Exploring Private Law

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E X PLOR I NG PR I VAT E L AW

Inspired by recent debate, the purpose of this collection of essays on private law doctrines, remedies and methods is to celebrate and illustrate the contribution that both ‘top-down’ and ‘bottom-up’ methods of reasoning make to the development of private law. The contributors explore a variety of topical subjects, including judicial approaches to ‘top-down’ and ‘bottom-up’ methods; teaching trusts law; the protection of privacy in private law; the development of the law of unjust enrichment; the private law consequences of theft; equity’s jurisdiction to relieve against forfeiture; the nature of fiduciary relationships and obligations; the duties of trustees; compensation and disgorgement remedies; partial rescission; the role of unconscionability in proprietary estoppel; and the nature of registered title to land. e l i s e ba n t is an Associate Professor in the Melbourne Law School at the University of Melbourne and an Honorary Fellow of the University of Western Australia. m at t h e w h a r d i n g is a Senior Lecturer in the Melbourne Law School at the University of Melbourne.

E X PLOR I NG PR I VAT E L AW Edited by E L ISE BA N T and M AT T H EW H A R DI NG

CAMBRIDGE UNIVERSITY PRESS

Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521764353 © Cambridge University Press 2010 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2010

ISBN-13

978-0-521-76435-3

Hardback

Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

For Michael Bryan

CONTENTS

List of Contributors x Foreword xii Acknowledgments xvi Table of Cases xvii Table of Legislation xl Introduction

1

elise bant and matthew harding

i Method 1

17

Do top-down and bottom-up reasoning ever meet? keith mason

2

Internationalization or isolation: the Australian cul de sac? The case of contract law 41 paul finn

3

The Australian law of restitution: has the High Court lost its way? 67 andrew burrows

4

Privacy and private law: developing the common law of Australia 86 michael tilbury

5

Towards legal pragmatism: breach of confidence and the right to privacy 109 megan richardson

6

Teaching trust law in the twenty-first century tang hang wu

vii

125

19

viii

Contents

ii Unjust enrichment 7

151

The impact of legal culture on the law of unjustified enrichment: the role of reasons 153 helen scott and daniel visser

8

Natural obligations and unjust enrichment

175

mitchell mcinnes

9

Causality and abstraction in the common law

200

birke häcker

10

Trust and theft

223

robert chambers

iii Equity and trusts 11

247

What is left of equity’s relief against forfeiture?

249

sarah worthington

12

Contracts, fiduciaries and the primacy of the deal anthony duggan

13

Four fiduciary puzzles

298

james edelman

14

Good faith: what does it mean for fiduciaries and what does it tell us about them? 319 richard nolan and matthew conaglen

15

Trustees’ duties to provide information

343

lusina ho

iv Remedies 16

361

The measurement of compensation claims against trustees and fiduciaries 363 lionel smith

17

Substitutability and disgorgement damages in contract 377 katy barnett

275

Contents

18

Unconscionability and proprietary estoppel remedies 402 andrew robertson

19

Partial rescission: disentangling the seedlings but not transplanting them 427 peter watts

20

Of horses and carts: theories of indefeasibility and category errors in the Torrens system 446 kelvin fk low

Index

468

ix

LIST OF CONTR IBUTORS

e l i se ba n t is an Associate Professor in the Melbourne Law School, University of Melbourne, and an Honorary Fellow of the Faculty of Law, The University of Western Australia. k at y b a r n e t t is a PhD student in the Melbourne Law School, University of Melbourne. a n dr e w bu r row s QC (Hon) FBA is the Norton Rose Professor of Commercial Law at the University of Oxford, and a Fellow of St Hugh’s College, Oxford. robe rt ch a m be r s is a professor of Property Law at University College London. m at t h e w c onagl e n is a University Senior Lecturer, University of Cambridge, and a Fellow of Trinity Hall, Cambridge. a n t hon y dug g a n holds the Hon Frank H Iacobucci Chair in the Faculty of Law at the University of Toronto, and is a Professorial Fellow in the Melbourne Law School, University of Melbourne. j a m e s e d e l m a n is Professor of the Law of Obligations at the University of Oxford and a fellow of Keble College, Oxford, as well as a Conjoint Professor, University of New South Wales, and a barrister at One Essex Court, Temple. paul finn is a judge of the Federal Court of Australia, and a Professorial Fellow of the University of Melbourne. birke häcker is a lecturer at Ludwig-Maximilians-Universität München. m at t h ew h a r di ng is a Senior Lecturer in the Melbourne Law School, University of Melbourne. lu s i n a h o is a Professor in the Faculty of Law at the University of Hong Kong. x

List of Contributors

xi

k e lv i n l ow is an Associate Professor at the Singapore Management University, having held the same post at the University of Hong Kong when his chapter was written. The Honourable Keith Mason AC QC is a Professorial Visiting Fellow of the University of New South Wales and was, until 2008, the President of the New South Wales Court of Appeal. m i t c h e l l m c i n n e s is a Professor in the Faculty of Law at the University of Alberta. r ic h a r d n ol a n is a Reader in Corporate and Trust Law at the University of Cambridge, a Fellow of St John’s College, Cambridge, and a Door Tenant at Erskine Chambers, Lincoln’s Inn. m e g a n r ic h a r d s on is Professor of Law and Deputy Director of the Centre for Media and Communications Law at the Melbourne Law School, University of Melbourne. a n dr e w robe rt s o n is a Professor of Law at the University of Melbourne. h e l e n s c o t t is Associate Professor in the Department of Private Law at the University of Cape Town. l ion e l s m i t h is James McGill Professor of Law and the Director of the Quebec Research Centre of Private and Comparative Law in the Faculty of Law at McGill University. ta ng h a ng w u is an Associate Professor in the Faculty of Law at the National University of Singapore. m ich a e l t i l bu ry is Kerry Holdings Professor in Law, Chair of Private Law, the University of Hong Kong; a Professorial Fellow of the University of Melbourne; and an Adjunct Professor of Law at the University of Technology, Sydney. da n i e l v is se r is Professor of Law and Deputy Vice-Chancellor at the University of Cape Town. pet e r wat t s is a Professor in the Faculty of Law at the University of Auckland. s a r a h wort h i ngt on QC FBA is Professor of Law at the London School of Economics and Political Science, a Bencher of Middle Temple and an academic member of 3–4 South Square, Gray’s Inn.

FOR EWOR D

I am delighted to be invited to contribute a foreword to Exploring Private Law, which celebrates the breadth of Michael Bryan’s scholarly interests and the influence of his work on former students, academic colleagues and members of the judiciary. The purpose of a foreword is often to provide an overview of the material which follows. In this case, however, the excellent introduction by Elise Bant and Matthew Harding describes the intellectual terrain covered by the book, considers the topics examined by the 24 contributors and identifies the intersecting issues explored in the various essays. In these circumstances it would add little to describe the scope of the work or discuss the contents of particular essays. Instead, I will briefly mention three broad conceptual questions which underpin the book, and make it such an original and interesting contribution to legal scholarship. Until recently, most legal texts examined subject areas defi ned by reference to recognized common law categories (for example criminal law, contract, property and torts) or (less frequently) by reference to an area of statute law (for example trade practices law). Legal and equitable remedies were often discussed separately from substantive legal principles. By contrast, this book aims to explore the intersections, gaps and inconsistencies between principles which have traditionally been treated as falling within the boundaries of distinct legal and equitable doctrines. Thomas Kuhn’s theory that revolutionary changes in science are prompted by shifts in guiding paradigms1 has been widely accepted in the social and human sciences. By analogy, the identification of different approaches used to resolve questions within different subject boundaries

1

T Kuhn, The Structure of Scientific Revolutions (3rd ed, University of Chicago Press, Chicago 1996).

xii

Foreword

xiii

may help to generate new questions, and result in new ways of ‘seeing’ and resolving particular legal problems. There is increasing scholarly recognition that creative development of the law requires recognition and rationalization of overlaps and inconsistencies between principles which may lead to different outcomes, depending on the category of legal principle which is applied. This book is an important example of that approach, thus contributing to more adventurous legal scholarship, which will assist practising lawyers and judges. A number of the essays adopt a comparative law approach, which may lead to recognition of different ways of analysing and resolving problems which are common to many legal systems. Consistently with Michael Bryan’s reputation as a challenging and thoughtful teacher as well as a rigorous and creative legal scholar, the way the essays in this book cut across conventional legal boundaries will also encourage new approaches to teaching students about the law. The second theme, which is explicitly explored in the fi rst part of the book, concerns the techniques of legal reasoning which are available to resolve novel disputes in private law and the shared (and sometimes contested) understandings of lawyers about the legitimacy of various judicial approaches. It is trite to observe that syllogistic logic does not always provide a legally authoritative or just solution to a novel legal question. Julius Stone identified the limits of logical reasoning processes many years ago. He said: [p]erhaps the simplest illustration of these limits has reference to cases where two or more competing principles are available, each yielding different results; … ‘there are comparatively few cases’ said Lord Wright, ‘in which the relevant rules of law are uncertain. What is more often uncertain is, what is the right rule to apply’.2

Much of the development of common law and equity has come about through the incremental extension of rules laid down in decided cases, to cover new situations. (The recent decision of the Victorian Court of Appeal in Giller v Procopets,3 discussed in Michael Tilbury’s essay, is an example.) 2

3

Lord Wright, Legal Essays and Addresses (Cambridge University Press, Cambridge 1939) 343, cited in Julius Stone, Legal System and Lawyers’ Reasonings (Maitland, Sydney 1964), 56. [2008] VSCA 236.

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foreword

However the process of deducing a specific rule from a broader general principle is also a familiar legal technique. Both approaches have played a part in the development of law and equity and each may assist in providing just solutions to new legal problems. Imagine, for example, how torts law might have evolved without the development of liability for reasonably foreseeable injury. To my mind, debate about the proper limits to the application of both techniques of judicial reasoning is more interesting than debate about the legitimacy of ‘top-down’ compared with ‘bottom-up’ reasoning. As Keith Mason observes in his essay, ‘the two concepts inevitably meet in the day to day exertions of any conscientious judge, whether or not he or she is prepared to admit it’.4 Legal scholars may have more opportunities than practising lawyers and judges to stand back and discern the emergence of broad principles from a series of individual examples. While practising lawyers are sometimes dismissive of legal theory, history shows that it can have an important influence on the development of the law. This book’s combination of theoretical discussion of broad principles and fine-grained analysis of particular cases will be valuable to all those interested in the development and application of private law. The final theme, which is most explicitly addressed in the essays of Justice Paul Finn and Michael Tilbury, concerns the interaction between common law and statute in the future development of private law. One of the questions which is implicitly raised by many of the essays in the book is the extent to which the principled development of private law doctrine can be achieved by judicial decision. Whatever view is taken of the appropriateness of particular forms of legal reasoning, the role of the judge is to resolve particular disputes. This imposes limits on judges’ capacity to survey an area of the law and systematically rationalize competing legal principles. Almost all of the essays in this book raise questions about the limits to judicial creativity. As Justice Finn suggests in his essay on developments in contract law, there is an important place for use of law reform bodies, including ad hoc committees of legal scholars, practising lawyers and judges, to examine and rationalize particular areas of the law. In the future legal educators will need to think about the best ways of equipping tomorrow’s lawyers to participate in law reform. The necessary skills include the ability to think creatively and systematically, to draw insights from judge-made 4

40.

Foreword

xv

and statute law from a variety of legal systems and, sometimes, to look to disciplines outside the law. This fine collection of scholarly essays is a deserved tribute to Michael Bryan, which will stimulate thinking about the ways legal and equitable doctrines and statute law can, and should, change in the future. The Hon Justice Marcia Neave AO Melbourne 30 March 2010

ACK NOW L E D GM E N T S

The editors wish to thank Professor James Hathaway for his support at the early stages of the project, Professor Charles Rickett for his enthusiasm for the project, even though regrettably he could not take part in it, Professor Andrew Robertson for his encouragement and advice throughout, and Professor Carolyn Evans and the Research Committee of the Melbourne Law School for making funding available to us when we needed it. Thanks also to Cambridge University Press for their work in preparing the manuscript for publication. A version of the essay by Paul Finn is to be published in M Hiscock and W van Caenegem (eds), The Internationalisation of Law (Edward Elgar Publishing, Cheltenham UK and Northampton US 2010). Our thanks to the editors and publishers for permission to reproduce the essay here. Finally, we are especially grateful to our assistant Ms Bella Li for her professionalism, efficiency, and meticulous attention to detail.

