …. 1169 goods, accepted …. 1174 land, improvements to …. 1170 performance, variation of …. 1171 unjust enrichment, and …. 1169 generally …. 1154–1156 partial performance, after …. 1154 party in breach, claims against …. 934, 1166–1168, 1408, 1430 deemed acceptance, where …. 1167 deemed benefit, where …. 1168 generally …. 1166

Planché v Colburn, and …. 1168, 1408, 1409 party in breach, claims by …. 1161–1165 contractual terms, relevance of …. 1162 free acceptance, and …. 1161 successful …. 1165 unsuccessful …. 1164 reform of …. 1177 statute, based on …. 1172–1177 apportionment legislation …. 1173 consumers, sale of goods to …. 1175 generally …. 1172 goods, where accepted …. 1174 international sale of goods …. 1176 reform …. 1177 Sumpter v Hedges, rule in …. 1151, 1155, 1156, 1160 unjust enrichment, and …. 1161, 1162 unjust enrichment, and …. 1152, 1155, 1156, 1159, 1160, 1167, 1168 valuation of …. 1415–1430 retention of payment, terms governing …. 1126 subsequently ineffective contract, as …. 1438 Contract discharged without breach accrued rights …. 1213 consensual …. 1204, 1205, 1206, 1207 consequences of …. 1211, 1212, 1213, 1214 extent of …. 1212 frustrated contracts legislation …. 1236–1267 contract claims, impact of legislation …. 1242–1244 damages, claims for …. 1244

discharge, time and scope of …. 1242 performance, after frustration …. 1243 generally …. 1236 limitation periods …. 2724 New South Wales, in …. 1245–1252 discretion, and …. 1252 expenses incurred, recovery of …. 1247 generally …. 1245 money paid, recovery of …. 1246 non-monetary benefits, recovery of objects of legislation …. 1237 performance, where full …. 1248 performance, where partial …. 1249, 1250, 1251 recovery, basis of …. 1238 scope of legislation …. 1239, 1240, 1241 restitutionary claims, and …. 225, 231 South Australia, in …. 1253–1257 discretion, and …. 1257 generally …. 1253 valuation …. 1254, 1255, 1256 Victoria, in …. 1258–1268 discretion, and …. 1268 expenses incurred …. 1262, 1265 expenses incurred, recovery of …. 1259 frustration, effect of …. 1263 insurance, monies received from …. 1266 just sum, calculation of …. 1264 money paid, recovery of …. 1258 non-monetary benefits, recovery of …. 1260

personal services …. 1265 third parties …. 1267 valuation …. 1261 generally …. 1201–1214 money paid, recovery of at common law …. 1215–1226 agreement, based on …. 1216 failure of consideration, based on …. 1219–1226 benefit, receipt of, and …. 1220 condition, failure of …. 1219 generally …. 1217–1218 scope of …. 1221–1226 agreed return, identification of, and …. 1222 exclusion of …. 1224 partial failure, no recovery where …. 1221 reliance, and …. 1223 statute, role of …. 1226 total failure …. 1219–1220 sums due upon discharge, recovery of …. 1225 generally …. 1215–1216 operation of law, by …. 1208, 1209, 1210 quantum meruit …. 1227–1235 condition precedent, and …. 1229, 1233 frustration, after …. 1232 generally …. 1227–1228 other than frustration …. 1232–1235 reliance, expenditure in …. 1234 statute, role of …. 1235 prior to frustration …. 1229–1231 Australia, position in …. 1230

quasi-contract, influence of …. 1229 unjust enrichment, and …. 1231 risk, and …. 1228 valuation of …. 1415–1430 restitutionary claim, as basis for …. 1214 subsequently ineffective contract, as …. 1438 Contract price acceptance of performance, and …. 1159, 1174 damages, and …. 1810, 1822, 1824, 1841 work done …. 1818 entire contract, in …. 1113 forfeiture of …. 1138 penalty, not …. 1137 restitutionary claim …. 914 distinguished from …. 1408 failure of consideration and …. 927, 1025, 1131, 1408 quantum meruit, and …. 1025, 1154, 1159, 1177 valuation of …. 1421–1430 sale of goods …. 914, 1174 severable contract, in …. 1153 substantial performance …. 926, 1032, 1152, 1162 Contract rescinded or set aside see also Restitutio in integrum discretionary claims …. 1329–1335 general law, under …. 1331–1332 generally …. 1329–1330 overdue payment …. 1332 restitution, and …. 1330 restitutionary orders …. 1331

statute, under generally …. 1333 prohibited conduct …. 1334 unjust contract …. 1335 undue influence …. 1329, 1330 money, recovery of …. 1319–1328 failure of consideration, on …. 1322–1328 consequence of, as …. 1322 duress …. 1326, 1328 misrepresentation …. 1325 mistake …. 1324, 1328 rescission, when consensual …. 1323 generally …. 1319–1321 interest on …. 2814, 2816 undue influence …. 1329–1330 overdue payment …. 1327 sale of goods contract …. 1336–1339 subsequently ineffective contracts …. 902, 904, 1437 unconscionable conduct …. 1310, 1314 ‘catching bargains’, and …. 1314 consequences of …. 1318 delay, and …. 2706, 2713 discretion and …. 1314, 2212, 2713 equity of …. 1310 mistake, and …. 1008, 1311 restitutio in integrum, and …. 2212, 2324 sale of goods contract …. 1337 special disability, and …. 1314 undue influence …. 1310, 1313, 2706

consequences of …. 1318 equity of …. 1310 restitutio in integrum, and …. 1318, 1437, 2324 sale of goods contract …. 1337 wrongs, and …. 1506 Contractual capacity see also Inherently ineffective contract; Necessitous intervention acceptance of benefit, and …. 1027 ineffective contract, and …. 1002 necessary goods, and …. 1037, 1039, 1040 restitutionary liability, and …. 1030 statute, and …. 1047 unenforceable contract …. 1012, 1017, 1039 void contract …. 1010 Contribution see also Recoupment availability …. 611 basis of liability …. 610 categories of relationships …. 611, 619 co-sureties …. 612, 618 directors …. 616 insurers …. 618 joint contractors …. 613 joint tenants …. 617 partners …. 614 tenants in common …. 617 trustees …. 615, 616 common demand …. 620 commonality of burden …. 621, 623

co-ordinate liabilities …. 623 source of principle, and …. 622 co-ordinate liabilities …. 619 scope of liabilities …. 623 directors …. 616, 619 discharge of debt …. 622 equitable principles …. 610 generally …. 601, 602, 610 hotchpot …. 649 insolvency, and …. 646 interest …. 648, 2821 liability rules …. 641 actual payment …. 643 costs …. 648 discharge of debt unnecessary …. 622 equitable lien …. 650 equitable relief …. 644 hotchpot …. 649 imminent liability …. 642 interest …. 648 limitation of action …. 2738 loss of right …. 647 modification of right …. 645 present liability …. 642 quia timet relief …. 644 securities, right to …. 649 statutory liability …. 619 loss of right …. 647 marshalling, and …. 610, 625

modification of right …. 645 statutory modification …. 607–609, 624, 646 officiousness …. 601 quia timet relief …. 644 recoupment, and …. 612, 622, 641 securities, right to …. 649 source of principle …. 604, 610, 625 common demand, and …. 622 Dering v Earl of Winchelsea …. 605, 610 statutes of limitation …. 2738 statutory liability …. 619 statutory modification …. 607, 608 proportionate liability …. 609, 646 South Australia …. 624 United Kingdom …. 609 Victoria …. 609, 624 tortfeasors …. 608, 609 unjust enrichment, and …. 606, 607 Conversion see also Goods; Tort; Wrongs bailment, and …. 1608 damages …. 1522, 1534 alternative claims …. 1515 inadequacy …. 1612 measure of damages …. 1627 generally …. 1608 illegality and …. 2616, 2620, 2621, 2622, 2623 indebitatus assumpsit, and …. 113 restitutionary claims …. 217, 220

statutes of limitation …. 2718, 2727, 2728, 2729, 2730, 2731, 2732, 2733 statutory bars …. 1533 waiver of tort …. 1517, 1619 proof of debt …. 1532 unauthorised disbursal of money …. 306 Corporations acceptance of benefit, and …. 1027 contractual capacity of …. 1010 demand colore officii …. 529 directors contribution …. 616, 619 fiduciary duty …. 1028 insolvent trading …. 1725 pre-incorporation contract, and …. 1047 recoupment …. 630 remuneration …. 1173 frustrated contracts legislation, and …. 1240 partially performed contract, and …. 1173 pre-incorporation contract …. 1017, 1027, 1047 director, claim against …. 1047 statute, and …. 1047 prohibited conduct by …. 1047 restitutionary claims, and …. 1010, 1173 ultra vires rule, and …. 1010 void contract, where …. 1017 Costs contribution and recoupment …. 648 Counter-restitution see Restitutio in Integrum

Criminal conduct improper pressure, and …. 503, 509 duress of person …. 527 threats to prosecute …. 504, 515 Crown wrongful killing, and …. 1924 Crown, restitution against adoption of Woolwich principle …. 2002, 2020, 2032 change of law …. 2030 Constitution, and …. 2027–2029 constitutional principles …. 2024–2026 demand colore officii …. 2023 effect of adoption …. 2032 imposts affected …. 2034 likelihood of adoption …. 2032 prospective overruling …. 2031 status in Australia …. 2002, 2020 supporting reasons …. 2032 ultra vires statutes …. 2033 Constitution, and …. 2004, 2027 invalidity of statute …. 2028, 2036 States’ position …. 2029 statutory shields …. 2029 constitutional principles …. 2024 countervailing factors …. 2026 favourable principles …. 2025 contract …. 2006, 2012 defences …. 2005, 2037 change of position …. 2040

compromise …. 2038 failure to exhaust remedies …. 2039 intention to close transaction …. 2038 passing-on …. 2042 special limitation periods …. 2039 value directly received …. 2041 windfall gain …. 2042 demand colore officii …. 1620, 2011, 2023 existing law …. 2007 frustration of contract, following …. 1239 generally …. 2001, 2002, 2006, 2007 immunity from claims …. 2006, 2024 improper pressure …. 2001, 2007, 2010 demand colore officii …. 2011, 2023 interest …. 2826 judicial review …. 2014, 2018, 2022 limitation periods …. 2039, 2726 mistaken payments …. 2001, 2007, 2008, 2017 impact of decisions …. 2009 Royal Insurance case …. 2015 reimposition of tax …. 2035 statutes of limitation …. 2039, 2726 statutory bars …. 2029, 2036 statutory entitlement …. 2013, 2016 judicial review …. 2014 refund of payments …. 2013, 2015, 2016 Royal Insurance case …. 2015 statutory obligations …. 2003

unjust enrichment, and …. 2004, 2018, 2040 Woolwich principle …. 2002, 2004, 2018 Australian Constitution, and …. 2027 Australian position, and …. 2002, 2020–2034 background to decision …. 2017 constitutional principles …. 2024, 2025 defences …. 2037 demand colore officii …. 2023 English law, and …. 2018 facts of case …. 2018 impact of decision …. 2018 imposts affected …. 2034 judicial review …. 2018, 2022 other jurisdictions …. 2019 ultra vires statutes …. 2033 unjust enrichment …. 2018 Crown, restitutionary right account of profits …. 1714 change of position …. 2107, 2403 contractual obligations …. 2109 control of disbursements …. 2102 defences change of position …. 2107, 2403 estoppel …. 2106 excessive disbursements …. 2105 generally …. 2101 goods or services …. 2104, 2105 harshness of rule …. 2111 interest …. 2826

money had and received …. 1714 principle …. 2103 application of principle …. 2104 Auckland Harbour Board …. 2103, 2104, 2108 scope of principle …. 2108 ultra vires requirement …. 2104, 2108 statutory discretion …. 2110 ultra vires contracts …. 2104 ultra vires statute …. 2104 Damages see also Compensation account of profits, and …. 1509 alternative claims …. 1515, 1516 bankruptcy, and …. 1532 breach of confidence …. 1707, 1719, 1726 causation …. 1528 compensatory damages …. 1507, 1508, 1510, 1531, 1602 contract see Contract damages corporations legislation …. 1721 conversion …. 1522, 1534 alternative claims …. 1515 inadequacy of damages …. 1612 measure of damages …. 1627 deceit …. 1633 detinue …. 1612, 1628 measure of recovery …. 1629 disgorgement damages …. 1508, 1509 election by plaintiff …. 1405

equitable compensation, distinction …. 1723, 1724 equity, in …. 1511, 1719 Lord Cairns’ Act …. 1511, 1719, 1720, 1726, 1836, 1837 statutory jurisdictions …. 1719, 1720 exemplary damages …. 1510, 1525, 1535 fiduciary breach …. 1706, 1725, 1726 generally …. 1504, 1507 intellectual property infringement …. 1719 liquidation, and …. 1532 object of damages …. 1809 reliance damages …. 1407, 1410, 1430 remoteness …. 1528 restitution, and …. 209, 1410, 1411, 1414 restitutionary see Restitutionary damages statute, under …. 1512 tort …. 1602, 1613, 1616, 1639 conversion …. 1515, 1522, 1534, 1612, 1627 deceit …. 1633 detinue …. 1612, 1628, 1629 inadequacy of damages …. 1612 interference with property interests …. 1623–1629 object of damages …. 1809 Phillips v Homfray …. 1617 taking of minerals …. 1624 trespass …. 1607, 1614, 1615, 1616, 1617, 1625, 1626 use and occupation of land …. 1615, 1625, 1626 wrongful use of goods …. 1628, 1629 trespass …. 1607, 1616, 1625

measure of damages …. 1626 mesne profits …. 1614, 1615, 1625, 1626 unauthorised use of goods …. 1628, 1629 wayleave damages …. 1616, 1617 Death see Wrongful killing Debt see also Contract price acknowledgment of debt …. 2740 assumpsit, and …. 113 common counts, and …. 115 ‘debt or liquidated demands’ …. 2922 money had and received …. 117 money paid …. 116 consideration, defence of, and existing, discharge of, as …. 2518–2522 limitations …. 2522 proof, elements of …. 2519 historical background …. 112, 113 indebitatus assumpsit, and …. 113 payment of another’s debt …. 841–847, 2911 absence of request …. 843 adopted payments …. 842 bill of exchange, acceptance …. 844 compulsion, contrast …. 843 discharge of debt …. 847 justification for cases …. 846 necessitous intervention …. 841–847 pleading …. 2911 request for payment …. 842

