Restitution Past, Present and Future: Essays in Honour of Gareth Jones 9781472558794, 9781901362428

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Freface This year will see the retirement of Gareth Jones from the Downing Professorship of the Laws of England at Cambridge University, after a distinguished tenure of that Chair for nearly a quarter of a century. The Law Faculty at the University decided to honour his great contribution to the development and teaching of the law, not just by a volume of essays written in his honour, but by a Conference at which papers would be presented and discussed, and by the subsequent publication of those papers. This volume contains the fruit of that imaginative decision. The Conference was entitled "Restitution: Past, Present and Future", and so was intended to celebrate Gareth's extraordinary contribution to that subject, both as author and teacher. The occasion was a tremendous success. As the reader will discover, the papers were of a very high standard, and contained original work of considerable significance. They demonstrate of themselves the determination of the contributors to show their admiration for Gareth and his work. But further evidence of this was provided by the extraordinarily large number of lawyers—judges, practitioners, law teachers and postgraduate students—who attended the Conference; by the liveliness of the discussions which followed the presentation of the papers; and above all, by the spirit of the Conference. I have never attended a more enjoyable occasion. Everybody seemed to be party to a benign conspiracy to generate a combination of high scholarship and sheer fun. I believe that Gareth's presence of the Conference contributed a great deal to this outcome. There can be no doubt about the standing of Gareth Jones in the world of legal scholarship, not only in this country but also in the USA. This is because Gareth is not only a distinguished author. He is also, beyond doubt, one of the finest law teachers in the common law world. It is the principal function of a professor to profess; and Gareth has performed that function with such skill that he has been invited back, again and again, to teach law and equity in American Law Schools. But it is perhaps his work in the development of the Law of Restitution which is his greatest contribution, and for which he will be principally remembered. I know how lucky I was to find Gareth as my collaborator in the enterprise which became Goff and Jones on Restitution. We were introduced by Brian Simpson, who had already introduced Gareth to his future wife, Vivienne. Gareth was the ideal co-author—hard-working, good tempered, and generous to a fault. But it is not I alone who am in his debt for his great contribution to this subject. It is the whole community of common lawyers who reaped that

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benefit. It is they who were represented by the authors of these papers and by all those who attended the Conference, who combined on this occasion to pay tribute to Gareth and his achievements during his distinguished career. This book, in which those papers are published, constitutes, I believe, a contribution to the Law of Restitution which is not merely valuable in its own right, but provides a fitting encomium of Gareth and of his work. I gladly commend it to all who may read it. Robert Goff House of Lords January 1998

Table of Cases Aberdeen Railway Co. v. Blaikie (1854) 1 Marq. 461 92, 95 Aberdeen Town Council v. Aberdeen University (1877) 2 App. Cas. 544 90 AG v. Blake [1997] 1 All ER 833 101,153,159,160,220 300,309,311 AG v. Guardian Newspapers (No.2) [1990] 1 AC 109, 286C 156 AG v. Lord Dudley (1815) G Coop 146 90 AG of Hong Kong v. Humphreys Estate Ltd [1987] AC 114 188 AG for Hong Kong v. Reid [1994] 1 AC 324 (HL) 17,64,69-72, 82, 101,159,206-7,263, 297,312,332,334 Agip (Africa) Ltd. v. Jackson [1991] Ch 547 68, 201,222,227, 243,316 Air Canada v. Ontario (Liquor Control Board) [1997] 2 SCR 581 ....277, 287-8 Albazero, The [1977] AC 774, 845 138 Allen v. Snyder [1977] 2 NSWLR 685, 698 200 Andrews v. Ramsay &c Co. [1903] 2 KB 635 108 Anon. (1695) B & M 468 5.1 Anon. (1697) B & M 469 51 Aquaculture Corp v. NZ Green Mussel Co Ltd [1990] 3 NZLR 299 ....255,271 Arris v. Stukely (1677) B & M 466 38,51, 55,140 Asher v. Wallin (1707) 11 Mod. 146 141 Astley v. Reynolds (1731) 2 Stra. 915 51,55 Ayers v. The South Australian Banking Co (1871) 3 PC 548 211 Bailey v. Barnes [1894] 1 Ch. 25 72 Banque Financiere de la Cite v. Pare Battersea Ltd (Unreported, 1998) 308 Banque Keyser Ullmann SA v. Skandia (UK) Insurance Ltd. [1990] 1 QB 665, 771-81; [1991] 2 AC 249,280 18,190 Barclays Bank pic v. Khaira [1992] 1 WLR 623, 637 190 Barclays Bank pic. v. Boulter [1997] 2 All ER 1002 96-7 Barclays Bank pic v. O'Brien [1994] 1 AC 180 129,190, 257 Barclays Bank Ltd. v. Quistclose Investments Ltd. [1970] AC 567 75-6,217, 223-4 Baltic Shipping Co v. Dillan (1993) 176 CLR 344 251 Barclays Bank v. WJ Simms Ltd [1980] QB 695 130,140 Bartlet v. Dimond (1845) 14 M & W 49 49 Barton v. Armstrong [1976] AC 104 131 Baumgarter v. Baumgarter (1987) 164 CLR 137 263,281

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Baylis v. Bishop of Lindon [1913] 1 Ch 127 238, 310 Beckingham and Lambert v. Vaughan (1616) B & M 465, Moo. 854 48 Belmont Finance Corp Ltd v. Williams Furniture Ltd (No 2) [1980] 2 All ER 393, 405 231, 236 Bentley v. Craven (1853) 18 Beav. 75 90,110,113 Berkley v. Poulet [1977] 1 EGLR 86,93 206 45 Bespiche v. Coghill (1638) KB 27/1561 Betts v. Gibbins (1834) 2 Ad. & E. 57 46 BG Checo International Ltd. v. British Columbia Hydro and Power Authority [1993] 1 SCR 12 296 Birch v. Blagrave (1755) Amb. 274 201 Bishopsgate Investment Management Ltd. (in liq) v. Homan [1995] 1ALLER347 264 Blackburn v. Mackey (1823) 1 C & P 1 48,113 Blackham v. Haythorpe (1917) 23 CLR 156 91,120 Blackpool and Fylde Aero Club Ltd. v. Blackpool BC [1990] 1 WLR 1995 ..168 Blueberry River Indian Band v. Canada (Department of Indian Affairs and Northern Development) [1995] 4 SCR 344 277 Boardman v. Phipps [1967] 2 AC 46 73, 82, 99,100,102,116,117,244 Bodmer v. Turnage 233 P 2d 157 (1951) 176 Boeing Co. v. Boeing Travel and Tourist [1989] (3) PM 108 145 Bollinger v. Costa Brava Wine Co. [1960] Ch 262 146 Bonnell v. Fowke (1657) 2 Sid. 4 50-1 Bolton Partners v. Lambert (1889) 41 Ch D 307 216 Boscawen v. Bajwa [1996] 1 WLR 328 83,166, 208, 214, 223, 224, 227,308,313,316,323 Bosden v. Thinne (1603) Yelv.40, Cro. Jac. 40 45 Boustany v. Pigott [1995] 69 P & CR 298 222 Bowkett v. Action Finance Ltd [1989] 1 NZLR 449 258 Bowmakers Ltd v. Barnet Instruments Ltd [1945] KB 65 211 Box v. Midland Bank Ltd. [1979] 2 Lloyds Rep 391 190 Breen v. Williams (1996) 186 CLR 71 88, 93,102,128,257, 282,299,302 Bretton v. Barnet (1599) Owen 86 39 Brewer Street Investments Ltd. v. Barclays Woollen Co Ltd. [1954] 1 QB 428 178-9,185-6 Brickenden v. London Loans &c Savings Co. [1934] 3 DLR 465...'. 113 British Steel Corporation v. Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504 170,171,172-3,197 Bristol & West B.S. v. May, May & Merrimans (a firm) [1996] 2 All ER801 ; 103 Bristol & West B.S. v. Mothew [1996] 4 All ER698 88,98,103-4,114, 119,120,216,302 Brown v. Brown (1993) 31 NSWLR 582 201

Table of Cases Brown v. Hodgson (1811) 4 Taunt. 189 Brown v. I.R.C. [1965] AC 244 Bryson v. Bryant (1992) 29 NSWLR 188 Bulmer, ex pane Greaves, In Re [1937] Ch 499 Bin-land v. Earle [1902] 83 Burmah Oil v. Lord Advocate [1965] AC 75 (HL)

xi 46 100,102 27 119 89, 90 32

C. v. MGM [1997] 1 WLR 131 (CA) 162 Camelot Group pic v. Centaur Communications [1998] 1 All ER 251 (CA) .161 Campbell v. Walker (1800) 5 Ves. 678 90-1 Canson Enterprises Ltd. v. Boughton & Co (1991) 85 DLR (4th) 129 (SCC) 10,262,265, 277,291-5,300,301 Cape Breton Co., Re (1885) 29 Ch D 795 109-11,115 Capitol Records Inc. v. Mercury Records 221 F. 2d 657 (1955) 150 Car Universal Finance v. Caldwell [1965] 1 QB 525 331-2,334 Carl Zeiss Stiftung v. Herbert Smith & Co (No 2) [1969] 2 Ch 276 235 Carpenter v. Williams 154 SE 298 (1930) 258 Case v. Roberts (1817) Holt NP 500 49 Cassell &c Cp v. Broome [1972] AC 1027 161 Castlereagh Motels Ltd. v. Davies-Rose (1966) 67 SR (NSW) 279 261 Cavendish-Bentinclc v. Fenn [1887] 12 App.Cas. 652 ...103,104,110,115 Central Trust Co. v. Refuse [1986] 2 SCR 147 291 Chan v. Zacharia (1984) 154 CLR 178 100 Chase Manhattan Bank v. Israel-British Bank [1981] Ch 105 20,35, 83,212, 221,229,334 Chesworth v. Farrar [1967] 1 QB 407 136,325-6,336-7 Childers v. Childers (1857) 1 De G & J 842 201 Church v. Church (1656); 45 CIBC Mortgages v. Pitt [1994] 1 AC 200 115,257 Cie Immobilier Vigier Ltee v. Laureat Giguerlva [1977] 2 SCR 67 298 City of London v. Goray (1676) 3 Keb. 677 38 Clarke v. Shee and Johnson (1774) 1 Cowp 197 315 Clarks Case (1613) Godb. 210 39 Colbeam Palmer Ltd. v. Stock Affiliates Pte Ltd. (1968) 122 CLR 25 267 Cole v. Saxby (1800) 3 Esp. 159 46 Coleman Engineering Co v. North American Aviation Inc 420 P 2d 713 (1966) 177 Coles v. Trecothick (1804) 9 Ves. Jun. 234 94-5 Combe v. Combe [1951] 2 KB 215 189 Commercial Bank of Australia Ltd. v. Amadio (1983) 151 CLR 447 257-8, 265 Commissioner of State Revenue v. Royal Insurance Australia Ltd. (1994) 182 CLR 51 18

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Commonwealth of Australia v. John Fairfax &C Sons Ltd. (1980) 147 CLR39 265 Commonwealth Bank of Australia v. Smith (1991) 102 ALR 453 257 Commonwealth of Australia v. Verwayen (1990) 170 CLR 394 258,265, 269,270 Compaq Computers Ltd. v. Abercorn Group Ltd. [1991] BCC 484 66 Cook v. Deeds [1916] 1 AC 554 263 Cookef. Head [1972] 1 WLR518 223 Core v. May (1536) B & M 243 39 Cornish v. Midland Bank pic [1985] 3 All ER 513,523 190 Cowan de Groot Properties Ltd v. Eagle Trust Pic [1992] 4 All ER 700 249 Crabb v. Arun District Council [1976] Ch 179 265,269 Crown House Engineering Ltd. v. Amec Projects Ltd. (1990) 48 BLR 32 173 Cuny v. Brugewode (1506) 38 Dale v. I.R.C. [1954] AC 11 1-5 Daly v. Sydney Stock Exchange Ltd [1986] 160 CLR 271 216 Daniels v. Anderson (1995) 37 NSWLR 438 262 David Securities Pty Ltd. v. Commonwealth Bank of Australia (1992) 175 CLR 353 130,251,319,336 Davis v. Bryan (1827) 6 B & C 651 214 49 Davison v. Atkinson (1792) 5 Term Rep. 434 Dawson, Re [1966] 2 NSWLR 211 106,261 Day v. Mead [1987] 2 NZLR443 265, 273 De Bernardy v. Harding (1853) 8 Ex. 822 44 Dean v. McDowell (1877) 8 Ch D 345 263 Decker v. Pope (1757) Selw. NP (1812 edn.), I. 71-2 46 Deering v. Winchelsea (1787) 1 Cox CC 318, 2 Bos. &c Pul. 270 46 Deglman v. Guaranty Trust Co of Canada [1954] SCR 725 276, 297,299 Demagogue Pty Ltd v. Ramensky (1992) 39 FCR 31 256 Dent v. Scott (1648) Aleyn. 61 47 Derry v. Peek (1889) 14 App Cas 337 260 Dickson Elliott Longeran Ltd. v. Plumbing World Ltd. [1988] 2 NZLR 608, 612 180 Dies v. British and International Mining and Finance Co Ltd. [1939] 1 KB 724 185 Diplock, Re [1948] Ch 465, 514 27, 224,227,239^2,245,323,325 Disbourne v. Donaby (1649) Rolle Abr. i. 30 49 Donaghue v. Stevenson [1932] AC 562,619 (HL) 159 Dougan v. Macpherson [1902] AC 197 94 Downsview Nominees Ltd. v. First City Corp Ltd. [1993] 1 NZLR 513 262 Dusik v. Newton (1985) 62 BCLR 1 261, 266 Dutch v. Warren (1722) 1 Stra. 406 52 Dyer v. Dyer (1788) 2 Cox Eq. 92 223