xvi

TA BL E OF C A SE S

3464920 Canada Inc v Strother (2002) 26 BLR (3d) 235 283 3464920 Canada Inc v Strother (2005) 38 BCLR (4th) 159 283 3464920 Canada Inc v Strother (2005) 8 BLR (4th) 1 283 3464920 Canada Inc v Strother (2005) 256 DLR (4th) 319 283 3464920 Canada Inc v Strother (2007) 281 DLR (4th) 640 11, 277, 282, 283, 284, 289, 290, 297, 299 Abacus Trust (Isle of Man) Ltd v Barr [2003] EWHC 114, [2003] Ch 409, 388 Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461, 149 RR 32, 340 Abou-Ramah v Abacha [2006] EWCA Civ 1492, [2007] 1 Lloyd’s Rep 115, 314, 315, 316 ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 76 Actionstrength Ltd v International Glass Engineering In Gl En SpA [2003] 2 AC 541 464 Adams v Amex Bank of Canada [2009] QJ No 5769, 178 Adamson, Ex p (1878) 8 Ch 807 366, 369, 370, 372 Adderley v Dixon (1824) 1 Sim & St 607, 57 ER 239, 254, 378, 381, 383 Adras Building Material Ltd v Harlow & Jones GmbH (1983) 37(4) PD 225 385 Adras Building Material Ltd v Harlow & Jones GmbH (1998) 42(1) PD 221 384, 385 Agip (Africa) Ltd v Jackson [1990] EWCA Civ 2, [1991] Ch 547, 225 Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 251 ALR 322 55, 60 Air Canada v British Columbia (1989) 59 DLR (4th) 161 181 Air Canada v Ontario (Liquor Control Board) (1997) 148 DLR (4th) 193 190 Alati v Kruger (1955) 94 CLR 216 212, 218 Allcard v Skinner (1887) 36 Ch D 145 216, 219 Allen v Gold Reefs of West Africa [1900] 1 Ch 656 328 Allied Irish Banks Plc v Byrne (Chancery Division, 1 February 1994) 432 American Baseball and Athletic Association v Harper, 54 Cent L J 449 (1902) 387, 388 American Broadcasting Company v Wolf, 52 NY (2d) 394, 420 NE (2d) 363, 438 NYS (2d) 482 (1981) 387

xvii

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Table of Cases

AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 37 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1975] AC 561, 389 Anderson v Galbraith (1858) 15 UCQB 57 188 Angelopoulos v Sabatino (1995) 65 SASR1 35 ANZ Executors and Trustees Ltd v Humes Ltd [1990] VR 615, 386 Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581, 383 Arklow Investments Ltd v Maclean [2000] 1 WLR 594 300, 341 Armitage v Nurse [1998] Ch 241 146, 147, 290, 304, 323, 324, 325, 330, 343, 346, 350, 351, 355 Armory v Delamirie (1722) 1 Str 505, 93 ER 664, 229, 375 Atlas Steels (Australia) Pty Ltd v Atlas Steels Ltd (1948) 49 SR (NSW) 157 387, 388 Atlee v Backhouse (1838) 3 M and W 633 158 Attorney-General v Blake [1998] Ch 439 307, 398 Attorney-General v Blake [2001] 1 AC 268 377, 381, 382, 383, 391, 393, 394, 397, 398, 398, 399, 400 Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 7, 105, 111, 113, 114, 115, 116, 118, 119, 120 Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 NSWLR 86 116, 310 Attorney-General (England and Wales) v R [2002] 2 NZLR 91 311 Attorney-General (Belize) v Belize Telecom Ltd [2009] UKPC 10, 301 Attorney-General (Hong Kong) v Reid [1992] 2 NZLR 385 236 Attorney-General (Hong Kong) v Reid [1993] UKPC 2, [1994] 1 AC 324, 236 Aussie Invest Corp Pty Ltd v Pulcesia Pty Ltd [2005] VSC 362, 250 Austin v The Commonwealth (2003) 215 CLR 185 22, 28 Australia and New Zealand Banking Group Ltd v Petrik [1996] 2 VR 638 434, 435 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 86, 91, 94, 95, 97, 98, 106, 110, 115, 116, 119, 120 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 117 Australian Capital Television Pty Ltd v The Commonwealth (1992) 177 CLR 106 21, 22, 30, 36 Australian Communist Party v The Commonwealth (1951) 83 CLR 1 29 Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29 29 Australian Securities Commission v AS Nominees Ltd (1995) 133 ALR 1 341 Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) (2007) 160 FCR 35 11, 278, 293, 294, 295, 296, 341 Author of a Blog v Times Newspapers Ltd [2009] EWHC 1358, 124 Avanes v Marshall (2007) 68 NSWLR 595 344, 346

Table of Cases Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan & Co Ltd (in liq) (1919) 26 CLR 410 389 Baden Delvaux and Lecuit v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1983] BCLC 325, 312 Badman v Drake [2008] NSWSC 1366, 219 Bahr v Nicolay (No 2) (1988) 164 CLR 604 452, 453, 454, 465 Baker v Baker (1993) 25 HLR 408 408, 410, 416 Baker v Courage & Co [1910] 1 KB 56 76 Baker v JE Clark & Co (Transport) UK Ltd [2006] EWCA Civ 464 148, 306 Baker Ltd v Medway Building and Supplies Ltd [1958] 2 All ER 532 80 Baker Ltd v Medway Building and Supplies Ltd [1958] 3 All ER 540 80 Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344 264 Bamford v Bamford [1970] Ch 212, 335 Banque Belge pour l’Etranger v Hambrouck [1921] 1 KB 321 215 Banque Financière de la Cité v Parc (Battersea) Ltd [1998] UKHL 7, [1999] 1 AC 221, 69, 70, 85, 232, 265 Banque Financière de la Cité SA v Westgate Insurance Co Ltd [1991] 2 AC 249 329 Barbados Trust Co Ltd v Bank of Zambia [2007] EWCA Civ 148, 229 Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677, 206 Barclays Bank Plc v Guy [2008] EWCA Civ 452, 226 Barclays Bank Plc v Guy [2008] EWHC 893, 226 Barclays Bank Plc v O’Brien [1994] 1 AC 180 432, 460 Barker v Furlong [1891] 2 Ch 172 235 Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37 313, 314, 315, 316, 317 Barnes v Addy (1874) LR 9 Ch App 244 23, 33, 34, 71, 77, 78, 81, 82, 447, 449, 450, 451, 466 Barrett v Ministry of Defence [1995] 3 All ER 87 37 Barthe v Succession of Lacroix, 29 La Ann 326 (1877) 197 Bathurst City Council v Saban (1985) 2 NSWLR 704 92 Baylis v Bishop of London [1913] 1 Ch 127 180 BCCI (No 8), Re [1988] AC 214 265 BCCI v Akindele [2001] Ch 437, 71 Bell v Lever Brothers Ltd [1932] AC 161, 302 Bell v Long [2008] EWHC 1273, [2008] 2 BCLC 706, 331 Bell Group Ltd v Westpac Banking Corp (No 9) [2008] WASC 239 335 Belvoir Finance Co Ltd v Stapleton [1971] 1 QB 210 211 Bennett v Alcock (1787) 2 TR 166, 100 ER 90, 95 Berman v Riverside Casino Corp, 323 F (2d) 977 (9th Cir, 1963) 188 Beswick v Beswick [1968] AC 58, 255

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Table of Cases

Bethlehem Engineering Export Co v Christie, 105 F (2d) 933 (1939) 387 Bexley London Borough Council v Maison Maurice Ltd [2006] EWHC 3192, 424 BICC Plc v Burndy Corp [1985] Ch 232 250, 252, 254, 259, 266 Bilbie v Lumley (1802) 2 East 469, 102 ER 448, 180, 181, 193 Bird v Fort Frances [1949] 2 DLR 791 228 Bishopsgate Investment Management Ltd v Homan [1994] EWCA Civ 33, [1995] Ch 211, 225 Bize v Dickason (1786) 1 TR 285, 99 ER 1097, 179 Black v Garnock (2007) 230 CLR 438 205 Black v S Freedman & Co (1910) 12 CLR 105 223, 225, 228, 239, 240, 242 Black Clawson v Papierwerke [1975] AC 591, 192 Blacklocks v JB Developments (Godalming) Ltd [1982] Ch 183, 226 Blue Haven Enterprises Ltd v Tully [2006] UKPC 17, 273 Boardman v Phipps [1967] 2 AC 46 281, 338, 396 Boardwalk Regency Corp v Maalouf (1992) 88 DLR (4th) 612 187 Bofinger v Kingsway Group Ltd [2009] HCA 44 6, 85, 299 Bogdanovic v Koteff (1988) 12 NSWLR 472 241 Bo-Lassen v Josiassen [1973] 4 WWR 317 195 Bond Worth Ltd, Re [1980] 1 Ch 228 258, 267 Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25 258, 267 Bosanquett v Dashwood (1734) Cas T Talbot 38, 25 ER 648, 190 Boudier Cas Req 15.6.1892, S 1893.1.28 166, 172, 173 Bowlen Estate, Re [2002] 207 DLR (4th) 175 237 Bowman De Wet and Du Plessis NNO & Ors v Fidelity Bank Ltd 1997 (2) SA 35 (SCA) 155 Boyd v Mayor of Wellington [1924] NZLR 1174, 455 Bozeman v Louisiana, 879 So 2d 692 (La, 2004) 178 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 307 Breakspear v Ackland [2008] EWHC 220, [2009] Ch 32, 344, 346 Breen v Williams (1996) 186 CLR 71 299, 325, 341 Breitmeir v Batke (1966) 56 WWR 678 188 Breskvar v Wall (1971) 126 CLR 376 457 Brickles v Snell [1916] 2 AC 599 250 Bridge v Campbell Discount Co Ltd [1962] AC 600, 270 Bridgeman v Green (1757) Wilm 58, 97 ER 22, 81 Bridger v Savage (1884) 15 QBD 363 188 Bridges v Mees [1957] Ch 475, 448 Bridgewater v Leahy (1998) 194 CLR 457 15, 438, 440, 442, 443, 445 Brinsmead v Harrison (1871) LR 6 CP 584 455 Bristol and West Building Society v Mothew [1998] Ch 1 207, 300, 304, 323, 324, 330, 341 British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479 316

Table of Cases British Motor Trade Association v Gilbert [1951] 2 All ER 641 400 Brodie v Singleton (2001) 206 CLR 512 35, 37 Browning v Morris (1778) 2 Cowp 790, 98 ER 1364, 189, 190 Bryant, Powis & Bryant Ltd v Quebec Bank [1893] AC 170, 335 Buckenara v Hawthorn Football Club Ltd [1988] VR 39 387, 388 Buckley v Tutty (1971) 125 CLR 353 389 Bulldogs Rugby League Club v Williams [2008] NSWSC 822 387, 388, 390 Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712 381, 382 Bunyan v Jordan (1937) 57 CLR 1 100 Burland v Earle [1902] AC 83 328, 337 Burr v Bloomburg, 101 NJ Eq 615, 318 A 876 (1927) 383 Burrows v Sharp (1991) 23 HLR 82 404, 407, 410, 411, 421 Butcher v Stapeley (1686) 1 Vern 363, 23 ER 524, 463 Butler v Broadhead [1975] Ch 97, 80 Butler v Rice [1910] 2 Ch 277 435 Butt v Long (1953) 88 CLR 476 389 Buxton v Lister (1746) 3 Atk 383, 26 ER 1020, 383 Cadbury Schweppes Inc v FBI Foods Ltd [1999] 1 SCR 142, 167 DLR (4th) 577, 369 Campbell v Griffin [2001] EWCA Civ 990, 421 Campbell v Hogg [1930] 3 DLR 673 372 Campbell v MGN Ltd [2004] UKHL 22, [2004] 2 AC 457, 106, 115, 119, 120, 121, 122, 123 Campbell v Walker (1800) 5 Ves 678, 31 ER 801, 338 Canadian Aero Service v O’Malley (1973) 40 DLR (3d) 371 396 Canadian Pacific Airlines Ltd v British Columbia (1989) 59 DLR (4th) 218 181 Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534, 85 DLR (4th) 129, 13, 284, 363, 364, 366, 367, 369, 370, 372, 373, 374, 375, 376 Canson Enterprises Ltd v Boughton & Co (1995) 11 BCLR (3d) 262 366 Canson Enterprises Ltd v Boughton & Co (1998) 31 BCLR (2d) 46 364 Cape Breton Co Ltd, Re (1885) 29 Ch D 795 337 Car & Universal Finance Co Ltd v Caldwell [1963] EWCA Civ 4, [1965] 1 QB 525, 209, 244 Caratun v Caratun (1992) 96 DLR (4th) 404 229 Carlis v McCusker 1904 TS 917 158 Carrier v Bonham [2002] 1 Qd R 474 100, 101, 102 Carter v Ferguson, 12 NYS 580, 58 Hun 569 (1890) 387 Castillo v Castillo (2005) 260 DLR (4th) 439 193 Castle Phillips Finance Co Ltd v Piddington [1995] 1 FLR 783 435 Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, 260 Chambers v Miller (1862) 13 CBNS 125 206 Chan v Zacharia (1984) 154 CLR 178 395 Chang v Registrar of Titles (1976) 137 CLR 177 205

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Table of Cases

Chapin v Powers, 73 NYS (2d) 854 (1947) 387 Chaplin v Leslie Frewin (Publishers) Ltd [1966] Ch 71, 195 Chapman v Westerby [1913] WN 277, 389 Charge Card Services Ltd, Re [1987] Ch 150, 265 Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 3 WLR 267, 59, 431 Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105 214, 215, 217, 218, 435 Cheese v Thomas [1994] 1 WLR 29 433 Chesterfield v Janssen (1750) 1 Atk 301, 26 ER 191, 189 Chinn v Hochstrasser [1979] Ch 447, 386 Christinson v McBride (1881) 9 R 34 187 Church of Scientology v Kaufman [1973] RPC 627, 116 Citco Banking Corporation NV v Pusser’s Ltd [2007] UKPC 13, [2007] 2 BCLC 483, 328 Citibank NA v QVT Financial LP [2007] EWCA 11, [2007] 1 All ER (Comm) 475, 137, 146, 303 Clarke v Shee & Johnson (1774) 1 Cowp 197, 98 ER 1041, 188 Clark Paper & Manufacturing Co v Stenacher, 236 NY 312, 140 NE 708 (1923) 388 Clifton Manufacturing, 76 F 2d 577 (4th Cir, 1935) 194 Clough Mill Ltd v Martin [1985] 1 WLR 111 238 Coalport China Co Ltd, Re [1895] 2 Ch 404 324 Cobbe v Yeoman’s Row Management Ltd [2006] EWCA Civ 1139 407, 408, 424 Cobbetts LLP, Lee Crowder (a firm) v Mark Reginald Stuart Hodge [2009] EWHC 786, 307 Coco v AN Clark (Engineers) Ltd [1969] RPC 41 105, 113 Coco v The Queen (1994) 179 CLR 427 88 Cohen v Mirror Newspapers Ltd [1971] 1 NSWLR 623 89 Collings v Lee [2001] 2 All ER 332 208 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 44 Commissioner for Inland Revenue v First National Industrial Bank 1990 (3) SA 641 (A) 155 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 68, 71, 232 Commonwealth of Australia v Australia and New Zealand Banking Group Ltd (NSWSC, 7 October 1993) 217 Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 115, 116 Commonwealth of Australia v Official Trustee in Bankruptcy as Trustee of the Property of Stephen Vasil [2004] NSWSC 1155, 240 Commonwealth of Australia v Verwayen (1990) 170 CLR 394 405