statutes of limitation …. 2740 Deceit see also Misrepresentation contract not void for …. 1007 criminal …. 2630 damages …. 1043, 1325, 1403, 1405, 1633 conveyancing costs as …. 1432 restitution, and …. 1304, 2614, 2628 equitable fraud, and …. 1314 failure of consideration, and …. 1319, 1325, 1334 illegality, defence of, and …. 2609, 2614, 2626, 2627, 2630, 2636, 2637 rescission of contract for …. 1008, 1009, 1310, 1311 restitutio in integrum, and …. 1326, 1330, 1426, 1437 sale of goods, where …. 1336 consumer sale, and …. 1338, 1339 equitable principles, and …. 1337 tort …. 1633, 1635 vitiating factor, as …. 1302 waiver of tort …. 1619 Defences see also Statutes of limitation account of profits …. 1715 approach to …. 2204 bona fide purchaser …. 232, 2205, 2208, 2213, 2523–2530 want of title …. 321 change of position see Change of position classification of …. 2207–2213 discretionary …. 2209, 2212 estoppel …. 2213 general …. 2208

generally …. 2207, 2211 partial …. 2209 self-operative …. 2209 specific …. 2208 statutory …. 2210 total …. 2209 compromise …. 2206, 2213, 2511–2522 Crown, restitution against …. 2038 consideration as …. 2205, 2208, 2213, 2507–2510 contract, and …. 2206, 2509 Crown, restitution against …. 2005, 2037–2042 Crown, restitutionary right …. 2106, 2107, 2111 delay see Delay duress …. 505 election as …. 2205, 2211, 2213 estoppel …. 2208, 2209, 2404, 2407, 2413 change of position, and …. 2213, 2401, 2405, 2406, 2409 direct defence …. 2405 failure of consideration …. 915 generally …. 144, 2201–2206 background …. 2202 defence, concept of …. 2203 proof, onus of …. 123, 2203 unjust enrichment, injustice element …. 136, 2204 honest claim, submission to …. 441 illegality as …. 2205, 2208 improper pressure …. 505, 524, 528, 2910 ineffective contracts …. 906, 911

judgments reversed or set aside …. 713 laches …. 2212, 2702, 2704, 2713, 2723, 2736 mistaken payments …. 437, 2909 agents and intermediaries …. 435, 436 change of position …. 408, 412, 439, 2410, 2411, 2416, 2421 common law rule …. 443 compromise of honest claim …. 441, 442 consideration in good faith …. 442 moneys due anyway …. 440 payment over …. 436, 439 statutory policy …. 443 onus of proof …. 2203 payment over …. 436, 439, 2413, 2910 change of position, and …. 2401, 2406, 2410 pleading see Pleading recognition of …. 2204 statute, and …. 232 unjust enrichment …. 136, 144 affirmative defences …. 144 elements of …. 141, 2203, 2204 injustice, and …. 2204 restitutionary defence …. 136, 140, 141, 144 want of title …. 318 bona fide purchase …. 321 change of position …. 306, 320 knowing receipt …. 313, 318 ministerial receipt …. 319 Delay

arbitration …. 2716 effect of delay …. 2705 exercise of rights …. 2702, 2706, 2713 conferred by contract …. 2707, 2708 conferred by law …. 2708 conferred by statute …. 2709 election between rights …. 2708 estoppel …. 2710 generally …. 2205, 2211, 2701 limitation of actions see Statutes of limitation onus of proof …. 2703 pursuit of remedy …. 2702, 2711 discretion, and …. 2713 estoppel …. 2712 rights and remedies …. 2702 effect of delay …. 2705 scope of defence …. 2703 unreasonable delay …. 2704 Deposit consideration for …. 1126 damages …. 1413, 1819, 1823 earnest, payment in, as …. 1113 forfeiture of …. 1126 agreement for …. 1113, 1138 discharge of contract, and …. 1138 penalty doctrine, and …. 1137, 1140 relief against …. 1137 illustrations …. 1144

jurisdiction for …. 1140 prospective …. 1145 statute under …. 1148, 1414 unconscionable conduct, and …. 1140, 1144 unjust enrichment, and …. 1140 specific performance, and …. 1141 overdue …. 1130, 1131, 1145 pre-estimate of damages, not …. 1137 price, as element of …. 1113, 1126, 1138 restitutio in integrum, and …. 1433, 1437, 1439 restitution contract discharged …. 1126, 1140, 1144 contract rescinded …. 1323, 1337 damages, and …. 1408 failure of consideration, and …. 1018, 1019, 1126 intention, and …. 1126, 1130 Statute of Frauds, and …. 1019 statute under …. 1148, 1414 unenforceable contract …. 1019 void contract …. 1018 security, as …. 1138 Detinue see also Goods bailment, and …. 1609 damages …. 1628 inadequacy of damages …. 1612 measure of damages …. 1629 generally …. 1609 illegality and …. 2616, 2620, 2623

statutes of limitation …. 2718, 2732 Discretion account of profits, and …. 1715 consumer protection, and …. 1139 contract discharged for breach, and …. 1148 contract set aside …. 1314, 1329, 1330, 2212, 2713 defences, and …. 2324, 2334 change of position …. 2209, 2212 restitutio in integrum …. 1318, 1330, 1337, 1437, 2324, 2334 delay …. 2713 frustrated contracts legislation, award under, and …. 1252, 1257, 1268 injustice, contrast …. 166 restitution and …. 1337, 1339 restitutionary claims based on …. 1310 compensation …. 228, 229 contract rescinded or set aside …. 1329–1335 statute …. 227–229 unjust enrichment …. 166, 407 wrongful killing …. 1910 Duress see also Contract rescinded or set aside Australian Consumer Law …. 504 causation …. 521, 522 colore officii …. 501, 529, 530, 1620, 1631, 2010, 2011, 2023 commercial pressure …. 517 common count, and …. 203 compromise, and …. 1328 consideration, and …. 1321

contract induced by …. 506, 1310, 1312, 1332 damages …. 1304, 1403, 1405, 1516 defence, as …. 505 economic duress …. 501, 518, 1312, 1326 causation …. 522 commercial pressure …. 517, 518 future business, refusal …. 516 terminology …. 518 failure of consideration, and …. 1326, 1328 goods, to …. 528, 1312 illegality, and …. 1003, 2626, 2636, 2638 improper pressure, as …. 1312, 1321, 1326 interest, and …. 2816 lawful act duress …. 518 overborne will theory …. 521, 1312, 1332 overdue payment …. 1327 person, of …. 527, 1312 pleading …. 2910 prohibited conduct, as …. 1315, 1334 property, of …. 528 rescission of contract …. 506, 1310, 1312, 1332 consequences of …. 1318 restitutio in integrum, and …. 1310, 1330 restitution, and …. 1322 restitution based …. 1326 compromise, and …. 1328 discretion, and …. 1310 restitutio in integrum, and …. 1310, 1330 unjust enrichment, and …. 1305, 1326

sale of goods …. 1336, 1337 undue influence, and …. 1313 unjust enrichment …. 168 vitiating factor, as …. 1301 void, contract not …. 1302 voidable, contract …. 1302, 1328 wrongs, and …. 1514, 1516 Election acceptance of benefit, and …. 1157, 1158 breach of confidence …. 1739 damages …. 1403, 1405, 1411, 1412 bases of assessment …. 1812 quantum meruit, and …. 1168, 1403, 1405, 1408, 1428, 1430 defence, as …. 906, 2205, 2211, 2317–2320 discharge of contract …. 905, 916, 1102 elements of …. 2304, 2318 estoppel, and …. 2213, 2308 failure of consideration, and …. 1125 fiduciary breach …. 1739 forms of …. 2315 generally …. 220, 321, 905, 1517, 2301, 2302, 2303, 2304, 2905 impact of …. 2307 inconsistent remedies, between …. 321, 2304–2313 restitution and damages …. 2309 enrichment, reliance on …. 2312 wrong, reliance on …. 2313 restitution and specific performance …. 2310 inconsistent rights, between …. 2314–2323

acceptance of goods, and …. 2323 damages, and …. 1405 discharge of contract, and …. 1161, 2319 estoppel, and …. 2322 generally …. 2317 related defences …. 2321 requirements …. 2318 rescission of contract, and …. 2320 statute …. 2323 ineffective contract, and …. 905, 906 intellectual property infringement …. 1739 proof, onus of …. 2316 property, revesting on …. 1118, 1129, 1438, 2528 quantum meruit claim, and …. 1101, 1155, 1156, 1168 rescission of contract …. 902, 905, 2320 restitutionary claim, and …. 1166 time for …. 2306, 2311 waiver of tort, and …. 221, 1517, 1621, 2313 Emergency assistance doctrine development …. 824, 852 Equity account of profits see Account of profits alternative claims …. 1738 breach of confidence see Breach of confidence compensation …. 1511, 1719, 1722 account of profits, and …. 1726 availability …. 1722 common law damages, distinction …. 1723

damages, as …. 1724 interest …. 2815 measure of compensation …. 1726 principles …. 1723 restitution, as …. 1725 constructive trusts see Constructive trusts contracts, rescinded or set aside, and sale of goods …. 1337, 1338 contribution …. 644, 649, 650 damages …. 1511, 1719 Lord Cairns’ Act …. 1511, 1719, 1720, 1724 measure of damages …. 1726 statutory jurisdictions …. 1719, 1720 delivery up …. 221, 1722, 1732 fiduciary breach see Fiduciary breach fusion fallacy …. 123, 1724, 1725 improper pressure …. 504 ineffective contracts, and …. 1042, 1046 knowing receipt see Knowing receipt laches …. 2212, 2702, 2704, 2713, 2723, 2736 money had and received, and …. 120–123 proprietary remedies …. 242, 244, 247, 256 availability …. 244 constructive trust …. 242, 244, 246, 248, 249, 250, 251, 256, 257, 315, 447, 1727, 1728, 1729, 1737 effect on restitution …. 244 fiduciary breach …. 1731 knowing receipt …. 314 lien …. 242, 244, 249, 250, 1734, 1737 mistaken payments …. 446, 447

refusal of remedy …. 252 rescission …. 253 subrogation …. 242, 244, 250, 255 tracing …. 303 unsecured creditors …. 257 quasi-contract, and …. 123 quia timet relief …. 644 recoupment …. 644 remedial minimalism …. 248, 1729 restitutionary claims …. 123, 222 resulting trusts …. 254 mistaken payments …. 447 specific performance …. 244 subrogation …. 242, 244, 250, 255, 639, 649 tracing …. 303 unconscientious conduct …. 255, 256 Estoppel alternative rights …. 2404, 2405 change of position, and …. 2213, 2403, 2408 Crown, restitutionary right …. 2106 defence, as …. 2208, 2209, 2213, 2401, 2413 direct defence …. 2405 delay, and …. 2705, 2710, 2712 generally …. 2213, 2308, 2322, 2404, 2530 illegality, and …. 2611 ineffective contracts, and …. 1046 limitation of actions …. 2710, 2712 negligence, by …. 2530 reliance, and …. 149, 2409

Exclusion clause defence, as …. 2206 valuation of claims, and …. 1430 Failure of consideration acceptance of non-monetary benefit, relevance to …. 928 agreed return …. 917, 924 classification of contracts …. 927 classification of payments …. 921 identification …. 920 payments on terms …. 925 quantum meruit, and …. 928 reasonable remuneration …. 928, 937, 941 reliance …. 937, 938, 941 statutory modification …. 929 substantial failure …. 926 classification of ineffective contracts …. 927 common count …. 117, 203, 916, 2924 condition, failure of, and …. 923 defence, as …. 915 discharge of contract see Contract discharged for breach; Contract discharged without breach generally …. 170, 915, 916, 919, 930 mistaken payments, and …. 408 partial failure …. 172 principle …. 917 promisor’s promise …. 919 quantum meruit, and …. 928 quasi-contract …. 117, 203, 915, 916

reasonable remuneration …. 928, 937, 941 reliance, and …. 937, 938, 941 rescission or setting aside see Contract rescinded or set aside statutory modification …. 929 terminology …. 145 total failure requirement …. 170, 918, 926 unjust enrichment, and …. 170, 172, 203, 917 unjust factor, as …. 922 Fictions …. 125–127, 150, 250 Fiduciary breach account of profits …. 1509, 1704, 1706, 1710, 1718 calculation of profits …. 1716, 1717 functions of account …. 1711 ‘just allowances’ …. 1717, 1736 plaintiff’s loss, irrelevance …. 1712 alternative claims …. 1709, 1738, 1739 breach of contract, and …. 1827 bribes …. 1524, 1731 compensation …. 1706, 1719, 1722, 1723, 1724, 1726 constructive trust …. 250, 251, 315, 1704, 1706, 1728, 1731, 1737 counter-restitution …. 1737 damages …. 1706, 1726 defendant’s contributions …. 1733 generally …. 1501, 1701, 1704 interest …. 2815 money had and received …. 1706, 1718, 2905 remedies …. 1704, 1706 proprietary remedies …. 1731, 1733