Table of Cases Dyer v. East (1669) 1 Sid. 425,1 Mod. 9, 2 Keb. 554,1 vent 42,146 Dyxson v. Bulson (1533) KB 27/1086

xiii 47 42

E.Pfeiffer Weinkellerei-Weineinkauf GmbH v. Arbuthnot Factors Ltd; [1988] 1 WLR 150 66 Eagle Trust Pic v. SBC Securities Ltd. [1993] 1 WLR 484 249 Earhart v. William Low Co. 600 P 2d 1344 (1979) 175,176-8 Earl of Chesterfield v. Janssen (1751) 2 Ves Sen 124 265 Edgar v. Caskey (1912) 7 DLR 45 128 Edgington v. Fitzmaurice (1885) 29 Ch D 459 191 Edwards v. Bates (1844) 7 M & G 590 49 Edwards v. Lees Administrators 976 SW 2d 1028 (1936) 300 Edwards v. Lowndes (1852) 1 E & B 81, 89 49 Edwards v. Meyrick (1842) 2 Hare 60 94 El Ajou v. Dollar Land Holdings pic [1993] 3 All ER 717 120,201,229 Elders Pastoral Ltd v. Bank of New Zealand [1989] 2NZLR 180 258,259, 263,281 English v. Dedham Vale [1978] 1 WLR 93 144,259 Equiticorp Industries Corp Ltd v. Hawkins [1991] 3 NZLR700 259 Ervin Warnink v. Townend [1979] AC 731 146 Esso Petroleum Co Ltd. v. Mardon 190 Exall v. Partridge (1799) 3 Esp. 8, 8 Term Rep. 308 46 Farebrother v. Ansley (1808) 1 Camp. 343 46 Farmer v. Dean (1863) 32Beav. 327 91 Farrar v. Farrars Ltd. (1888) 40 Ch D. 395 96 Farrington v. Rowe, McBride 8c Partners [1985] 1 NZLR 83 265 FC Jones & Sons v. Jones [1996] 3 WLR 703 84,227 Federal Sugar Refining Co. v. U.S. Sugar Equalisation Board 268 F. 375(1920) 139,259 Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1943] A.C. 32,61 3, 208, 276,288,306,310 Field v. Dale (1614) Rolle Abr. I. 11-12 47 Foss v. Harbottle (1843) 2 Hare 461 102 Foster v. Spencer [1996] 2 All ER 672 116 Frame v. Smith [1987] 2 SCR 99 279, 283-4 Framson v. Delaware (1595) Cro. Eliz. 458 ...39 Fullwood v. Hurley [1928] 1 KB 498 108 Futuretronics International Pty Ltd. v. Larkin (1989) 96 FLR 464 268 G&C Kreglinger v. New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25 Gates v. City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 Gibson v. Jeyes (1801) 6 Ves 678

252 254 128

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Giradet v. Crease & Co. (1987) 11 BCLR (2d) 361 (SC) 282 Gilbert v. Ruddeard (1607) Dyer (Treby ed.) 272 48 Giles v. Edwards (1797) 7 Term Rep. 181 52 Gillies v. Keogh [1989] 2 NZLR 327 257, 259, 270 Giradet v. Crease & Co. (1987) 11 BCLR (2d) 361 (SC) 282 Gissing v. Gissing [1971] AC 896 223 Goldcorp Exchange Ltd., Re [1995] 1 AC 74 66,76,264,281,282,297 Goldsmith v. Bhoyrul [1997] 4 All ER 268 162 52 Gompertz v. Demon (1832) 1 Cr. & M. 207 Goss v. Chilcott [1996] AC 788,798 182,214 Gray v. New Augarita Porcupine Mines Ltd. [1952] 3 DLR 1 93 Greenvile v. Slaning (1613) Cro. Jac. 687 39 Grist v. Bailey [1967] Ch 532 308 Guerin v. Canada [1984] 2 SCR 335 277, 278,293 Guinness pic v. Saunders [1990] 2 AC 663 90-3,106-8,116 Hadley v. Baxendale (1854) 9 Ex 341,156 ER 145 292 Hagan v. Waterhouse (1991) 34 NSWLR 308 225 Hall v. Woollen (1620) Hutton 39 44 Hallett's Estate, Re (1880) 13 Ch D 696,710 224-5,245 Hambly v. Trott (1776) Cowp. 371,98 ER 1136 135 Hardoon v. Belilos [1901] AC 118 204 Harper v. Adametz 113 A.2d 136,55 A.L.R. 2d (1955) 148 Harris v. De Bervoir (1624) Cro. Jac. 687; 2 Rolle Rep. 440 39 Harrison v. Kirk [1904] AC 1,7 240 Harrods Ltd. v. Harrodian School Ltd. [1996] RPC 697 145-7 Hart v. EP Dutton & Co Inc 93 NYS 2d 871 (1949) 161 Hasser v. Wallis (1708) 1 Salic. 28 52 Hedley Byrne &c Co Ltd. v. Heller & Partners Ltd [1964] AC 465 261 Hely-Hutchinson v. Brayhead Ltd. [1968] 1 QB 549 90,92 Henderson v. Merrett Syndicates [1994] 3 WLR 761 (HL) 24,88,204 138 Hepburn v. A. Tomlinson (Hauliers) Ltd. [1966] AC 451 Hickley v. Hickley (1876) 2 Ch D 190 97 Hodgkinson v. Simms (1994) 117 DLR (4th) 161 257,277,279-80, 283,284-5,292, 294,300 Hodgson v. Marks [1971] 1 Ch 892 202 Hoffman v. ed Owl Stores (1965) 133 NW (2d) 267 192 Holder v. Holder [1968] 1 All ER 665 90 Holland v. Hodgson (1872) LR7CP328 16 Holmes v. Hall (1704) 6 Mod. 161 51 Holt v. Markham [1913] 1 KB 504 54,300,310 Hornsby Building Information Centre Pty Ltd v. Sydney Building Information (1978) 140 CLR 216 254

Table of Cases

xv

Hospital Products Ltd v. United States Surgical Corp (1984) 156 CLR41 259,284 Howard v. Wood (1680) B & M 478,2 Show. 21,2 Lev. 245, T. Jones 126,1 Freem. 473,478 51, 55 Howlett v. Osbourn (1595) Cro. Eliz. 380 48 Hughes Aircraft Systems International v. Airservices Australia (1997) 146ALR1 253-4 Hunt v. Silk (1804) 5 East. 449 52 Hunt v. Wotton (1679) T. Taym 260 45 Hussey v. Palmer [1972] 1 WLR 1286 223 Imperial Mercantile Credit Association v. Coleman (1873) LR 6 HL189 Industrial Development Consultants v. Cooley [1972] 1 WLR 443 International News Service v. The Associated Press 248 U.S. 215 (1918)

93,97 99-100

James, Ex parte (1803) 8 Ves. 337 Jenkins v. Tucker (1788) 1 Hy Bla. 90 Jennings and Chapman Ltd v. Woodman, Matthews Sc Co [1952] 2 TLR 409 Johnson v. Buttress (1936) 56 CLR 113 Jones v. AMP Perpetual Trustee Company NZ Ltd. [1994] 1 NZLR 690 Jones v. Ryde (1814) 5 Taunt. 488 Joyce v. Sengupta [1993] 1 WLR 337 (CA)

150-1 91 45 185 265 95 52 161

Karak Rubber Co Ltd v. Burden (No 2) [1972] 1 WLR 602,632 236,241 Kecks Case (1744) 44 Keech v. Sanford (1726) Sel.Cas.T. King 61 154 Kelly v. Cooper [1993] AC 205 98 Kelly v. Solari (1841) 9 M 8c W 54 130,185 Kenora (Town) Hydro Electric Commission v. Vacationland Dairy Co-operative Ltd [1994] 1 SCR 80 277 Kleinwort Benson v. Birmingham CC [1996] 4 All ER 733 (CA) 18,209 Kleinwort Benson v. Glasgow City Council [1997] 4 All ER 641 (HL) 27-8, 306,325, 327-8 Kleinwort Benson Ltd. v. Sandwell BC [1994] 4 All ER 890 325 Knuller v DPP [1973] AC 435 (HL) 160 Korkontzilas v. Soulos (1997) 146 D.L.R. (4th) 214 220,262,263, 270, 271,277, 290-1 LAC Minerals Ltd. v. International Corona Resources Ltd. (1989) 61 DLR (4th) 14 263,271,277,279-80, 283,289,290,300

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Lamine v. Dorrell (1705) 2 Ld Raym. 1216 55,138 Lampleigh v. Brathwait (1615) Hob. 105, Moo. 866 45 Lane v. Dighton (1762) Amb. 409 201 Law v. Wilkin (1837) 6 Ad. & E. 718 48 Lee Panavision Ltd. v. Lee Lighting Ltd. [1991] BCLC 575 97 Leeds & Haniey Theatres of Varieties, In re [1902] 2 Ch 809 103, 261 Lench v. Lench (1805) 10Ves.511 201 259,281 Liggett v. Kensington [1993] 1 NZLR 257 Lipkin Gorman v. Karpnale [1991] 2 AC 458 25,122,141-2,163,166, 179,211,216,227 238, 241-2, 248,250,306, 314-16,320-1,324 Lister v. Stubbs [1890] 45 Ch D 1 64,69,70,72, 83,102 Lloyds Bank v. Bundy [1975] QB 326 129 223 Lloyds Bank v. Rosset [1991] 1 AC 107 Lonrho pic v. Fayed (No.2) [1992] 1 WLR 1,10-11 119,143^t, 148,206 Lord Napier and Ettrick v. Hunter [1993] AC 713 205-6, 264 Louth v. Diprose (1992) 175 CLR 621 265 Lowther v. Carlton (1741) 2 Atk. 242 91 Lumley v. Gye (1853) 2 Bl. & Bl. 216 139 MacMillan v. Bishopsgate Investment Trust [1996] 1 All ER 585; [1996] BCC 453 (CA) 21-2, 25,36,248,313,328,337 Maguire v. Makarionis (1997) 144 ALR 729 112,130-1,262,265,271,272 18,114-15,120,261, 266 Mahoney v. Purnell [1996] 3 All ER 61 Manby v. Scott (1663) 1 Sid. 109,1 Keb. 482,1 Lev. 4,1 Mod. 124 47 Martin v. Sitwell (1691) B & M 467, 468 51 Mason v. Dixon (1628) W. Jo. 173 38 Marston Construction Co. Ltd. v. Kigass Ltd (1989) 46 BLR 109 ....171-2,174, 183,197 Mathieson Gee (Ayrshire) Ltd. v. Quigley 1952 SC (HL) 38 170 Mclnerney v. MacDonald [1992] 2 SCR 138 278,282 McKenzie v. McDonald [1927] VLR 134 114,252, 261,266,269 McPhillips v. Ampol Petroleum (Victoria) Pty Ltd (1990) ATPR 41-014 268 Megod's Case (1586) B & M 497,498 39 Megott v. Broughton KB 27/1298 39 Merryweather v. Nixan (1799) 8 Term Rep. 186 46 Metall und Rohstoff A.G. v. Donaldson Lufkin &c Jenrette [1990] 1QB391 221 Metropolitan Bank v. Heiron (1880) LR 5 ExD 319 69-70 Milchas Investments Pty Ltd. v. Larkin (1989) 96 FLR 464 268 Miller v. Attlee (1849) 13 Jur. 431 54 Mimsav Cp. v. Sodagal (1996) 50(3) PD 35 149 Ministry of Healtht/. Simpson [1951] AC 251 210,239-40,322

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xvii

M(K) v. M(H) [1992] 1 SCR 980 277,280,285-6,301 Montagu's Settlement Trusts, Re [1987] Ch 264 203,235,333 Moody v. Cox & Hatt [1917] 2 Ch 71 98,103 Moorgate Tobacco Co Ltd. v. Philip Morris Ltd. (No 2) (1984) 156 CLR414 255 Mortimore v. Wright (1840) 6 M & W 482 48 Moses v. Macferlan (1760) 2 Burr. 1005 13,54-5,306,310 Motivex v. Bulfield [1988] BCLC 104 92 Muller, Re [1953] NZLR 879 201 Munchies Management Pty Ltd. v. Belperio (1988) 84 ALR 700 261 Muschinski v. Dodds (1986) 62 ALR 429 63,252,263,281 My Kinda Town v. Soli [1982] FSR 147 14 National Merchandising Corp. v. Leyden 348 N.E. 2d 771 (1976) 139,259 Nelson v. Rye [1996] 1 WLR 1378 207,324,326 Neville v. Watson [1997] Ch 144 221 Newdigate v. Davy (1695) 1 Ld. Ram. 742 51 Nocton v. Lord Ashburton [1914] AC 932 103,260,283 Norberg v. Wynrib [1992] 2 SCR 226 278 Norgeln Ltd. (in liquidation) v. Reeds Rain Prudential Ltd. [1977] 3 WLR 1177,1181 (HL) 161 Norfolk's S.T., Re [1982] Ch 61 108,116 North & South Trust Co. Ltd. v. Berkeley [1971] 1 WLR 470 98,103 Norton v. Ashburton 261 Norwich Union v. W H Price Ltd [1934] AC 455 130 Nottingham Patent Tile &c Brick Co. v. Butler (1886) 16 QBD 778 91 Oatway, Re [1903] 2 Ch 356 Oldham v. Bateman (1637) Rolle br. I. 31 On Hatzafon (Weingarten) Ltd. v. Sodapop Ltd. (Unreported, 1997) Orwell v. Mortoft (1505) B 8c M 406 O'Sullivan v. Management Agency and Music Ltd. [1985] QB 428 Overseas Tankship (UK) Ltd. v. Morts Dock 8c Engineering Co Ltd. (The Wagon Mound 1) [1961] AC 388