Table of Cases Conlan v Registrar of Titles (2001) 24 WAR 299 241 Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 81 Conway v Ratiu [2005] EWCA Civ 1302, [2006] WTLR 101, 341 Coomber, Re [1911] 1 Ch 723 298 Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1, 255 Cornelius v De Taranto [2001] EMLR 329, 100 Cornelius v De Taranto [2002] EMLR 112, 100 Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 116 Costello v Derbyshire Constabulary [2001] EWCA Civ 381, [2001] 1 WLR 1437, 228, 229, 233 Coull v Kolbuc (1968) 78 WWR 76 195 Cowan de Groot Properties Ltd v Eagle Trust Plc [1992] 4 All ER 700 312 Cowin, Re (1886) 33 Ch D 179 351 Coxhead v Newmans Tours Ltd (1994) 6 TCLR 1 438 Crabb v Arun District Council [1976] Ch 179 403, 404, 407, 408, 409, 411, 422 Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 426 244 Cream Holdings Ltd v Banerjee [2005] 1 AC 103 117 Cressman v Coys of Kensington (Sales) Ltd [2004] EWCA Civ 47, [2004] 1 WLR 2775, 69 Criterion Properties Plc v Stratford UK Properties LLC [2004] UKHL 28, [2004] 1 WLR 1846, 336 Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] 1 Ch 949 331 Cud v Rutter (1719) 1 P Wms 569, 24 ER 521, 386 Cundy v Lindsay (1878) 3 App Cas 459 211, 226 Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 387, 388, 389 Curtice Bros v Catts, 72 NJ Eq 831, 66 A 935 (1907) 384 Dagenham (Thames) Dock Co, ex p Hulse, Re (1873) 8 Ch App 1022 250, 251, 254, 266 Daly v Smith (1874) 49 How Pr 150 387 Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 218 Damberg v Damberg (2002) 52 NSWLR 492 38, 311 Dan v Barclays Australia Ltd (1983) 46 ALR 437 428 Dartnall, Sawyer v Goddard, Re [1895] 1 Ch 474 351 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 23, 37, 67, 181, 206 Davis v Foreman [1894] 3 Ch 654 388 Davis v Hewitt (1885) 9 OR 435 188 DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd [2009] SGHC 62, 137 Denley’s Trust Deed, Re [1969] 1 Ch 373 144 DeJardin v Roy (1910) 12 WLR 704 187

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De Molestina v Ponton [2002] 1 All ER (Comm) 587 435, 440 DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 341 Dies v British International Mining and Finance Corporation Ltd [1939] 1 KB 724 264 Diggle v Higgs (1877) 2 Ex D 422 188 Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 31 Director of Public Prosecutions for the Northern Territory v WJI (2004) 219 CLR 43 26, 27 Dollars & Sense Finance Ltd v Nathan [2007] NZCA 177, 226 Domowicz v Orsa Investments Ltd (1993) 15 OR (3d) 661 371 Don Lodge Motel Ltd v Invercargill Licensing Trust [1970] NZLR 1105, 442 Donaldson v Smith [2006] EWHC 1290, 334 Donis v Donis (2007) 19 VR 577 407, 419, 421 Donoghue v Stevenson [1932] AC 562 97, 160, 164 Dougan v Ley (1946) 71 CLR 142 381, 383, 385, 386 Douglas v Hello! Ltd [2001] QB 967 98, 120 Douglas v Hello! Ltd (No 3) [2005] EWCA Civ 595, [2006] QB 125, 103, 115, 120, 123 Dover v Buck (1865) 5 Giff 57, 66 ER 921, 337, 338 Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295, 328 Duchess of Argyll v Duke of Argyll [1967] Ch 302 105, 118, 123 Duff v Russell, 14 NYS 134, 60 J & S 80 (1891) 387 Dufour v Ackland (1830) 9 LJ 3 188 Dunbar v Plant [1997] EWCA Civ 2167, [1998] Ch 412, 237 Dunbar Bank Plc v Nadeem [1998] 3 All ER 876 433 Duncuft v Albrecht (1841) 12 Sim 189, 59 ER 1104, 386 Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896 334 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, 270 Dunn v Flood (1885) 28 Ch D 586 334 Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399 460 Durham Tees Valley Airport Ltd v BMI Baby Ltd [2009] EWHC 852, 301 Eastern Air Lines v Gulf Oil Corporation, 415 F Supp 429 (1975) 384 Eastern Rolling Mill v Michlovitz, 157 Md 51, 145 A 378 (1929) 383 Edelstein v Edelstein 1952 (3) SA 1 (A) 158 Ehrman v Bartholomew [1898] 1 Ch 671 388, 389 El Ajou v Dollar Land Holdings Plc [1993] 3 All ER 717 239 El Ajou v Dollar Land Holdings Plc [1994] 2 All ER 685 239 Emcorp Pty Ltd v Australian Broadcasting Corporation [1988] 2 Qd R 169 94 Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 316 Emhill Pty Ltd & Anor v Bonsoc Pty Ltd (No 2) [2007] VSCA 108 444

Table of Cases Engels v Merit Insurance Brokers Ltd (2000) 17 CBR (4th) 209 198 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 47 Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269, 389 Ettingshausen v Australian Consolidated Press Ltd (1991) 23 NSWLR 443 89, 90 Ettingshausen v Australian Consolidated Press Ltd [1993] NSWCA 10 89, 90 Evans v European Bank Ltd (2004) 61 NSWLR 75 239, 240 Evening News Association v Peterson, 477 F Supp 77 (1979) 387 Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323 394, 395, 399 Export Credits Guarantee Department v Universal Oil Products Co [1983] 1 WLR 399 270 Extrasure Travel Insurances Ltd v Scattergood [2002] EWHC 3093, [2003] 1 BCLC 598, 324, 325 Fairweather v St Marylebone Property Co Ltd [1963] 1 AC 510 233 Falcke v Gray (1859) 4 Drew 651, 62 ER 250, 383 Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 34 Fannon v Dobranski (1970) 73 WWR 371 195 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2004] NSWSC 800, 77 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 5, 6, 20, 21, 22, 23, 25, 26, 33, 34, 36, 37, 48, 77, 78, 79, 84, 317, 449, 450, 451, 454, 455, 466 Farmer v Arundel (1772) 2 Bl W 824, 96 ER 485, 179 Farquharson Brothers & Co v C King & Co [1902] AC 325, 227 Fassihi v Item Software (UK) Ltd [2004] EWCA Civ 1244, [2004] BCC 994, 302 Fletcher v Fletcher (1844) 4 Hare 67 129 Flight v Bolland (1828) 4 Russ 298, 38 ER 817, 195 Flynn v Mackin [1974] IR 101, 203 Foley v Hill (1848) 2 HLC 28, 9 ER 1002, 225 Forbes v NSW Trotting Club Ltd (1979) 143 CLR 242 389 Foreman v Chambers [2007] 284 DLR (4th) 210 236 Foreman v Kingstone [2004] 1 NZLR 841 346, 349, 353, 355, 356, 358 Forge v Australian Securities and Investments Commission (2006) 228 CLR 45 30 Foskett v McKeown [2000] UKHL 29, [2001] 1 AC 102, 70, 225 Fothergill v Rowland (1873) LR 17 Eq 132 383 Francis v Municipal Councillors of Kuala Lumpur [1962] 3 All ER 633 386, 387 Francome v Mirror Group Ltd [1984] 2 All ER 408 113, 114 Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, 60 Frazer v Walker [1967] 1 AC 569 453, 461, 462, 467 Friend v Brooker [2009] HCA 21, 299 Fuller v Happy Shopper Markets Ltd [2001] 1 WLR 1681 76

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Fyffes Group v Templeman [2000] 2 Lloyds Rep 643 317 Gagné v Duval (1946) 28 CBR 43 198 Gala v Preston (1991) 172 CLR 243 35 Galambos v Perez [2009] SCC 48, 12 Garcia v National Australia Bank (1998) 194 CLR 395 76, 452, 460 Garland v Consumers’ Gas Co (2001) 208 DLR (4th) 494 183, 190 Garland v Consumers’ Gas Co (No 2) (2004) 237 DLR (4th) 385 182, 183, 190, 191, 193 Gartside v Outram (1856) 26 LJ Ch 378 116 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2000) 128 FCR 1 55 60 General Securities Corporation v Welton, 223 Ala 299, 135 So 329 (1931) 386 Georges v Wieland [2009] NSWSC 733, 386 Geraghty v Minter (1979) 142 CLR 177 389 Gett v Tabet [2009] NSWCA 76, 20 Giller v Procopets [2008] VSCA 236 xiii, 86, 100, 101, 103, 104, 123 Gillett v Holt [2001] 1 Ch 210 404, 415, 422 Gisborne v Gisborne (1877) 2 App Cas 300 324 Giumelli v Giumelli (1999) 196 CLR 101 405, 419 Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543 341 Global Container Lines Ltd v Bonyad Shipping Co [1998] 1 Lloyd’s Rep 528 341 Golden Strait Corporation v Nippon Yusen Kubishka Kaisha [2007] 2 AC 353 368 Goldsmith v Rodger [1962] 2 Lloyd’s Rep 249 213 Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873 420, 421 Goods and Services Tax (Alta), Reference re (1992) 94 DLR (4th) 51 183 Goss v Chilcott [1996] AC 788, 264 Governor, Goulburn Correctional Centre, ex p Eastman, Re (1999) 200 CLR 322 47 Graham v Freer (1980) 35 SASR 424 213 Graham v Pollock (1848) 10 D 646 187 Gray v McCormick, 663 So 2d 480 (La Ct App 2d Cir, 1995) 197 Greater Pacific Instruments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 219 Greig v Greig [1966] VR 376, 89 Griffiths, Re [2008] EWHC 118, [2008] 2 All ER 654, 80 Grimston v Cuningham (1893) 1 QB 125 387, 388 Grosse v Purvis [2003] QDC 151 87, 99 Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 28 Grupo Torras SA v Al Sabah [2001] CLC 221, 309 Guerin v R [1984] 2 SCR 335, 13 DLR (4th) 321, 13, 366, 367, 373, 374, 375 Guinness Plc v Saunders [1990] 2 AC 663 337, 338

Table of Cases Ha v New South Wales (1997) 189 CLR 465 29 Halliday Estate v Kennedy (1997) 50 CBR (3d) 281 198 Halpern v Halpern (Nos 1 and 2) [2007] EWCA Civ 291, [2008] 1 QB 195, 433 Hambro v Burnand [1904] 2 KB 10 335 Hancock Family Memorial Foundation v Porteous (2000) 22 WAR 198 219 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 5, 28, 31, 32, 299 Hartigan v International Society for Krishna Consciousness Inc [2002] NSWSC 810 219, 220 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 346, 355, 356 Harvard Securities, Re [1998] BCC 567, 129 Hawkesley v May [1957] 1 QB 304 347, 348, 349 Hawkins v Clayton (1987–88) CLR 539, 347 Hawthorn Football Club Ltd v Harding [1988] VR 49 387, 388 Hayim v Citibank NA [1987] AC 730, 304 Hedley Byrne & Co Ltd v Heller and Partners [1964] AC 465 302, 312 Heggies Bulkhaul Ltd v Global Minerals Pty Ltd [2003] NSWSC 851, 424 Heine Bros (Aust) Pty Ltd v Forrest [1963] VR 383 388, 389 Heinl v Jyske Bank [1999] Lloyd’s Rep Bank 511, 335 Helmet Integrated Systems v Tunnard [2007] FSR 16, 307 Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 335, 336, 337 Heperu Pty Ltd v Belle [2009] NSWCA 252 10, 241, 243 Hermann v Charlesworth [1905] 2 KB 123 197 HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] 1 All ER (Comm) 349 305 Hill v Van Erp (1997) 188 CLR 159 25, 35 Hill v William Hill (Park Lane) Ltd [1949] AC 530 (HL) 188 Hillsdown Plc v Pensions Ombudsman [1997] 1 All ER 862 334 Hilton v Barker Booth and Eastwood (a firm) [2002] EWCA Civ 723 301, 302 Hilton v Barker Booth and Eastwood (a firm) [2005] UKHL 8, [2005] 1 WLR 567, 277, 300, 301, 302 Hogan v Tumut Shire Council (1954) 54 SR (NSW) 284 386, 387 Hogg v Cramphorn Ltd [1967] Ch 254, 335 Holder v Holder [1968] Ch 353, 334 Holliday v Lockwood [1917] 2 Ch 47 440, 442 Holroyd v Marshall (1862) 10 HLC 191, 11 ER 999, 382 Holt v Markham [1905] 1 KB 505 180 Hopkins v TL Dallas Group Ltd [2004] EWHC 1379, [2005] 1 BCLC 543, 334, 336 Horseshoe Club Operating Co (cob The Horseshoe Club) v Bath [1998] 3 WWR 128 (BCSC) 187 Hosegood v Pedler (1896) 66 LJ QB 18 334 Hosking v Runting [2005] 1 NZLR 1 99