Fiduciary obligations conflicts rule …. 1827 contractual obligations, and …. 1825 directors …. 1028 generally …. 1703, 1826, 1827 good faith …. 1703 liability to account …. 1705, 1714, 1715 profits rule …. 1827 trustees …. 1703 Fiduciary relationship categories …. 1703 constructive trust, and …. 250, 303 contract, and …. 1825, 1827 generally …. 1703 tracing, and …. 303 Forfeiture, relief against see also Contract discharged for breach; Deposit contract discharged for breach …. 1136–1145, 1170, 1439 deposit payment, of …. 1137, 1140, 1145, 1148, 1414 part payment, of …. 1137, 1138, 1140, 1141, 1143, 1144 damages, and …. 1413, 1414 interest, and …. 1402, 2812, 2824 jurisdiction …. 1140 equity …. 1136, 1143 statute …. 1148, 1414 unconscionable conduct, and …. 1140, 1144 restitutio in integrum, and …. 1432, 1439 specific performance, by …. 1141, 1169 terms, on …. 1143

unjust enrichment as explanation for …. 1142 Forfeiture rule see Wrongful killing Forms of action see Quasi-contract Fraud see Contract rescinded or set aside; Deceit Free acceptance concept …. 157–158, 815 pleading …. 2916 Frustration of contract see Contract discharged without breach Gaming contract consideration, defence of, and …. 2522 illegality, and …. 2602 policy, and …. 1021 void contract, as …. 1010, 2522 Gifts benefit, and …. 152, 1302 improper pressure …. 519 common counts, and …. 116 completed …. 2605 consideration, and …. 1015, 1302 contribution …. 613 duress …. 519 illegality, and …. 2605, 2614 improper pressure …. 504, 519 mistaken gifts …. 417–421 necessitous intervention …. 807, 816, 841, 846, 848 ‘bounteous’ gifts …. 833 quantum meruit, and …. 1167 unconscientious conduct …. 504

undue influence …. 504, 519 unjust enrichment …. 152, 164, 168 will, by see Will wrongful killing, and …. 1910, 1922, 1923 Good faith see also Bona fide purchase; Compromise bona fide purchase, and …. 2504, 2505 change of position, and …. 2417 compensation, and …. 1035 compromise, and …. 442, 507, 514, 2504, 2505, 2519 consideration …. 442, 2511 contract negotiation, in …. 1004, 1042 contract performance …. 1825, 1829, 1834, 1835 defences, and …. 442, 2422, 2504, 2505, 2519, 2529 duty of …. 1004, 1042, 1825, 1829, 1834, 1835 equities, title free from …. 2529 fiduciary duty …. 1703 improper pressure …. 511, 516, 528 mistaken payments …. 442 necessitous intervention …. 839, 846 Goods see also Lease; International sale of goods; Sale of goods; Quantum valebat; Quasi-contract conversion …. 113, 217, 220, 1608, 2616, 2620, 2621, 2622, 2623, 2732 detinue …. 1609, 2616, 2620, 2623, 2732 inadequacy of damages …. 1612 successive wrongs …. 2732 Goods sold and delivered see Quantum valebat; Quasi-contract; Sale of goods Guarantee see also Surety

co-extensiveness …. 1135 commercial pressure, and …. 517 failure of consideration, and …. 1121, 1133, 1135 forfeiture, relief against, and …. 1142 indemnity, and …. 1135 letter of credit, and …. 1135, 1142 misleading conduct, and …. 1334 money paid and …. 116 performance bond, and …. 1135 unconscionable contract, as …. 1332 void, declared …. 1334 Guarantor contribution, and …. 604, 605, 612, 621, 645 independent promise by …. 1133 overdue payment, recovery from …. 1133, 1135 recoupment, and …. 604, 625, 626, 627, 634, 645 responsibility of …. 1135 subrogation, and …. 604 unconditional promise by …. 1133 Hire see also Lease charterparty …. 910 duress, and …. 1326 failure of consideration, and …. 1124, 1133 minor to …. 1043 overdue payment …. 1133 periodic payments …. 921 shipbuilding contract, and …. 1133 wrongful use …. 1629

Hire-purchase failure of consideration, and …. 1124 illegality, and …. 2622 severable payments under …. 1132 Homicide see Wrongful killing Ignorance see also Mistaken payments contribution, and …. 612, 621 illegality, and …. 2628, 2629, 2630 mistaken payments …. 306, 410, 415, 430 cheque transactions …. 429, 430 not an unjust factor …. 430 unjust enrichment …. 167, 306 want of title …. 308 Illegal contract see also Public policy approach to …. 1013 classification of …. 1013–1014 generally …. 1013 public policy …. 1002, 1014 statute …. 1002, 1014, 1028 concept …. 1002 consideration for failure of …. 1015 founded on …. 1005 impact on …. 1022, 2605 preliminary agreement, and …. 1044 quasi-contract, and …. 1003 restitution, and …. 1003 sale of goods …. 1041

statute, claim under …. 1042 tort, claim in …. 1042, 1043 void, as …. 1005 Illegality see also Improper pressure unjust enrichment …. 169 Illegality defence approach to …. 2601, 2602 Crown, claims by …. 2612 dependent claims …. 2616 estoppel, and …. 2611 ex turpi rule …. 1022 exceptions to …. 2620–2624 failure of consideration, and …. 2606, 2607, 2609, 2614, 2625, 2629 generally …. 2610, 2613 policy, where applicable to restitution …. 2615 reliance on illegal conduct …. 2614 in pari delicto rule and common purpose, absence of …. 2628 exceptions, to …. 2626, 2627 ignorance, of plaintiff …. 2628, 2629, 2630 illegality, where obvious …. 2630 improper pressure, and …. 2636, 2638 maxim of …. 1022, 2625 mistake, and generally …. 2636, 2637 induced mistake …. 2637 operation of …. 2625 position, abuse of …. 2640

protected class, and …. 2639 repentance, and …. 2631, 2632 achieved purpose, where …. 2633 frustration of purpose, and …. 2635 motive, and …. 2635 partial execution …. 2634 independent claims elements of …. 2621 generally …. 2617 statute, role of …. 2617 property rights, assertion of …. 2621 equitable interests …. 2624 generally …. 2620 title, proof of …. 2622 wrong, proof of …. 2623 ineffective contracts, and …. 906 past, where …. 2618 proof, onus of …. 2603 quantum meruit claim, and …. 1028, 2615, 2616 relevance of …. 2604 severance, and …. 2619 treatment of …. 1013, 2205 unjust enrichment and generally …. 2606 implied contract theory, and …. 2607 policy, and …. 1022, 2609 prima facie claims …. 2608 Implied contract theory see Quasi-contract Improper pressure see also Duress; Undue influence

Australian Consumer Law …. 503 blackmail …. 503, 504, 509 categories of pressure …. 502, 509, 526, 533, 2010 abuse of process …. 513, 532 duress colore officii …. 529, 530, 2011, 2023 interference with legal rights …. 530 person …. 509, 527 property …. 528 threats to repudiate contract …. 531 causation …. 521 establishment of link …. 522 onus of proof …. 522 overborne will theory …. 521 protest …. 523 commercial pressure …. 509, 517 economic duress, and …. 518 lawful act duress, and …. 518 common law remedies …. 504, 533 compromise, and …. 507, 528 compulsion …. 510 express or implied threats …. 511 concept …. 501, 502 conferral of benefit …. 503, 508 gifts …. 519 money already due …. 520 types of benefit …. 519–520 contract …. 506, 518 compromise defence …. 507, 528 existing duty rule …. 506, 517

future business, refusal …. 516 threats to repudiate …. 506, 531 vitiating factors …. 506 contract induced by …. 1313, 1326, 1328 criminal conduct …. 503, 509 duress of person …. 527 threats to prosecute …. 504, 515 Crown, restitution against …. 2001, 2007, 2010 demand colore officii …. 2011, 2023 defence, as …. 505 defences …. 524, 2910 compromise defence …. 507, 528 money already due …. 520 duress …. 1312, 1321, 1326 elements …. 508 benefits conferred …. 519–520 causation …. 521–523 improper pressure …. 509–518 pleading …. 2910 equitable remedies …. 504, 533 establishing …. 508, 509 commercial pressure …. 509, 517, 518 compulsion …. 510, 511 exploitation …. 510 express threats …. 511, 512 future business, refusal …. 516 implied threats …. 511, 512 legal process, use …. 513, 514

threats to prosecute …. 515 threats to sue …. 513, 514 types of pressure …. 509 express threats …. 511 offers, distinction …. 512 generally …. 501 gifts …. 504, 519 good faith …. 511, 516, 528 implied threats …. 511 offers, distinction …. 512 reasonable conduct, contrast …. 511 interest, and …. 2820 legal process …. 513 abuse of process …. 513, 532 threats to sue …. 513, 514 overborne will theory …. 521 personal remedies …. 525 pleading …. 2910 independent claims …. 2920 proprietary remedies …. 525 protest …. 523 rescission of contract …. 506, 1312 statutory claims …. 504 statutory defences …. 524 terminology …. 518 threats to prosecute …. 504, 515 threats to repudiate contract …. 506, 531 threats to sue …. 513, 514 types of pressure …. 509

unlawful conduct …. 503, 518 Indemnity conditional …. 2725 contribution …. 609, 612, 613, 614, 615, 618, 624 fiduciary right …. 1737 guarantee, and …. 1135 insurers …. 618 joint contractors …. 613 joint tortfeasor, against …. 1532 partners …. 614 restitutio in integrum, and …. 1437 contract rescinded or set aside, where …. 1437 future claims, against …. 1432, 1437 partnership liabilities, against …. 1437 trustees …. 615 wrongful killing …. 1909, 1911, 1919, 1926 Ineffective contract benefit …. 931–935 reliance, and …. 938 categories …. 904 concept …. 902 damages, and …. 1805 defences, and …. 906, 911 discharged for breach see Contract discharged for breach discharged without breach see Contract discharged without breach election, and …. 905 defence, as …. 906

examples …. 902 failure of consideration see Failure of consideration generally …. 202, 215, 216, 901, 902, 904 goods, sold and delivered …. 914 illegality defence …. 906 inherently ineffective …. 903 distinction …. 902 interest …. 2812, 2824 pleading …. 2912 quantum meruit …. 908, 909, 912, 913, 914, 1023–1024 quantum valebat …. 914 quasi-contract, and …. 908 failure of consideration …. 916 inconsistent contractual promise …. 909 reasonable remuneration …. 908, 909 available claims …. 913 implied contract …. 913 reliance …. 937, 940, 941 third parties …. 910 reliance, and …. 936, 937 benefit …. 938 failure of consideration …. 937, 938, 941 forms of reliance …. 939 generally …. 936 issues …. 937 reasonable remuneration …. 937, 940, 941 rescinded or set aside see Contract rescinded or set aside restitutio in integrum, and …. 1435

statute, and …. 908 third parties …. 910 types of claims …. 907 failure of consideration …. 915–930 generally …. 907–911 quantum meruit …. 912, 913, 914 reasonable remuneration …. 913, 914 Inherently ineffective contract categories of …. 1002, 1011–1014 claims arising from estoppel, and …. 1046 implied contract as …. 1045 implied term based on …. 1045 other …. 1004, 1042 restitution, in …. 1003 risk allocation, and …. 1042 statute, under …. 1047 tort, in …. 1042, 1046 definition of …. 1002 equity, role of …. 1042, 1046 generally …. 902, 903, 1001 goods, accepted …. 1037–1041 contractual claim …. 1037 illegality, and …. 1041 necessaries, supply …. 830, 1040 necessary goods …. 1037, 1039, 1040 unenforceable contract …. 1039 void contracts …. 1038 illegal contracts …. 1002, 1013

public policy …. 1014 statutory …. 1014 limitation periods …. 2722 money, recovery of …. 2912, 1015–1022, 2912 condition precedent unfulfilled, where …. 1018 countervailing factors …. 1020–1022 generally …. 1020 illegality …. 1022 statutory policy …. 1021 failure of consideration, based on …. 1015–1019 generally …. 1015, 1016 mistake, based on …. 1003, 1015, 1016 pleading …. 2912 unenforceable contract …. 1019 void contract …. 1017 preliminary agreements, and …. 1042, 1044 reasonable remuneration …. 1023–1036 acceptance of benefit …. 1025 contract fails to materialise, where …. 1033–1036 benefit, where realisable …. 1036 work done, for …. 1034–1035 fully executed …. 1034 partially executed …. 1035 Pavey & Matthews, decision in …. 1024 pleading …. 2915 reasonable remuneration, as …. 1023, 1024 unenforceable contract, where …. 1024, 1029–1032 fully performed, when …. 1030

generally …. 1029 partially performed, when …. 1032 substantial performance, on …. 1031 valuation see Valuation of claims void contract, where …. 1026–1028 generally …. 1026, 1027 policy, impact of …. 1028 statute, impact of …. 1028 Statutes of limitation …. 2722 unenforceable contracts …. 1002 capacity, for lack of …. 1012 common law, at …. 1012 statute, under …. 1011 void contracts …. 1002 agreement, for lack of …. 1005 condition, on non-occurrence of …. 1006 mistake, for …. 1007, 1008, 1009 other …. 1010 Insolvency see also Bankruptcy; Liquidation contribution, and …. 646 Insurance contract compromise of …. 1332 contribution, and …. 606, 618, 621, 645 deceit …. 1633 frustration, and …. 1221, 1255, 1264 legislation, application of, to …. 1240 money payable under …. 1266 obligation to effect …. 1228

illegal …. 2629 ineffective contract, as …. 1332 mistaken payments …. 402, 421, 441, 1332 recoupment, and …. 645 rescission of …. 1332 subrogation …. 638 wrongful killing …. 1909, 1911, 1919, 1926 Intellectual property infringements account of profits …. 1509, 1708, 1710, 1713 calculation of profits …. 1716 ‘just allowances’ …. 1717 alternative claims …. 1709, 1738, 1739 damages …. 1719 corporations legislation …. 1721 delivery up …. 1732 generally …. 1501, 1701 remedies …. 1708 delivery up …. 1732 unjust enrichment …. 1702 Interest allocatur rule …. 2808 accrual of interest …. 2803 date of accrual …. 2808 cause of action …. 2807 accrual …. 2803, 2806, 2807, 2809, 2810, 2818, 2822 common law …. 2803, 2811 contract damages …. 2817 equitable interest …. 2817 ineffective contracts …. 2812

quasi-contract …. 2811 restitutionary claims …. 2811 compound interest …. 2802, 2803, 2805, 2811, 2814 contribution claims …. 648, 2821 definition …. 2806 equitable interest …. 2803, 2813 common law claims …. 2817 compound interest …. 2814 equitable compensation …. 2815 fiduciary breach …. 2815 function …. 2813 rate of interest …. 2814 rescinded contracts …. 2816 forfeiture, relief against …. 1402, 2812, 2824 free-standing claims …. 2807 function of award …. 2806 generally …. 2801 historical background …. 2802 improper pressure …. 2820 incipitur rule …. 2808 ineffective contracts …. 2812, 2824 judgments reversed or set aside …. 710, 2811, 2822 jurisdiction to award …. 2803, 2804 mistaken payments …. 426, 2807, 2808, 2819 money paid …. 2808 pleading …. 2907 proceedings …. 2804, 2806 rate of interest …. 2803, 2807, 2808, 2809, 2814, 2821