225 49 148 39 108-9, 116,117 292

Paramount Airways Ltd, Re [1993] Ch 223 249 Pascoe v. Turner [1979] 1 WLR 431 269 Paver & Matthews Pty Ltd. v. Paul (1987) 162 CLR 221 281 Payne v. Whale (1806) 7 East 274 52 Pearson v. Skelton (1836) 1 M & W 504 46 Peel (Regional Muncipality) v. Canada; Peel (Regional Municipality) v. Ontario [1992] 3 SCR 762 277, 287-8 Pepper v. Hart [1993] AC 593 26

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Permanent Building Society (in liquidation) v. Wheeler (1994) 14 ASCR109 88 Peter v. Beblow [1993] 1 SCR 980 277,289 Peter Lind & Co Ltd. v. Mersey Docks and Harbour Board [1972] 2 Lloyds Rep 234 173 Pettkus v. Becker (1980) 117D.L.R. (3d) 257 220,276, 277,286-8, 289,298-300 Philips v. Biggs (1660) Hard. 164 46 Phillips v. Hunter (1795) 2 H Bl 402,416 13 Phillips v. Phillips (1892) 4 De GF & J 208 216 Planches Collins (1831) 8 Bing. 15,5 C & P58 44 Powers v. Wells (1778) 2 Cowp. 818 52 Proprietary Mines Ltd. v. MacKay [1939] 3 DLR 215 261 R. v. Ireland; R. v. Burstow [1997] 3 WLR 534 160 R. v. Preddy [1996] AC 815 68 137 R. Leslie v. Sheill [1914] 2 KB 607 Rathwell v. Rathwell [1978] 2 SCR 436 276,298 Rawluk v. Rawluk [1989] 1 SCR 1161 287,301 Reading vAG [1951] AC 507 143-^,159 Reckitt & Colman Products v. Borden Inc. [1989] 1 WLR 491 146 Reference re: Goods and Services Tax (GST) (Can) [1992] 2 SCR 344 277, 286-8 Regal (Hastings) Ltd. v. Gulliver (1942) [1967] 2 AC 134 99-100 Regalian Properties pic v. London Docklands Development Corporation [1995] 1 WLR 212 171,175,183^», 189,197 Remon v. Hayward (1835) 2 Ad. &c E. 666 49 Robinson v. Harman (1848) 1 Ex 850, 855 171 Rogers v. Head (1610) Crp. Jac. 262 43 Rogers v. Price (1829) 3 Y & J 28 45 Rolfe v. Abbott (1833) 6 C & P 286 48 Rolle v. Cofferer (Hil. 1650) 49 Rooke v. Rooke (1610) Cro. Jac. 245, Yelv. 175 44 Rookes v. Barnard [1964] AC 1129 161 Roper v. Holland (1835) 3 Ad. & E. 99 49 Rose, Re [1952] Ch 499 221 46 Ross v. Pope (1551) Plowd. 72; Shepp. Abr. iii 326-7 Royal Brunei Airlines Sdn. Bhd. v. Tan [1995] 2 AC 378 232,243,248 Runciman v. Walter Runciman pic [1992] BCLC 1084 90, 91-2 Ryall v Ryall (1730) 1 Ark. 59 201 Sabemo v. North Sydney Muncipal Council [1977] 2 NSWLR 880 Salisbury v. Tibbetts (1958) 259 F.2d. S9,64

165,180, 183,185,193 203

Table of Cases

xix

Saunders v. Punch Ltd. [1998] 1 All ER 234 161 Scarisbrick v. Parkinson (1869) 20 LT 175 44 Scott v. Scott (1962) 109 CLR 649 225 Sebel Products Ltd. v. Customs and Excise Commissioners [1949] Ch409 19,35 Selangor United Rubber Estates Ltd. v. Cradock (No.3) [1968] 1 WLR1555 118,222,247 Serjeant Rolle's Case (1679) 1 Free. 479 49 Shaw v. Sherwood (1599) Cro. Eliz. 729 39 Shelton v. Springett (1851) 11 CB 452 48 Shepherd v. Edwards (1615) Crp. Jac. 370 43 224 Sheridan v. Joyce (1844) 1 Jo. & Lat. 41 Shuttleworth v. Corporation of Lincoln (1613) 2 Buls. 122 37 Sidney Blumenthal & Co v. Unied States 30 F.2d 247 (1929) 258 Sinclair v. Brougham [1914] AC 398 83,196,204, 211, 217,227,333 Singh v. Ali (1960) AC 167 211 Sir Henry Compton's Case (c. 1612/15) 47 Sir Thomas Gardener's Case (1615) Rolle Abr. I. 351 47 Slade v. Morley (1602) 20 Smith v. Land and House Property Corp (1884) Ch D 7 190 Smith Kline & French Laboratories (Aust) Ltd. v. Development of Community Services (1990) 22 FCR 73 265 Smith New Court Securities Ltd. v. Citibank N.A. [1997] AC 254 302 Smith New Court Securities Ltd v. Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 113,301 Sodagal Ltd. v. Spielman (1994) 47(3) PD 459 149 Solle v. Butcher [1950] 1 KB 671 308 Sorachan v. Sorachan [1986] 2 SCR 38 289 South Australia Asset Management Cpn. v. York Montague Ltd. [1997] AC 191 301,302 South Tyneside MBC v. Svenska International pic [1995] 1 All ER 545 320 Space Investments Ltd. v. Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986] 1 WLR 1072 264 Speake v. Richards (1617) Hob. 206 38 Stapleford Colliery Co. (Barrow's Case), Re (1880) 14 Ch D 432 91 Starkey v. Milne (1651) Rolle Abr. I. 32 49 Stephens v. Avery [1988] 2 All ER 477 262 Stern v. McArthur (1988) 165 CLR 489 252 Stocks v. Wilson [1913] 2 KB 235 137 Strand Electric and Engineering Co v. Brisford Entertainments [1952] 2 QB 246, 254 7 Street v. Blay (1831) 2 B 8c Ad. 456 52 Sumpter v. Hedhes [1898] 1 QB 673 179

xx

Table of Cases

Swindle v. Harrison [1997] 4 All ER 705 Szarferi/. Chodos (1986) 54 or (2D) 663

10-11,103-4, 302 112,113

Taillour v. Medwe (1320) 104 Selden Soc. 39 Tang Man Sit v. Capacious Investments Ltd. [1996] AC 514 Target Holdings Ltd. v. Redferns [1996] 1 AC 421

38 87,100,104 10,112,113, 119,262 Tatung (UK) Ltd. v. Galex Telesure Ltd. [1989] 5 BCC 325 66 Taylor v. Johnson (1983) 151 CLR 422 258 10th Cantanae Pty Ltd v. Shoshana Pty Ltd (1987) 10 IPR 289 267, 272 Thompson's Settlement, Re [1985] 2 All ER 720 89,95-6 Thomson v. Eastwood (1877) 2 App.Cas. 215 94 Thursby v. Warren (1628) W.Jones 208 45 Tilley's WT, Re [1967] 1 Ch. 1179 84,225,241 Tinsley v. Milligan [1994] 1 AC 340,370 211,318 Tito v. Waddell (No. 2) [1977] Ch 106 89, 94-5,99,105,128 Tottenham v. Bedingfiled (1572) B 8c M 295 49 Tournier v. National Provincial and Union Bank of England [1924] 1KB 461 265 Towers v. Barrett (1786) 1 Term Rep. 133 52 Townshend v. Hunt (1635) Rolle Abr. 1.13 45 Tracey v. Atkins (1979) 105 DLR (3d) 632 258 Traill v. Baring (1864) 4 DJ & S 318 191 Transvaal Lands Co. v. New Belgium (Transvaal) Land 8c Development Co. [1914] 2 Ch 488 98 Treadwell v. Martin (1976) 67 DLR (3d) 493 266 Tribe v. Tribe [1996] Ch 107 211 Tricentrol Oil Trading Inc v. Annesley (1991) 809 S.W. 2d. 218 203 Trident General Insurance Co Ltd. v. McNiece Bros Pty Ltd. (1988) 165 CLR 107 253 Trustee of Jones v. Jones [1996] 3 WLR 703 (CA) 18,209 T.S.B. Bank pic v. Camfield [1995] 1 WLR 430 308 Tse Kwong Lam v. Wong Chit Sen [1983] 1 WLR 1349 96 Tugwell v. Heyman (1812) 3 Camp. 298 45 Turner v. Davies (1796) 2 Esp. 159 46 United Australia Ltd v. Barclays Bank Ltd [1941] AC 1, 28-9

Vandervell v. IRC [1967] 2 AC 291 Vaux v. Newman (1610) 8 Co.Rep. 146 Vinogradoff, The [1935] WN 68 Wade v. Kent (1555) KB 27/1173

\

182,196, 319,336

201,202,223, 224 43 201, 223 48

Table of Cases

xxi

Waler v. Portington (1647) Clayton 117 Wales v. Wadham [1977] 1 WLR 199 Walford v. Miles [1992] 2 AC 128 Walker v. Walker (Unreported, 1884) Wallersteiner v. Moir (No.l) [1974] 1 WLR 991 Walton Stores (Interstate) Ltd. v. Maher (1988) 164 CLR 387

49 191 169,188 200 1-6 189,192, 253,257 Warbrooke v. Griffin (1609) 2 Brownl. & Golds. 254 43 Ward v. Taggart 336 P. 2d 534 (1959) 148 Warman International Ltd. v. Dwyer (1995) 182 CLR 544 ....100,113,117,270 Watson's Case (1648) Clayton 125 47 Way v. Latilla [1937] 3 All ER 759 169,196 Weaver v. Borrows (1725) 44 West v. West (1613) Rolle Abr. 1.11 : 45 Westdeutsche Landesbank Girozentrale v. Islington [1996] AC 669 (HL)16,20, 23,26,75, 81-3, 200,201,202,204,209-10, 213, 217,221-2,224, 227-30,235, 253,306,308,323 Weston v. Downes (1778) 1 Dougl. 23 52 White v. Jones [1995] 2 AC 207 136,139 Wilkes v. Spooner [1911] 2 KB 473 91 Wilkinson v. Kitchin (1696) 1 Ld. Raym. 89 51 William Lacey (Hounslow) Ltd. v. Davis (1957] 1 WLR 932 171,174,176, 178-83,195 Williams v. Williams (1863) 32 Beav. 370 201 Wilson v. Milner (1810) 2 Camp. 452 46 Willmott v. Baker (1880) 15 Ch D 258 Winkfield, The [1902] P. 42 138 Woodward v. Aston (1676) B & M 471 n . l l , 1 Mod. 95,1 Vent. 296 51 Wooley v. Batte (1826) 2 C & P 417 46 Woolwich Equitable Building Society v. IRC (No 2) [1993] AC 70 (HL) 19, 213,306 Wright v. Morgan [1926] AC 788 89 X v. AG [1997] 2 NZLR 623 Zacchini v. Scripps-Howard Broadcasting Co. 433 U.S. 569, 575-6 (1977)

262, 273

150

xxii

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LEGISLATION Bankruptcy Code (United States) Brussels Convention on Jurisdiction and Judgments in Civil and Commercial Matters 1968 Art.2 Art.5 Companies Act 1985 s.35 S.35A s.310 S.322A s.395 PartX Companies (Tables A-F) Regulations 1985

73

28 27-8,327-8 91 91 92 89,91 65,66,67 94 91

Defamation Act 1996 s.5

162

Fair Trading Act 1986 (New Zealand) Family Law Act 1986 (Ontario)

253 286

Insolvency Act 1986 ss.238^1 s.245

65,66,249 65,66

Limitation Act 1939 Limitation Act 1980 s.2 s.4A s.5 s.15 s.23 s.32A Lord Cairns Act (Australia)

325 162 26-7,325 326 326 162 286

Minors Contracts Act 1987 s.3

137

Official Secrets Acts

153

Pensions Act 1995 s.31 s.32

26-7

92 92

Table of Cases Sale of Goods Act 1893 Supply of Goods and Services Act 1982 s.15 Supreme Court Rules Order 11 Theft (Amendment) Act 1996 Trade Practices Act 1974 (Australia) S.51AA s.52 s.80 s.82 s.87 Uniform Commercial Code s.2-204

xxiii 53 169 327 68 262 255 148,253-6,259-60 254 254 254,255,271

169

Misnomer PETER BIRKS*

T

HE modern history of the law of restitution has been in large measure the story of its escape from obscure or positively misleading nomenclature. The language of the forms of action, money had and received, money paid, quantum meruit and quantum valebat, is no longer understood and anyhow supplies no single name. Quasi-contract and implied contract misinform. They also omit equitable parallels, or are taken to do so. Constructive trust brings back into view some of equity's contribution but tells only what is not going on: there is no express trust. Restitution is the best name the subject has so far had. In that one word a dozen fragments, each with a wayward life of its own, are reassembled. But the name "restitution" has its own pitfalls. The whole thrust of the law of restitution is towards defining and analysing the event which most commonly brings it about. Generically, that event is unjust enrichment. Most of us most of the time, when we talk of the law of restitution, do in fact mean to refer to the law of unjust enrichment. We treat the two terms as forming a perfect square, the one being the effect of the cause, and the other the cause of the effect. Restitution is the response to unjust enrichment, and unjust enrichment is the event which triggers restitution. This paper wilj try to say that we ought to allow the name of the event to predominate over the name of the response. In other words, we ought to call our subject unjust enrichment. This is partly a matter of elegance. The dominant categories of our law are categories of event. The series "contract (or, larger, consent), wrongs, unjust enrichment, and other causative events" is on its face a well-dressed series in which every term is of the same kind. It is a classification of the events which generate legal rights and duties. When we substitute restitution for unjust enrichment, we appear to have invited a cuckoo into the nest. One term now refers, not to a cause, but to an effect. On the assumption of perfect quadration between restitution and unjust enrichment, there is in fact no cuckoo at all, merely the appearance of one. That is * Regius Professor of Civil Law in the University of Oxford, Fellow of All Souls College.