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Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 227, 282, 295, 296, 301, 341, 396 Howard Perry & Co v British Railways [1980] 1 WLR 1375 384 Howe v Smith (1884) 27 ChD 89 267 Hubbard v City of Hickman, 67 Ky 204 (1868) 194 Hubbard v Vosper [1972] 2 QB 84 117 Huber v Steiner (1835) 2 Bing NC 202, 132 ER 80, 192 Hughes v Western Australian Cricket Association (Inc) (1986) 69 CLR 660 389 Huish v Ellis [1995] BCC 462, 328 Hunter v Canary Wharf Ltd [1997] AC 655, 93 Hunter v Moss [1994] 1 WLR 452 129 Hunter v Senate Support Services Ltd [2004] EWHC 1085, [2005] 1 BCLC 175, 338 Hunter BNZ Finance Ltd v CG Maloney Pty Ltd (1989) 18 NSWLR 420 207 HW Gossard Co v Crosby, 132 Iowa 155, 109 NW 483 (1906) 386, 388 Hyer v Richmond Traction Co, 168 US 471 (1897) 386 Hypec Electronics Pty Ltd v Mead [2003] NSWSC 934, 424 Hypec Electronics Pty Ltd v Mead [2004] NSWCA 221, 424 Hyundai Heavy Industries Ltd v Papadopoulos [1980] 1 WLR 1129 264 Ilich v R (1987) 162 CLR 110 206, 218 Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589 341 Ingram v IRC [1997] 4 All ER 395 337, 338 Ingram v IRC [2000] 1 AC 293 338 IRC v Schroder [1983] STC 480, 346 Irwin v Hunnewell, 21 So 2d 485, 488 (La, 1945) 198 Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244, [2005] 2 BCLC 91, 323, 325, 326, 327, 330 Jakeman v Cook (1878) 4 Ex D 26 198 James, Ex p (1803) 8 Ves 337, 32 ER 385, 334 Jane Doe v Australian Broadcasting Corporation [2007] VCC 281 87, 99, 107 JA Pye (Oxford) Ltd v Graham [2002] UKHL 30, [2003] 1 AC 419, 235 Jaques v Stafford (1890) 11 NSWLR 127 43 JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 386 Jennings v Rice [2002] EWCA Civ 159, [2003] 1 FCR 501, 406, 407, 409, 412, 413, 416, 417, 418, 419, 420, 421, 422, 425 JJ Harrison (Properties) Ltd v Harrison [2001] EWCA Civ 1467, [2002] 1 BCLC 162, 336 J Leslie Engineers Ltd, Re [1976] 1 WLR 292 80 Jobson v Johnson [1969] 1 WLR 1026 270, 272 John Cort v Lassard & Lucifer, 18 Ore 221, 22 P 1054 (1889) 387 Johnson v EBS Pensioner Trustees Ltd [2002] EWCA Civ 164, [2002] Lloyd’s Rep PN 309, 300, 436 Johnson Matthey (Aust) Pty Ltd v Dascorp Pty Ltd [2003] VSC 291, 227

Table of Cases Johnston v Australian Broadcasting Corporation (1993) 113 FLR 307 89 Jones v Shipping Federation of British Columbia (1963) 37 DLR (2d) 273 355 J Willis & Sons v Willis [1986] 1 EGLR 62 420, 421 Kane v Radley-Kane [1999] Ch 274, 337 Kasumu v Baba-Egbe [1956] 1 AC 539 189 Kaye v Robertson [1991] FSR 62 87, 88, 114 Keech v Sandford (1726) Sel Cas King 61, 25 ER 223, 396 Keith v Kellermann, 169 F 196 (1909) 387 Kelly v Cooper [1993] AC 205 277, 301, 302 Kelly v Solari (1841) 11 LJ Ex 10, 152 ER 24, 75, 158 Kelly Asphalt Block Co v Brooklyn Alcatraz Asphalt Co, 133 NE 899 (1922) 194 Kennedy v Panama New Zealand and Australian Royal Mail Co (1867) LR 2 QB 580 212 Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 205 Khorasandjian v Bush [1993] QB 727 93, 107 Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319 250, 251, 254, 259, 266 Kilroy v A OK Payday Loans Inc (2007) 278 DLR (4th) 193 191 KLB v British Columbia [2003] 2 SCR 403 288 Kleinwort Benson Ltd v Birmingham City Council [1997] QB 380, 232 Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 76, 181 Kleinwort Benson Ltd v South Tyneside Metropolitan Borough Council [1994] 4 All ER 972 76 Kolari, Re (1981) 36 OR (2d) 473 239 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 65 Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] 3 VR 16 78, 449 Kramer v McMahon [1970] 1 NSWR 194 213 Kuwait Oil Tanker SAK v Al Bader [2000] 2 All ER (Comm) 271 309 Kyrris v Oldham [2003] EWCA Civ 1506, [2004] 1 BCLC 305, 341 Laclede Gas Co v Amoco Oil Co, 845 F 2d 76 (4th Cir, 1975) 383 LAC Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574, 61 DLR (4th) 14, 236, 396 Lady Hood of Avalon v Mackinnon [1909] 1 Ch 476 183 Lake v Bayliss [1974] 1 WLR 1073 381, 382, 383 Lands Allotment Co, Re [1894] 1 Ch 616 335 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 30 Larner v London County Council [1949] 2 KB 683 196 Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 216 Laurin v DeCarolis Construction Co, 363 NE 2d 675 (Mass 1977) 382 Leaf v International Galleries [1950] 2 KB 86 212 Leason Pty Ltd v Princes Farm Pty Ltd [1983] 2 NSWLR 381 212

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Legator McKenna Inc & Anor v Shea & Ors [2009] 2 All SA 45 (SCA) 155, 156 Legione v Hateley (1983) 152 CLR 406 44, 250, 251, 254, 256, 259, 260, 266 Lemos v Coutts & Co (Cayman) Ltd [1992–93] CILR 460, 351 Leroux v Brown (1852) 12 CB 801, 138 ER 1119, 192 Lewis, Re [1904] 2 Ch 656 347, 348 LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517 449 Lincoln Hunt Australia Pty Ltd v Willesee (1986) 4 NSWLR 457 94 Lindner v Murdock’s Garage (1950) 83 CLR 628 389 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 70, 79, 81, 188 Lipohar v The Queen (1999) 200 CLR 485 20, 46, 49 Lister & Co v Stubbs (1890) 45 Ch D 1 236 Lloyd’s v Harper (1880) 16 Ch D 290 129 Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 465 London Assurance v Mansel (1879) 11 Ch D 363 329 Londonderry’s Settlement, Re [1965] Ch 918 344, 346, 356 Long v Lloyd [1958] 1 WLR 753 212 Longstaff v Birtles [2001] EWCA Civ 1219, [2002] 1 WLR 470, 308 Lord Ashburton v Pape [1913] 2 Ch 469 115 Louth v Diprose (1992) 175 CLR 621 219, 221 Lowe v Waller (1781) 2 Doug 736, 99 ER 470, 189 Lowry v Bourdieu (1780) 2 Doug 468, 99 ER 299, 190 Lumbers v W Cook Builders Pty Ltd (2008) 232 CLR 635 6, 20, 24, 34, 35, 37, 38, 82, 83, 84, 85 Lumley v Wagner (1852) 1 De GM & G 604, 42 ER 687, 387, 388, 389 Lyman v Kuzik (1965) 57 WWR 110 187 Lysaght v Edwards (1876) 2 ChD 499 204, 213, 382 MacDonald Estate v Martin [1990] 3 SCR 1235 288, 289 MacKenzie v Royal Bank of Canada [1934] AC 468, 441 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 226, 449, 450, 460 Maddison v Alderson (1883) 8 App Cas 467 464 Magill v Magill (2006) 226 CLR 551 101 Maguire v Makaronis (1997) 188 CLR 449 338, 436 Malone v Metropolitan Police Commissioner [1979] Ch 344 113, 114 Malone v United Kingdom (1985) 7 EHRR 14 114 Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] EWCA Civ 151, [2002] Ch 216, 208, 226 Manisty’s Settlement, Re [1974] Ch 17 304, 352 Marco Productions Ltd v Pagola [1945] 1 KB 111 387, 388 Marcq v Christie, Manson & Woods Ltd [2003] EWCA Civ 731, [2004] QB 286, 235 Marriott v Hampton (1797) 7 TR 269 158 Martin v Perrie (1986) 24 DLR (4th) 1 193

Table of Cases Martin v Pont [1993] 3 NZLR 25 75 Marvin v Wallace (1856) E & B 726, 119 ER 1035, 466 Mayo v Cantrade [1998] JLR 173, 311 Mayson v Clouet [1924] AC 980, 264 McCulloch v Fern [2001] NSWSC 406, 219 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 264, 265 McDonald v Ellis [2007] NSWSC 1068 344, 346, 347, 348, 349, 351 McDonald v North Queensland Newspaper Co Ltd [1997] 1 Qd R 62 90 McGinty v Western Australia (1996) 186 CLR 140 20, 21, 22, 29, 38 McGrath v Campbell (2006) NSW ConvR 56 159 462 McKeand v Thomas [2006] NSWSC 1028 [2006] NSWSC 1356, 424 McKennitt v Ash [2006] EWCA Civ 778, [2008] QB 73, 103, 123, 124 McNeil v Fultz (1906) 38 SCR 198 374 McPhail v Doulton [1971] AC 424, 346 Medforth v Blake [2000] Ch 86 324, 328 Mediana, The [1900] AC 113, 234 Mediterranean Salvage & Towage v Seamar Trading & Commerce ‘The Reborn’ [2009] EWCA Civ 531, 301 Meinhard v Salmon, 164 NE 545 (NY, 1928) 276 Merchants Express Co v Morton (1868) 15 Gr 274 238 Mestaer v Gillespie (1805) 11 Ves 621, 32 ER 1230, 463 Metallgesellschaft Ltd and Hoechst AG v Commissioners of Inland Revenue (Joined Cases C-397/98 and C-410/98) [2000] ECR I-1727 68 Metropolitan Bank v Heiron (1880) 5 Ex D 319 236 Millar v Bassey [1994] EMLR 44, 316 Ministry of Defence v Simpson [1951] AC 251, 80 Minnesota Mining & Manufacturing (Australia) Pty Ltd v Richards [1963] NSWR 1613, 389 M(K) v M(H) [1992] 3 SCR 6 287, 288 M(K) v M(H) (1993) 96 DLR (4th) 289 191 Montague v Flockton (1873) 16 LR Eq 189 387 Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, 227 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 105 Moreno v Hanford Sentinel Inc, 172 Cal App 4th 1125 (2009) 124 Morgan v Ashcroft [1938] 1 KB 49 182 Morgan Grenfell & Co Ltd v Welwyn Hatfield District Council [1995] 1 All ER 1 186 Morice v Bishop of Durham (1804) 9 Ves 399, 32 ER 656, 133, 346 Morice v Bishop of Durham (1805) 10 Ves 522, 32 ER 947, 346 Mortimer v Beckett (1920) 1 Ch 571 388 Moses v Macferlan (1760) 2 Burr 1005, 97 ER 676, 73, 179, 186, 189, 191, 193 Mosley v News Group Newspapers Ltd [2008] EWHC 1777 123, 124 Moynes v Coopper [1956] 1 QB 439 207, 215

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Muller, Re [1953] NZLR 879, 238 Munt v Beasley [2006] EWCA Civ 370, 422 Munt v Stokes (1792) 4 TR 561, 100 ER 1176, 180, 184 Murphy v Burrows [2004] EWHC 1900, 415 Murphy’s Settlement, Re [1999] 1 WLR 282 352 Murray v Big Pictures (UK) Ltd [2008] EWCA Civ 446 106, 123 Murray v Schreuder [2009] WASC 51, 347 Muschinski v Dodds (1985) 160 CLR 583 220 Muse v St Paul Fire & Marine Insurance Co, 328 So 2d 698 (La Ct App 1st Cir, 1976) 198 Mussen v Van Diemen’s Land Co [1938] Ch 253 250, 267, 268 Mutch v Sleeman (1928) 29 SR (NSW) 125 89 Myddleton v Lord Kenyon (1794) 2 Ves 391, 30 ER 689, 442 Natal Bank v Roorda 1903 TH 298 158 National Commercial Bank v Wimborne (1978) 5 BPR 11, 958, 310 Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 471 100, 101, 102 Nationwide News Pty Ltd v Willis (1992) 177 CLR 1 21 Nepean (Township) Hydro Electric Commission v Ontario Hydro (1982) 132 DLR (3d) 193 181, 189 New Solutions Financial Corp v Transport North American Express Inc (2004) 235 DLR (4th) 385 191 New South Wales v Ibbett (2006) 229 CLR 485 88, 89, 99 New South Wales v Lepore (2003) 212 CLR 511 101 Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 437, 444 Nguyen v Nguyen (1990) 169 CLR 245 46 Nocton v Lord Ashburton [1914] AC 932, 305 North v Great Northern Railway Company (1860) 2 Giff 64, 66 ER 28, 383 North-West Transportation Co Ltd v Beatty (1887) 12 App Cas 589 328 Northern Territory v Mengel (1995) 185 CLR 307 100 Norwich Union Fire Insurance Society Ltd v William Price Ltd [1934] AC 455, 206 Obermann v ACP Publishing Pty Ltd [2001] NSWSC 1022, 90 OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1, 115, 315, 316, 317 O’Brien v Sheahan [2002] FCA 1292, 424 Oddy, Re (1911) 104 LT 128 324 Oh Hiam v Tham Kong (1980) 2 BPR 9451 456, 461, 467 OJSC Oil Company Yugraneft (in liq) v Abramovich [2008] EWHC 2613 309, 311 Olympia & York Canary Wharf Ltd (No 2), Re [1993] BCC 159 256 On Demand Information Plc (in administrative receivership) v Michael Gerson (Finance) Plc [2002] UKHL 13, [2003] 1 AC 368, 250, 254, 266 Orakpo v Manson Investments Ltd [1978] AC 95, 74

