DOCSLIB.ORG

Restitution: a New Start ?

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Restitution: a New Start ? 5 Restitution: A New Start ? LIONEL SMITH * I. Th e Problem In my view, something has gone wrong in the law of restitution for unjust enrichment. In this chapter, I aim to explain what I think has gone wrong, and to propose the beginning of a solution. Th e fi rst part aims to describe the problem and why it is a serious one. Th e second part off ers the beginning of a way forward. Private law in the common law is oriented around causes of action. Causes of action are normative packages that justify liability. Th e phrase ‘ cause of action ’ is actually quite ambiguous and in my view has three distinct meanings or senses.1 Th e fi rst meaning is the most abstract and general. An example of it is in the sentence, ‘ the cause of action in battery consists of the intentional infl iction upon the body of another of a harmful or off ensive contact ’ . 2 Th is is a statement that if any conduct occurs that fi ts this general description, a claim will arise (subject to defences). Th e second meaning focuses on facts. It is oft en found in judicial defi ni- tions, like this one: A cause of action has traditionally been defi ned as comprising every fact which it would be necessary for the plaintiff to prove, if disputed, in order to support his or her right to the judgment of the court. 3 On this defi nition, a cause of action is not a general statement but a collection of particular facts that have happened. Th is defi nition is important when, for exam- ple, you have to know where or when a cause of action arose, as you might for * I thank Professor Robert Stevens for sharing many ideas, in particular from his recent unpublished work. I also thank Professor Peter Devonshire and Mr Rohan Havelock for their kind invitation to and hospitality at the Faculty of Law, University of Auckland on 18 – 19 September 2017, where a version of this chapter was presented. 1 For a fuller argument, see L Smith , ‘ Defences and the Disunity of Unjust Enrichment ’ in A Dyson , J Goudkamp and F Wilmot-Smith (eds), Defences in Unjust Enrichment ( Oxford , Hart Publishing , 2016 ) 27 . In the current chapter I discuss the common law, but the earlier paper looks at this question comparatively and notes that civilian systems have an approach that is not dissimilar. 2 S e e Bettel v Yim ( 1978 ) 20 OR (2d) 617 (Ontario County Court) 621. 3 Danyluk v Ainsworth Technologies Inc 2001 SCC 44 , [2001] 2 SCR 460 [54]. 88 Lionel Smith jurisdictional reasons or in relation to concerns about the limitation of actions. Th e third and fi nal meaning is also particular: a lawyer might say, ‘ you have a cause of action in libel against that publisher ’. She is not referring to a general proposition about how liability can arise (the fi rst sense), nor to a set of facts (the second sense). She is saying that because certain facts have occurred (a cause of action in the second sense), those facts, when combined with a general rule (a cause of action in the fi rst sense), create a claim by this particular plaintiff against this particular defendant. Her claim is thus both normative and very particular: that defendant is liable to this plaintiff . My concern is with the fi rst sense: general statements of the conditions on which claims will arise. A cause of action in this sense exists to protect something valuable, something we consider worthy of protection. Th e cause of action in libel protects our reputations, while the cause of action in battery protects our bodily integrity. Th ose are usually treated as diff erent rights that we have, founded on diff erent aspects of personality that are worthy of protection. Th is is why commit- ting the tort of libel is diff erent from committing the tort of battery. Th is explains why the defences to the two are diff erent, and why a battery is much more likely to be a crime than a libel. Other causes of action may be founded on constitutional values, which are also things that are valuable and worthy of protection. In the law of unjust enrichment, some of us have failed to articulate the causes of action. Th e majority of scholars in the fi eld, and some courts, have avoided this issue. I am here speaking principally of the approach pioneered by Peter Birks, an approach to which I have largely adhered. In my view, many scholars have avoided this issue unintentionally. Th ey have avoided it by simultaneously acting as if there is only one cause of action in unjust enrichment, while also acting as if there are multiple causes of action in unjust enrichment. Many textbooks on unjust enrichment contain a discussion as to whether unjust enrichment is itself a cause of action, or rather a ‘ principle ’ that might contain multiple causes of action. In general, this question is then dismissed as unimportant. 