recoupment claims …. 648, 2821 rescinded contracts …. 2816 restitutionary claims …. 2818 Crown …. 2826 improper pressure …. 2820 ineffective contracts …. 2824 judgments reversed or set aside …. 2822 mistaken payments …. 2819 necessitous intervention …. 2823 wrongs …. 2825 separate proceedings …. 2804, 2807 simple interest …. 2805, 2811, 2814 statutory interest …. 2803, 2804 general power …. 2809 limitations …. 2810 Lord Tenterden’s Act …. 2809, 2810 state legislation …. 2809 taxation …. 2805 unjust enrichment, and …. 2801, 2807 International sale of goods avoidance of contract for …. 1110, 1209, 1226, 1436 benefit, receipt of, under …. 1176 exemption for failure to perform …. 1209 failure of consideration …. 1220, 1226 frustration of …. 1209 fundamental breach of …. 1108 letter of credit, and …. 1135 restitutio in integrum, and …. 1149, 1436, 2332, 2333 restitution …. 225, 1149, 1176, 1220, 1226, 1235, 1436, 2332

statute …. 225, 1149, 1176, 1201, 1226, 1235, 1436, 2332 application of …. 1201 benefit, and …. 1176 common law, and …. 1176 concurrent restitution under …. 1436 interest under …. 2808 Joint contractors see also Recoupment contribution …. 613 Joint tenants see also Recoupment contribution …. 617 wrongful killing …. 1918, 1927, 1930 Joint tortfeasors double recovery, and …. 1536 proof of debt …. 1532 Judgments reversed or set aside defences …. 713 effect of appeal …. 703 successful appeal …. 704 effect of judgment …. 703 generally …. 701 interest …. 710, 2811, 2822 rationale for principle …. 702 reversal of judgment …. 706 right to restitution …. 706, 707 benefit directly ordered …. 708 interest …. 710 parties to judgment …. 709

time for seeking order …. 711 scope of principle …. 707 setting aside …. 705 unjust enrichment, and …. 701, 712 Knowing receipt restitution for wrongs, as …. 1518, 1705 Laches …. 2212, 2702, 2704, 2713, 2723, 2736 Land see also Deposit; Lease; Sale of land; Trespass improvements …. 240 benefit, as …. 931, 1025, 1150, 1156, 1170 acceptance of …. 1025, 1163, 1164 incontrovertible benefit …. 932 frustrated contracts legislation, and …. 1247, 1250 mistake …. 451 permanent …. 1170 proprietary estoppel …. 451, 1046 quantum meruit, and …. 1025, 1156 restitutio in integrum, and …. 1432, 1434, 1437, 1438, 1439 rule in Sumpter v Hedges …. 1156 specific performance, and …. 1169, 1170 unconscionable conduct, and …. 1169, 1170 unjust enrichment, and …. 1046, 1156, 1169 use and occupation of land …. 1615, 1617, 1625 causes of action …. 1625 measure of recovery …. 1626 Lease business, of …. 1124

building …. 1035 failure of consideration, and …. 1124 goods, of failure of consideration, and …. 1124 guarantor of …. 1132 minor …. 1043 overdue payment under …. 1132 severable payments under …. 1132 tort, liability in …. 1043 illegality, and …. 2605, 2639 land, of apportionment legislation, and …. 1147 contribution …. 620, 642 Crown, restitutionary right …. 2103, 2109 deposit, forfeiture, of …. 1138 forfeiture, agreement for …. 1138 illegality, and …. 2639 mistaken payments …. 411 overdue payment under …. 1132, 1147 quasi-contract, and …. 1116 recoupment …. 627, 642 sale, and …. 1019 severable payments under …. 1132 unjust enrichment, and …. 1116 overdue payment under …. 1132 periodic payments …. 921, 1132 restitution, and …. 1124 Lien equitable lien …. 221, 240, 1734

contribution …. 650 proprietary remedy, as …. 242, 244, 249, 250, 1734 Liquidated damages penalties, distinction …. 1137, 1140, 1824 contract price, not …. 1137 deposit, and …. 1137, 1140 Liquidation damages claims, and …. 1532 Loan defence of consideration, and …. 2520 illegal …. 2608 mistaken payments …. 416, 434, 2520 necessitous intervention, and …. 807 payment over time …. 921 Lord Cairns’ Act see Damages Manslaughter see Wrongful killing Maritime salvage see Salvage Mental disability see also Inherently ineffective contract acceptance of benefit, and …. 1030 contractual capacity, and …. 1030 necessaries …. 126 goods …. 1040 necessitous intervention …. 831 services, liability for …. 1030 necessitous intervention …. 816, 819, 831 wrongful killing …. 1908, 1909, 1910 Mesne profits see Tort Minors see Inherently ineffective contract; Necessitous

intervention Misappropriation personal claims …. 301, 308 proprietary claims …. 301, 314 unauthorised disbursal of money …. 307 waiver of tort …. 306 Misdirected funds see Want of title Misprediction see Mistaken payments Misrepresentation see also Contract rescinded or set aside; Deceit common law, at …. 1325, 1329 contract, not void for …. 1007 damages, and …. 1304 discretion, and …. 1329, 1330 equity, in …. 1325, 1329 mistake, and …. 1008, 1009, 1324 rescission of contract …. 231, 1301, 1311, 1325 consequences of …. 1318 restitution claim for …. 1325 order for …. 1331 restitutio in integrum, and …. 1331, 1403 sale of goods contract, and …. 1336–1339 statute, and …. 1315, 1334 vitiating factor, as …. 1301 Mistake see also Contract rescinded or set aside; Inherently ineffective contract; Mistaken payments categories of mistake …. 406, 409, 410, 413, 1007–1009 mistakes of fact …. 411, 412, 414 mistakes of law …. 413–416

civil liability, bases for, and …. 104 common law, at …. 1007, 1310, 1325 contracts …. 404, 1007–1009 demand before action …. 426 equity, in …. 1026, 1310 gifts …. 417–421 ignorance …. 430 illegality, and …. 2609, 2626, 2627, 2628, 2629, 2630, 2636, 2637 implied contract theory, and …. 402 limitation period …. 2703 extension or postponement …. 2741 misrepresentation, and …. 1008, 1009, 1324 mistakes of fact …. 411, 413 fact/law distinction …. 414 legal liability …. 411 moral obligations …. 412 mistakes of law …. 414–417 Crown, restitution against …. 2008, 2015, 2017 fact/law distinction …. 414 judicial overruling …. 417 money had and received …. 117, 126 rescission of contract for …. 1310, 1311 restitutio in integrum, and …. 1336, 1337, 1433 restitutionary claims …. 160, 202, 203, 204, 208 spontaneous …. 1325 statutes of limitation …. 2703 extension or postponement …. 2741 unauthorised disbursal of money …. 308, 311 unconscionable conduct, and …. 1008

unjust enrichment …. 166, 167, 168, 204, 208 vitiating factor, as …. 1301 Mistaken payments agents and intermediaries …. 425, 432, 433, 439–442 ‘agency defence’ …. 441 payment by …. 440 payment over …. 442 receipt by …. 441 unjust enrichment …. 439 banking transactions …. 433–438 categories of mistake …. 406, 409, 410, 413 gifts …. 417–421 ignorance …. 430 improvements to land …. 458 misprediction …. 431 mistakes of fact …. 411–413, 419 mistakes of law …. 414–417, 419 causation …. 416, 421, 2909 ‘but for’ test …. 429 change of position …. 412, 439, 445, 2410, 2411, 2416 constructive knowledge …. 2421 cheque transactions …. 433 absent signature …. 437 death of customer …. 433, 436 forged cheques …. 437 incapacity of customer …. 433, 436 insufficient funds …. 438 overpayment …. 434

stopped cheques …. 435 types of mistake …. 433 conditional payments …. 408 contract, void for …. 1007–1009 contractual mistakes …. 404 Crown, restitution against …. 2001, 2007, 2008, 2017 impact of decisions …. 2009 Royal Insurance case …. 2015 defences …. 406, 437, 2909 ‘agency defence’ …. 441 change of position …. 407, 445, 2410, 2411, 2416, 2421 common law rule …. 443 compromise of honest claims …. 447 consideration in good faith …. 448 limitation …. 450, 2717 moneys due anyway …. 445 payment over …. 442 rationale …. 443 rejected defences …. 444 statutory policy …. 449 unjust enrichment, and …. 437 doubt and risk-taking …. 432 effect of mistake …. 406 failure of consideration, and …. 408 generally …. 117, 443–450 gifts …. 401, 417–421 causation …. 421 change of mind …. 421 deeds …. 419

ignorance …. 430 cheque transactions …. 429, 430 in specie return …. 239 interest …. 426, 2807, 2808, 2819 limitation of action …. 2741 misprediction …. 431 mistakes of fact …. 411 anticipated liability …. 413 fact/law distinction …. 414 future legal liability …. 413 legal liability …. 411 moral obligations …. 412 mistakes of law …. 414 Crown, restitution against …. 2009, 2015, 2017 fact/law distinction …. 414 historical background …. 414 judicial overruling …. 417 legal entitlement …. 415 right to recovery …. 415 ‘voluntary’ payments …. 415, 416 nature of claim …. 402 non-monetary benefits …. 455 discharge of another’s liability …. 456 equity …. 458 ineffective contracts …. 457 onus of proof …. 409, 415, 426 payee’s interests …. 405 pleading …. 2909

proprietary remedies …. 401, 402, 451 Chase Manhattan …. 4454 common law …. 452 equity …. 453 rescission of contract, and …. 215, 1311, 1324, 1328 right to recovery …. 406, 413 broadening of scope …. 428 ‘but for’ causation …. 429 irrelevant matters …. 422 contribution to mistake …. 423 demand before action …. 426 knowledge of non-paying agent …. 425 negligence by payer …. 424, 430 sharing of mistake …. 423 unjust enrichment, and …. 407 services …. 401, 410, 448, 450, 458 test of mistake …. 404, 424 ‘but for’ causation …. 429 ‘fundamental mistake’, and …. 407, 428 unjust enrichment …. 203, 239, 403, 407 agents and intermediaries …. 433 defences, and …. 443 endorsement of principle …. 407 payees …. 403 unifying concept …. 407 voluntariness …. 412, 415, 416, 441 Money had and received see also Mistaken payments; Quasicontract alternative claims, and …. 2905

bribes …. 1718, 2905 common count …. 114, 117, 504, 2924 pleading …. 115, 2905, 2910 Crown, restitutionary right …. 1714 damages, and …. 2313 deceit …. 1633 dependent claim, and …. 2313 equitable principles …. 120–123 extortion …. 117 fiduciary breach …. 1706, 1718, 2905 illegality, and …. 443, 2609 implied contract theory, and …. 125, 126, 127, 128, 129, 130 improper pressure …. 504, 514, 2910 indebitatus assumpsit, and …. 113 independent claim, and …. 2313 interest, and …. 2802 juridical origins debate …. 120, 121 Chancery jurisprudence …. 123 oppression …. 117 personal remedies …. 444 Phillips v Homfray …. 1617 pleading …. 115, 2905, 2920, 2924 improper pressure …. 2910 quasi-contract claims …. 114, 115, 117, 120, 125, 126, 127, 128, 162, 203 ineffective contracts, and …. 908, 916, 1101, 1202, 1309 total failure of consideration …. 916 restitutionary analysis of …. 1114 restitutionary liability …. 203

specific receipt, and …. 1520 statutes of limitation …. 1533, 2723, 2730, 2731, 2732, 2734 statutory bars …. 1533 terminology of …. 1202, 2312 third parties …. 1634 tort, and …. 1618, 1630, 1634 deceit …. 1633 theft …. 1632 undue advantage …. 117 unjust enrichment, and …. 162, 908, 2609 waiver of tort, and …. 1618, 1620, 1631 proof of debt …. 1532 wrongs, and …. 1514, 1516 Money paid common count …. 114, 116, 842, 2925 defeat of claim …. 116 pleading device, as …. 115 use of claim …. 116 generally …. 116, 154, 2807 guarantee, and …. 116 improper pressure …. 503, 2910 interest …. 2808 necessitous intervention …. 808, 842 pleading …. 2908 common count …. 115, 2925 improper pressure …. 2910 ineffective contract …. 2912 mistaken payments …. 2909 payment of another’s debt …. 847, 2911