Table of Cases Ormonde v NSW National Parks and Wildlife Service (No 2) [2004] NSWADT 253 86 O’Rourke v Darbishire [1920] AC 581, 346 Orphanos v Queen Mary College [1985] AC 761, 72 Oscar Hammerstein v Marguerite Mann, 122 NYS 276 (1910) 387 Osorio v Cardona (1984) 15 DLR (4th) 619 187 Ottey v Grundy [2003] EWCA Civ 1176 407, 422, 423 Oz-Us Film Productions Pty Ltd v Heath [2000] NSWSC 967, 311 P & V Industries Pty Ltd v Porto (2006) 14 VR 1 323, 325 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 59 Page One Records v Britton [1968] 1 WLR 157 388, 389 Paine v Hutchinson (1868) LR 3 Ch 388 386 Palais Parking Station Pty Ltd v Shea (1980) 24 SASR 425 465 Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 87, 95 Pan Ocean Shipping Co Ltd v Creditcorp Ltd, The Trident Beauty [1994] 1 WLR 161 84, 85 Pape v Commissioner of Taxation [2009] HCA 23, 20 Paramasivam v Flynn [1998] FCA 1711, 310 Parker v Great Western Railway (1844) 7 Man & G 253 158 Parry v Roberts (1835) 3 Ad & El 118, 111 ER 358, 75 Parton v Milk Board (Vic) (1949) 80 CLR 229 42 Pascoe v Turner [1979] 1 WLR 431 407, 408, 422 Patel v Ali [1984] Ch 283 205, 381 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 37, 38, 67, 72, 73 Peacock v Powell (1886) 7 NSWLR 139 43 Pearce v Brain [1929] 2 KB 310 195 Perry v Clissold [1907] AC 73, 230 Peskin v Anderson [2001] 1 BCLC 372 341 Philadelphia Ball Club Ltd v Lajoie, 202 Pa 210, 51 A 973 (1902) 387, 388 Phillips v Eyre (1870) LR 6 QB 1 (Exch) 29 192 Phillips v Phillips (1861) 4 De G F & J 208, 45 ER 1164, 216 Pianta v National Finance & Trustees Ltd (1964) 180 CLR 146 381 Plenty v Dillon (1991) 171 CLR 635 88 Plimmer v Wellington Corporation (1884) 9 App Cas 699 404 Port of Brisbane Corp v ANZ Securities (No 2) [2003] 2 Qd R 661 81 Powell v Benney [2007] EWCA Civ 1283, 406 Prince Albert v Strange (1849) 1 H & Tw 1, 47 ER 1302, 111, 113, 122 Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 306, 308 Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 144 Public Trustee v Cooper [2001] WTLR 901, 334 Quek v Beggs (1990) 5 BPR 11 219 R v Khan [1997] AC 558, 87

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Table of Cases

R v Neil [2002] 3 SCR 631 288, 289 R v Potisk (1973) 6 SASR 389 206 R v Prince (1868) LR 1 CCR 150 206 Rabaiotti’s Settlements, Re [2000] WTLR 953, 346 Rabihai v Man Shaket Ltd (in liq) (1977) 33(2) PD 281 385 Rahim v Minister of Justice 1964 (4) SA 630 (A) 63 158 Rapley v Ferrari (NSWCA, 10 August 1990) 428 Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407 237 Ratiu v Conway [2005] EWCA Civ 1302, 308 Ratych v Bloomer [1990] 1 SCR 940, 69 DLR (4th) 25, 368 Rawlins v Wickham (1858) 3 DeG & J 304, 44 ER 1285, 432 Reading v Attorney-General [1951] AC 507, 398 Reading v The King [1948] 2 KB 268 398 Reckitt v Barnett, Pembroke & Slater Ltd [1928] 2 KB 244 335 Reckitt v Barnett, Pembroke & Slater Ltd [1929] AC 176, 335 Red River Forest Products Inc v Ferguson [1991] 1 WWR 749 187 Red River Forest Products Inc v Ferguson [1993] 2 WWR 1 187 Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 396 Regentcrest Plc (in liq) v Cohen [2001] 2 BCLC 80 323, 324 Reid v Reid (NSWSC, 30 November 1998) 219, 220, 221 Reid-Newfoundland Co v Anglo-American Telegraph Co Ltd [1912] AC 555, 398 Rely-A-Bell Burglar and Fire Alarm Company Ltd v Eisler [1926] 1 Ch 609 388, 389 Renate Ilsinger v Martin Dreschers (Case C-180/06) [2009] ECR I-0000 312 Rentokil Pty Ltd v Lee (1995) 66 SASR 301 389 Repatriation Commission v Tsourounakis [2007] FCAFC 29, 406 Riddiford v Warren (1901) 20 NZLR 572 212 Rigby v Connol (1880) 14 Ch D 482 386 Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71, 270 Ringsted v Lady Lanesborough (1783) 3 Doug 197, 99 ER 610, 25, 26 Rinsdale Pty Ltd v Australian Broadcasting Corporation (1993) Aust Torts Reports ¶81–231 94 Road Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 35 Robins v Incentive Dynamics Pty Ltd (in liq) (2003) 175 FLR 286 450 Rochefoucauld v Boustead [1897] 1 Ch 196 463 Rollo Ventry Wakefield Gray v BNY Trust Company of Australia Ltd (formerly Guardian Trust Australia Ltd) [2009] NSWSC 789, 347 Rothko, Re, 372 NE 2d 291 (NY, 1977) 281, 282, 297 Roufeil v Lusby [2003] NSWSC 1002, 424 Routestone Ltd v Minories Finance Ltd [1998] BCC 180, 328 Rowe v Vale of White Horse DC [2003] EWHC 388, [2003] 1 Lloyd’s Rep 418, 69 Rowland v Divall [1923] 2 KB 500 264, 271

Table of Cases Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 6, 20, 21, 22, 23, 25, 26, 28, 34, 71, 72, 73, 76, 84, 232 Royal Bank of Scotland Plc v Etridge (No 2) [2002] 2 AC 773 460 Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] 1 AC 378 312, 314 Rudder v George Hudson Holdings Ltd [1972] 1 NSWLR 529 386 Ryall v Ryall (1739) 1 Atk 59, 26 ER 39, 238 Ryan v Mutual Tontine Westminster Chambers Association [1893] 1 Ch 116 388 Rylands v Fletcher (1868) LR 3 HL 330 91 S (a child), Re [2005] 1 AC 993 107 Sampson v Murray, 415 US 61 (1974) 386, 387 Sangah v Baxter [2009] NSWCA 78, 102 Saunders v Vautier (1841) 4 Beav 115, 49 ER 282, 204 Saunders v Vautier (1841) Cr & Ph 240, 41 ER 482, 204 Saxby v Fulton [1909] 2 KB 208 187 Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309 5, 33, 77 Scales Trading Ltd v Far Eastern Shipping Co Public Ltd [1999] 3 NZLR 26 430 Scales Trading Ltd v Far Eastern Shipping Co Public Ltd [2001] 1 All ER (Comm) 319, [2001] 1 NZLR 513, 430 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana, The Scaptrade [1983] 2 AC 694 250, 251, 252, 253, 256, 258, 267, 268 Schaverien v Jones [2007] NSWSC 1429, 347 Schmidt v Air Products of Canada Ltd [1994] 2 SCR 611 284, 286 Schmidt v Rosewood Trust Ltd [2003] UKPC 26, [2003] AC 709, 130, 131, 132, 344, 345, 346, 349, 351, 352, 353, 354, 355, 356, 358 Schreuder v Murray (No 2) [2009] WASCA 145 347 Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 257, 270 Schwabacher, Re, 98 LT 127 (1907) 386 Scott v National Trust [1998] 2 All ER 705 334 Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324, 326 Scottish & Newcastle Plc v Lancashire Mortgage Corporation Ltd [2007] EWCA 684, 424 Semelhago v Paramadevan [1996] 2 SCR 415, 136 DLR (4th) 1, 204, 368, 371, 381 Sempra Metals Ltd v IRC [2007] UKHL 34, [2007] 3 WLR 354, 69, 70 Service Station Associates Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 321 Shalson v Russo [2003] EWHC 1637, [2005] Ch 281, 228 Sharp v McNeil (1913) 15 DLR 73 239 Sharp v McNeil (1915) 70 DLR 740 239 Shaw v Foster (1872) LR 5 HL 321 262 Sheffield Nickel and Silver Plating Co Ltd v Unwin, The (1877) 2 QBD 214 443, 444

xxxv

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Table of Cases

Shepherd Investments Ltd v Walters [2006] EWHC 836, [2007] 2 BCLC 202, 325, 326 Shiloh Spinners v Harding [1973] AC 691 250, 251, 253, 258 Shubert Theatrical Co v Rath, 271 F 827, 20 ALR 846 (1921) 387 Silven Properties Ltd v Royal Bank of Scotland Plc [2003] EWCA Civ 1409, [2004] 1 WLR 997, 331 Simon v Metivier (1766) 1 Bl W 601, 96 ER 347, 466 Sinclair Investment Holdings SA v Versailles Trade Finance Ltd, AV Lomas, Robert W Birchall [2005] EWCA Civ 722, 300 Singh v Ali [1960] AC 167, 211 Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 WLR 577 383, 384 Sledmore v Dalby (1996) 72 P & CR 196 416, 417, 421, 425 Smith, Re [1896] 1 Ch 71 324 Smith v Bromley (1760) 2 Doug 696, 99 ER 441, 190 Smith & Fawcett Ltd, Re [1942] Ch 304, 324 Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 107, 116 Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 28 FCR 291 107 Smith New Court Securities Ltd v Citibank NA [1997] AC 254 368, 375, 436 Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] 1 AC 254 368, 375, 436 Snepp v United States, 444 US 507 (1980) 397, 398, 399, 400 Soper v Arnold (1889) 14 App Cas 429 267 South Shore Co-Op Association, Re, 103 F 2d 336 (2d Cir, 1939) 194 Spangaro v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025, 81 Spellson v George (1987) 11 NSWLR 300 346 Spence v Crawford [1939] 3 All ER 271 209 Spencer v Hemmerde [1922] 2 AC 507 463 Sport International Bussum BV v Inter-Footwear Ltd [1984] 1 WLR 776 250, 252, 255, 256, 266, 268 Stack v Dowden [2007] 2 AC 432 128 State v Placke, 786 So 2d 889 (La Ct App 2d Cir, 2001) 177 State Bank of New South Wales v Swiss Bank (1995) 39 NSWLR 350 81 Steedman v Drinkle [1916] 1 AC 275 250, 256, 259, 266, 268 Steel v Paz [1993–95] Manx LR 426, 346 Steinberg v Scala (Leeds) Ltd [1923] 2 Ch 452 195 Stephens v Avery [1988] Ch 449 105, 118, 123 Stern v McArthur (1988) 165 CLR 489 205, 250, 251, 254, 256, 259, 260, 262, 266 Stockloser v Johnson [1954] 1 QB 476 249, 250, 265, 266, 267, 268, 271, 272 Stocks v Wilson [1913] 2 KB 235 211 Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 264

Table of Cases

xxxvii

Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246 234 Strover v Strover [2005] EWHC 860 406, 411, 414, 415, 421, 423, 424 Stuart v Kirkland-Veenstra [2009] HCA 15, 46 Succession of Jones, 505 So 2d 841 (La Ct App 2d Cir, 1987) 197 Sullivan v Sullivan [2006] NSWCA 312 407, 412, 418, 419, 421 Sumitomo Bank Ltd v Thahir [1993] 1 SLR 735 311 Sumitomo Bank Ltd v Thahir [1994] 3 SLR 257 311 Summers v Cocks (1927) 40 CLR 321 381 Sumpter v Hedges [1898] 1 QB 673 429, 437 Sunrise Co v Lake Winnipeg, The [1991] 1 SCR 3, 77 DLR (4th) 701, 369 Sweet v Sommer [2004] EWHC 1504, 424 Taitapu Gold Estates Ltd v Prouse [1916] NZLR 825 212, 226 Talbot v Moquin Ménard Giroux Du Temple Inc (1996) 41 CBR (3d) 160 198 Tame v New South Wales (2002) 211 CLR 317 101 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 205, 213, 250, 251, 256, 260, 262, 266, 268, 382 Tara Shire Council v Garner [2003] 1 Qd R 556 449, 450 Target Holdings Ltd v Redferns [1996] AC 421, 363 Taylor v Johnson (1983) 151 CLR 422 44 Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, 259 TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333 88, 95 TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd (2008) 71 NSWLR 323 259 Television New Zealand Ltd v Rogers [2008] 2 NZLR 277 88, 95 Tempest v Lord Camoys (1882) 41 Ch D 571 89, 94 Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd [2009] EWCA Civ 453, 99 Thomas v Brown (1876) 1 QBD 714 324 Thomas v Bryant, 639 So 2d 378 (La Ct App 2d Cir, 1994) 300 Thomas Borthwick v South Otago Freezing [1978] 1 NZLR 538 158 Thompson’s Settlement, Re [1986] Ch 99, 184 Thorner v Major [2009] UKHL 18, [2009] 1 WLR 776, 337 Tierney v King [1983] Qd R 580, 420 Tillman v Attorney-General (NSW) (2007) 70 NSWLR 448 20 Tillott, Lea v Wilson, Re [1892] 1 Ch 86 355, 356 Tito v Waddell (No 2) [1977] Ch 106 334 Tolley v Fry [1931] AC 333, 90 Tolofson v Jensen (1994) 120 DLR (4th) 289 192, 193 Tooth v Power (1890) 10 NSWLR 143 43 Tornroos v Crocker [1957] SCR 151 281, 282, 297 Tote Investors Ltd v Smoker [1965] 1 QB 509 186 Toteff v Antonas (1952) 87 CLR 647 436 Tracy (representative ad litem of) v Instaloans Financial Solution Centres (BC) Ltd (2008) 293 DLR (4th) 60 191