4 In my view, it is very important. In the next sections I will aim to explain why this is so. Before getting to that, it is important to say that diff erent scholars use the term ‘ unjust enrichment ’ in diff erent ways. Some include a great deal more in it than others. Some think it is only a principle; still others do not think it is useful at all. I will say something about this only because I think that the problem which I wish to highlight exists among all of those who treat unjust enrichment as a ground of liability. A. Big Unjust Enrichment Among those who write about unjust enrichment, even if we confi ne ourselves to those taking what might be called a Birksian approach, there is a somewhat 4 Smith, ‘ Defences ’ (n 1) 41. Restitution: A New Start? 89 hidden diversity of views as to what is the scope of this fi eld. Peter Birks himself had a very expansive view of its scope; indeed, one which grew during his career. 5 In his fi nal book, he included among claims in unjust enrichment, the following: (i) a claim by a person who had made a mistaken or compelled payment to recover it from the payee; (ii) a claim by a person to recover the value of benefi ts conferred under a contract that was later set aside or frustrated; (iii) a claim by a person who had paid taxes not due, without mistake, to recover them; (iv) a claim by a person who had discharged a debt, but who was not primar- ily liable, to recover from the person who was primarily or co-equally liable (including a claim by the fi rst person to take over rights of discharged credi- tors of the person primarily liable); (v) a claim by a person who had acted under necessity, against a person who had benefi ted from that act; (vi) a claim by a person for the benefi t acquired by another person from the use, without authority, of an asset in which the fi rst person held legal or equitable rights. In what follows I will call this ‘ big unjust enrichment ’ . In my view, one diffi culty about Birks ’ s project is this: he was unclear about causes of action. He frequently invoked the maxim that ‘ like cases must be treated alike ’ , as part of an argu- mentative strategy for the development of the law.6 But what is a ‘ like case ’ ? We do not assume that defences that are available to the tort of inducing breach of contract – such as ‘ justifi cation ’ – must be available to the tort of false impris- onment. Th ose are not ‘ like cases ’ , in the relevant sense, even though both are torts. Phrased in terms of causes of action, the problem is this: Birks, and others, have assumed or taken for granted that all examples of liability in the law of unjust enrichment fall under a single cause of action, and so must be treated alike in a strong sense: the elements of the claim must be the same, the defences must be the same, the things that are not relevant (such as the defendant ’ s ignorance of the conferral of a benefi t) must be the same. So far as I know, Birks never expressly 5 I examined how Birks ’ s view of unjust enrichment evolved over time precisely to include more and more claims within its scope, in L Smith , ‘ Tracing ’ in AS Burrows and A Rodger (eds), Mapping the Law: Essays in Memory of Peter Birks ( Oxford , Oxford University Press , 2006 ) 119 . He rejected any requirement that the plaintiff have transferred its rights to the defendant – indeed any requirement that the plaintiff have suff ered any loss at all – and he rejected any requirement that the plaintiff show a positive reason for restitution. 6 One prominent example was his conviction that since the common law provides strict liability for a mistaken payment, therefore a defendant should be strictly liable who receives trust property, even though in the latter case the claim only lies if the plaintiff ’ s interest survives: see, eg P Birks , ‘ Receipt’ in P Birks and A Pretto (eds), Breach of Trust ( Oxford , Hart Publishing , 2002 ) 213 . 90 Lionel Smith said that there is only one cause of action. But consciously or not, he took this for granted, because if there are multiple causes of action in unjust enrichment, as there are in the law of torts, then all these causes of action can be expected to reveal diversity in relation to all these aspects, just as is the case in the law of torts.
Load more

Recommended publications
  • The London School of Economics and Political Science Proprietary Rights
    The London School of Economics and Political Science Proprietary rights in indirectly held securities: legal risks and future challenges Elena Christine Zaccaria A thesis submitted to the Department of Law of the London School of Economics and Political Science for the degree of Doctor of Philosophy, London, April 2015. Declaration I certify that the thesis I have presented for examination for the MPhil/PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 69,572 words. Statement of use of third party for editorial help I confirm that my thesis was copy edited for conventions of language, spelling and punctuation by Babette Pragnell and Rachel Murray. 2 Abstract Over the centuries, English law has developed a ‘flexible’ and ‘malleable’ idea of property - in particular through the rules of equity - which has proved capable of adapting to the continuing changes in market practice. The question now to be addressed is whether this ‘flexible’ idea of property can also adequately represent interests in indirectly held securities or whether (as suggested by the Financial Market Law Committee) the new financial practice requires statutory clarification.