2

PETER BIRKS

mere inelegance. But it would be worth preferring unjust enrichment to restitution even if it were only a matter of avoiding a mildly misleading inelegance. However, the paper goes on to say that the danger of preferring restitution is greater. It argues that the perfect quadration is artificial and tries to show that in that artificiality are hidden a number of intellectual traps.

Modern History If we made a list of the common law's great achievements in this century, the work of Professor Jones and Lord Goff in the law of restitution would come near the top. And, though the exercise makes for absorbing table talk, between those near the top there really is no point in drawing lines. The architects of modern criminal law have been Glanville Williams and Sir John Smith. Sir William Wade and Professor Stanley de Smith made administrative law. In the same way, Gareth Jones and Robert Goff made the law of restitution. The publication of Goff and Jones revealed, and at the same time transformed, this huge area of law, not only here in England but all over the world.1 The great book had its forerunners. There is no book that has not. But it succeeded, as they had not, in releasing a wave of pent-up energy. The torrent of literature shows no sign of abating. In fact it certainly will not abate. Why is this? The answer is that The Law of Restitution revealed a truth which had been denied. It demonstrated the existence in our case law of a genus of cause of action concealed in antique or inappropriate language. The book showed that the common law did recognize the cause of action consisting in unjust enrichment at the expense of another. We had been pretending that most problems within the field of civil liability could be solved in terms of contract or tort, consent or wrongdoing. But no system can suppress liabilities imposed by reason of one person's being unjustly enriched by another. Goff and Jones destroyed the pretence that the common law had done so. A plaintiff pays a defendant by mistake. The defendant incurs an obligation to repay a like sum. It is not necessary to explain that obligation as arising from contract or tort. Indeed it was false to try to do so. It arises from the unjust enrichment of the defendant at the plaintiff's expense. Numerous instances of restitution answer to the same analysis. Like many great advances, the job seems in retrospect simpler, more obvious, and more inevitable than it was. We should not underestimate the magnitude of the achievement. We might go back for a moment to the forerunners. When the scaffolding provided by the forms of action was knocked away in the nineteenth century, the common law had not yet prepared the rational structures necessary for 1

G.H. Jones (ed.), Goff and Jones on the Law of R.estitution,4th edn. (London, Sweet and Maxwell, 1993). The first edition was published in 1966.

Misnomer

3

stability. Much as some crabs scuttle into a crevice while a new shell hardens, it found temporary security in tighter respect for precedent. The doctrine of stare decisis became more rigid than it had been. That holding operation made time for the development of rational, and rationally related, conceptual structures. The task of developing those structures, still unfinished, fell to those who were willing to write books and hence in large measure to the new jurists in the universities. Early attempts to venture into the substance lying beyond contract and tort seized on the hopelessly misinforming name "Quasi-Contract". 2 Books using that title made some progress,3 but reason and comparative law urged a new start in less mystifying language. A great advance was made by the American Law Institute when it entrusted the preparation of a restatement of this field of law to Professor Austin Scott and Professor Warren Seavey. Their work was done in the 1930s. The Restatement of Restitution was published in 1937.4 Within a few years, in the Fibrosa case in 1942, Lord Wright of Durley famously observed that every civilized system must have a law of unjust enrichment.3 He had recently reviewed the Restatement in the Harvard Law Review.6 The element of exhortation in his remarks in the Fibrosa case is to be found more explicitly in his review: "I feel some hope that the Restatement will induce English lawyers to produce a reasoned treatise on the subject, and to classify, analyse and rationalize the large mass of authority in English case law. They will find an admirable model in the Restatement."7 The response was delayed. Such a work would anyway have taken many years. But the war and its grim aftermath interrupted everything. Thirty years after the Restatement, the publication of The Law of Restitution was that response.8 Three more decades have now passed. We can see the effect the 1 The substantive "quasi-contract (sort-of-contract)" was coined by Theophilus in his Greek edition of Justinian's lnstitutes-.TbeophWus, Paraphrase 3.27.3,5. It derives from the slightly less misleading notion that some obligations can be said to arise "as though upon a contract (scil). where there is none". More detailed discussion: P. Birks and G. McLeod, "The Implied Contract Theory of Quasi-Contract" (1986) 6 Oxford JLS 46, esp. 53-4. 3 W.A. Keener (1893), F.C. Woodward (1913), R.M. Jackson (1936), J.H. Munkman (1950), P.H. Winfield (1952). In the person of the late Professor Stoljar, quasi-contract retained the loyalty of one distinguished scholar: S. Stoljar, The Law of Quasi-Contract, 2nd edn. (Sydney, 1989) pp. 1-3. 4 American Law Instititute, Restatement of Restitution (St.Paul, 1937). 5 Fibrosa Spolka Akcyjna v. Fairbaim Lawson Combe harbour Ltd. [1943] A.C. 32,61. 6 Lord Wright of Durley, Legal Essays and Addresses (Cambridge, CUP, 1939) pp. 34-65, reprinted from (1937) 51 Harvard LR 369-83. 7 Essays and Addresses, (n. 6 above), 34-5. 8 The first edition of Goff and Jones (n. 1 above) was published in 1966. Curiously the American effort shortly afterwards began to falter. After the Restatement Professors Scott and Seavey were followed by the brilliant work of Professor Jack Dawson (esp. J.P.

4

PETER B1RKS

book has had. All over the world young lawyers are studying the subject with enthusiasm. The literature of the subject is constantly multiplying. New textbooks have been written. Books of cases and materials are making the subject easier to teach and learn. There is even a Restitution Law Review. It contains some of the best and most exciting legal writing in the world. In its pages can be seen the beginnings of a dynamic dialogue between the emergent law of unjust enrichment in England and the more deeply rooted regimes of civilian jurisdictions. As for the law reports, although it is wise not to jump on new bandwagons without taking time to ensure that they run better than the old, the period for cautious reflection is evidently over, for even the cases are now beginning to speak the new language of restitution of unjust enrichment. In three decades Goffand Jones has changed the landscape beyond recognition.

Restitution and Unjust Enrichment Lord Wright's speech in the Fibrosa case was perfectly clear that what every civilized system needed was a properly worked-out law of unjust enrichment. In his review he was politely but noticeably cool towards the choice of "restitution": "The general title Restitution is well chosen but may need explanation. It indicates the essential feature of this branch of law, which distinguishes it from the other main branches. Restitution is not concerned with damages, or compensation for breach of contract, or for torts, but with remedies for what, if not remedied, would constitute an unjust benefit or advantage to the defendant at the expense of the plaintiff. Hence (to state the matter very broadly) an action for restitution is not primarily based on loss to the plaintiff but on benefit which is enjoyed by the defendant at the cost of the plaintiff, and which it is unjust for the defendant to retain."9 Lord Wright here brings the focus round from response to causative event. It is evident in this that he sees very clearly that what really distinguishes this from all other principal branches of the law is, not so much the restitutionary response, but the fact that the cause of action is not a tort or breach of contract but an unjust enrichment at the plaintiff's expense. That is quite Dawson, Unjust Enrichment: A Comparative Analysis (Chicago, 1951)) and the magisterial four- volume treatise of Professor George Palmer (G.E. Palmer, The Law of Restitution (Boston, 1978) four volumes, with supplements). But something clearly went wrong, and the project for a second Restatement was suspended for many years, until, after one abortive attempt, it was entrusted in 1997 to Professor Andrew Kull of Emory University. One cannot but suspect that "restitution" has played some part in the puzzling decline of American scholarship prior to Professor Kull's appointment. Where it has been taught and studied, it has been hidden in courses on "remedies", something which could never have happened to a law of unjust enrichment. On the American eclipse, see further the paper by J. Langbein at p.57. ' Essays and Addresses (n. 6 above) 36.

Misnomer

5

right. Every student of the subject knows that its focus is nearly always on the event which triggers restitution, not on the measure or mode of the restitution which is triggered. The study is, overwhelmingly, the study of a cause of action. The aim of the Restatement was to document that cause of action or at least to initiate the process of achieving that goal. It starts with what is in effect a ringing pronouncement of that purpose. In article 1 it says that "a person who has been unjustly enriched at the expense of another is required to make restitution to the other". Here an event happens, a person has been unjustly enriched at the expense of another; and a response is triggered, the person enriched must make restitution. And the emphasis is on the event. Restitution, as such, is comparatively uninteresting. If the focus is and always was on the causative event, not really on the response, and if the series in which the subject was to take its place was a series of events in which contracts and wrongs formed the most familiar members, we might well ask why it was not from the beginning the Restatement of Unjust Enrichment. There is some evidence that the reporters themselves were uneasy with the choice of restitution.10 And Professor Andrew Kull, the reporter for the new Restatement,11 has found evidence that until quite late in the process both restitution and unjust enrichment were intended to appear in its title.12 It may be that the story of the final choice of name can be fully reconstructed. Meanwhile, a speculative answer is not far to seek. The words "unjust enrichment" were at one time thought, wrongly, to invite the judges to redistribute wealth on the basis of direct appeals to "justice". This misperception led in England to the term's being, in Nicholas's memorable phrase, "withered by judicial scorn."13 There was an aggravating factor. In the aftermath of the Bolshevik revolution in Russia, the great depression of pre-war years saw the rise of both idealistic communism and the menace of national socialism. It was prudent in the 1930s to choose a tough, seemingly long-established name. It is foolish to wave a red rag at a bull. In the prevailing atmosphere "restitution" was not provocative. But the fears have subsided. We know that the law of unjust enrichment invites the judges to apply the law, not to pursue theories of distributive justice. It is the same with the law of wrongs. Theory constantly percolates into every area of the law, but, from day to day, the judges must apply the law; they cannot find that the law is X 10

W.A. Seavey and A.W. Scott, "Restitution" (1938) 54 LQR 29 is a sustained exposition of the proposition that despite the name the aim was to gather together the law of unjust enrichment. Cf. "Perhaps unjust enrichment would be a better term": W.A. Seavey, "Problems in Restitution" (1954) 7 Oklahoma LR 257. 11 On the delay in producing this, see n. 8 above. 12 A. Kuil, "Rationalizing Restitution" (1995) 83 California LR 1191,1213 n. 67. 13 B. Nicholas, "Unjustified Enrichment in Civil Law and Louisiana Law" (1962) 36 Tulane LR 605, with the dicta cited in his n. 2.

6

PETER BIRKS

but do Y. The law of unjust enrichment is the law of legally reversible enrichment. It does not invite the courts to remake the world. The mission was and is to organize the law of unjust enrichment. To name that subject, not from the event itself, but from the response to it, restitution, is at best to get the emphasis wrong. Moreover, it is inelegant to line up a word from the domain of effects with others from the domain of causes. Contract and tort belong to the latter. It is certainly inelegant to continue the series with restitution, which belongs to the former, along with compensation, punishment, and so on. Proposing a series which goes "contract, wrongs-, restitution and other events" is rather like dividing up birds according as they are insect-eaters, seed-eaters, yellow, or eaters of other things. If all yellow birds ate only fish and fish was eaten only by yellow birds, we might get away with it. The inelegance of the series would puzzle. It would create a constant need for explanation, in that we would have to keep saying that by "yellow" we really meant "fish-eating". But, given the perfect quadration between yellow birds and the eating of fish, the puzzling inelegance would not do much damage. However, if the quadration were imperfect, so that, while yellow birds ate only fish, fish was also eaten by birds of different colours, the risks would be much higher. So far we have not challenged the quadration between unjust enrichment and restitution. We have only said that the response-oriented name is mildly misleading and taxonomically inelegant. However, even if we were to stop there, a case would have been made out for putting the emphasis on unjust enrichment. This simple statement is one of the foundations of our thinking: all rights arise from events which happen in the world, and those causative events are manifestations of consent, wrongs, unjust enrichments, and miscellaneous others. It is ugly to say instead that rights arise from consent, wrongs, restitution, and other events.