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Tracy (representative ad litem of) v Instaloans Financial Solution Centres (BC) Ltd (2009) BCCA 110, 191 Trimble v Hill (1879) 5 App Cas 342 43 TSB Bank Plc v Camfield [1995] 1 WLR 430 432, 433, 434, 435, 436, 445 TS Production LLC v Drew Pictures Pty Ltd (2008) 172 FCR 433 42 Tuck’s Settlement Trusts, Re [1978] Ch 48, 145 Turner v Harvey (1821) Jac 169, 37 ER 814, 334 Twinsectra Ltd v Yardley [2002] 2 AC 164 313, 314 Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 250, 251, 256, 259, 268 United Shoe Machinery Co of Canada v Brunet [1909] AC 330, 444 United States v Dollfus Mieg et Cie SA [1952] AC 582, 455 United States International Marketing Ltd v National Bank of New Zealand Ltd [2004] 1 NZLR 589 313 Unity Joint Stock Banking Corporation v King (1858) 25 Beav 72, 53 ER 563, 404 Universal Distributing Co Ltd, Re (1933) 48 CLR 171 38 University of Canterbury v Attorney-General [1995] 1 NZLR 78 183 Urane v Whipper [2001] NSWSC 796, 442 Uren v First National Home Finance Ltd [2005] EWHC 2529, 69 Urquhart v MacPherson (1878) 3 App Cas 831 443 Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 334 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 428, 429, 430, 431, 432, 435, 436, 444, 445 Vallance v The Queen (1961)1 08 CLR 56 27 Valpey v Manley (1845) 1 CB 594 158 Van der Byl v Solomon (1877) 7 Buch 25 158 Vatcher v Paull [1915] AC 372, 354 Velensky v Hache (1981) 121 DLR (3d) 747 187 Victoria Park Racing and Recreations Grounds Co Ltd v Taylor (1937) 58 CLR 479 91, 92, 93, 97, 98 Vinogradoff, Re [1935] WN 68, 238 Viscountess Montacute v Maxwell (1720) 1 P Wms 618, 24 ER 541, 463 Visser v Rousseau en Andere NNO 1990 (1) SA 139 (A) 155 Von Knierem v Bermuda Trust Co Ltd and Grosvenor Trust Co Ltd 1 BOCM 116 (Bermuda High Court, 1994) 346 Wainwright v Home Office [2003] UKHL 53, [2004] 2 AC 406, 90, 101 Wait, Re [1927] 1 Ch 606 204 Wakim, ex p McNally, Re (1999) 198 CLR 511 47 Walker v Stones [2001] 1 QB 902 305 Wall v Bright (1820) 1 Jac & W 494, 37 ER 456, 382 Walsh v Trebilcock (1894) 23 SCR 695 188 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 405, 464 Wambo Coal Pty Ltd v Stuart Karim Ariff [2007] NSWSC 589, 218

Table of Cases Warner Brothers Pictures Inc v Ingolia [1966] NSWR 988 387, 388 Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209 387, 388 Warren v Mendy [1989] 1 WLR 853 388, 389 Watt v Westhoven [1933] VLR 458, 212 Wayling v Jones (1995) 69 P & CR 170 404 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12, [1996] AC 669, 143, 185, 215, 217, 218, 238, 239, 240, 242 Wheeldon v Burrows (1879) 12 Ch D 31 458, 459, 462 White v Tomasel [2004] 2 Qd R 438 462 White Brothers v Treasurer-General (1883–84) 2 SC 322 157, 158 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 336 Whitwood Chemical Company v Hardman, reproduced at [1891] 2 Ch 416 388, 389 Wilkinson v Downton [1897] 2 QB 57 100, 107 William Robinson & Co v Heuer [1898] 2 Ch 451 389 Williams v Staite [1979] Ch 291, 421 Willis Faber Enthoven v Receiver of Revenue 1992 (4) SA 202 (A) 155, 158 Winkfield, The [1902] P 42 229, 234 Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 363 85 Wolverhampton and Walsall Railway Co v London NW Rwy Co (1873) LR 16 Eq 433 386 Woodward v Hutchins [1977] 1 WLR 760 117 Woolworths Ltd v Richmond Growth Pty Ltd & O’Brien (NSWSC, 1 November 1996) 218, 221 Workers Trust and Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573 267, 270 World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2001] EWHC Ch 482 394, 399 Wormall v Wormall [2004] EWCA Civ 1643, 420 Wright v Morgan [1926] 1 AC 788 334, 337 Xenos v Wickham (1867) LR 2 HL 296 302 XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1985) 155 CLR 448 99 Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55, [2008] 1 WLR 1752, 408 Yew Bon Tew v Kenderaan Bas Mara [1983] 1 AC 553 193 Yoshimoto v Canterbury Golf International Ltd [2001] NZLR 523, 59 Young v Blaikie (1822) 1 Nfld LR 277 187 Young v Lalic [2006] NSWSC 18, 406 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 363, 364 Zhu v New South Wales Treasurer (2004) 218 CLR 530 205

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TA BL E OF L EGISL AT ION

Australia CTH Cheques Act 1986, 227 Constitution 29, 31, 38, 39 Corporations Act 2001, 294 International Arbitration Act 1974, 54 Privacy Act 1988, 86 Trade Practices Act 1974 48, 58, 63, 64 Trade Practices Amendment (Australian Consumer Law) Bill 2009, 61

ACT Civil Law (Wrongs) Act 2002, 90 Human Rights Act 2004, 86 Limitation Act 1985, 226 Sale of Goods Act 1954, 213

NSW Civil Liability Act 2002 35, 102 Defamation Act 2005, 90 Real Property Act 1900 203, 454, 455, 456, 457, 459 Sale of Goods Act 1923 203, 204, 213

NT Defamation Act 2006, 90 Land Title Act 241

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QLD Defamation Act 2005, 90 Land Title Act 1994, 241 Succession Act 1981 440, 441

SA Defamation Act 2005, 90 Real Property Act 1857−1858 454 Sale of Goods Act 1895, 227

TAS Defamation Act 2005, 90 Sale of Goods Act 1896, 227 Supreme Court Civil Procedure Act 1932, 94

VIC Charter of Human Rights and Responsibilities Act 2006, 86 Defamation Act 2005, 90 Goods Act 1958 203, 204, 383 Transfer of Land Act 1958 203, 450, 458, 459

WA Defamation Act 2005, 90 Sale of Goods Act 1895 213, 227

Canada Criminal Code, RSC 1985, c C-46, 187, 190, 191 Civil Code, RSQ, c C-1991 178, 193 Gaming Control Act, SO 1992, c 24, 187 Limitation Act, RSBC 1996, c 266, 192 Limitation Act, SNL 1995, c L-16.1, 192 Vehicles Act, RSS 1978, c V-3, 193

European Union Council Directive (EC) 93/13 of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29 62

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table of legislation

Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1 (Brussels Regulation) 312 Council Regulation (EC) 593/2008 of 17 June 2008 on the law applicable to contractual obligations [2008] OJ L177/6 (Rome I) 309 Convention for the Protection of Human Rights and Fundamental Freedoms, Council of Europe (European Convention on Human Rights) (ECHR) 1950 89, 103, 106, 107, 114, 117, 119, 120

France Code civil 166, 167, 168, 169, 170, 171, 172, 174

Germany Civil Code (Bürgerliches Gesetzbuch) (BGB) 56, 154, 162, 164, 178, 193

Israel Contract (Remedies) Law 1970, 385 Sale (International Sale of Goods) Law 1971, 385

New Zealand Contractual Remedies Act 1979 436, 437 Judicature Act 1908, 181 Land Transfer Act 1915, 455 Land Transfer Act 1952, 461

People’s Republic of China Contract Law 53, 54, 57

Singapore Banking Act (Cap 19, 2008 Rev Edn) 132, 134 Land Titles Act 2004 (Cap 157, 2004 Rev Edn) 459 Trustees Act (Cap 337, 2005 Rev Edn) 132, 134 Unfair Contract Terms Act (Cap 396, 1994 Rev Edn) 148

Table of LEGISLATION

South Africa Alienation of Land Act 1981, 158

United Kingdom Australian Courts Act1828 (9 Geo 4 c 83) 43 Bar Council’s Code of Conduct 324 Civil Procedure Rules 1998, 324 Companies Act 2006, 337 Consumer Credit Act 1974, 258 Gambling Act 2005 176, 187 Gambling Act2005 (Commencement No 6 and Transitional Provisions) Order 2006 SI 2006/3272 176 Gaming Act 1845, 187 Human Rights Act 1998 103, 104, 106, 117, 119, 120, 121 Land Registration Act 2002 103, 104, 106, 117, 119, 120, 121 Law of Property Act 1925 203, 258, 338, 339 Limitation Act 1980 192, 226, 233 Lord Cairns’s Act 104 Sale of Goods Act 1893 202, 212 Sale of Goods Act 1979 202, 204 Statute of Frauds 1677 (29 Car 2 c 3) 158, 463, 464, 465, 466 Unfair Contract Terms Act 1977 148, 306 Usury Act1660 (12 Car 2 c 13) 189

United Nations Convention on Contacts for the International Sale of Goods (opened for signature 10 April 1980, entered into force 1 January 1988) 1489 UNTS 3, 5, 41, 42, 50, 51, 53, 54, 56, 59, 60, 61, 63, 64 Convention on the Law Applicable to Trusts and on their Recognition (adopted 1 July 1985, entered into force 1 January 1992) 1664 UNTS 311 (Hague Convention) 310 Convention Relating to a Uniform Law on the International Sale of Goods (opened for signature 1 July 1964, entered into force 18 August 1972) 834 UNTS 107, 385 International Covenant on Civil and Political Rights (adopted 16 December 1966, entered into force 23 March 1976) 999 UNTS 171 (ICCPR) 89 United Nations Committee on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 1985, 54

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table of legislation

Universal Declaration of Human Rights (adopted 10 December 1948 UNGA Res 217A(III)) (UDHR) 89

United States Constitution 386 La Civil Code 178, 193 Restatement (Second) of the Law of Contracts 1981 49, 52, 57, 59, 61, 386 Restatement of the Law of Restitution 1937 194, 198, 215, 218 Restatement (Second) of Torts 1977, 98 Restatement (Second) of Trusts 1963 291, 293 Restatement (Third) of Trusts 276, 293 Statute of Frauds 194 Statute of limitations 194 Uniform Commercial Code 2007 5, 49, 50, 51, 53, 54, 55, 56, 57, 61, 62, 63 Uniform Trust Code 2008 276, 293, 344

Virgin Islands Trust Act 2003, 134

Other Principles of European Contract Law 2002/2003 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63 Unidroit Principles of International Commercial Contracts 1994/2004 5, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64

Introduction Elise Bant and Matthew Harding

Th is book of essays is dedicated to Professor Michael Bryan on the occasion of his retirement after 37 years of legal scholarship. Michael, who was educated at the Universities of Oxford and London, taught at Oriel College Oxford and Queen Mary and Westfield College, London, before arriving in 1991 at the then Faculty of Law of the University of Melbourne (now the Melbourne Law School). Over his time in Melbourne, Michael has been a much-loved and respected teacher, mentor and colleague. Indeed, of the 24 scholars who have come together to create this book (22 authors and two editors), no fewer than ten have been students or colleagues of Michael during his Melbourne years. However, as the book attests, Michael’s influence as a scholar has been felt far beyond Melbourne: he has earned the respect and affection of private lawyers all over the world, from both the common law and the civilian traditions. The authors of the essays in this book are judges and scholars from across Australia, as well as Canada, England, Germany, Hong Kong, New Zealand, Singapore and South Africa. All of these authors jumped at the chance to participate in this project, and their essays are a heartfelt tribute both to Michael’s scholarly achievements and to the quiet – and always positive – influence he has had on the research, the careers and the lives of his friends around the world. The book aims to honour Michael by exploring those areas of private law that have long dominated the intellectual landscape of his teaching and research activities. The terrain is expansive, ranging over many difficult and overlapping areas often classified in the classroom as falling within the law of contract, tort, unjust enrichment, equity and trusts, remedies and property. Michael has always been particularly interested in the intersection, or meeting point, of different rules, doctrines and principles: as Birke Häcker notes in her essay, he has ‘never been one for thinking of the law in terms of isolated “compartments”’.1 This fluidity 1

200.

1

2

Bant and Harding

of legal categories is reflected in the book, and many of the essays extend across classroom classifications. Thus, for example, Sarah Worthington’s essay is at the boundary of contract, unjust enrichment and equity, a boundary that Michael himself has explored often in his own work.2 Tony Duggan’s essay brings together contract and equity, while Kelvin Low’s contribution considers the proper relation of equity and statute. Richard Nolan and Matthew Conaglen range across fiduciary and non-fiduciary contexts in illuminating the concept of good faith in private law. Robert Chambers’ contribution deals with the intersection of personal and proprietary liability, and unjust enrichment and wrongs. And Birke Häcker’s essay occupies ground at the intersection of contract, property and unjust enrichment. Notwithstanding the considerable challenges of classification presented by such wide-ranging essays, and the considerable debate in private law scholarship about taxonomical matters generally, we have chosen some divisions for the presentation of the essays in the book. We hasten to add, however, that these divisions have been chosen with readers’ ease, rather than classificatory elegance, in mind. These are Method, Unjust Enrichment, Equity and Trusts, and Remedies. The latter three have been selected because they describe subjects that Michael has taught for many years, often with the scholars who have contributed to this book. The first has been selected because of the overarching theme of the book, to which we now turn. As a scholar as well as a man, Michael is modest: he has never sought to articulate a ‘grand vision’ of private law. Nonetheless, there is a discernable method in Michael’s work, and it is this method that we celebrate in this book. It is the method implied by the book’s title: Exploring Private Law. One trend in recent literature on private law has been to use the metaphor of ‘mapping’ the law to refer to method in private law scholarship.3 Certainly, the ‘mapping’ metaphor is apt: no explorer should shirk from 2

3

See eg, M Bryan, ‘Rescission, Restitution and Contractual Ordering: The Role of Plaintiff Election’ in A Robertson (ed), The Law of Obligations: Connections and Boundaries (Cavendish, London 2004) 59; M Bryan, ‘Unjust Enrichment and Unconscionability in Australia: A False Dichotomy’ in JW Neyers, M McInnes and SGA Pitel (eds), Understanding Unjust Enrichment (Hart Publishing, Oxford 2004) 47; M Bryan, ‘Unconscionable Conduct as an Unjust Factor’ in S Degeling and J Edelman (eds), Unjust Enrichment in Commercial Law (LawBook Co, Sydney 2008) 295; M Bryan, ‘Equitable Relief from Forfeiture: Performance or Restitution?’ in CEF Rickett (ed), Justifying Private Law Remedies (Hart Publishing, Oxford 2008) 363. See eg, A Burrows and Lord Rodger (eds), Mapping the Law: Essays in Memory of Peter Birks (Oxford University Press, Oxford 2006).