    [Show full text]
  • 1 the FAILURE of UNIVERSAL THEORIES of TORT LAW James
    THE FAILURE OF UNIVERSAL THEORIES OF TORT LAW James Goudkamp* and John Murphy** Many scholars have offered theories that purport to explain the whole of the law of torts. At least some of these theories do not seem to be specific to a single jurisdiction. Several appear to endeavour to account for tort law in at least the major common law jurisdictions, or even throughout the common law world. These include Ernest Weinrib’s corrective justice theory, Robert Stevens’s rights theory, and Richard Posner’s economic theory. This article begins by explaining why it is appropriate to understand these three theories as universal theories of tort law, which is an important feature of these theories that has not hitherto been properly appreciated. This explanation draws upon various overt claims (or other strong intimations) made by the theorists themselves to the effect that this is how their respective accounts should be understood. The article then proceeds to test these theories, all of which are leading accounts of tort law, against the evidence in Australia, Canada, the United Kingdom and the United States. Not all of these theories have received a proper airing in these major common law jurisdictions, which is a gap in the literature that this article seeks to fill. The parts of tort law on which we focus are (1) the breach element of the action in negligence, (2) the law that determines when a duty of care will be owed in respect of pure economic * Fellow, Keble College, Oxford; Associate Professor, Oxford Law Faculty; Academic Fellow, Inner Temple; Senior Honorary Research Fellow, Faculty of Law, University of Western Australia, Honorary Principal Fellow, School of Law, University of Wollongong, barrister, 7 King’s Bench Walk.
    [Show full text]
  • Restitution and Unjust Enrichment Reasons for Restitution 211 D
    vi Preface Quartahl Reuicu: and Current Legal Problems, Butterworths, Pty Ltd, publishers of the [ournal of Contract Law, the University of Toronto Press, publishers of the Unh'ersity of To rOil to Law [ourna! and the Editorial Committees of the Cambridge Law lou mill, the Canadian [ournal Contents of Law and [urisprudence (formerly the University of Western Ontario Law Revieio), and of Current Legal Problems for permission to use works originally published in those journals. /sbbreuiatious Over the years participants in the Oxford BCL Restitution class IX Table of Cases have provided enthusiasm and perceptive questioning (often from a X Commonwealth perspective) which has helped me to clarify and Table of Statutes xxviii develop my thoughts. Faculty and students at the National University 1. What Can Restitution Do For You? of Singapore, Osgoode Hall Law School, the University of Western 1 Australia and the University of Virginia, institutions at which I have 2. Benefit, Reliance, and the Structure of Unjust Enrichment 21 been fortunate enough to teach, also contributed to my understanding of a subject which can sometimes appear elusive. Merton College and 3. Discharge for Breach: Instalments, Deposits, and Other the Faculty of Law at Oxford have provided supportive and stimulating Payments Due Before Completion 45 environments in which to work and my Merton colleague, John Barton, has patiently dealt with many questions. I am also indebted to many 4. Gap-filling and Risk-reversal 78 others who commented on drafts of the articles on which these essays 5. Duress, Restitution, and Contract Renegotiation are based, but primarily to Peter Birks who, first as a teacher and later as -I- 95 a colleague, stimulated my interest in this subject and who also found ....f.
    [Show full text]
  • 1 Rights and Private Law
    1 Rights and Private Law DONAL NOLAN AND ANDREW ROBERTSON* I. INTRODUCTION N RECENT YEARS a strand of thinking has developed in pri- vate law scholarship which has come to be known as ‘rights’ or I ‘rights-based’ analysis. This kind of analysis seeks to develop an understanding of private law obligations which is driven, primarily or exclusively, by the recognition of the rights we have against each other, rather than by other infl uences on private law, such as the pursuit of community welfare goals. Rights-based theories of contract,1 torts2 and unjust enrichment3 have been developed. A number of doctrines within the law of tort have been subjected to rights analysis.4 Thinking on the law of property has been informed by innovative analysis of the nature of property rights.5 The relationship between primary rights and the second- * We are grateful to Allan Beever, Peter Cane, Helge Dedek, Gregory Keating, Jason Neyers and Robert Stevens for their helpful comments on an earlier draft. The usual caveat applies. 1 See, eg, P Benson, ‘The Unity of Contract Law’ in P Benson (ed), The Theory of Con- tract Law (Cambridge, Cambridge University Press, 2001) 118. On rights-based theories of contract more generally, see SA Smith, Contract Theory (Oxford, Oxford University Press, 2004) 140–58. 2 R Stevens, Torts and Rights (Oxford, Oxford University Press, 2007). 3 See, eg, EJ Weinrib, ‘The Normative Structure of Unjust Enrichment’ in C Rickett and R Grantham (eds), Structure and Justifi cation in Private Law: Essays for Peter Birks (Oxford, Hart Publishing, 2008) 21.