Mortgage compulsion …. 628 consumer …. 1436 contribution, and …. 617, 618 debenture …. 1521 deceit …. 1633 deed of …. 1332 guarantee, by way of …. 1332 improper pressure …. 514, 522 insurers …. 618 mistaken payments …. 415, 426, 434 necessitous intervention …. 835 restitutio in integrum, and …. 1436, 1437 security, as …. 1232, 1633 threats to sue …. 514 unconscionable conduct, and …. 1332 void covenants …. 415 Murder see also Wrongful killing duress and …. 522 Necessaries see Inherently ineffective contract; Necessitous intervention Necessitous intervention agency of necessity, and …. 812, 819, 821, 822, 823 support of spouse …. 849 assumptions …. 803 availability of restitution …. 808 general principle …. 810 quasi-contract …. 809

unjust enrichment, and …. 809 bailment …. 821, 822, 838, 839 benefit, and …. 811 accepted benefit …. 815 conferral of benefit …. 811, 813, 814 incontrovertible benefit …. 815, 839 saving of expense …. 809, 839 concept …. 802, 823 contractual relationship …. 823 debt, payment of another’s …. 841–847 elements …. 811 communication between parties …. 816 necessity …. 816 reasonable intervention …. 818 emergency assistance doctrine …. 824, 852 establishment of claims …. 811 examples of issues …. 804 fulfilment of another’s duty …. 840 contractual duty …. 853 duty to bury the dead …. 848 payment of debt …. 840–846 public interest …. 847 statutory duty …. 851 support of infant child …. 850 support of spouse …. 849 tortious duty …. 852 generally …. 801, 823 interest …. 2823 intervener …. 817

intention of intervener …. 819 proper intervener …. 817 legal issues …. 804 meaning …. 802 measure of recovery …. 820 medical services …. 825 capacity to consent …. 827 declining assistance …. 826, 828 duty of care …. 827 instructions not to render …. 828 intoxicated persons …. 832 public interest …. 826, 827 rescuers, and …. 827 statutory duty, and …. 851 mentally disabled persons …. 816, 819 supply of necessaries …. 831 minors …. 816, 833 moral obligation …. 801, 804 support of infant child …. 850 necessaries, supply …. 830 ineffective contracts, supply under …. 1037, 1039, 1040 intention of intervener …. 819 intoxicated persons …. 832 mentally disabled persons …. 831 minors …. 833 negotiorum gestio …. 812 payment of another’s debt …. 840 absence of request …. 842

adopted payments …. 841 bill of exchange, acceptance …. 843 compulsion, contrast …. 844 discharge of debt …. 846 justification for cases …. 845 pleading …. 2911 request for payment …. 841 policy considerations …. 805 affirmative duties …. 806 reluctance to countenance claims …. 807 preservation of property …. 834 bailment …. 838 Falcke v Scottish Imperial Insurance …. 835 general principle …. 834, 835 illustrations …. 837 in personam claims …. 839 reasons for approach …. 836 salvage on land …. 835 professional persons …. 809, 819 medical services …. 826, 827, 828 protection of life or health …. 825 medical services …. 825–829 rescuers …. 827, 829 supply of necessaries …. 830–833 public interest …. 847 duty to bury the dead …. 848 medical services …. 826, 827 statutory duty …. 851 support of infant child …. 850

support of spouse …. 849 tortious duty …. 852 salvage, and …. 814, 817, 820, 829, 834, 835, 836, 837 summary of principles …. 811 accepted benefit …. 815 identifying principles …. 812 incontrovertible benefit …. 815 intention of intervener …. 819 measure of recovery …. 820 necessity …. 816 officiously conferred benefits …. 814 proper intervener …. 817 reasonable intervention …. 818 unjust enrichment, and …. 809, 813 ‘unjust sacrifice’ …. 813 unrequested benefits …. 814 unjust enrichment, and …. 804, 809, 813 policy considerations …. 805 Negligence cause of action …. 207 change of position, and …. 2423 contributory negligence …. 1528 damages …. 1808 election between remedies and concurrent liability …. 2313 estoppel by …. 2530 frustration, and …. 1255 good faith, and …. 2505 joint contractors …. 613

mistaken payments …. 424, 434 necessitous intervention, and …. 806, 827 tort of …. 1043 wrongful killing …. 1911, 1919, 1926 Negligent misstatement reliance, and …. 149 Negotiable instrument see Bill of exchange Negotiorum gestio see Necessitous intervention Nemo dat rule see Bona fide purchase Nuisance see also Tort; Wrongs recoupment, and …. 632, 642 Offer and Acceptance …. 1005, 1007, 1045 Officiousness see also Necessitous intervention benefit …. 147 conferral of benefit …. 156, 814 unrequested benefit …. 156 contribution, and …. 601 necessitous intervention, and …. 814, 816 policy, and …. 147 recoupment, and …. 601, 635, 636 Oppression see also Improper pressure illegality, and …. 2609, 2626, 2636, 2638, 2639, 2640 money had and received …. 117 threats to sue …. 514 Partner see also Fiduciary relationship contribution …. 614 liability …. 614

restitution in favour of …. 1437 Partnership account …. 614 debts …. 614 deceit …. 1437, 1633 frustrated contracts legislation, and …. 1240 rescinded …. 1437 restitutio in integrum, and …. 1437 Payment of another’s debt necessitous intervention …. 840, 2911 absence of request …. 842 adopted payments …. 841 bill of exchange, acceptance …. 843 compulsion, contrast …. 844 discharge of debt …. 846 justification for cases …. 845 pleading …. 2911 request for payment …. 841 Payment over agent or intermediary …. 435, 436, 524, 2910 defence of …. 436, 439, 2413, 2910 change of position, and …. 2401, 2406, 2410 improper pressure …. 523, 524 mistaken payments …. 435, 436 protest, and …. 523 Pleading alternative claims …. 2905, 2906 combining claims …. 2906 double recovery …. 2906

generally …. 2901 implied contract …. 132, 2903 interest …. 2907 Judicature pleading …. 2902 mistake …. 2909 money paid …. 2908 common count …. 115, 2925 improper pressure …. 2910 ineffective contract …. 2912 mistaken payments …. 2909 payment of another’s debt …. 2911 pre-Judicature system …. 2921 account stated …. 2926 common counts …. 115, 2923, 2924, 2925, 2926 ‘debt or liquidated demand’ …. 2922 money paid at defendant’s request …. 2925 New South Wales …. 2924 remuneration …. 2913 historical background …. 2914 requested work …. 2915 unrequested work …. 2916 unjust enrichment …. 132, 206, 208, 2904 wrongs …. 2917 benefit at plaintiff’s expense …. 2919 independent claims …. 2920 unjust factor …. 2918 Preservation of property see Necessitous intervention Privity of contract …. 214

Promissory estoppel reliance, and …. 149 Property-based claims causes of action …. 301 defences …. 318 bona fide purchase …. 321 change of position …. 306, 320 knowing receipt …. 313, 318 ministerial receipt …. 319 following …. 303 generally …. 235 improvements …. 240 knowing receipt …. 304, 312 beneficial receipt of property …. 313, 314 defences …. 313, 318 elements …. 313 information …. 314 knowing assistance, and …. 313 knowledge …. 313, 317 trust property …. 313, 315 unauthorised dealing …. 313, 316 unjust enrichment …. 313 personal remedies …. 302 retention of money …. 307 stripping of profits …. 309 torts …. 1611 proprietary remedies …. 302 constructive trusts …. 315 distinction …. 235

identification of property …. 303 knowing receipt …. 314, 315 reservation of title …. 240, 1169 Romalpa clause, and …. 1169 tracing …. 236, 303, 2527 knowing receipt …. 314 stripping of profits …. 309 unauthorised disbursal of money …. 304, 305 in specie recovery …. 311 independent cause of action …. 308 mistake …. 308, 311 principle …. 305 proving ownership …. 310 retention of money …. 307 stripping of profits …. 309 third parties …. 308 tracing …. 309 unjust enrichment …. 306 waiver of tort …. 306 Proportionate liability contribution …. 609, 646 Proprietary claims may generate personal or proprietary remedies …. 302 misdirected, lost or stolen money …. 304 Proprietary remedies advantages …. 246 bona fide purchase, and …. 2523, 2527 constructive trust …. 242, 244, 246, 250, 256, 1503, 1504, 1727

breach of confidence …. 1728, 1730, 1737 examples …. 251 fiduciary breach …. 250, 251, 1728, 1731, 1737 fiduciary relationships …. 250, 315 functions …. 1728 recognition of remedial …. 247, 249, 315 theft …. 250, 251 unsecured creditors …. 257 discharged contract, and …. 1160, 1169 equitable lien …. 242, 244, 249, 250, 1734, 1737 equity …. 242, 247, 256, 1503, 1504 availability of relief …. 244 constructive trust …. 242, 244, 246, 249, 250, 251, 256, 257, 315, 1727, 1728, 1729, 1730, 1731, 1737 delivery up …. 1732 effect on restitution …. 244 lien …. 242, 244, 249, 250, 839, 1734, 1737 mistaken payments …. 446, 447 rescission …. 253 refusal of remedy …. 252 remedial minimalism …. 248, 1729 subrogation …. 242, 244, 250, 255 unconscientious conduct …. 255, 256 unsecured creditors …. 257 flexible remedialism …. 247 generally …. 102, 234, 242 improper pressure …. 525 inherently ineffective contract, and …. 1040, 1046 insolvency …. 257

mistaken payments …. 401, 402, 444 Chase Manhattan …. 447 common law …. 445 equity …. 446, 447 money, in relation to …. 2527 nemo dat rule, and …. 2527 personal claims, and …. 1202, 1303 pleading, and …. 2918 property-based claims …. 302 distinction …. 235 rescission …. 243, 253 resulting trust, and …. 242 retention of benefit …. 245 subrogation …. 242, 244, 250, 255 value of benefit …. 238 want of title …. 302 wrongs, based on …. 1526 Public office duress colore officii …. 529, 530, 2007, 2010, 2011, 2023 Public policy see also Illegal contract; Illegality, defence of enrichment, and …. 147 estoppel, and …. 2611 ex turpi maxim, and …. 2604 failure of consideration, and …. 1020, 1021 illegal contracts, and …. 1013–1014, 1016, 1021, 2615 illegality, and …. 1014, 1022, 2601, 2602, 2606, 2627 implied contract theory and …. 1021 in pari delicto maxim, and …. 2625, 2631

quantum meruit, and …. 1028 statutory bars …. 1028, 1533 statutory illegality …. 1014 subordination of private right, as …. 1003 unenforceable contract, and …. 1002, 1014, 1030 unjust enrichment, and …. 1039, 1502, 2606, 2609 unsolicited goods, and …. 1038 void contract, and …. 1014, 1028 wrongful killing …. 1524, 1901, 1907 wrongs, and …. 1502, 1506 serious crime …. 1506 Quantum meruit common count …. 114, 115, 118, 128, 132, 135, 2914, 2924 debt and …. 113 failure of agreed return, and …. 928 generally …. 203, 912 historical development …. 113, 203, 2914 implied contract theory, and …. 109, 132, 135, 913 ineffective contract, and …. 908, 909, 912, 913, 914, 1023–1024, 1154–1168, 1227–1235 discharged for breach …. 1150, 1154–1168 discharged without breach …. 1227–1235 inherently …. 1023–1036 subsequently …. 1305, 1318 necessitous intervention …. 808 pleading …. 115, 132, 2914, 2915, 2916 reasonable remuneration, as …. 1150 reform, statutory …. 1177

terminology, and …. 145 unjust enrichment, and …. 132, 135 valuation of …. 1437–1439 Quantum valebat see also Quasi-contract; Sale of goods common count …. 114, 119, 203 availability of count …. 119 pleading device, as …. 115 necessitous intervention …. 808 Quasi-contract causes of action …. 206, 2733 common counts …. 103, 114–119, 2923, 2924 accepted work or goods, based on …. 203 account stated …. 115, 2926 compulsion, based on …. 203 debt, and …. 112, 113, 2922 ‘debt or liquidated demand’ …. 2922 duress, based on …. 203 existence of debt …. 115 failure of consideration …. 203 goods bargained and sold …. 113, 115, 119, 203, 2924 goods sold and delivered …. 115, 119, 203, 2924 history …. 112 illegal demand …. 203 indebitatus counts …. 115, 118, 119 mistake …. 203 money claims, pleading …. 2924 money due as interest …. 115 money had and received …. 114, 117

money lent …. 115 money paid …. 114, 115, 116, 842, 2908, 2925 pleading …. 115, 2922, 2923 quantum meruit …. 113, 114, 118, 128, 132, 135 quantum valebat …. 113, 114, 119, 203 ultra vires demand …. 203 work done …. 115, 118, 203 work done and materials supplied …. 203 forms of action …. 114, 206, 908, 914, 2733 account …. 112, 113 causes of action, and …. 206 covenant …. 112 debt …. 112, 113, 2922 ‘debt or liquidated demand’ …. 2922 indebitatus assumpsit …. 113, 125, 129, 132, 2922 quantum meruit …. 113, 114, 118, 128, 132, 135, 2914 quantum valebat …. 113, 114, 119, 203 frustrated contract, and …. 1229 generally …. 101, 103 historical development …. 112 assumpsit, and …. 113 implied contract theory …. 125–132 juridical origins debate …. 120–123, 127 implied contract theory …. 125, 204 criticism …. 129–130 Australian cases …. 130 English cases …. 129 developments despite …. 128 fiction, as …. 125, 127

formal structures, emphasis …. 126 generally …. 124 illegality, and …. 2607 inconsistent contractual promise …. 909 influence of …. 126, 127 rejection of theory …. 131, 202, 204, 209, 908 impact of …. 132 unjust enrichment, and …. 135 ineffective contracts, and …. 908 discharged for breach …. 1105, 1114, 1116, 1134, 1136, 1151, 1158, 1161, 1174 discharged without breach …. 1202, 1217, 1219, 1222, 1227, 1228, 1229, 1230 inconsistent contractual promise …. 909 inherently ineffective …. 1003, 1004, 1020, 1024, 1025, 1030, 1040, 1042, 1045 rescinded or set aside …. 1303, 1305, 1319, 1330 interest …. 2811 juridical origins debate …. 120, 121, 127 Chancery jurisprudence …. 123 civilian concepts …. 122 Roman concepts …. 122 limitation periods …. 2719, 2733 money had and received …. 114, 115, 117, 203 categories of cases …. 117 implied contract theory …. 125, 126, 127, 128, 129, 130 juridical origins debate …. 120, 123 wrongful conduct …. 117 necessitous intervention …. 809

pleading, and …. 115, 2921–2926 ‘debt or liquidated demands’ …. 2922 statutes of limitation …. 2719, 2733 terminology …. 145 unjust enrichment, and …. 135 waiver of tort …. 129, 162, 220, 1620 Reasonable remuneration see also Quantum meruit acceptance of benefit …. 157, 158, 934, 1025, 1157–1160 available claims …. 913 contract discharged for breach …. 1150, 1154–1168 acceptance of benefit and …. 1157 alternatives to …. 1160 effect of …. 1159 forms of …. 1158 generally …. 1157 analogous claims …. 1169–1171 generally …. 1169 goods, accepted …. 1174 land, improvements to …. 1170 part performance …. 1171 unjust enrichment, and …. 1169 generally …. 1154–1156 partial performance, after …. 1154 party in breach, claims against …. 934, 1166–1168, 1408, 1430 deemed acceptance, where …. 1167 deemed benefit, where …. 1168 generally …. 1166 Planché v Colburn …. 1168, 1408, 1409

party in breach, claims by …. 1161–1165 contractual terms, relevance of …. 1162 free acceptance, and …. 1161 successful …. 1165 unsuccessful …. 1164 reform of …. 1177 statute, based on …. 1172–1177 apportionment legislation …. 1173 consumers, sale of goods to …. 1175 generally …. 1172 goods, where accepted …. 1174 international sale of goods …. 1176 reform …. 1177 Sumpter v Hedges, rule in …. 1151, 1155, 1156, 1160 unjust enrichment, and …. 1161, 1162 unjust enrichment, and …. 1152, 1155, 1156, 1159, 1160, 1161, 1162, 1167, 1168 valuation of …. 1415–1430 failure of agreed return …. 928 reliance …. 937, 941 generally …. 2913 historical development …. 2914 implied contract …. 913 ineffective contract …. 908, 909, 910, 913 failure of agreed return …. 928, 937, 941 reliance …. 937, 940, 941 inherently ineffective contract …. 1023–1036 acceptance of benefit …. 1025 contract fails to materialise …. 1033–1036