A Greater Danger This section says that there is a stronger reason for adopting nomenclature in which the event explicitly prevails over the response. The greater danger is similar to that which we risk when we say that all trusts are express, implied, resulting (= jumping back), or constructive. More than one of these kinds of trust can "result". An express trust can do so. And ex hypothesi a resulting trust can do so. An interest "results" when it jumps back to the settlor. Nevertheless, in a classification which tries to tell us how trusts come into existence, we take the risk, much magnified by an obsolete latinate usage, of saying resulting when we mean, not jumping back, but arising by presumption. It so happens that trusts arising by presumption do all result. The beneficial interest always jumps back to the settlor. But the proposition cannot be turned round. Not all jumping back trusts arise by presumption. When the

Misnomer

7

quadration is imperfect, the habit of naming something by reference to one of its characteristics, always an enemy of good taxonomy, creates unnecessary mysteries. So here, until very recently, the name "jumping back trusts" has deflected attention from the precise nature of their causative event, or events. 14 The truth is that the quadration of unjust enrichment and restitution is not naturally perfect.15 It can be made perfect only by artificially imposing a restricted meaning upon the word "restitution". We have to assert that the word means only that yielding up which is precipitated by unjust enrichment. In the law such artificiality, within limits, is commonplace. But it is always dangerous. The natural meaning is hard to keep at bay. There must be a compelling reason to justify the attempt. And here there is none. Unjust enrichment triggers restitution, but, naturally, restitution is triggered by events other than the analytically distinct event called unjust enrichment. This means that, unless we are to remain constantly on guard against infringing the line between the natural and the artificial meanings and resolve never to use "restitution" except in its artificially restricted sense, it will never be certain that a claim which we describe as restitutionary does indeed arise from unjust enrichment. It may be that those who spend a large part of their lives in this subject can fall easily enough into habitual vigilance against this danger. But it is t o o much to expect every judge and every author to be similarly alive to it. "The claim . . . is not based on loss to the plaintiff . . . It resembles therefore a n action for restititution, rather than an action in tort." 16 What does this kind of sentence mean? Does the speaker mean that the cause of action is unjust enrichment rather than tort, or that, the cause of action remaining the tort, the claim is for restitution rather than compensation? Our present practice offers no escape from this kind of ambiguity. There are artificialities and artificialities. Otherwise we could have no terms of art. But the unnatural restriction must be easily grasped. This one is too subtle and deceptive. The rest of this paper assumes, without further argument, the classification of rights by reference to their causative events. All rights, whether in 14 The classification has deeper failings, not dissimilar to those of the classification of obligations which included quasi-contract and quasi-delict. It muddies the line between consent-based and imposed trusts, and then, in relation to those which are imposed, it tells you only the obvious negative, that they are not express. They now have their own book, which remedies this neglect: R. Chambers, Resulting Trusts (Oxford, OUP, 1997). 15 This is a recantation of my own teaching: P. Birks, Introduction to the Law of Restitution (Oxford, OUP, 1985, revised 1989) p. 26, where it is already evident that the quadration is achieved only by including restitution for wrongs within the square. Later, at pp. 44—5 the square is defended by a dogmatic exclusion of restitutionary rights arising by consent. Cf. p. 54, where classificatory logic is said to render it impossible to find any example of restitution in the fourth, miscellaneous category. 16 Strand Electric and Engineering Co v. Brisford Entertainments [1952] 2 QB 246, 2 5 4 , Denning LJ. His Lordship certainly meant that the claim was for restitution rather than for compensation. N o cause of action had been advanced other than tort.

8

PETER BIRKS

personam or in rent, arise from events which happen in the world and, further, these causative events divide into four genera, namely consent, wrongs, unjust enrichment, or other events. In this series, "consent" includes not only contracts, but also other manifestations of consent such as conveyances, wills, and declarations of trust. When the series is arranged in this order, the line between consent and the others distinguishes between rights conceded by a person and rights raised by operation of law; in the language of the will, the voluntas, that is the line between voluntary and involuntary. The series can be rearranged. If one puts wrongs first, the line between wrongs and the rest distinguishes between wrongs and not-wrongs. In that order it helps us remember that many claims and their correlative liabilities arise independently of wrongdoing. It is rather easy to forget not-wrong liabilities. It is very important to distinguish clearly between wrongs and not-wrongs. In plain terms, the fact that the defendant has committed a wrong is a justification for mistreating him, within whatever extrinsic limits seem appropriate. Hence, a victim of a wrong faces no problem in asserting that the wrongdoer should make good his consequential loss. A not-wrong, such as a mistaken payment, may justify some particular response, as a mistake justifies restitution, but it will not justify more. The limits are intrinsic. A contract, which is not a wrong, explains only the obligation to perform. However, for the wrong of breach of contract the victim might be allowed to cut off the contract-breaker's ears, if extrinsic considerations of utility, proportionality, and humanity did not dissuade. Analytically distinct events There are two further points about this series which it is necessary to insist upon without the argument which they deserve. First, each member of the series is analytically distinct from all the others. Any given set of facts may be susceptible of two or more analyses, but each analysis then stands alone. In other words a plaintiff may have a choice between two causes of action. For example, a plaintiff who pays money by reason of a misrepresentation may sometimes be able to choose between unjust enrichment and wrongs. The misrepresentation will nearly always operate as an unjust factor entitling the plaintiff to restitution, but the misrepresentation may also be a civil wrong entitling the plaintiff to recover damages. The plaintiff then has a choice whether to base himself on the wrong or, ignoring that characterization of the facts, on the unjust enrichment. Secondly, accepting that in a loose sense every plaintiff who comes to court does so because he feels that he has suffered a wrong and needs a remedy (a word more abused than any other), it is essential to take great care in identifying the precise sense in which "wrongs" are analytically distinct from all other causative events in the fourterm series. This is difficult. In this paper I take a "wrong" to be any breach of duty, so that it follows that a right arises from a wrong where, in order to

Misnomer

9

establish it, the plaintiff must so analyse the facts as to disclose a breach of duty. Although fault of some kind is very commonly a necessary ingredient of such an analysis, fault is not a reliable indicator. Some wrongs — some breaches of duty — can be committed without fault, and, the other way around, the fact that a defendant appears to be at fault is not a sure guide to his having committed a wrong. 17 It follows from the analytical independence of the four causative events that a plaintiff who relies on a wrong cannot, whatever measure of liability he seeks to impose, be claiming under any one of the other three heads. He cannot, for example, be suing in unjust enrichment, not even if that which he is seeking is correctly described as restitution. To be suing in unjust enrichment he must be able to drop the analysis of the facts as a breach of duty. That is, he must move into the land of not-wrongs and, in particular, into the not-wrong which is, generically, unjust enrichment. If this all seems arid, technical and formalistic, that character derives only from the attempt to say precisely what we really know in our bones as belonging in the usually unplumbed nature of things. It is in the nature of things that there are different factual bases of liability and that the different factual bases of liability generate different liabilities. In broad terms, for example, much weaker facts will justify an obligation to return an unjust enrichment than will justify a liability to make good another's loss or pay punitive damages. The four categories of causative event are the four great factual bases of liability. Or, more honestly, the first three are the three great bases, and the fourth is a confession of taxonomic intellect for the moment defeated. Only a system indifferent to rationality, and hence ultimately indifferent to justice, will dismiss the exercise of analysis with an impatient invocation of the fashionably pejorative language of formalism.

To prove: that other events trigger restitution If rights in rent and in personam, or, in other words, property rights and personal rights which correlate with obligations, are the creatures of causative events, restitutionary rights, rights to restitution, whether in rent or in personam, are, no less than other rights, the creatures of causative events. The limited aim of what follows is to prove that, if we abandon artificiality, restitutionary rights can be triggered by events other than unjust enrichment. That is, restitutionary rights can sometimes be triggered by consent, by wrongs, and by events in the miscellaneous residue beyond unjust enrichment. In the fourterm series of events, unjust enrichment is analytically distinct from the other three. The aim is only to show that, if we want to identify that distinct member of the series, we must call it unjust enrichment. Unless we think we 17

Further discussion: Birks, "The Concept of a Civil Wrong" in D. Owen (ed.),

Philosophical Foundations of the Law of Tort, revised edition (Oxford, OUP, 1997) p. 29.

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can get away with the artificial restriction of restitution to that restitution which is precipitated by unjust enrichment, we must not use the two names as though they were synonyms. The sections which follow show that restitution is sometimes triggered by wrongs, by consent, and by events in the miscellaneous fourth category.

Wrongs It is essential to begin with some ancillary semantic hygiene. There are two matters which require attention. One is the relation between "restitution" and "compensation". The other is the suggestion which has been made that "restitution" ought never to be used of gain-based awards for wrongs. Restitution and compensation. There is one artificiality which we have no choice but to insist upon. It is comparatively simple and calls for very little vigilance: "restitution" must not be used as a synonym for "compensation". When we say that a defendant must make restitution to a plaintiff, we mean that he must give up to the plaintiff something that he has received or its value in money. According to this usage, restitution is unequivocally a gain-based response. It looks to removing the defendant's gain and not to making good the plaintiff's loss. It is necessary to reassert that elementary proposition. The reason is that the word "restitution" is increasingly being used in the courts in an entirely different sense, in which it becomes focused on the loss suffered by a plaintiff.18 Were it to persist, this usage would reduplicate the dangers inherent in the word. It is perfectly true that, in ordinary usage, "restitution", and indeed "restoration", can be used to denote making good a loss. Restitution of a person to an original condition, or of a person's wealth to an original condition, means making good what has gone missing. The same is true of restoration of someone to an earlier position, or of his wealth to an earlier level. These words then look to making good the plaintiff's loss. It is impossible to deny their natural range. Compensation for loss is a generic term. A great deal depends on the moment from which the loss is measured and the principles of remoteness which are applied. It is elementary that there are different measures of compensation. The wrong of breach of contract, for example, generally gives expectation damages, damages measured from the expectation base or, in other words, from the position that the plaintiff would have reached if the contract had been fulfilled. Sometimes the plaintiff can get reliance damages instead. That is, he can get damages which will put him back in the position which he would have been if he had never made the contract or acted in reliance on its being in place. Expectation damages and reliance damages are 18

This is particularly evident in the judgment of Evans LJ in Swindle v. Harrison [1997] 4 All ER 705, discussed immediately below. Cf. Lord Browne-Wilkinson in Target Holdings Ltd v. Redferns [1996] 1 AC 421 and the case by which he was much influenced Canson Enterprises Ltd v. Boughton & Co (1991) 85 DLR (4th) 129 (SCC).

Misnomer

11

different measures of compensation. They differ in the way the loss is contemplated. As we shall see, it begins to look as though the word "restitution" is beginning to be used in the courts to denote a particularly severe measure of compensation. The only consequence will be unnecessary confusion. We have the word "compensation" for loss-based awards. We need "restitution" for gain-based awards. In Swindle v. Harrison19 a firm of solicitors had committed breaches of fiduciary duty in arranging a bridging loan. The only question, eventually answered negatively, was whether the solicitors had made themselves liable for losses suffered by the borrower. As Hobhouse LJ said, having first observed that there was no claim to rescind the security, "Nor was the action concerned with any claim to recover any profits, secret or otherwise, made by the firm . . . The claim which we have to consider is a claim for damages or "equitable compensation" of the character of damages for breach of duty". 20 Mummery LJ nevertheless allowed himself to slip between the language of restitution and compensation: "Equitable compensation may be awarded for breach of fiduciary duty. As observed in a number of cases cited, the restitutionary obligation imposed on those who owe trustee or fiduciary duties is more strict than the common law obligation to pay damages for contractual or tortious negligence". 21 Evans LJ pressed "restitution" into service to express the difference between awards of loss calculated by reference to different points of time. That is, he used "restitution" to denote those awards which were calculated on the most severe basis, as, for example, for common law deceit. The focus of the specially severe measure is the plaintiff's situation "when the wrong occurred", and loss calculated on that basis is "restitution (of a person to a position)": "The best starting point . . . is the historical fact that the courts in certain circumstances have awarded damages sufficient to restore the plaintiff . . . to the position in which he was when the defendant committed the legal wrong against him. This measure . . . might appear to be the same as the general measure, . . . but it is not. The difference arises because the position 'he would have been in if he had not sustained the wrong' is not necessarily the same as his situation when the wrong occurred . . . To restore a person to the position that he was in when the wrong was committed against him involves present financial restitution to that former state of affairs. Compensation, on the other hand, which is necessary to put him into the position he would have been in, if he had not sustained the wrong, is not strictly restitution at all. It is a measure of the difference between his present situation and what his situation would have been."22 It is essential not to use "restitution" to denote any kind of "compensation". "Restitution" must be kept for the yielding up of gains, "compensation" for 19 21

[1997] 4 All ER 705, CA. [1997] 4 AH ER 705,733f.

20

[1997) 4 All ER 705,722bc. [1997] 4 All ER 705,713j, 714f.