    [Show full text]
  • When and Why Does Unjustified Enrichment Justify the Recognition of Proprietary Rights?
    WHEN AND WHY DOES UNJUSTIFIED ENRICHMENT JUSTIFY THE RECOGNITION OF PROPRIETARY RIGHTS? ROBERT STEVENS∗ INTRODUCTION ............................................................................................... 919 I. RIGHTS AND THINGS............................................................................ 920 II. RIGHTS AND TRUSTS ........................................................................... 921 III. TRUSTS AND TRANSFERS ..................................................................... 923 IV. RIGHTS AND VALUE ............................................................................ 925 V. RIGHTS AND TRACING ......................................................................... 929 VI. RIGHTS AND SUBROGATION ................................................................ 930 VII. RIGHTS AND LIENS .............................................................................. 931 VIII. RIGHTS AND REMEDIES ....................................................................... 932 IX. RIGHTS AND PRIORITIES ...................................................................... 935 CONCLUSION ................................................................................................... 936 INTRODUCTION A Restatement’s central purpose is not to explain why the law is as it is, but rather to restate the law in as clear and coherent a manner as possible. In this paper my purpose is not to duplicate the (superb) work of the Restatement (Third) of Restitution and Unjust Enrichment,1 but rather to try to explain
    [Show full text]
  • The Nature of the Beneficiary's Right Under a Trust: Proprietary Right, Purely Personal Right Or Right Against a Right? A
    This is a pre-copyedited, author-produced version of an article accepted for publication in Law Quarterly Review following peer review. The definitive published version Zaccaria, E.C. (2019) 'The nature of the beneficiary’s right under a trust: proprietary right, purely personal right or right against a right?', Law Quarterly Review, 135 (July), 460-483 is available online on Westlaw UK, https://uk.westlaw.com/Document/ I79B94910865C11E997B3891CC225DE3D/View/FullText.html. For educational use only. The nature of the beneficiary’s right under a trust: proprietary right, purely personal right or right against a right? Elena Christine Zaccaria∗ Keywords Beneficiaries; Equitable interests; Proprietary rights; Trust A. Introduction Legal theorists typically regard the concept of property as a “bundle of rights” that may be exercised by the rightful owner or possessor in regard to a thing. The interests that are associated with property are the three traditional rights of enjoyment, management and possession as understood in their broadest, most abstract form1. By enjoyment what is meant is the right to enjoy the benefits of property and receive an income from it. The right to management is the right to decide how and by whom the thing owned or possessed shall be used or transferred. Lastly, the right of possession consists of two elements: “first, the exercise of factual control over the [thing]; and secondly, the concomitant intention to exclude others from the exercise of control”.2 The same “bundle of rights” does not necessarily attach to all forms of property, as there may be a need to detach some rights from others and to vest them in different persons.
    [Show full text]
  • The Refugee Jurist and American Law Schools, 1933-1941 Kyle Graham Santa Clara University School of Law, [email protected]
    Santa Clara Law Santa Clara Law Digital Commons Faculty Publications Faculty Scholarship 1-1-2002 The Refugee Jurist and American Law Schools, 1933-1941 Kyle Graham Santa Clara University School of Law, [email protected] Follow this and additional works at: http://digitalcommons.law.scu.edu/facpubs Recommended Citation 50 Am. J. Comp. L. 777 This Article is brought to you for free and open access by the Faculty Scholarship at Santa Clara Law Digital Commons. It has been accepted for inclusion in Faculty Publications by an authorized administrator of Santa Clara Law Digital Commons. For more information, please contact [email protected]. KYLE GRAHAM The Refugee Jurist and American Law Schools, 1933-1941 The position of younger men, just about to enter upon their careeras academic men is almost more distressing than that of the fully arrived professor. The latter can find a home else- where. The former have the roots cut out from under them.1 - Yale Law School Professor Edwin Borchard, 1933 With patience younger men can fit into the American scheme 2 of things. Older men will find difficulty. - Borchard, 1938 In 1933, Adolf Hitler and his National Socialist party assumed control of the German government. Over the next decade, Nazi- orchestrated persecution would force hundreds of academics, includ- ing several dozen law teachers, from their positions at European uni- versities. 3 Many displaced jurists sought to continue their careers in the United States. They thought a spirit of scientific brotherhood and respect for Continental scholarship would impel U.S. law schools to grant them refuge and succor.