benefit, where realisable …. 1036 work done, for …. 1034–1035 fully executed …. 1034 partially executed …. 1035 Pavey & Matthews, decision in …. 1024 pleading …. 2915 unenforceable contract …. 1024, 1029–1032 fully performance …. 1030 generally …. 1029 partial performance …. 1032 substantial performance …. 1031 valuation, see Valuation of claims void contract, where …. 1026–1028 generally …. 1026, 1027 policy, impact of …. 1028 statute, impact of …. 1028 limitation periods …. 2722 pleading …. 2913 historical development …. 2914 requested work …. 2915 unrequested work …. 2916 reliance …. 937, 940, 941 statutes of limitation …. 2722 terminology, and …. 145, 203, 912 third parties …. 910 Receiver appointment fiduciary breach …. 1706

frustrated contracts legislation, under …. 1252, 1257 judgment reversed or set aside …. 708 ratification of actions …. 1521 Recoupment see also Contribution availability of right …. 626 discharge of office …. 630 guarantors …. 627 occupiers meeting owner’s obligations …. 628 release of property or agent …. 629 statutory right …. 631 sureties …. 627 basis of liability …. 625 contractual rights …. 626 contribution, and …. 612, 622, 641 costs …. 648 generally …. 601, 602, 625 interest …. 648, 2821 liability rules …. 641 actual payment …. 643 costs …. 648 equitable relief …. 644 imminent liability …. 642 interest …. 648 loss of right …. 647 modification of right …. 645 present liability …. 642 quia timet relief …. 644 loss of right …. 647

marshalling, and …. 625 modification of right …. 645 statutory modification …. 607 officiousness …. 601, 635, 636 quia timet relief …. 644 requirements for claims …. 632 benefit from payment …. 634 discharge of liability …. 636 officiousness …. 635 payment relates to both parties’ liability …. 633 source of principle …. 604, 622, 625 Dering v Earl of Winchelsea …. 605 statutory modification …. 607 unjust enrichment, and …. 606, 607 Release see also Compromise abandonment of claim, and …. 2513, 2517 compromise, and …. 2513, 2516 contribution …. 602, 612, 647 debtor, of …. 602 goods, of …. 528, 1312, 1327 improper pressure, and …. 528, 530, 1312, 1327 probate …. 530 property of …. 612, 629 recoupment …. 602, 625, 629, 635, 647 Reliance benefit, and …. 938 change of position …. 2407, 2413, 2415, 2416, 2417, 2423 detrimental conduct …. 2420

onus of proof …. 2408 election see Election estoppel …. 149, 2409 failure of agreed return …. 937, 938, 941 forms of reliance …. 939 generally …. 146, 149, 936, 937 ineffective contract, and …. 936–941 reasonable remuneration …. 937, 940, 941 Reliance damages election, and …. 1812 generally …. 1407, 1410, 1430, 1802 Relief against forfeiture see Forfeiture, relief against Remedies account of profits see Account of profits breach of contract see Contract cause of action, and …. 206 constructive trusts see Constructive trusts contract …. 212, 213, 215 damages see Contract damages; Damages; Restitutionary damages debt see Debt deceit see Deceit delay, and …. 2702, 2705, 2711 discretion, and …. 2713 estoppel …. 2712 duress see Duress election see Election fiduciary breach …. 1704, 1706, 1718, 1731

flexibility …. 247, 1503 generally …. 102, 212, 233, 1503 improper pressure see Improper pressure misrepresentation see Deceit; Misrepresentation mistake see Mistake; Mistaken payments personal remedies …. 102, 235, 237 goods received …. 240 improper pressure …. 525 mistaken payments …. 444 money had and received …. 444 nature of claims, and …. 238 payment of money …. 239 property-based claims …. 302, 307, 309, 1611 return of money …. 239 services rendered …. 240 tort …. 1611, 1613 tracing …. 236, 303 unauthorised disbursal of money …. 307, 309 want of title …. 302, 307, 309 proprietary remedies …. 102, 233, 235, 238, 242, 1503 advantages …. 246 delivery up …. 1732 constructive trusts …. 242, 244, 246, 248, 249, 250, 251, 256, 257, 315, 1504, 1727, 1728, 1729, 1730, 1731, 1737 equity …. 242, 244, 248, 249, 250, 251, 252, 253, 256, 257, 1727–1734, 1737 flexible remedialism …. 247 improper pressure …. 525 lien …. 242, 244, 249, 250, 1734, 1737

mistaken payments …. 401, 402, 444–447 property-based claims …. 302, 303 distinction …. 235 knowing receipt …. 314, 315 pure …. 2622–2623 rescission …. 243, 253 retention of benefit …. 245 subrogation …. 242, 250, 255 tracing …. 236, 303, 309, 314 unsecured creditors …. 257 want of title …. 302, 303 knowing receipt …. 314, 315 quantum meruit …. 118 restitution …. 102, 212, 221 classification of remedies …. 233 measure of restitution …. 213, 215 personal remedies …. 234, 237–241 proprietary remedies …. 234, 235, 238, 242–257 tort, and …. 217 specie, in …. 212 specific performance see Specific performance tort see Tort unconscionable conduct see Unconscionable conduct undue influence see Undue influence unjust enrichment, and …. 213 waiver of tort see Waiver of tort wrongs, and …. 1503, 1504, 1530, 1702 advantages …. 1534

compensation …. 1508, 1511, 1531 double recovery …. 1536 exemplary damages …. 1535 flexibility …. 1503 proof of debt …. 1532 role of remedies …. 1531 statutory bars …. 1533 Remuneration see Reasonable remuneration Repair contribution …. 617 covenant to repair …. 627, 633 quantum meruit claim …. 1164 recoupment …. 627, 633 restitutio in integrum, and …. 1432, 1437 Request see also Necessitous intervention absence of …. 147, 153, 157 free acceptance …. 157, 158, 174 necessitous intervention, and …. 805, 807, 808 remuneration claims …. 2913, 2916 acceptance of benefit …. 934, 1023, 1415 deemed, where …. 1167 goods, where …. 1038 benefit, and …. 146, 147, 154, 932, 933, 935 absence of request …. 157–158, 174 incontrovertible benefit …. 153 other remedies …. 156 policy, and …. 147 restitutionary remedy …. 155

services with no end product …. 935 common counts, and …. 115, 116, 118, 119, 938, 2925 contract, and …. 928, 1025, 1227 unenforceable, where …. 1030, 1032–1036 void, where …. 1026, 1027 detinue …. 1841 failure of consideration, and …. 928 illegal contract, expressed in …. 2616 implied …. 427 implied contract, and …. 1045 implied contract theory, and …. 127, 132 implied terms, and …. 1045 mistaken payments …. 427 quantum meruit and illegality, defence of …. 2616 valuation of …. 1416, 1417, 1418, 1421 quantum valebat …. 914 reasonable remuneration …. 2915 absence of request …. 2913 third parties …. 910 reliance, and …. 149, 938 unjust enrichment, and …. 1156, 1231 Rescission see also Contract rescinded or set aside bases for …. 1306–1316 breach of contract, for, no …. 1103, 1105, 1106 confirmation of …. 1310 consensual see Contract rescinded or set aside consequences of …. 1317–1318 discharge, and …. 1103, 1110

consumer protection and …. 1338, 2709 deceit see Deceit duress see Duress election to rescind …. 902, 905, 1322 failure of consideration, and …. 1305, 1311, 1319, 1320, 1323, 1324, 1325, 1326, 1330, 1337 fraud, for, see Deceit improper pressure see Improper pressure insurance contract, of …. 1332 interest …. 2816 misrepresentation see Misrepresentation mistake see Mistake mistaken payments, and …. 419, 1311, 1324, 1328 proprietary remedies, and …. 242, 253 Restatement, Third …. 104, 835 restitutio in integrum see Restitutio in integrum restrictions see Delay; Election; Laches; Restitutio in integrum right of …. 1304, 1307 unjust enrichment, and …. 1305 sale of goods see Sale of goods statute, and …. 1334 unconscionable conduct, and …. 1310 undue influence, and …. 1310 Restitutio in integrum adjustment under …. 1431–1439 discharged contract, and …. 1438 duress, and …. 1330 forfeiture, relief against, and …. 1439

fraud, and …. 1330 generally …. 1431, 1432, 1433 inherently ineffective contract …. 1435 international sale of goods …. 1436 misrepresentation, and …. 1329–1331, 1433, 1437, 2324, 2327, 2328, 2330 rescinded contract …. 1437 statute, role of …. 1436 undue influence, and …. 1318, 1437, 2324 defence, as …. 2324–2335 content of …. 2328 discharge of contract, and …. 2331 discretion, role of …. 2324, 2334 effect of …. 2326 generally …. 2324, 2327 international sale of goods …. 2332 policy, role of …. 2335 rescission of contract, and …. 2330 sale of goods legislation, and …. 2333 Seddon’s case, rule in, and …. 2333 statute, and …. 2334 where possible …. 2325 rescinded contracts, and …. 1329–1331 unjust enrichment, as basis for …. 1330, 1331, 1434, 2324, 2329 Restitution see also Quasi-contract Australia, emergence in …. 105 causes of action …. 205–209 compensation, and …. 209, 1725, 1804 conceptual triggers …. 219

contract, and …. 215, 506, 909 gap filling …. 216 overlap between …. 215 quantification …. 213, 215 remedies …. 212, 215 damages, and …. 209 development of concept …. 104, 105, 109, 112, 131 emergence in Australia …. 105 equitable principles …. 123 implied contract …. 127, 131 published works …. 109 structural debates …. 106 unjust enrichment, and …. 133–139 forfeiture, relief against, and …. 1142 function of law …. 211 judgments reversed or set aside …. 701, 706, 707 benefit directly ordered …. 708 defences …. 713 effect of appeal …. 703, 704 effect of judgment …. 703 interest …. 710, 2822 parties to judgment …. 709 rationale for principle …. 702 reversal of judgment …. 706 setting aside …. 705 time for seeking order …. 711 unjust enrichment, and …. 701, 712 liability …. 203 imposed liability …. 204

objects …. 101, 108 remedies …. 102, 212, 213, 215 scope …. 103, 110 source of duty …. 108 tort, and …. 210 overlap …. 217 quantification …. 213 remedies …. 212 unconscionable conduct, and …. 105 underlying principle …. 102 Restitutionary claims assignment …. 1534 bases of liability …. 108, 109, 111, 202, 210 artificiality argument …. 109 causes of action …. 205 forms of action, and …. 206 unjust enrichment …. 206, 207 importance of recognition …. 209 uncertainty …. 208, 209 claimants …. 108 classification of claims …. 201, 218 approach to classification …. 202 common law …. 221 dependent claims …. 219, 220, 1514 equity …. 221 independent claims …. 219, 1514 statute …. 222–232 classification of remedies …. 233

personal remedies …. 235, 237–241 proprietary remedies …. 235, 242–257 tracing …. 236, 303 Crown see Crown, restitution against; Crown, restitutionary right damages …. 220 dependent claims …. 161, 219, 220, 1514 discharge of contract see Contract discharged for breach; Contract discharged without breach generally …. 201, 202 implied contract theory …. 204 improper pressure see Improper pressure independent claims …. 160, 170, 219, 1514 unauthorised disbursal of money …. 308 ineffective contract see Ineffective contract; Inherently ineffective contract interest see Interest measure of restitution …. 213 nature of claims …. 138, 143, 202, 203, 209, 237 consequences of nature …. 238 imposed liability …. 204, 209 necessitous intervention …. 808 general principle …. 810 unjust enrichment, and …. 809 personal claims …. 237, 241 consequences of nature …. 238 goods received …. 240 money paid …. 239 services rendered …. 240

pleading, see Pleading primary sense …. 135, 159, 160 property-based claims …. 235, 301 defences …. 306, 313, 318–321 improvements …. 240 knowing receipt …. 304, 312–317, 318 proprietary remedies …. 302, 314, 315 distinction …. 235 reservation of title …. 240 tracing …. 236, 303, 309, 314, 2527 unauthorised disbursal of money …. 304, 305–311 recognised claims …. 138, 202 remedies see Remedies rescission of contract see Contract rescinded or set aside restitutionary damages, and …. 1804 secondary sense …. 142, 159, 161, 1515 statute …. 222 Australian Consumer Law …. 229 common law restrictions …. 231 conferral of rights …. 225 indirect conferral …. 226 international sale of goods …. 225 contract validity …. 230, 232 enforceability …. 230 legality …. 230 contribution …. 607, 609, 624 direct restrictions …. 232 discretionary powers …. 227

adjustment of rights …. 228 compensation …. 228, 229 repayment of money …. 228 effect of statute …. 223 frustrated contracts …. 225, 231, 1236–1267 illegal contracts, and …. 1014 indirect restrictions …. 232 ineffective contracts …. 908, 1047 recognition of right …. 224 recoupment …. 607, 631 rescinded contracts, and …. 1333–1335, 1338 restitutio in integrum …. 1436 restrictions on claims …. 232 removal of common law …. 231 unenforceable contract, and …. 1011, 1019 valuation, and …. 1420 void contract, and …. 1028 terminology …. 145 third parties, against …. 910, 1518 valuation see Valuation of claims want of title …. 301 defences …. 306, 313, 318–321 following …. 303 knowing receipt …. 304, 312–317, 318 personal remedies …. 302, 307, 309 proprietary remedies …. 302, 314, 315 tracing …. 303, 309, 314, 2527 unauthorised disbursal of money …. 304, 305–311

wrongs see Wrongs Restitutionary damages assessment of damages …. 1603, 1802, 1805, 1807, 1810, 1830 basis for award …. 1836 injunction, in lieu …. 1837 Lord Cairns’ Act …. 1836, 1837 specific performance, in lieu …. 1837 statutory basis …. 1838 breach of contract …. 1529, 1801, 1802, 1816, 1832 assessment of damages …. 1802, 1805, 1807, 1810, 1830 Australian position …. 1830 availability of damages …. 1802, 1806, 1812 basis for award …. 1836–1838 benefit without loss …. 1830, 1831 character of breach …. 1833–1835 duty of good faith …. 1835 effect of damages …. 1809 English developments …. 1831 fiduciary duties …. 1827 general principle …. 1806 inherently effective contracts …. 1805 nature of wrong …. 1839–1841 objective of award …. 1812, 1813, 1814 terminology …. 1803 terms of contract …. 1824, 1825, 1827 unjust enrichment, and …. 1804, 1813, 1814 waiver of tort, and …. 1801, 1806 causation, and …. 1528

character of breach …. 1833 duty of good faith …. 1835 intentional breach …. 1834 disgorgement damages, and …. 1508 generally …. 1507, 1508, 1529, 1531, 1535, 1603, 1802 Lord Cairns’ Act …. 1836, 1837 nature of damages …. 1508 nature of wrong …. 1839 claims in tort, and …. 1840 wrongful dealing with property …. 1841 objective of award …. 1508, 1812, 1813 unjust enrichment …. 1813, 1814 plaintiff’s expense …. 1804 policy perspectives …. 1527 discretion and uncertainty …. 1529 remoteness, and …. 1528 restitutionary claims, and …. 1804 statute, and …. 1512 terminology …. 1803 tort …. 1601, 1603, 1616, 1639, 1840 assessment of damages …. 1603 compensatory principle, and …. 1602 interference with property interests …. 1625, 1626 Phillips v Homfray …. 1617 proprietary torts …. 1606, 1610 unjust enrichment, and …. 1804, 1813, 1814 waiver of tort, and …. 1801, 1806, 1841 Retention of benefit …. 245, 311