Introduction

3

the task of mapping, including an explorer of private law. However, the mapping metaphor captures only part of what it means to explore private law. An explorer, as opposed to a planner, or even a Utopian visionary, must map what he sees from the ground, feeling his way where he must as well as taking the bird’s eye view where he can. In this sense, the explorer brings order to chaos, but not by turning away from the chaos, and not by refusing to bear the responsibility of imposing order. Exploring private law is therefore methodologically pluralistic, and not singular: it entails both mapping in accordance with abstract ordering principles, and the rougher art of observation. This pluralistic method, captured – we hope – in the metaphor of the explorer, is the overarching theme of this book. According to Sir Isaiah Berlin, ‘[t]here is little need to stress the fact that monism … has always proved a deep source of satisfaction both to the intellect and to the emotions’.4 We hope that the essays in this collection, celebrating as they do the pluralistic method entailed in exploring private law, go some way to unsettling the satisfactions of monism, something of which Berlin of course would have approved thoroughly. And we hope that in doing so, the essays reflect both Michael’s own refusal, over the years, to engage in what Robert Chambers in his essay calls ‘arid debates about classification’, 5 as well as his suspicion of what might be called the ‘forest floor’ method of reasoning by analogy from case to case with little effort – at least explicitly – to identify overarching principles of likeness that could guide the analogizing. In the parlance of contemporary legal scholarship, the essays in this book insist on the value of both ‘top-down’ and ‘bottom-up’ styles of reasoning.6 A pluralistic method that takes in both styles of reasoning is, in our view, fitting to thinking about law, given that law entails a sophisticated array of human practices and institutions that on the one hand must reflect and respect, and on the other hand shape and bring order to, the diversity and messiness of human life. In celebrating a pluralistic method in exploring private law, many of the essays in this book are also works of considerable comparative scholarship: a form of legal discourse that can occupy only a marginal place in 4

5 6

I Berlin, ‘Two Concepts of Liberty’ in I Berlin, Four Essays on Liberty (Oxford University Press, Oxford 1969) 118, 170. 245. RA Posner, ‘Legal Reasoning from the Top Down and from the Bottom Up: The Question of Unenumerated Constitutional Rights’ (1992) 59 U Chi L Rev 433 reprinted as RA Posner, Overcoming Law (Harvard University Press, Cambridge MA 1995) ch 5. See also K Mason, ‘What Is Wrong with Top-Down Legal Reasoning?’ (2004) 78 ALJ 574.

4

Bant and Harding

a strictly bottom-up method and that can be pressed into the service of overly ambitious ends by devotees of a rigorous top-down style. Many of the essays look beyond the traditional distinction of law and equity to discern appropriate paths for judicial decision-making in areas of private law in which there exists no authoritative precedent. All engage in close consideration of the innumerable cases that, taken together, are the bedrock of private law in the common law world. The balance of this Introduction provides an overview of these original, distinctive and significant contributions to private law scholarship.

A.

Method

The first part of the book contains a series of essays exploring different methods of legal reasoning, their respective strengths and weaknesses, and their effect on the development of legal doctrine. The essays progress from a wide-ranging analysis of the current method of the High Court of Australia, to a more focused consideration of legal reasoning with reference to confidential information and a developing law of privacy, before concluding with an examination of the particular value of pluralistic method in the context of teaching trusts law in the 21st century. This first part, then, introduces the methods of legal reasoning – top-down and bottom-up – that the essays in the rest of the book explore and exemplify in specific legal settings. Part I commences with Keith Mason’s essay on judicial method. In many ways, this essay exemplifies the aim of the whole book: to show the ways in which a pluralistic method assists the development of private law, and how this must and should be so. Mason considers the High Court of Australia’s use of the distinction, fi rst drawn by Richard Posner, between top-down and bottom-up reasoning.7 He argues that the Court’s repeated castigation of top-down method is a departure from Posner, and is inconsistent and unjustified. Mason shows that the Court has a long tradition of top-down reasoning and argues that such reasoning has been indispensible: indeed, rational judicial decisionmaking demands it. He also argues that the Court has failed to draw the important distinction between an inherently unstable concept and a wrongful application of a stable concept. Drawing on his own experience as a judge, Mason argues that both top-down and bottom-up reasoning have their place in a sound judicial method: ‘the two concepts 7

Posner (n 6).

Introduction

5

inevitably meet in the day-to-day exertions of any conscientious judge, whether or not he or she is prepared to admit it’.8 As a former President of the New South Wales Court of Appeal, Mason provides a unique insight into judicial method and his discussion of Harris v Digital Pulse Pty Ltd9 and Farah Constructions Pty Ltd v Say-Dee Pty Ltd10 – both cases on which he sat – illustrate this distinct perspective. The second essay in the book is by Justice Paul Finn of the Federal Court of Australia. His paper examines the profound effect that legal culture, in particular, the culture of the High Court of Australia, has had on the substantive law of contract in Australia. The paper is in three parts. The first tracks Australia’s journey from legal colonialism, through the development of a species of legal realism in the Mason years that focused on developing an Australian common law and embraced comparative developments from other common law jurisdictions, to the development of the current and fairly restrictive form of legal nationalism. This last stage of development is evident in the current High Court of Australia’s emphasis on the unification of the common law of Australia and the importance of strict doctrinal analysis and the rule of precedent over broader questions of policy. The second part considers international developments in contract law, in particular, the modernization and harmonization of contractual principles that have been achieved through both legislative and ‘soft law’ instruments such as the Uniform Commercial Code in the United States, the Convention on the International Sale of Goods and the Principles of International and Commercial Contracts. The third part considers why Australian courts and practitioners have failed to avail themselves of this rich source of learning, to the increasing cost of Australian contract law. Finn argues that unless Australian courts, the profession and the academy start to integrate comparative law into their analysis and discourse, Australian contract law is in danger of becoming an isolated and irrelevant museum of legal doctrine. Furthermore, it is only through the combined efforts of all those judges, practitioners and academics who are experts in the field that a much-needed systematic reappraisal of Australian contract law can be achieved. Like Keith Mason’s essay, Andrew Burrows’ essay takes up the theme of the High Court of Australia’s criticism of top-down reasoning. However, Burrows focuses in particular on three recent cases of the 8 10

9 40. (2003) 56 NSWLR 298. (2007) 230 CLR 89 (‘Farah ’). The decision of the New South Wales Court of Appeal was Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309.

6

Bant and Harding

Court: Roxborough v Rothmans of Pall Mall Australia Ltd,11 Farah, and Lumbers v W Cook Builders Pty Ltd.12 Burrows regards all three cases as rightly decided, but he is critical of the reasoning of the Court in each of the cases, especially on questions of judicial method in private law. Starting with Roxborough, Burrows argues that Gummow J’s criticism in that case of unjust enrichment scholarship as characterized by top-down reasoning was unfounded, pointing out that unjust enrichment scholarship displays a clear bottom-up pedigree. Burrows also looks at Gummow J’s use of the concept of unconscionability in Roxborough, arguing that it may itself reveal top-down reasoning. With regard to Farah, Burrows’ indictment is more serious: he argues that in a sense the Court refused to engage in reasoning of any kind in that case, by failing to explain inconsistencies between the common law and equity and, indeed, within equity as well. Finally, Burrows argues that the Court demonstrated an unjustified atavism in its decision in Lumbers, preferring the language of the abolished forms of action to the rational and well-established framework for liability that characterizes the modern law of unjust enrichment. Burrows concludes with a plea for the Court to get ‘back on track’.13 The next two essays consider questions of judicial method with reference to a developing law of privacy. As a former New South Wales Law Reform Commissioner who has been considering the protection of the privacy interest in Australian law in recent years, Michael Tilbury is well placed to consider the extent to which the common law of Australia is able to protect that interest. Tilbury undertakes a survey of the law of tort and the law of breach of confidence, arguing that the protection of privacy provided by established causes of action is indirect, piecemeal, and may lead to incoherence in the law. He also argues that no new ‘tort of privacy’ is likely to, or indeed should, develop in Australian law. Th is leads Tilbury to the conclusion that the privacy interest must be protected by statute, not by the common law. Thus, his essay may be read as a demonstration of the limits of the bottom-up method that has traditionally characterized private law decision-making. Megan Richardson takes the opposite view: she argues that the common law, with its incrementalism, is well suited to protecting the privacy interest. Richardson’s paper tracks the protection of the privacy interest 11 13

12 (2001) 208 CLR 516 (‘Roxborough ’). (2008) 232 CLR 635 (‘Lumbers’). 85. At the end of his essay, Burrows notes that the High Court has recently restated its criticisms of unjust enrichment reasoning in Bofinger v Kingsway Group Ltd [2009] HCA 44.

Introduction

7

over time, and she focuses especially on developments in the law of breach of confidence since the celebrated Spycatcher case.14 She argues that the common law, by refusing to theorize the privacy interest, has been able to remain responsive to that interest – whatever it might be – notwithstanding rapid technological, social and even moral change. In this, she contends that the common law has demonstrated its ability to accommodate the ‘messiness of the self’.15 Richardson concludes with some observations about the nature of the privacy interest itself: as a site of conflicting values that are ever changing, the privacy interest itself is forever in flux, and the day may come when ‘even privacy may become an arcane concept’.16 Part I concludes with an essay tackling questions of method in quite a different, and novel, way. Tang Hang Wu considers the important role of method in the teaching of trusts law. His essay demonstrates how comparative analysis – comparing the laws of different jurisdictions, and the rules, doctrines and principles of the common law and equity – can usefully inform a trusts course. Tang acknowledges that there is no one way to teach trusts law. However, he advocates encouraging students to form a ‘transactional mindset’, and he therefore argues that trusts teachers ought to design their courses to reflect trusts practice. For Tang, this aim may be achieved in two ways. First, Tang argues that teachers of trusts law should contextualize the trust. He explains how he does this by introducing the trust as a wealth management vehicle, pointing his students to the uses of offshore trusts, and taking his students through two commercial applications of the trust: securitization, and investment in real estate. For Tang, comparative analysis plays an important pedagogical role in this process, illustrating the benefits and limitations of domestic trusts law in commercial settings. Second, Tang argues for introducing students to the theoretical approach to the express trust that regards it as analogous to – if not a type of – contract, an approach that is well represented in this book.17 He explains how contractarian theory may assist in getting students to think about exclusion clauses and settlor control devices.

B.

Unjust enrichment

The second part of the book is made up of four essays exploring issues in the law of unjust enrichment. Part II opens with three contributions that might just as easily have been placed in Part I, considering broad questions 14 15 17

Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109. 111, 123. 16 124. In the essays by Tony Duggan and James Edelman.

8

Bant and Harding

from a comparative perspective. These essays are good examples of the problem of easy classification that we alluded to at the beginning of this Introduction. And indeed the same is true of the contribution that closes Part II, which tackles a notoriously difficult question at the interface of property, civil wrongs, and unjust enrichment. Helen Scott and Daniel Visser explore in their essay how judicial method has influenced the development of legal doctrine. They take as their starting point a puzzle in the South African law of unjustified enrichment: despite adopting the traditional civilian ‘absence of legal ground’ approach to unjustified enrichment, South African courts have increasingly pointed to ‘unjust factors’ in their decision-making. Scott and Visser argue that the influence of unjust factors in South African law may be attributable to the common law method itself, a method that treats judicial decisions as authoritative, accords a key role to judicial reasoning as a technique for justifying the exercise of law-making power and – in consequence – tends to promote the use of specific and positive reasons for restitution over negative propositions such as that embodied in the absence of legal ground approach. To test the argument, Scott and Visser compare the position in South Africa with another civilian jurisdiction: France. They argue that because French judges are formally prohibited from giving reasons, judicial creativity tends to be concealed: the true reasons for judicial decisions are to be found not in the brief and opaque arrêt of the court itself but rather in the rapports and conclusions of individual magistrates. Coupled with a strong absence of legal ground approach, this hidden reasoning has led to great breadth and unpredictability in the French law of unjustified enrichment. Scott and Visser’s essay demonstrates that judicial method can have a profound effect on substantive law, a lesson worth meditating on when reading the essays by Keith Mason, Paul Finn and Andrew Burrows in Part I of the book. Their essay is also food for thought for those engaged in debates about the retention of ‘unjust factors’ in the law of unjust enrichment in the common law world. Mitchell McInnes explores a relatively neglected area within the law of unjust enrichment, namely, the role and operation of natural obligations. McInnes argues that natural obligations – which are not positively enforceable, but negatively explain why an unjust or unjustified enrichment may be retained – have featured not only in civilian legal systems, but also in the common law. He traces their acceptance in the common law in eighteenth-century cases, through their fall in the nineteenth century, to their rise again in the twentieth century in the wake of the abolition of the mistake of fact/mistake of law distinction. Drawing on

Introduction

9

Duncan Sheehan’s work,18 McInnes argues for a two-fold test for natural obligations that asks: first whether the reason for refusing positive enforcement also impugns the transfer itself; and second whether the reason for refusing positive enforcement aims to protect a party that has performed its side of a bargain. McInnes argues that there is room for natural obligations wherever the law wants to send the message that a transfer is condoned without being assisted, in the grey area ‘between law and morality’.19 He tests his analysis by considering a number of natural obligations arising in the context of gaming, usurious loans, obligations extinguished by the passage of time, and minority contracts. He concludes by considering some possible future avenues for the concept of natural obligations, including payments to ‘dating services’ and payments by bankrupts in satisfaction of discharged debts. Birke Häcker’s essay ranges over a wide variety of impaired consent transfers, adopting a comparative perspective. Drawing the civilian distinction between ‘causal’ and ‘abstract’ transfers, Häcker asks to what extent the common law and equitable approaches to transfers in England and Australia reflect those two models. Although this might seem a curious topic for the ‘Unjust Enrichment’ part of the book, Häcker demonstrates that a satisfactory account of causality and abstraction in the common law tradition cannot be given without an analysis of proprietary restitution and, in particular, the role of equity in reversing impaired consent transfers made without a legal basis. Häcker finds that at common law, abstract transfers are the norm (at least outside sale), so that the validity of a conveyance does not depend on the validity of the underlying legal basis for the transfer. However, she also finds that there is a tension in equity between the causal and the abstract models. Where equity automatically reverses transfers made without sufficient legal basis and pursuant to an ‘unjust factor’, equity operates a causal model. Scholars like Robert Chambers take this view in their accounts of the resulting trust, according to which the right to proprietary restitution vests immediately upon transfer.20 However, Häcker argues that matters are more complicated, and that a ‘power model’ under which equity does not automatically reverse vitiated transfers but rather empowers the defendant to rescind or reverse them, also explains many of the cases. This ‘power model’ is structurally similar to the abstract model of transfer associated with the 18

19

D Sheehan, ‘The Instance and Effect of Natural Obligations in English Law’ (2004) LMCLQ 170. 197. 20 R Chambers, Resulting Trusts (Oxford University Press, Oxford 1997).