22

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the making good of loss, however the loss is measured. There is a real danger, if the words are used interchangeably, that it will be assumed that every set of facts which gives rise to restitution (of benefits received) will justify an award of compensation. Misuse of "restitution" conceals these traps. The same is true of over-extensive use of "equitable compensation". We will have to return to that below,23 but it is essential to bring this issue to the surface here. A wrong will in principle justify any kind of response, subject only to extrinsic considerations. An unjust enrichment will only justify restitution of the enrichment. Take the case of mistake or purely innocent misrepresentation. These are not wrongs, but they will entitle a plaintiff to restitution of benefits transferred to the defendant. If we think that "restitution" includes "compensation" the plaintiff will seem to have a case for recovering consequential loss. That is not so. Some misrepresentations will justify such awards. They will do so if on the particular facts they can be analysed as wrongs. A purely innocent misrepresentation cannot be so analysed. It is an "unjust factor" for the purpose of the law of unjust enrichment and, as such, will give restitution of the enrichment, but it will give nothing more. The law is unlikely to go so far as to make misrepresentation a tort of strict liability. It is not permissible to achieve the same consequence by deducing the availability of compensation from the availability of restitution. Similarly, if we wanted the recipient of a mistaken payment to be liable for consequential loss suffered by the payer, we could not derive that consequence from his liability to make restitution. We would have to invent another implausible new wrong, perhaps the strict liability wrong of breach of the duty to repay or, slightly less implausibly, a fault-based version of that wrong. The characterization "wrong" would justify mistreating him. We could then confidently leave him worse off than at the beginning of the story, by compelling him to bear and pay for the payer's losses. Restitution and disgorgement. The second matter is the use of "restitution" to denote gain-based awards for wrongs, as opposed to unjust enrichment. Suppose an account of profits is given for an infringement of patent or a breach of fiduciary duty or a trespass. The question is whether the award of profits should be called restitution at all. It has been argued that another name should be coined. Dr. Smith thinks that no clarity will be achieved till gainbased awards for wrongs are put in the language of disgorgement.24 In his view restitution is only appropriate when something has to be given back. In the cases of gain-based awards for wrongs which have just been mentioned, there is only a giving up, for the profit will have come from third parties. The attraction of Dr Smith's terminology is that, universally adopted, it would go far towards restoring and securing the quadration between 23

Text from n. 39 below. L.D. Smith, "The Province of the Law of Restitution" (1992) 71 CBR 672; see also (1994) 73 CBR 259. 24

Misnomer

13

autonomous unjust enrichment and restitution. However, it is not clear that it is either possible or desirable to try to move all lawyers to adopt it. Supposing it possible, there are are a number of arguments against. Some are relatively trivial. The switch to disgorgement would disrupt a usage only now settling down, according to which "restitutionary damages" and "restitution for wrongs" are becoming accepted.25 Next, "disgorgement" has no adjectival form. "Disgorgement damages" is an ugly phrase. Further, it is not clear, etymologically or otherwise, that restitution must naturally be a giving back and not a giving up. Much more important is the fact that not every case of restitution for a wrong will involve a giving up rather than a giving back. This fact would tend to obscure the line between restitution and disgorgement and create a worse confusion. If you kidnap me and demand a ransom, or if you defraud me of a sum of money, I can lay aside the wrong and claim restitution for unjust enrichment: you have been enriched from me, and my consent to that enrichment was impaired by illegitimate pressure or by mistake. But there might be some reason for not founding my claim on that analysis. If I claimed on the basis of the wrong, I would normally go for compensatory damages and include my payment in my losses. But there might be some reason for founding on the wrong but claiming your gain instead. Such a claim, though founded on the tort of false imprisonment, would be for a giving back, and it would be hard to remember that, because it was sought on the basis of the wrong, it must be called disgorgement, not restitution. There is a famous illustration of this phenomenon. Moses v. Macferlan26 itself is a case which is inexplicable as an example of autonomous unjust enrichment. Macferlan promised not to sue Moses on certain notes. He did sue, and Moses paid up. When one looks for an unjust factor (a reason for restitution) one finds pressure but not illegitimate pressure: it was by due process of law that Macferlan had obtained the money which Moses now wanted back. Lord Mansfield's conclusion in favour of Moses has been condemned on that account.27 But Lord Mansfield's premise, surely correct, was that Moses certainly was entitled to his action for breach of contract, the only question being whether he could use the action for money had and received to do the work. 28 Moses wanted to get back money he had paid, but his claim should be regarded as based on the wrong of breach of contract. He wanted a gain-based remedy for the wrong. Dr Smith would say he wanted disgorgement, not restitution. But it seems less artificial to say that he wanted restitution, restitution for the wrong, not for autonomous unjust enrichment. 25 As witness Law Commission, Aggravated, Exemplary and Restitutionary Damages, Law Com N o 247 (London, Stationery Office, 1997), Part III, "Restitution for Wrongs". 26 (1760) 2 Burr 1005. 27 Phillips v. Hunter (1795) 2 H Bl 402,416; cf. Goff and Jones (n. 1 above) 763-^4. 28 Cf. J.H. Baker's paper at p. 54-5 below.

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The wrong as the causative event. Unless and until Dr Smith's prescription is swallowed, gain-based awards for wrongs are examples of restitution. Every acquisitive wrong can be loosely described as an unjust enrichment at the expense of the plaintiff, but, where the plaintiff relies on the wrong, the invocation of that language does not alter the fact that the causative event upon which he is relying is the wrong, not unjust enrichment. As we have seen, when we affirm that rights arise from wrongs or from not-wrongs and, among not-wrongs, from contract, unjust enrichment and other events, we necessarily affirm at the same time that each member of the series is analytically distinct from every other. T h e independence of each causative event is essential to the nature and function of the series. However, if we say that profits taken from an infringement of patent or the tort of passing-off constitute an unjust enrichment and, as such, give rise to restitution,29 we ignore the line between wrongs and the not-wrong which is unjust enrichment. "Unjust enrichment" is short for "unjust enrichment at the expense of the plaintiff". When connection between the plaintiff and the enrichment which he seeks to recover is a wrong, the phrase "at the expense of the plaintiff" means "by doing wrong to the plaintiff". Whenever a plaintiff relies on that sense of "at the expense of", his cause of action is the wrong itself.30 If you are paid to beat me up, your profit is an enrichment obtained by doing wrong to me. The language of unjust enrichment will not alter the fact that my claim to your profit can only be made out through the battery, you were enriched at my expense only in that sense. By contrast, a mistaken payment is an enrichment from the payer, rendered unjust by the mistake. In the series of independent causative events, unjust enrichment at the plaintiff's expense must conform to that subtractive model in which "at the plaintiff's expense" means "from the plaintiff". In our series of causative events, the topic which we identify as "restitution for wrongs" thus belongs under wrongs, not under unjust enrichment. It tends to be addressed in books and courses on restitution. But it belongs in the books and courses on torts or civil wrongs, for it is no more than an inquiry into the consequences of wrongs. Which wrongs give punitive damages? Which wrongs give aggravated damages? These questions are obviously part of the law of tort. It should be no less obvious that the inquiry into gain-based awards belongs there too. Which wrongs give restitutionary damages? That question belongs in the same series. The phrase "restitutionary damages" tends to set some jurists" teeth on edge. 31 There is no imperative need to court 29 Copyright, Designs and Patents Act 1988, s. 96(2); cf. s. 229(2) and s. 1911(2). For passing-off, My Kinda Town v. Soil [1982] FSR 147, reversed on other grounds (1993] RPC 407. 30 For more detail see P. Birks, An Introduction to the Law of Restitution, revised edn. (Oxford, OUP, 1989) pp. 312-16. 31 H. McGregor, "Restitutionary Damages" in P. Birks, (ed.), Wrongs and Remedies in the Twenty-First Century (Oxford, OUP, 1996) p. 203: "In my lexicon there is 'restitution' and there is 'damages'. I do not say that never the twain shall meet for they meet, and overlap, all the time. But they are different concepts".

Misnomer

15

a hostile reaction. There are a variety of money obligations which can be generated by a wrong. It would be useful to be able to use one word for all, but it is enough to say that the consequence of civil wrongs is in general that the wrongdoer must pay money to the victim. The quantification of the amount payable belongs to the law of wrongs. 32 It is worth pausing on the meaning of "belongs to" in that last sentence. Our series of causative events exists because of the need to know from what events rights arise. The terms in the series do not identify mere contextual categories: all the law about wrongs, contract, and so on. There is no objection, of course, to turning them into contextual categories, so long as one is conscious of doing so. In practice, that conversion happens rather easily. Thus most books on contract contextualize the causative event and do present all the law about contract. We might by the same convenient technique justify discussing restitution for wrongs in a book or course on unjust enrichment, but the justification for doing so would have to be based on the convenience of treating the causative category as a contextual category. In an unannounced way, that has been the effect of calling the subject restitution. The responseoriented name has invited us to speak of rather more than the causative event unjust enrichment. When we say, therefore, that restitution for wrongs belongs to wrongs and not to unjust enrichment, we say it on the assumption that we are talking of pure causative categories. Proprietary rights effecting restitution for wrongs. We have just seen that personal rights, and their correlative obligations, can be restitutionary (because they cause one party to yield up a gain to another) without necessarily arising from unjust enrichment. Such personal restitutionary rights can arise from wrongs. The same is true of proprietary restitutionary rights. Proprietary rights can be restitutionary in purpose and effect (because they cause one party to yield up a gain to another) and originate in a wrong. This may seem surprising. The argument needs to be taken step by step. In the common law family, restitution is sometimes effected by raising proprietary rights. The fact that the right is a property right does not exclude its arising from unjust enrichment, but its restitutionary purpose and effect does not mean that it must arise from autonomous unjust enrichment. All rights respond to events. The law of property (the law of proprietary rights) is a category of response, as is the law of obligations (the law of personal rights). Like rights in personam (obligations), so, and no less, proprietary rights are the creatures of events. It is not common to say so, but they too arise from 32

"Wrongs" is here used to include "torts" but so as not to exclude breaches of equitable

duty: cf. Birks, "Equity in the Modern World: An Exercise in Taxonomy" (1996) 26 UWALR 1, 25-52. It might be objected that it belongs better in remedies, but "remedy" is a hopeless word. In this context, to place this inquiry in the law of remedies means only to place it in that part of the law of wrongs which is concerned with the precise content of the obligations which are triggered by wrongs.

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events generically identical to those which give rise to obligations: from consent, wrongs, unjust enrichment, and other events. Most property rights arise from the consent of a grantor, as by conveyance or express declaration of trust. A fixture built on my land becomes mine by accession.33 That is an event in the fourth category. It cannot, on analysis, be attributed to consent, to a wrong or to an unjust enrichment. Some property rights arise from unjust enrichment. In Westdeutsche Landesbank Girozentrale v. Islington34 a contract which involved money payments by both parties over a fixed period had ceased to be performed when it was discovered to have been void. The German bank had then paid the London borough much more than the borough had paid to it. In the Lords there was no longer any doubt that the German bank had a personal claim in unjust enrichment to recover the difference. The bank said that this particular unjust enrichment had given it, not only a personal claim to restitution, but also an equitable proprietary right in the money which constituted that enrichment. Hobhouse J and the Court of Appeal thought that that was correct. These facts had generated both a personal claim at law and a proprietary interest in equity. The House of Lords disagreed. The bank's legal property in the money had passed to the borough, and no equitable interest had arisen. The question when an unjust enrichment provokes a proprietary response is now more controversial than ever.35 The leading speech says it depends on bad conscience: the defendant must have been unjustly enriched and must know it, the knowledge supervening before the enrichment ceases to be identifiable in his hands. We must not pursue this. For at this point we are only concerned with showing that property rights arise from different events. And our main concern is to show that, though a restitutionary proprietary right can arise from unjust enrichment, such a right can also arise from a wrong. If a given wrong gives rise to the gain-based response which we are calling restitutionary, that response belongs to the law of wrongs. We have established that. If the response takes the form of a proprietary right, that proprietary right also belongs in the law of wrongs. It belongs in the law of property, because the law of property is the law of all proprietary rights. But in a classification by causative events it belongs in wrongs. We might say that a proprietary right raised in response to a wrong belongs in that part of the law of property where property rights are raised by wrongs, as opposed to those parts in which they are raised by consent, unjust enrichment, or by the innominate events in the residual fourth category. There is nothing contradictory in saying that a given right is proprietary, restitutionary (because it effects restitution) and wrong-based (because it arises from a wrong). A concrete example is provided by the case of the corrupt prosecutor in 33

Holland v. Hodgson (1872) LR 7 CP 328. « [1996] AC 669, HL. 35 The controversy will not be resolved until the full impact is absorbed of R Chambers, Resulting Trusts (Oxford, OUP, 1997). 3

Misnomer

17

Hong Kong.36 The Privy Council very firmly held that the Hong Kong Government obtained an equitable proprietary right in every bribe received by Mr Reid, the corrupt prosecutor, at the instant it was received. Tracing the value of the bribes to farms in New Zealand, the Hong Kong Government could assert a similar proprietary right in that land. To say that this right arose under a constructive trust is only to say that it did not arise from the consent of any grantor. That is purely negative information. From what event did it arise? If we said it arose from unjust enrichment, we would be falling into the error of neglecting the analytical line between unjust enrichment and wrongs. This is a case of restitution for wrongs. The connection between the Hong Kong Government and the bribes taken by Mr Reid was that they had been obtained by a wrong — that is to say, by Mr Reid's breach of duty. The property right of the Hong Kong Government in the bribes received by Mr Reid arose from his wrong. He was enriched at his employer's expense only in the "wrong" sense of "at the expense of". When the phrase bears that sense, the language of unjust enrichment misleadingly conceals the fact that the causative event in question is the wrong. The effect of the Government's right was restitutionary, causing Mr Reid to yield up his gains. It was a restitutionary right (from its purpose and effect). It was a proprietary right (from its analysis as a right in rem). The case is thus an example of a proprietary restitutionary right generated by a wrong, not by autonomous unjust enrichment. Alternative analysis. Two causative events may lurk in one set of facts. Two things need to be said about this phenomenon. One is that analysis of facts as a wrong says nothing either way about the ease or frequency of analysing them instead as an unjust enrichment. It .might be possible in a few cases or in many. The other is that, while alternative analysis may indeed be possible, it must be carefully done: a wrong will not necessarily re-analyse as an unjust enrichment, and an unjust enrichment will not necessarily reveal a wrong. Restitution, whether by personal or by proprietary rights, is sometimes triggered by wrongs. We have already seen that a plaintiff who is kidnapped and forced to pay a ransom will have an action in tort for trespass to the person but can also formulate a claim structurally identical to the claim to recover a mistaken payment: the defendant was enriched from the plaintiff, and the plaintiff's intention that the defendant should benefit was impaired, in this case by pressure.37 Alternative analysis is possible wherever one set of facts can be shown to reveal more than one of our four categories of causative event. Restitutionary rights sometimes arise from the analysis which characterizes facts as a wrong. Formally, the incidence of alternative analysis as unjust enrichment might be very frequent, or it might be very rare. However, recent developments suggest that the incidence of cases in which the plaintiff 36 37

AC for Hong Kong v. Reid [1994] 1 AC 324, HL. On dual analysis, see Birks (n. 15 above) 39-43,314-15.