    [Show full text]
  • Procedural Incrementalism: a Model for International Bankruptcy John A
    University of Michigan Law School University of Michigan Law School Scholarship Repository Articles Faculty Scholarship 2005 Procedural Incrementalism: A Model for International Bankruptcy John A. E. Pottow University of Michigan Law School, [email protected] Available at: https://repository.law.umich.edu/articles/619 Follow this and additional works at: https://repository.law.umich.edu/articles Part of the Bankruptcy Law Commons, Conflict of Laws Commons, Jurisdiction Commons, Legislation Commons, and the Transnational Law Commons Recommended Citation Pottow, John A. E. "Procedural Incrementalism: A Model for International Bankruptcy." Va. J. Int'l L. 45, no. 4 (2005): 935-1015. This Article is brought to you for free and open access by the Faculty Scholarship at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Articles by an authorized administrator of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. Procedural Incrementalism: A Model for International Bankruptcy JOHN A. E. POTTOW* TABLE OF CONTENTS I. Introduction ............................................................................... 936 II. The Transnational Insolvency Debate ....................................... 940 A. Insolvency Law Generally ............................................... 940 B. The International Perspective .......................................... 943 C. The Tradition: Territorialism ........................................... 944
    [Show full text]
  • Questioning the Trust-Law Duty of Loyalty: Sole Interest Or Best Interest?
    LANGBEIN_TO_POST4/4/2005 9:45:38 PM Article Questioning the Trust Law Duty of Loyalty: Sole Interest or Best Interest? John H. Langbein† CONTENTS INTRODUCTION.......................................................................................... 931 I. ADDRESSING CONFLICTS OF INTEREST .............................................. 934 A. The Ubiquity of Conflicts............................................................. 934 1. Family and Personal Life...................................................... 935 2. Nontrust Service Providers ................................................... 936 3. Settlor-Authorized Conflicts in Trusts................................... 938 4. Trustee Compensation........................................................... 939 5. Estate Administration............................................................ 941 a. Health Care Surrogacy................................................... 942 b. Durable Powers .............................................................. 943 B. The Concern About Concealment ................................................ 944 1. The Revolution in Equity Fact-Finding................................. 945 2. Fiduciary Recordkeeping ...................................................... 947 3. The Fiduciary Duty of Disclosure ......................................... 949 C. Deterrence (and Overdeterrence)................................................ 951 † Sterling Professor of Law and Legal History, Yale University. I acknowledge with gratitude suggestions on prepublication
    [Show full text]
  • THE ENIGMA of the QUISTCLOSE TRUST Brandon Dominic Chan
    THE ENIGMA OF THE QUISTCLOSE TRUST Brandon Dominic Chan Abstract - The Quistclose trust is an invaluable commercial device for lenders in view of its unique quasi-security element. It is the product of equity's flexibility in navigating the strict rigours of the common law. Unfortunately, since its inception and recent resurgence in Twinsectra v Yardley, it has been an eternally baffling subject. This mystery is largely caused by the unconventional principles upon which the Quistclose trust is founded and its strategic straddle between the realm of trusts and insolvency law. However, its increasing importance in commercial contracts and international finance transactions such as securitisations sparks renewed interest in the subject. Analysing the doctrinal difficulties which confounds both equity scholars and legal practitioners alike, this paper argues that this trust device is too useful in commercial practice to be abandoned and ultimately lends support to the restitution-inspired arguments of Lord Millett in rationalising the juridical conundrums that afflict the trust. A. INTRODUCTION The institution of the Quistclose trust is a peculiar creature. It arises when a sum of money, on loan or otherwise is advanced to a recipient with a specific purpose stated as to the use of such monies. When this purpose fails or if it is not complied with, the Quistclose trust fastens on the monies, crucially conferring proprietary interest upon the transferor instead of a mere personal right which is contractual in nature. It also represents a paradigm example of the conflicting tensions and inter-relationship between English trusts, security and insolvency law. This explains why the Quistclose trust has always attracted legal and academic analysis, not least because its enigmatic existence challenges the established principles of trusts law and seeks to extend its boundaries, which in turn has very practical commercial implications in the event of corporate insolvencies.
    [Show full text]