Revenue see Crown, restitution against; Crown, restitutionary right Reversed judgments see Judgments reversed or set aside Romalpa clause bailment, and …. 1169 Sale of goods see also Necessitous intervention; Quantum valebat acceptance of …. 1037–1041, 1174, 1415, 2323 bargained and sold …. 113, 115, 119, 203 bona fide purchase, and …. 2527, 2528, 2530 common counts, and …. 113, 115, 119, 203 consumers, to …. 1175 contracts, rescinded or set aside, and sale of …. 1336–1338 Crown, contracts for …. 2104 damages …. 1627 equity, and …. 1336–1339 ineffective contracts and acceptance …. 1037–1041 international see International sale of goods necessaries …. 1037, 1039, 1040 rescinded or set aside …. 1337, 1338 sold and delivered …. 115, 119, 203, 914 tort …. 1627 valuation, where goods accepted …. 1415 wrongful dealing …. 1841 Sale of land deposit, recovery of …. 1130, 1413 discharge of, agreement, by …. 1216 election, defence of, and …. 2318 entire contract, as …. 1153

failure of consideration …. 1019, 1118, 1121, 1122, 1125, 1126, 1220 failure of condition, and …. 1219 prospective …. 1131 forfeiture, relief against, and …. 1136, 1141, 1142, 1169, 1170, 1439 deposit, of …. 1144, 1148 part payments, of …. 1143 restitutio in integrum, and …. 1439 guarantors of …. 1135 rescission of …. 1331 consensual …. 1323 restitutio in integrum, and …. 1331, 1432, 1433, 1437, 1438, 1439 Seddon’s case, rule in, and …. 2323 specific performance of …. 1141, 1169, 2310 Statute of Frauds, and …. 1019 ‘subject to contract’ …. 1006 Salvage admiralty jurisdiction …. 221 incontrovertible benefit …. 153, 814 land …. 835 maritime salvage …. 221, 814, 817, 820, 829, 834, 836, 837 necessitous intervention, and …. 814, 817, 820, 829, 834, 835, 836, 837 ‘no cure, no pay’ policy …. 820 subvention …. 820 Services see Benefit; Quantum meruit Set-off acceptance of goods, and …. 1038 combination of claims …. 1536

Crown, restitutionary right …. 2103 forfeiture, relief against, and …. 1439 restitutio in integrum, and …. 1439 restitutionary claim, and …. 1439 void contract, where …. 1038 Setting aside see Judgments reversed or set aside Settlement see also Compromise account, of …. 1534 compromise, as instrument of …. 1328 contractual …. 2018, 2511 Crown, and …. 1016, 2018 disputed claim, of …. 2511 intimidation, procured by …. 1328 legal proceedings …. 441, 2514 partnership assets …. 614 wrongful killing, and …. 1928 Severance see Illegality, defence of Specific performance availability …. 1816 damages, and …. 1720 damages in lieu …. 1816, 1836, 1837 discharged contract, and …. 1169, 1170 discretionary relief, as …. 1148 election between remedies, and …. 2303, 2304, 2310 restitution, and …. 2310 equitable interest, as basis for …. 1118 forfeiture, relief against, by …. 1139, 1141, 1143, 1170 unjust enrichment …. 244

Stakeholder illegality, and …. 2634, 2635 quasi-stakeholder …. 2634 Statute restitutionary claims and …. 223–233 Statute of Frauds see also Inherently ineffective contract benefit acceptance of, and …. 1025 contracts affected by …. 1002, 1011 estoppel, and …. 1046 performance, and …. 1046 preliminary agreement, and …. 1044 quasi-contract, and …. 1025 restitution, and …. 230, 1019, 1020, 1024, 1025, 1029–1032 unenforceable contract, and …. 230, 1002, 1011, 1039 Statutes of limitation application …. 2701, 2715 Australian Consumer Law …. 2725 Crown, restitution against …. 2039, 2726 dependent claims …. 2727, 2734 benefit, when received …. 2735 causes of action …. 2729, 2733 contract of approaches …. 2730 conversion …. 2727, 2728, 2729, 2730, 2731, 2732 England, approach …. 2731 evasion of time bar …. 2728 forms of action …. 2733 successive wrongs to goods …. 2732 United States, approach …. 2731

equitable claims …. 2736 breach of trust …. 2737 constructive trusts …. 2737 contribution …. 2738 frustrated contracts …. 2724 generally …. 2704, 2705, 2711, 2714 independent claims …. 2720 accrual of cause of action …. 2720 Australian Consumer Law …. 2725 Crown, restitution against …. 2726 enrichment not discharging obligation …. 2722 enrichment pursuant to obligation …. 2723 frustrated contracts …. 2724 unjust enrichment principle …. 2721 limitation periods …. 2717 alternative claims …. 2719 breach of contract …. 2719 date of accrual …. 2719 effect of expiry …. 2718 extension or postponement …. 2703, 2739 acknowledgment of debt …. 2740 fraud …. 2742 fraudulent concealment …. 2742 mistake …. 2741 onus of proof …. 2739 quasi-contract …. 2719 standard periods …. 2717 onus …. 2703 restitution, and …. 2714

waiver of tort …. 1533, 2727, 2730, 2732, 2742 Subrogation availability of remedy …. 255, 603, 639, 640 conceptual approach …. 255 condition precedent …. 649 consensual subrogation …. 638 co-sureties …. 612 equity …. 242, 244, 250, 255, 639, 649 generally …. 255, 601, 603, 637, 639 historical development …. 639 hotchpot …. 649 insurers …. 618 liability rules …. 641, 649 actual payment …. 643 imminent liability …. 642 present liability …. 642 necessitous intervention, and …. 843 non-consensual subrogation …. 638 historical development …. 639 varieties …. 640 proprietary remedies …. 242, 244, 250, 255 reviving subrogation …. 640 securities, right to …. 649 simple subrogation …. 640 source of principle …. 604, 605 unconscientious conduct …. 255 underlying rationale …. 639 unjust enrichment, and …. 255, 257, 606, 639

varieties of subrogation …. 640 Surety see also Guarantor claim against …. 1135 contribution …. 604, 605, 612, 618, 642, 645, 647, 649 guarantor, as …. 1135 interest, and …. 2811 recoupment …. 604, 605, 627, 642, 645, 647 subrogation …. 604, 605, 637, 649 Taxation interest, and …. 2805, 2808, 2809 Taxpayers see Crown, restitution against Tenants in common contribution …. 617 Terminology economic duress …. 518 failure of consideration …. 145 generally …. 145, 203 implied contract theory …. 145 improper pressure …. 518 money had and received …. 203, 1202, 2312 quantum meruit …. 145 quasi-contract …. 145, 203 reasonable remuneration …. 145, 203, 912, 1150 restitutionary claims …. 145 restitutionary damages …. 1803 unconscientious conduct …. 175 unconscionable conduct …. 175 unjust enrichment …. 145

waiver of tort, of …. 2313 Testator see also Will; Wrongful killing contribution, and …. 621 quantum meruit, and …. 1027, 1416 Third parties see also Necessitous intervention; Subrogation improper pressure, and …. 502 misdirected funds …. 1634 plaintiff’s expense, at …. 159 restitution against …. 910, 1518 tracing …. 303 unauthorised disbursal of money …. 308 wrongful killing, and …. 1919, 1925 wrongs …. 1518 Tort account of profits …. 1616, 1637, 1639 Phillips v Homfray …. 1617 affirmative duties …. 806 assignment of action …. 1534 bases of liability …. 210 cause of action …. 206, 207 contract, and …. 211, 213, 214 breach of contract, and …. 1840 contribution …. 608, 609 conversion …. 1522, 1534, 1608 alternative claims …. 1515 detinue, and …. 1609 inadequacy of damages …. 1612 measure of damages …. 1627

crimes …. 1604 damages …. 1602, 1613, 1616, 1637, 1639 conversion …. 1515, 1522, 1534, 1612, 1627 deceit …. 1633 detinue …. 1612, 1628, 1629 inadequacy of damages …. 1612 mesne profits …. 1614, 1615, 1625, 1626 object of damages …. 1809 Phillips v Homfray …. 1617 sale of goods …. 1627 taking of minerals …. 1624 trespass …. 1607, 1614, 1615, 1616, 1617, 1625, 1626 use and occupation of land …. 1615, 1625, 1626, 1637 wrongful use of goods …. 1628, 1629, 1637 detinue …. 1609, 1612, 1628 measure of recovery …. 1629 functions of law …. 211 generally …. 1601 ineffective contracts, and …. 1042, 1046 interference with property interests …. 1623 taking of minerals …. 1624 use or occupation of land …. 1625 limits of restitution …. 1636 money claims …. 1618, 1630 compulsion …. 1631 deceit …. 1633, 1635 fraudulent inducement …. 1635 misdirected funds …. 1634 theft …. 305, 315, 1632, 1634

necessitous intervention, and …. 806, 852 negligence, of …. 1043, 2313 object of law …. 211 personal remedies …. 1611, 1613, 1616 proprietary torts …. 1606, 1610 conversion …. 1608 detinue …. 1609 trespass …. 1607 quantification of relief …. 213 remedies …. 212, 213, 217, 1602, 1620, 1622 account of profits …. 1616, 1617, 1637, 1639 constructive trust …. 1612 excluded torts …. 1638 interference with property interests …. 1623–1629 limits of restitution …. 1636–1639 mesne profits …. 1614, 1615 money claims …. 1618, 1630–1635 personal remedies …. 1611, 1613, 1616 quasi-contractual claims …. 1617 specific restitution …. 1612 restitution, and …. 210, 212, 213 overlap …. 217 restitutionary damages …. 1601, 1603, 1616, 1639, 1840 assessment …. 1603 compensatory principle, and …. 1602 interference with property interests …. 1625 Phillips v Homfray …. 1617 proprietary torts …. 1606, 1610

sale of goods …. 1627 statutory regulation …. 1605 trespass …. 1607, 1625 measure of recovery …. 1626 mesne profits …. 1614, 1615, 1625, 1626 Phillips v Homfray …. 1617 unauthorised use of goods …. 1628, 1629 wayleave damages …. 1616, 1617 use and occupation of land …. 1615, 1617, 1625 causes of action …. 1625 measure of recovery …. 1626 waiver see Waiver of Tort wrongful taking of minerals …. 1624 wrongful use of goods …. 1628, 1637 measure of recovery …. 1629 wrongful use of land …. 1625, 1626, 1637 Tracing bona fide purchaser, and …. 2522 common law …. 303, 445, 1619 stripping of profits …. 309 consideration, and …. 2522 equity …. 303 function …. 303 generally …. 236, 303 knowing receipt …. 314 mistaken payments …. 433, 445 Chase Manhattan …. 447 money had and received …. 1632

nemo dat rule, and …. 2527 process, as …. 303 proprietary claims …. 236, 303 stripping of profits …. 309 third parties …. 303 waiver of tort, and …. 1619 Trespass damages …. 1607, 1616, 1625 measure of recovery …. 1626, 1629 mesne profits …. 1614, 1615, 1625, 1626 Phillips v Homfray …. 1617 unauthorised use of goods …. 1628, 1629 wayleave damages …. 1616, 1617 forms of trespass …. 1607 generally …. 1607 Trustee see also Fiduciary relationship; Trusts ‘agency defence’ …. 435 breach of trust …. 2737 contract damages …. 1828 contribution …. 615, 616 illegality, and …. 2618, 2632 interest rate …. 2814 statutes of limitation, and …. 2737 wrongful killing, and …. 1921, 1922, 1926 Trusts constructive see Constructive trusts knowing receipt …. 304, 312 beneficial receipt of property …. 313, 314

defences …. 313, 318 elements …. 313 information …. 314 knowing assistance, and …. 313 knowledge …. 313, 317 unauthorised dealing …. 313, 316 unjust enrichment …. 313 trust property …. 313, 315 recoupment …. 630 resulting trusts …. 242, 254 illegality, and …. 2624 mistaken payments …. 447 wrongful killing, and …. 1919 Ultra vires see also Crown, restitutionary right corporations, and …. 1010 Crown, restitution against …. 2033 demand …. 169, 203 duress colore officii, and …. 529 implied contract theory, and …. 126, 1021 restitutionary claim …. 169, 203 implied contract theory and …. 1021 inherently ineffective contract …. 1021 policy and …. 1021 void contract, as …. 1010 Unconscientious conduct see Unconscionable conduct Unconscionable conduct see also Contract rescinded or set aside; Restitutio in integrum; Unjust contract change of position, and …. 2405