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can reformulate his claim so as not to rely on a wrong may be greater than was previously thought. 38 The second point is that re-analysis requires caution. We have encountered this point already in discussing the abuse of "restitution". 39 Where it is given that the event is an autonomous unjust enrichment, yielding restitution, it may well be that the facts can be re-analysed as a wrong. The motivation for reanalysis of that kind will generally be to switch to a measure of recovery which is available for wrongdoing but not available for unjust enrichment independent of wrongdoing. Unjust enrichment from the plaintiff is a not-wrong. It cannot justify an award of punitive damages, nor even an award of compensatory damages designed to make good a plaintiff's loss. It follows that if a plaintiff who has a cause of action in unjust enrichment seeks a measure of recovery which is available only for a wrong, the court must not allow itself to slide from not-wrong to wrong without ensuring that the dual analysis is genuinely possible on the facts. In relation to mistakes attributable to nondisclosure, the question has been faced, and it appears to have been decided that, in the absence of a breach of fiduciary duty, the unjust factor cannot be re-analysed as a wrong. 40 With undue influence and misrepresentation, however, less caution has been exercised. Without argument these unjust factors have begun to be called wrongs. 41 Indiscriminate use of that language may attract liabilities which an unjust enrichment cannot explain or support. 42 38

Trustee of Jones v. Jones [1996] 3 WLR 703, CA, makes it obvious that more can be

achieved than might have been thought w i t h o u t relying o n any wrong. Equally important is the d o u b t cast o n the need for an exactly c o r r e s p o n d i n g impoverishment of the plaintiff: Commissioner of State Revenue v. Royal Insurance Australia Ltd (1994) 182 CLR 5 1 , M a s o n ACJ, e c h o e d in Kleinwort Benson v. Birmingham C C [1996] 4 All ER 7 3 3 , CA. T h e Eingriffskondiktion in G e r m a n law may point in the s a m e direction. T h e view of J. Beatson that "waiver of tort" must be explained in " n o n - p a r a s i t i c " terms, independently of the tort in question, may yet be proved right, not in the s e n s e o f e x p l a i n i n g or displacing restitution for w r o n g s , but in identifying the larger s c o p e o f a u t o m o u s unjust enrichment: J. Beatson, The Use and Abuse of Unjust Enrichment ( O x f o r d , O U P , 1991) pp. 2 0 6 - 4 4 . 39

T e x t t o n. 23 above. Banque Keyser Ullmann SA v. Skandia (UK) Insurance Ltd [1990] 1 Q B 665, 7 7 1 - 8 1 (Slade LJ); [1991] 2 A C 2 4 9 , 2 8 0 (Lord T e m p l e m a n ) . 41 Recurrently in Lord Browne-Wilkinson's s p e e c h in Barclays Bank pic v. O'Brien [1994] 1 A C 180. Contrary argument in P. Birks a n d N . Y . C h i n , "On the Nature of Undue Influence" in J. Beatson and D. Friedmann (eds.), Good Faith and Fault in Contract (Oxford, O U P , 1995) 57. 40

42 O n e vehicle in this transition is the n o t i o n o f e q u i t a b l e compensation: J . D . H e y d o n , "Equitable C o m p e n s a t i o n for Undue Influence" (1997) 113 LQR 8, noting Mahoney v. Purnell [1996] 3 All ER 61 (May J), o n w h i c h see a l s o Birks [1997] Restitution LR 72, suggesting that the monetary award could and s h o u l d be understood as pecuniary restitution of unjust enrichment, not as c o m p e n s a t i o n triggered b y a wrong. Both "damages" and equitable " c o m p e n s a t i o n " can sometimes m e a n n o m o r e than "money awards". T h a t blurs the line between restitution and c o m p e n s a t i o n . A n unjust enrichment can explain restitution, pecuniary or otherwise; it cannot e x p l a i n c o m p e n s a t i o n in the sense in which that w o r d is usually and properly used.

Misnomer

19

Consent This need not detain us very long. Restitution can sometimes be consentbased. A contractual right can be restitutionary. That is, it can be contractual in origin and restitutionary in purpose and effect. Again a gift can be restitutionary in purpose and effect. The quadration of unjust enrichment and restitution requires that this be artificially denied. But the artificiality is too great. It sometimes happens that money is given back when there was no obligation to return it. In Woolwich Equitable Building Society v. IRC 43 the question was whether the IRC had given the ultra vires tax back ex gratia, as a gift. The IRC maintained that that is what they had done. In their view they did not have to pay interest, because they could give back as much or as little as they chose. The House of Lords' answer was that they had been obliged to return it as a matter of law. And the consequence was that they had to pay the interest which they had been seeking to withhold. The word "restitution" does not naturally respect the technical line between repayment ex gratia and repayment under a legal obligation. Uncompelled giving back is giving back. In the same way uncompelled repayment is restitution, but it is not restitution arising from unjust enrichment. Uncompelled and uncompellable restitution happens as a gift. It illustrates that restitution can be consent-based. It is also possible, when money is claimed of you, for you to hand it over in exchange for a promise by the other to return it in certain events. There might be a doubt about its being due. You can take a promise that it shall be returned if and when the doubt is resolved against the recipient. These are contracts to make restitution. Nor does the horrible history of this subject, and in particular its long subjugation to the implied contract theory of restitution, mean that such a contract can never be genuinely implied. In earlier litigation not unlike the Woolwich case Vaisey J felt able to conclude that the Customs and Excise Commissioners had impliedly made such a promise. 44 He may have leaned over a little too far to find that agreement. There is a hint in the Woolwich case to that effect.45 However, so long as we are sure that use of the word "restitution" does not point inexorably back to the event "unjust enrichment", we have no reason to resist the notion that a restitutionary obligation can sometimes be the creature of contract. 46 43 44 45

[1993] AC 70, HL. Sebel Products Ltd v. Customs and Excise Commissioners [1949] Ch 409.

[1993] AC 70,165-6. It is important to underline the fact that we speak here of the primary obligation under the contract, not the obligations arising from the wrong of breach of contract. A claim in the nature of the old action of debt lies to enforce that primary obligation, so long as the plaintiff has not elected to terminate the contract and confine himself to his remedies for breach: Sir Guenter Treitel, The Law of Contract, 9th edn. (London, Sweet & Maxwell, 1995) 912, 914-15. The old action of debt enforced the primary obligation. It was displaced by the action on the case called assumpsit, giving damages for the wrong of breach:."For in 46

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In the same way a right to rescind can be reserved by contract, as where a sale is made "on approval", allowing the buyer to return the goods and recover his price if dissatisfied. Rescission is a specialized synonym for restitution. It denotes that restitution (that yielding up of benefits) which happens when the benefit received is, or is received under, a contract or other consentbased legal act, such as a conveyance. The right to rescind generally arises in relation to a contract but not by virtue of a contract. However, it does not cease to be rescission or restitution in the rarer case in which it is the creature of contract. ' Again, on the presently dominant analysis, resulting trusts provide a further example. The resulting interest is certainly restitutionary in effect, for it carries the benefit back from the recipient to the person from whom it proceeded. And the interest which he then has is not simply one which he had all along. It is an interest which is created by equity precisely to take from the recipient the benefit which he would otherwise have. 47 However, in the Westdeutsche case Lord Browne-Wilkinson, approving Mr Swadling's analysis, says that this effect is attributable to the intent to create a trust. 48 The presumption, in his view, is a presumption of such an intent. The presumption is not on this view a presumption merely of non-beneficial intent and the trust is not a response to the unjust enrichment of the recipient consisting in his receiving a benefit imperfectly or incompletely intended. There is no analogy, therefore, with the case in which a non-beneficial intent is proved without the aid of a presumption, as where a payment is proved to have been made by mistake and a trust carries back to a mistaken payer a beneficial interest in the mistaken payment. 49 These examples show that restitution is sometimes consent-based. Only by artificially denying that natural fact can this conclusion be resisted. The law sometimes has to specialize the meanings of even simple words. Roman law, the action of debt the debt itself is to be recovered, but in the action on the case onlydamages. And it may be that the jury would give less damages than the sum to which the debt amounts . . . Thus the actions d o reduce several [i.e. distinct] things to judgment": Serjeant Tanfield arg in Slade v. Morley (1602): J.H. Baker and S.F.C. Milsom, Sources of English Legal History (London, Butterworths, 1986) p. 430. 47 Westdeutsche Landesbank Cirozentrale v. Islington [1996] AC 669, 706. Note, however, the different reasoning in support offered by R. Chambers, Resulting Trusts (Oxford, OUP, 1997) pp. 45-56. 48 [1996] AC 6 6 9 , 7 0 8 - 9 , citing W.J. Swadling "A New Role for Resulting Trusts?" (1996) 16 Leg Stud 110. Chambers (n. 41 above) was published after the Westdeutsche case, so that its argument for the contrary position has yet to be taken into account. In a note on the case Dr Chambers says, and his book proves, "The theory that resulting trusts depend on an intention to create a trust can explain the majority of the resulting trust cases, but it cannot explain them all. There are many cases where any intention to create a trust would be impossible, contrary to the evidence or unenforceable" (1996) 20 Melbourne ULR 1192, 1195. 49 As in Chase Manhattan Bank v. Israel-British Bank [1981] Ch 105, reinterpreted by Lord Browne-Wilkinson [1996] AC 669, 714-15.

Misnomer

21

to maintain the boundaries between different forms of action, found that it had to specialize the meaning of the simple verb dare, to give. It had to say that "give" meant "so to transfer a thing as to cause the property in it to pass from transferor to transferee".50 If you gave me my gold, that was not a giving, because nothing that was mine could be given to me. There has to be some strong pressure to justify that kind of thing. In our case there is no such pressure. There is no good reason for insisting that the word "restitution" cannot be used of contractual or other consent-based giving back, and no part of the sky will fall in if we say it can.

Miscellaneous Other Events We have so far shown that restitutionary rights can be brought into existence, not only by unjust enrichment from the plaintiff, but also by wrongs and by consent. This section shows that it is necessary to accept that restitution can also be triggered by an event which cannot be fitted in any of the first three categories and must therefore belong in the miscellaneous fourth. This can be illustrated from Macmillan v. Bishopsgate Investment Trust.51 The case arose from the collapse of the Maxwell empire. Maxwell so pulled the strings that Macmillan, an American member of the empire, transferred its shares in the Berlitz language school within the empire to Bishopsgate. After the transfer Bishopsgate expressly acknowledged that it held the Berlitz shares on trust for Macmillan. Maxwell then started using them as security for huge loans. But this borrowing failed to save the day. After the collapse, the Berlitz shares were found in the hands of numerous lending institutions, all claiming to hold free of the Macmillan equitable interest. The finance houses relied on their having acquired as bona fide purchasers of the legal estate without notice. There were complex issues in the conflict of laws. It suited Macmillan to argue that English law should apply. The attraction of English law was that it took a relatively narrow view of what it meant to be a bona fide purchaser. The easiest path to the application of English law seemed to Macmillan to be through unjust enrichment. It argued that the claim to recover its shares should be analysed as a claim to restitution of unjust enrichment and should therefore be subject to the law of the place where the enrichment had been received, namely London. The courts appear to have accepted that Macmillan's claim was a claim in restitution.52 They nevertheless escaped the conclusion that English law applied. We do not need to pursue the conflicts 50

Gaius, institutes, 4.4. [1996] 1 All ER 585, [1996] BCC 453, CA. The appeal has only dealt with the issue of the applicable law. 52 [1996] 1 All ER 585, 596 (Staughton LJ), 614 (Aldous LJ); [1995] 1 WLR 978, 988-90 (MillettJ). 51

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questions.53 What matters here is only that the case illustrates a claim which is indeed restitutionary but which not only does not arise from unjust enrichment but does on analysis arise from an event in the fourth category, namely the receipt of a res which belongs in equity to another. It is necessary to distinguish two elements of Macmillan's contention. The first is that which the Romans would have recognized as a vindicatio and more specifically the distinctive intentio of that kind of action: "Those shares are ours!" The common law recognizes no such claim, but equity does. A plaintiff can ask for a declaration that the defendant holds on trust for him. "Please say they are mine in equity!" It comes to the same thing. The essence of the vindicatio is the direct assertion of a proprietary right. The second element derives from the inert nature of that assertion of any pure proprietary claim. Differently from a judicial declaration of any obligation ("The defendant ought to pay the plaintiff 100") a declaration of a proprietary right implies no imperative ("The shares belong to Macmillan"). Something more has to be tacked on. What, if anything, will the court make the defendant do? In classical Roman law the plaintiff would in the last analysis have to put up with a money judgment/4 In equity, provided that the plaintiff asks for something more than a declaration, a successful vindicatio will end in an order for specific transfer to trie plaintiff. The successfully vindicating plaintiff therefore evidently has a personal right that the defendant transfer the thing. That right, with its correlative obligation to transfer, is distinct from the inert proprietary interest. The fact that a plaintiff is bringing a vindicatio tells us nothing about the causative event from which his proprietary right arose. It can in principle be an event in any one of our four generic categories. Macmillan's equitable interest seems to have arisen from an express declaration of trust and hence in the category which we are calling consent, though it may be that for a short time before that declaration Bishopsgate was a resulting trustee, in which case the classification of the initial event must now be regarded as controversial.-55 However that may be, we can see that Macmillan's equitable interest antedated the transfer to the defendants and cannot be said to have arisen by reason of their unjust enrichment from the plaintiff. However, Macmillan's primary assertion is not immediately our problem. It is the subsidiary or activating obligation which poses a problem, the solution to which obliges us to admit that there can be a restitutionary claim in our fourth, miscellaneous category. It is tempting to say that this subsidiary obligation is merely part of the 53

J. Bird, "Choice of Law for Priority Disputes in relation to Shares" [1996] LMCLQ 57, cf. [1995] LMCLQ 308; A. Briggs, "From Complexity to Anticlimax" [1996] Restitution LR 88; F.D. Rose (ed.), Restitution in the Conflict of Laws (Oxford, Mansfield Press, 1995), esp. J. Bird pp. 64-141, R. Stevens pp. 190-220. 54 W.W. Buckland, A Textbook of Roman Law from Augustus to Justinian, 3rd edn. revised by P. Stein (Cambridge, CUP, 1963) pp. 657-62, 675. 55 See n. 48 above and text thereto.

Misnomer

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machinery for protecting proprietary interests and to write it off as being "remedial". But that evades the problem. The word "remedy" is analytically evasive. Every obligation must find its origin in some event. Where in a classification dominated by causative events does the subsidiary personal right belong, the right to the transfer of the thing? The relevant event is not the judgment of the court. If it were, our point would be easily proved, since a judgment must be a category four event, and the content of the obligation so arising is in this case manifestly restitutionary. If the restitutionary obligation arose from the judgment, we would have a secure example of restitution triggered in the fourth, residual category of causative event. However, the right and obligation must antedate the judgment because the judgment only reflects the law outside litigation. The causative event cannot but be the receipt of an asset belonging in equity to another. These words must taken to include the case in which the other's equitable proprietary right arises at the moment of the receipt or, being imperfect at that moment, is subsequently perfected. 56 A system which allows a vindicatio and will order the specific transfer of the asset must recognize that the receipt of an asset belonging to another puts the recipient under an obligation to deliver it to the other. Is it a restitutionary obligation? The great Viscount Stair thought so. For him, in the late seventeenth century, this was the central example of a restitutionary obligation. Under the heading "Restitution" he says: "The obligations, whereby men are holden to restore the proper goods of others, are placed here among natural or obediential obligations; because they are not by contract or consent, neither have they their original from positive law; for though there were no positive law, those obligations would be binding . . . We are not here to speak of the obligations of restitution, which are by any voluntary engagement, or which are by delinquence, but of those only, whereby that which is another's, coming into our power, without his purpose to gift it to us, and yet without our fault, ought to be restored, as things straying, or found, or recovered from pirates, thieves, &c. or bought bona fide or the like. 2. Restitution of things belonging to others may seem to be an effect of property, whence cometh the right of vindication or repetition of any thing; but, beside the real action, the proprietor hath to recover what is his own, (which doth not directly concern any other person, and so, being no personal right, hath no correspondent obligation;) there is an obligation upon the haver of that, which is another's, to restore it, and thence a personal right; which is a power in the owner to demand it, not only when it is in the possession of the haver, but if he have fraudfully out it

56 This formulation allows for the fact that equity often has had nothing to say about the situation until the transfer, so that the transferor obtains, and does not retain, his equitable interest; also for the further fact that, at least on one view, the equitable interest is not perfected until the recipient's conscience is affected by his obtaining knowledge of the relevant facts: Westdeutsche Landesbank Girozentrale v. Islington [1996] AC 669, HL, 706.

24

PETER BIRKS away. And yet it is his once having it that obliges him; and his fraudulent awayputting, though it be a delinquency, yet it gives rise not to the obligation, but only continues it in the same condition as if he yet had it."57

It is futile to object to describing the obligation which activates the vindicatio as a restitutionary obligation. It compels one person to give up to another something which that other ought to have. Stair was right in describing this obligation as an obligation to make restitution. Slightly more than 300 years later Professor Burrows likewise included it in his excellent textbook on restitution, which now dominates the teaching of the subject.58 The subsidiary obligation which realizes or activates the right asserted in the vindicatio is an obligation to make restitution. The mere receipt of an asset belonging to another is neither a contract nor a wrong. We might jiggle it into the definition of a wrong if we had to, but it belongs more naturally in either category three, unjust enrichment, or category four, miscellaneous other events. If we locate this obligation under unjust enrichment, we will encounter a huge difficulty. The subsidiary obligation will become subject to the defence of change of position. We do not want every vindicatio to be subject to that defence. It would mean that, simply because of their inert nature and their need to be enlivened by this ancillary obligation to deliver, all property rights, even those not born of unjust enrichment, would at one stage removed be subjected to the characteristic and essential weakness of rights which are born of unjust enrichment. That is not the law. Nor is it desirable that it should be. As we learn to live without the idea of a perfect quadration between restitution and unjust enrichment, it will become easier to accept that the restitutionary obligation to transfer which underpins every vindicatio is not an obligation which arises from unjust enrichment. It is an obligation which arises in category four, the miscellaneous residue of causative events. The mere receipt of another's thing is not a contract, not a wrong, and not an unjust enrichment. It is one among the "various other events". In many cases a dual analysis will be possible.59 If there is no impediment to 37 Stair, Institutions of the Law of Scotland 1.7.1-2. H e does not come to cases in which the property passes till 1.7.6, where he begins to deal with the non-contractual condictiones: "The duty of restitution extendeth t o those things, . . . which coming warrantably into our hands . . . , yet if the cause cease by which they become ours, there superveneth the obligation of restitution of them." 58 A. Burrows, The Law of Restitution (London, Butterworths, 1993) p p . 362-75, a chapter which clearly betrays the a n x i o u s consideration given to this problem. This now has to be read with the introductory note t o "Proprietary Restitution" in A.S. Burrows and E. McKendrick, Cases and Materials on the Law of Restitution (Oxford, OUP, 1997) pp. 723—5, in which the position taken is very similar to that proposed in this paper. 59 In the same way facts which obviously disclose a breach of contract can sometimes be re-analysed t o disclose a tort, a n d vice versa, Henderson v. Merrett Syndicates [1995] 2 AC 145, H L , a n d facts which disclose a t o r t can re-analysed to disclose an unjust enrichment: text to n. 31 above; cf. P. Birks, An Introduction to the Law of Restitution (Oxford, OUP, 1989) pp. 314-15.

Misnomer

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characterizing the receipt as an enrichment from the other, the absence of the plaintiff's consent will supply the unjust factor. That analysis will serve to relocate the facts within category three (unjust enrichment).60 The availability of this dual analysis gives the plaintiff an election, whether he will stand on his title, vindicate and rely on the category four obligation to transfer the res, or, instead, waive his title and sue in unjust enrichment. Had it pleaded the matter more carefully, Macmillan could have relied on this dual analysis and the election which it offered. Every recipient from a trustee in breach of trust stands in danger of concurrent claims of different kinds. The finance houses were in that position. Bishopsgate held the Berlitz shares on trust for Macmillan. Subject to defences, the recipients of those shares could be attacked in different ways. Macmillan never disentangled its options. It made a pure proprietary claim, a vindicatio, but attempted to characterize it as a claim in restitution capable of attracting rules applicable to unjust enrichment. That claim asserted an anterior proprietary right which did not arise from the unjust enrichment of the defendants at Macmillan's expense. And, had it succeeded, it would have been activated by a restitutionary obligation arising, not from unjust enrichment, but in the fourth category, from the defendant's receipt of Macmillan's shares. However, sooner or later equity will recognize, subject to vigorous defences, that the recipient of another's equitable property incurs a strict personal claim in unjust enrichment analogous to that pursued at law in Lipkin Gorman v. Karpnale Ltd.61 This conclusion could be reached by diluting or eliminating the knowledge requirement in knowing receipt, or by realizing that the strict claim recognized in relation to misdirections from the estates of the deceased cannot rationally be confined to that one context. This is not the place to pursue this further.62 The question here has not been whether an alternative 60

The role of the law of unjust enrichment in situations in which a res has passed from plaintiff to defendant but the property in it has not passed is discussed in more detail in P. Birks, "Property and Unjust Enrichment: Categorical Truths" [1997] NZLR 623, 643-60. 61 [1991] 2 AC 548. On the necessity of this development, see the paper by Lord Nicholls at p. 231 below. Another important witness is now C. Harpum, "Knowing Receipt and Knowing Assistance: the Basis of Equitable Liability" in Birks (ed.), Frontiers of Liability, vol. 1 (Oxford, OUP, 1994) pp. 9, 24-5, where he vividly conveys the clash between historical truth and analytical necessity. It is impossible now to defend the historical truth, except as history. But some remain sceptical or hostile. Sceptical: S. Gardner, "Knowing Assistance and Knowing Receipt:Taking Stock" (1996) 112 LQR 56; hostile: P.D. Finn, "The Liability of Third Parties for Knowing Receipt or Assistance" in D.W.M. Waters (ed.), Equity, Fiduciaries and Trusts (Toronto, Carswell, 1993) p. 195. 61 "Categorical Truths" (n. 60 above) seeks to show that in equity, subject to the necessary fine-tuning required for each, such a plaintiff has three options: (a) the vindicatio, (b) a personal action for the wrong of misappropriation, (c) a personal action for unjust enrichment. At common law the position differs, because (a) is missing. In that paper I argue that the best course is to abandon the attempt to stick new labels on old formulae such as "knowing receipt" and "the Diplock claim in personam" and argue instead directly from the fundamental ideas of "wrong" and "unjust enrichment". One consequence is that it then ceases to be necessary to knock out the notion that "knowing receipt" should be regarded as a wrong.

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claim in unjust enrichment can be made out on these facts but how to analyse the subsidiary obligation to return upon which a plaintiff who chooses to vindicate relies. That subsidiary obligation is a restitutionary obligation. Like all restitutionary obligations it is in some sense "receipt-based", a fact which merely reflects the definition of restitution as entailing the surrender of something received. But, though restitutionary and receipt-based, it does not arise from unjust enrichment. It arises simply from the receipt of something belonging in equity to another, without regard to the characterization of that receipt as an enrichment. It therefore arises from an event within the miscellaneous fourth category of causative events.

Two Legislative Puzzles Much of this paper requires an act of faith. The reader has to believe that nomenclature is worth worrying about, that the price of not worrying is ultimately bad and unjust decision-making. This section briefly seeks to underpin that belief, taking the perspective, not immediately of adjudication, but of legislation.

Limitation of actions Despite the emancipation of this subject from its subjugation to contract, in relation to the Limitation Act 1980 authority continues to oblige us to accept that most restitutionary claims are bizarrely covered by the words "simple contract". In Westdeutsche Landesbank Girozentrale v. Islington (or, more accurately, in the Sandwell action which was tried with it), 63 Hobhouse J had to decide what limitation period applied to a restitutionary claim to money received under a void contract. The plaintiffs there advanced an argument that no limitation period of any kind had been prescribed by the Act for restitutionary claims. Hobhouse J. held that such claims were covered by section 5. That says: "An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued". The learned judge arrived at this conclusion by a proof in which Euclid could not have taken pride. First, the proposition that no period had been prescribed ran counter to the general nature and purpose of the Act. Secondly, its implausibility in the light of that policy was sufficient to render the statute "ambiguous", so as to allow recourse to Hansard under Pepper v. Hart.64 Thirdly, Hansard showed that back in 1938 and 1939, when the SolicitorGeneral had introduced the bill which became the Limitation Act 1939, he had 63

[1994] 4 All ER 890.

[1989] 1 SCR 1161.

81

See n. 12 above.

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BEVERLEY MCLACHLIN

there was no conferral of a negative benefit. The Court also rejected the argument that the federal government received an "incontrovertible benefit" as it was not clear that the federal government would inevitably have made the payments itself. The Supreme Court of Canada most recently considered the possible recovery of unconstitutional taxes through the doctrine of unjust enrichment in Air Canada v. Ontario (Liquor Control Board).*2 In 1984, an airline drew to Ontario's attention the probable unconstitutionality of a statute requiring the airline to pay alcohol-related fees to the Province. Ontario agreed to stop collecting the fees from that airline on the condition that the airline not disclose to other airlines that this was occurring. When the arrangement was eventually discovered, other airlines successfully challenged the constitutionality of legislation. The courts below held that the airlines were entitled to restitution of the some of the fees, as the airlines had proven that they did not pass the costs on to passengers. However, the Court of Appeal only ordered restitution of the fees collected after 1984 on the basis that prior to that date the airlines and the province were in pari delicto. The Supreme Court of Canada unanimously ordered restitution of all fees collected. There was no rule in Canadian law that only fees collected by a government agency who knew that a law was unconstitutional could be recovered. The responsibility of ensuring the constitutional applicability of a law lies with the governmental agency in charge of administering the law, not the taxpayer. One way of viewing Air Canada v. Ontario (Liquor Control Board) is that it represents the culmination of the application of the Pettkus v. Becker tripartite model of unjust enrichment to tax collection. In all previous tax-collection cases, the plaintiffs lacked one of the three requirements. In Peel (Regional Municipality) v. Canada, the problem was the absence of an enrichment. In Air Canada v. British Columbia, the requirement that eluded the plaintiffs was deprivation. In Reference Re GST,83 the statute provided a juristic reason for the enrichment. Only in Air Canada v. Ontario (Liquor Control Board) was the plaintiff able to show all three elements: Ontario was enriched through the collection of the fees, the airlines suffered a deprivation, and the unconstitutional statute did not constitute a juristic reason for the enrichment. This brief survey is sufficient to demonstrate that the intersection of statutes and restitution gives rise to a host of different problems. To paraphrase the eloquent words of Lord Wright in Fibrosa,84 restitution is a powerful tool for ensuring that those who benefit at the expense of another do not retain that which it is against conscience that they should keep. However, care must be taken to ensure that restitution is not used merely as the means to circumvent the expressed intention of the legislature.

82

See n. 9 above.

w

See n. 11 above.

8