compromise, and …. 1332 contract set aside for …. 1310, 1314 ‘catching bargains’, and …. 1314 consequences of …. 1318 discretion and …. 1314, 2212, 2713 delay, and …. 2706, 2713 equity of …. 1310 mistake, and …. 1008, 1311 restitutio in integrum, and …. 2212, 2324 sale of goods contract …. 1337 special disability, and …. 1314 damages for, no …. 1304 defence, as …. 2609 duress, and …. 1312 election between rights, and …. 2322 estoppel …. 451, 1046, 2322, 2405, 2712 fair trading legislation …. 504 limitation periods …. 2725 forfeiture, relief against, and …. 1140, 1144 fraudulent concealment …. 2742 generally …. 175, 504, 533, 1315, 1316, 1334, 1339, 1403 gifts …. 504 illegality, and …. 2609 incontrovertible benefit …. 153 limitation periods …. 2725 mistake, and …. 1008, 1311 oppression, and …. 2609 overdue payment …. 1332 part performance, doctrine of, and …. 1046

policy, and …. 2609 proprietary remedies …. 255, 256 remedies …. 504, 533 rescission, confirmation of …. 1310 restitution, and …. 166, 173, 175 acceptance of benefit …. 175, 1025, 1035 concept of, and …. 105 discretion and …. 166, 1337, 1339 failure of consideration, and …. 1320 money …. 1320, 1437 reliance, and …. 1035 remedies …. 255 restitutio in integrum, and …. 1318, 1337, 1437 defence of …. 2324 discretion, and …. 1318, 1330, 1337, 1437, 2324, 2334 sale of goods, and …. 1337 statutes of limitation …. 2725, 2742 subrogation …. 255 terminology …. 175 unjust enrichment, and …. 166, 168, 175 vitiating factor, as …. 1301 wrongful killing …. 1901, 1909, 1910, 1912 Undue advantage money had and received …. 117 Undue influence see also Contract rescinded or set aside; Improper pressure; Restitutio in integrum actual …. 1313 categories of …. 1313

causation, and …. 522 confidence, relationship of …. 1313 contract induced by, relief from …. 1313 contract set aside for …. 1310, 1313, 2706 consequences of …. 1318 equity of …. 1310 restitutio in integrum, and …. 1318, 1437, 2324 sale of goods contract …. 1337 damages for, no …. 1304 doctrine of …. 504 duress, and …. 1313 generally …. 504, 533 gifts …. 504, 519 illegality, and …. 2626, 2636, 2638 presumed …. 1313 proof, burden of …. 1313 proved …. 1313 remedies …. 504, 533 rescission, confirmation of …. 1310 restitution based on …. 1329–1330 discretion, and …. 1329, 1330 restitutio in integrum, and …. 1318, 1437 defence of …. 2324 reasonable remuneration, allowance of …. 1437 sale of goods, and …. 1337 statute, and …. 1315, 1316 threats to prosecute …. 515 unjust enrichment …. 168, 169 vitiating factor, as …. 1301

Undue pressure see Improper pressure; Undue influence United States emergency assistance doctrine …. 824, 852 influence in restitution law …. 104 Unjust contract see also Unconscionable conduct consumer sale, and …. 1339 relief …. 228, 1316 restitution, and …. 1335, 1339 discretionary powers …. 228, 1335, 1339 statute, under …. 1316, 1335, 1339 Unjust enrichment absence of cause …. 106, 139, 165 unauthorised disbursal of money …. 306 account of profits, and …. 1509, 1711 benefit see Benefit breach of confidence …. 1702 cause of action …. 206, 207 current uncertainty …. 208, 209 concept …. 108, 109, 131, 135, 205, 208 unifying concept …. 131, 133–139, 208 conferral of benefit …. 108 constructive trust, and …. 249, 250, 256, 1728 contribution, and …. 606, 607 criticisms …. 107, 139 Crown, restitution against …. 2004, 2040 Woolwich principle …. 2018 defences …. 136, 144 affirmative defences …. 144

elements, and …. 141 restitutionary defences …. 136, 140, 141, 144 duress, and …. 1305, 1326 elements …. 110, 140, 141 benefit …. 141, 146, 931 acceptance …. 150, 156, 157, 158, 173, 174, 931, 934 deemed …. 1167, 1168 ‘exchange value’ approach …. 148 free acceptance …. 157, 158, 173, 174 incontrovertible benefit …. 151–153, 932, 1036, 1416, 1418, 1437, 1438, 1439 intangible benefit …. 148 non-requested benefits …. 157–158, 173, 174 pure services …. 935 realisable benefit …. 151, 153, 932, 1035, 1036 realised benefit …. 932, 1035, 1036, 1040 reliance …. 149 requested benefits …. 154–156, 933, 935 saving of necessary expense …. 148, 153 tangible benefit …. 148 injustice …. 141, 142, 164 absence of cause …. 165 acceptance of benefit …. 173, 174 compulsion …. 168 discretion, contrast …. 166 failure of condition …. 171 failure of consideration …. 170, 172 illegality …. 169 mistake …. 167, 168

unconscientious conduct …. 168, 173, 175 undue influence …. 168, 169 vitiating factors …. 167–169 legal concepts, as …. 142 no defence available …. 141 plaintiff’s expense, at …. 141, 142, 159 analysis and issues …. 163 breach of contract …. 1804 primary duty …. 159, 160 restitutionary damages …. 1804 secondary duty …. 159, 161 third parties …. 159 waiver of tort, and …. 162 equitable aspects …. 123 failure of consideration …. 170, 917, 1114 partial failure …. 172 forfeiture, relief against, and …. 1142 frustrated contract, and …. 1231 functions …. 135 independent claims, and …. 219 intellectual property infringements …. 1702 interest, and …. 2801, 2807 judgments reversed or set aside …. 701, 712 knowing receipt …. 313 meaning …. 108 mistake …. 166, 167, 168, 204, 208 mistaken payments …. 203, 239, 403, 407 agents and intermediaries …. 433 defences, and …. 437

endorsement of principle …. 407 payees …. 403 necessitous intervention, and …. 804, 809, 813 policy considerations …. 805 pleading …. 132, 206, 208, 2904 policy, and …. 147 primary sense …. 159, 160 principles …. 135 quantum meruit, and …. 1152, 1155, 1156, 1159, 1160, 1161, 1162, 1167, 1168 recognition of …. 103, 104, 134, 216 cause of action, and …. 209 claims …. 138 implications …. 135, 136, 204, 209 recoupment, and …. 606, 607 reliance, and …. 149 restitutio in integrum, and …. 1330, 1435 restitutionary damages …. 1804 objective of award …. 1813, 1814 restitutionary remedies …. 255, 256 constructive trust …. 249, 250, 256 scepticism towards concept …. 123, 139 secondary sense …. 142, 159, 161, 1515 specific performance, and …. 244 statute, and …. 222, 229, 231, 607 subrogation, and …. 606, 639 terminology …. 145 third parties …. 910, 1156, 1518 unauthorised disbursal of money …. 306

unifying concept, as …. 131, 133–139, 208 implications of recognition …. 135 mistaken payments …. 407 valuation of claims …. 137, 143 waiver of tort, and …. 162 wrongful killing, and …. 1903, 1912, 1933 wrongs …. 1702 Unjust sacrifice necessitous intervention, and …. 813 Unrequested benefit see Benefit; Necessitous intervention; Officiousness Unsolicited payment or service see Necessitous intervention; Officiousness Valuation of claims bases for …. 1416 commission basis, award of, on …. 1416, 1417, 1419 contract price, relevance of …. 1421–1430 discharge for breach, on …. 1429 ceiling, no …. 1428, 1429 criticism of …. 1430 justifications for …. 1426, 1427, 1429, 1430 discharge without breach …. 1423, 1427 frustrated contracts …. 1427 generally …. 1417, 1419, 1421 reasonable sum, as …. 1422 rescinded contracts …. 1426 unenforceable contracts …. 1425 void contracts …. 1424

contract terms, relevance of …. 1417, 1419 generally …. 137, 1401, 1402 goods, where accepted …. 1415 market rate …. 1417 reasonable remuneration …. 1415 restitutio in integrum, and …. 1431–1439 discharged contract, and …. 1438 forfeiture, relief against, on terms …. 1439 generally …. 1431, 1432, 1433 inherently ineffective contracts …. 1435 international sale of goods …. 1436 rescinded contract, and …. 1437 statute, role of …. 1436 unjust enrichment, role of …. 1434 statute, under …. 1420 time for …. 1418 Vindication of title restitution as …. 219, Chapter 3 Voluntariness acceptance of benefit, and …. 1163 conferral of benefit …. 168 criterion for restitution …. 168 defence …. 441, 524 colore officii …. 529, 2011 honest claim, submission to …. 441 improper pressure, and …. 524 mistaken payments …. 412, 415, 416, 441 necessitous intervention …. 834 senses …. 168, 441

wrongful killing …. 1911 Wagering contract see Gaming contract Waiver acceptance of benefit, and …. 1163, 1164, 1174 account of profits, and …. 2304 condition precedent of …. 1006, 1012 contribution, and …. 618 election between remedies …. 1621, 2313 election right, against …. 2315 ubiquitous term, as …. 2315 Waiver of tort availability …. 221, 1619 breach of contract, and …. 1801, 1806, 1841 classes of wrongs …. 1622 conversion …. 1517, 1619 proof of debt …. 1532 unauthorised disbursal of money …. 306 dependent claims, and …. 162 statutes of limitation …. 2727 effect of pleading …. 1620 election between remedies …. 1517, 1621, 2313 generally …. 162, 1517, 1530, 1601, 1618 goods, successive wrongs …. 2732 history …. 1517, 1619, 1620 money had and received …. 1618, 1620, 1631 proof of debt …. 1532 personal claims …. 1519

proof of tort …. 1620 proprietary rights …. 1619 quasi-contract, and …. 129, 162, 220, 1620 ratification and satisfaction …. 1521 senses of …. 1517 specific receipt, and …. 1520 statutes of limitation, and …. 1533, 2727, 2730, 2732, 2742 statutory bars, and …. 1533 successive wrongs to goods …. 2732 terminology …. 2313 unauthorised disbursal of money …. 306 unjust enrichment, and …. 162 Want of title causes of action …. 301 defences …. 317 bona fide purchase …. 320 change of position …. 319 equitable claims …. 313 ministerial receipt …. 318 following …. 303 generally …. 301 personal remedies …. 302 retention of money …. 307 stripping of profits …. 309 proprietary remedies …. 302, 314 constructive trusts …. 315 tracing …. 303 knowing receipt …. 314 stripping of profits …. 309

unauthorised disbursal of money …. 304, 305 in specie recovery …. 312 independent cause of action …. 307, 308 mistake …. 308, 311 principle …. 305 proving ownership …. 310 retention of money …. 311 stripping of profits …. 310 theft …. 314 third parties …. 315 tracing …. 309 unjust enrichment …. 309 waiver of tort …. 221, 1619 Will see also Testator; Wrongful killing forfeiture of interest …. 1904, 1905, 1906, 1918, 1922, 1923, 1931, 1933 quantum meruit, and …. 1027, 1416 Wrongful conduct money had and received …. 117 Wrongful killing beneficiaries …. 1913 benefits liable to forfeiture …. 1920 contract …. 1926 Crown, and …. 1924 distribution of deceased’s estate …. 1922 family provision …. 1929 gifts over …. 1923 grant of probate …. 1921

intestacy …. 1930 joint tenancy …. 1927, 1930 letters of administration …. 1921 life tenants …. 1927, 1928 profits from crime …. 1930 settlements …. 1928 statutory entitlements …. 1929 third parties, and …. 1925 evidence and procedure …. 1915 causation …. 1918, 1919 conviction …. 1915, 1932 civil proceedings, and …. 1917 criminal acquittal …. 1916, 1932 third parties …. 1919, 1925 forfeiture rule …. 1502, 1505, 1902, 1904 attainder and forfeiture, and …. 1932 beneficiaries …. 1913 criticism and reform …. 1931–1933 developments in approach …. 1909, 1910, 1911, 1912 discretion …. 1910 evidence and procedure …. 1915–1919, 1932 flexible approach …. 1910, 1911, 1912 history …. 1904 insanity, and …. 1908, 1909, 1910 intention of killer …. 1905, 1910, 1912, 1933 moral culpability, and …. 1909 operation of rule …. 1906 punitive function …. 1907, 1933 restitutionary function …. 1933

statutory modification …. 1909, 1914 unconscionability …. 1901, 1909, 1910, 1912 generally …. 1505, 1524, 1901–1903 homicide …. 1902, 1904, 1906, 1909, 1911, 1912, 1915, 1918, 1926, 1932, 1933 joint tenancy …. 1918, 1927, 1930 manslaughter …. 1906, 1909, 1911, 1912, 1916, 1926, 1933 motor vehicles …. 1909, 1926 negligence …. 1911, 1919, 1926 public policy …. 1901, 1907 restitution, and …. 1903 third parties …. 1919 dual capacity …. 1925 unjust enrichment, and …. 1903, 1912, 1933 Wrongs account of profits, and …. 1509, 1512 alternative claims …. 1515 implications …. 1516 waiver of tort, and …. 1517 breach of confidence see Breach of confidence categories of wrongs …. 1522, 1526 anti-enrichment wrongs …. 1524 harm to an institution …. 1525 universal approach …. 1523 compensation …. 1508 equity …. 1511 damages see Damages; Restitutionary damages dependent claims …. 1513, 1514

fiduciary breach see Fiduciary breach generally …. 160, 161, 219, 1501, 1502 independent claims …. 1513, 1514 interest …. 2825 personal claims …. 1519 pleading …. 2917–2920 policy perspectives …. 1527 causation …. 1528 discretion and uncertainty …. 1529 remoteness of damage …. 1528 public policy, and …. 1502 reliance on wrong permitted …. 1519 extent of recognition …. 1522–1526 personal claims …. 1519 satisfaction and ratification …. 1521 specific receipt …. 1520 reliance on wrong required …. 1513 alternative claims …. 1515, 1516, 1517 commission of wrong …. 1514 conduct of defendant …. 1514 dependent claims …. 1513, 1514 independent claims …. 1513, 1514 third parties, claims against …. 1518 unjust factors …. 1514 waiver of tort …. 1517 remedies …. 1503, 1504, 1530, 1702 advantages …. 1534 compensation …. 1508, 1511, 1531

double recovery …. 1536 exemplary damages …. 1535 flexibility …. 1503 proof of debt …. 1532 role of remedies …. 1531 statutory bars …. 1533 scope of concept …. 1522 third parties, claims against …. 1518 tort see Tort; Waiver of tort wrongdoer, in favour of …. 1506