10

Bant and Harding

common law. Through her comparative analysis, Häcker thus identifies a profound inconsistency in any common law system which allows equity to alternate between the abstract and the causal approaches. The last essay in Part II, by Robert Chambers, explores the trust as a response to theft. As Chambers points out, not only is the availability of the trust in response to theft an important practical issue, it also raises fascinating questions about the proper relation of law and equity. He considers in detail two types of case. The first is where assets are stolen and retained by the thief. Here Chambers argues that a trust is possible notwithstanding that the victim of the theft retains a (non-possessory) title. However, Chambers goes on to argue that there is no reason why a trust should arise, because the thief is not unjustly enriched at the expense of the victim and the wrong of theft is insufficient to warrant proprietary relief. The second type of case is where assets are stolen and sold by the thief, generating proceeds. Here, Chambers argues that a trust is both possible and justified, because the proceeds represent an unjust enrichment at the expense of the victim of the original theft. In making this argument, Chambers advocates what Häcker would call a thoroughly ‘causal’ model for the operation of a trust, developing his argument with reference to the recent Australian decision of Heperu Pty Ltd v Belle.21 He concludes with some observations about the possibility of a trust of proceeds of stolen assets where the victim of theft retains legal title to the assets in question.

C.

Equity and trusts

The third part of the book contains a set of five essays dealing with issues in equity and trusts. This part commences with a contribution questioning the long-standing equitable jurisdiction to relieve against forfeiture. It then presents a trio of essays on a topic that has attracted a great deal of scholarly interest in recent times: fiduciary relationships and obligations. The final essay in Part III tackles another topic of recent interest: what duties do trustees owe regarding the provision of information to their beneficiaries? The essays, taken together, demonstrate the value of pluralistic method in the development of private law in areas where the cases provide an incomplete explanation of what the law is, or where what courts say and what they do diverge. 21

[2009] NSWCA 252.

Introduction

11

Opening Part III is Sarah Worthington’s provocatively titled essay, ‘What is left of equity’s relief against forfeiture?’ Worthington takes Occam’s razor to the cases on forfeiture, using as her analytical paradigm the hypothetical case of a purchase of a diamond necklace by instalments. Her question is: can the vendor terminate the contract for breach and keep the necklace and the instalments? Her thesis is that, whatever may have been the situation in the past, there is no longer any distinct doctrine of ‘equitable relief against forfeiture’; any relief against forfeiture that might be awarded in the hypothetical case is explained using familiar doctrinal tools from contract law and the law of unjust enrichment. Along the way, Worthington makes observations about the nature of specific performance and the purchaser’s interest under a specifically enforceable contract of sale, and her essay shows that in forfeiture cases, what courts say is not necessarily the same as what they do. Tony Duggan’s essay is the first of three to consider the nature and effect of fiduciary obligations. Drawing on law and economics scholarship, and specifically on contractarian literature, Duggan argues that fiduciary obligations are consensual, not imposed. His thesis is not that contract law and fiduciary law are the same, or that fiduciary law should be subsumed into contract law. Rather, he argues that both contract law and fiduciary law serve the same function, being to facilitiate autonomous alignments of parties’ otherwise competing interests: what he calls ‘the deal’. He examines decisions of the Supreme Court of Canada, notably 3469420 Canada Inc v Strother,22 as well as academic writings, in illustrating the difficulties that courts and scholars have had with the question of the source of fiduciary obligations. He then turns to some of the implications of the functional underpinnings of contract law and fiduciary law, arguing that the primacy of the deal demands legal recognition of exclusion clauses, but subject to ‘the same sort of unconscionability standard that applies in contract law’.23 Finally, taking the recent Australian case of Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (No 4)24 as an example, Duggan argues that under certain conditions parties should be able to contract out of a fiduciary relationship altogether. In work published elsewhere, James Edelman has done for fiduciaries what Sarah Worthington in this book does for forfeiture: using Occam’s razor, he has argued that fiduciary obligations are nothing more than

22

(2007) 281 DLR (4th) 640.

23

292–3.

24

(2007) 160 FCR 35.

12

Bant and Harding

express or implied terms of voluntary undertakings.25 In his essay in this book, Edelman considers some of the implications of his understanding of fiduciary law for some difficult unresolved questions. Which fiduciary duties can be excluded by agreement? When do fiduciary obligations come to an end? What is the proper law to be applied to fiduciary duties when they arise in a cross-border context? What is the level of fault required before a person can be liable for inducing or assisting in a breach of fiduciary duty? In answering each of these four questions, Edelman demonstrates how an understanding of fiduciary obligations as express or implied terms can yield satisfying answers to these four fiduciary puzzles. Although he focuses on undertakings generally rather than contracts, his thinking is aligned with the analysis of Tony Duggan’s essay in this book, and he might be described to that extent as broadly contractarian. However, what Duggan approaches from a functionalist perspective, Edelman approaches using tools of doctrinal analysis. The lesson of the third essay on fiduciaries in Part III is simple: context is everything. Richard Nolan and Matthew Conaglen begin by drawing a distinction between requirements that apply to fiduciaries and only to fiduciaries – the conflicts rules – and requirements that apply to fiduciaries and non-fiduciaries alike but whose content varies depending on whether or not the person to whom they apply has given a fiduciary undertaking. One of these latter requirements is good faith. For Nolan and Conaglen, in all contexts good faith is concerned with ‘the management of risk inherent in discretion’.26 However, in the fiduciary context this translates into a specific requirement: not to act other than in a way that the fiduciary (subjectively) believes will advance the interests of the principal in the future. The authors note that good faith and the conflicts rules are functionally similar, being concerned with the management of discretion, but they argue that good faith is concerned with intentional behaviour whereas the conflicts rules aim at risk minimization. They go on to identify and explain some important remedial distinctions that flow from the operation of good faith and the confl icts rules in the fiduciary context. Finally, Nolan and Conaglen point out that good faith cannot tell us who is a fiduciary. Only a uniquely fiduciary requirement can do that, and only the conflicts rules are uniquely fiduciary. 25

26

J Edelman, ‘When Do Fiduciary Duties as Arise?’ (2010) 126 LQR 302. In his identification of undertaking as the central fiduciary concept, Edelman appears now to enjoy the company of the Supreme Court of Canada, in a decision handed down after the essays in this book were written: Galambos v Perez [2009] SCC 48. 322.

Introduction

13

Lusina Ho’s essay also explores the importance of context for the development and clarification of the law. Ho considers the duties of trustees to provide information to beneficiaries of the trust. She demonstrates that a satisfactory resolution of the question, ‘How much disclosure?’, requires a fine balance to be achieved between settlor autonomy, trustees’ duties and beneficiaries’ interests; her essay aims to provide some insights as to how this balance might be struck. Noting that the old explanation of duties of disclosure based on property rights has rightly been swept away by the case law, Ho points out that the true basis of trustees’ duties of disclosure has not yet been settled in the authorities. She makes two arguments that can assist in the development of principled criteria in this area. First, disclosure duties depend on the duties of trustees regarding the distribution of trust assets. So, for example, what must be disclosed to beneficiaries of a fi xed trust is likely to be more extensive than what must be disclosed to beneficiaries of a discretionary trust or objects of a fiduciary power. Second, the right of the settlor to exclude beneficiaries’ rights to information also depends on the duties of trustees. For example, in a fi xed trust, a settlor cannot exclude beneficiaries’ rights to information without compromising the core duty of the trustees to account, a duty without which there can be no trust.

D.

Remedies

The fourth part of the book contains essays that look at a wide range of issues in the law of remedies. The first two tackle questions relating to personal remedies of compensation and disgorgement. The latter three deal with the nature, operation and justification of remedies which potentially have proprietary consequences. All five essays illustrate the pluralistic method that characterizes the book, and in this sense they are a fitting way to wrap up the collection. The aim of Lionel Smith’s essay is to ‘clarify the principles governing the measurement of compensation claims against trustees and other fiduciaries’.27 To this end, Smith undertakes a close analysis of the judgments of the Supreme Court of Canada in the case of Canson Enterprises Ltd v Boughton & Co,28 which he uses to cast light on another leading Canadian case, Guerin v R.29 Smith’s thesis can be summarized in three central propositions. First, not every money claim is a claim for loss (and 27

364.

28

(1991) 85 DLR (4th) 129.

29

(1984) 13 DLR (4th) 321.

14

Bant and Harding

therefore compensation). This is especially important when thinking about money claims against trustees and fiduciaries, because some such claims involve the direct enforcement of a trustee’s or a fiduciary’s primary obligation in a manner akin to specific performance. Second, apparently confusing distinctions in the rules governing the award and calculation of money claims against trustees and other fiduciaries make sense once the first proposition is apprehended. Finally, Smith points out that, sometimes, distinctions in the law are explained not with reference to doctrine, but with reference to the rules of evidence. The underlying theme of the essay is that, although there are important differences between common law and equity, differences in the principles by which money claims are measured are not attributable to that jurisdictional divide. Rather, such differences are explained by the different remedial purposes underlying money claims and by rules designed to overcome evidential difficulties. Katy Barnett’s essay offers a wide-ranging analysis of the availability of disgorgement damages in contract law with reference to an organizing concept of substitutability of contractual performance. Her thesis is twofold. First, in cases where a party breaches a contract in order to enter into a more profitable contract with a third party, substitutability plays a key justificatory role for the award of disgorgement damages. Second, in cases where a party has expressly promised not to do something, and does it, and profits thereby, the key justificatory role is played by policy concerns other than substitutability. In making these two arguments, Barnett contributes to debates on the doctrine of efficient breach, the judicial distaste for restraint of trade, the protection of trust in the fiduciary setting, and the underlying values of contract law, such as human autonomy. Andrew Robertson wrote his PhD thesis on the reliance interest and estoppel. One of his supervisors was Michael Bryan. It is therefore especially fitting that Robertson returns to this subject in his essay in the book. Robertson examines the place of the protean concept of unconscionability in the law relating to the award of remedies in cases of proprietary estoppel. He identifies three approaches, each of which works a conception of unconscionability into the justification of the award of such remedies, and each of which finds some support in the case law. The first approach turns on the reprehensibility of the representor’s conduct; the second on the extent of the representor’s responsibility for the relying party’s expectation and detrimental reliance; and the third on all relevant facts taken ‘in the round’. Robertson argues that the proper basis of proprietary estoppel is the protection of the reliance interest in a context where that interest is often difficult to measure except with reference

Introduction

15

to expectation. Accordingly, Robertson rejects all three approaches on the basis that, to the extent that they draw on criteria that are external to the reliance interest, they are bound either to over-compensate or undercompensate the relying party. Robertson concludes that the only work the concept of unconscionability should do in the law of proprietary estoppel is to point to what is necessary, by way of remedy, to protect the reliance interest. No more, and no less, is required. Invoking the imagery of the garden, Peter Watts makes some fundamental arguments in his essay about the seedling doctrine of partial rescission. Watts argues that – notwithstanding statutory reform in New Zealand which permits partial rescission (though not invoked in the 30 years since enactment) – partial rescission is not justified, except perhaps on grounds of convenience in cases where a claimant would otherwise have been able to obtain damages for negligence or deceit. And even in those exceptional cases, according to Watts, there is a danger that partial rescission could become a vehicle for the type of unacceptable interference with party autonomy that he considers occurred in the Australian case of Bridgewater v Leahy.30 Watts proposes that in other cases where partial rescission might be contemplated, a just distribution may be achieved by complete rescission on terms, thus achieving results similar to partial rescission without the associated violence to doctrine. Watts’ conclusion is that there may be limited room in the legal garden for partial rescission where it is ‘victim-sided’, but there is insufficient justification for ‘transplanting’ it and giving it a life of its own in the law. The final essay in the book is by Kelvin Low, on a topic that has attracted Michael Bryan’s interest in recent years.31 The topic is the proper relation of the concept of indefeasibility of title to land that prevails in those jurisdictions that have a ‘Torrens’ system of title by registration, and claims to personal remedies against the holder of such a title. Low offers two visions of the so-called ‘personal equities exception’ to indefeasibility. First, it might be thought that to the extent that claims to personal remedies may be made against the holder of an indefeasible title, the limits of indefeasibility have been exceeded. On this view, claims to personal remedies help 30 31

(1998) 194 CLR 457. M Bryan, ‘Recipient Liability under the Torrens System: Some Category Errors’ in CEF Rickett and R Grantham (eds), Structure and Justification in Private Law: Essays for Peter Birks (Hart Publishing, Oxford 2008) 339, fi rst published in (2007) 26 UQLJ 83; M Harding and M Bryan, ‘Responding to Fraud in Title Registration Systems: A Comparative Study’ in M Dixon (ed), Modern Studies in Property Law (Vol 5) (Hart Publishing, Oxford 2009) 3.

16

Bant and Harding

to define the scope of indefeasibility. Second, it might be thought that, to the extent that claims to personal remedies may be made against the holder of an indefeasible title, a true exception to indefeasibility exists. On this view, claims to personal remedies overlap with and trump indefeasibility. Low criticizes these views, and argues that the continuing acceptance of both of them has led to conceptual uncertainty in thinking about indefeasibility because the two views are inconsistent with each other. In making this argument, Low sets out his views on the utility of the ‘ejectment’ and ‘notice’ provisions of standard Torrens statutes, and develops a theory of the interplay of equity and statute. His underlying thesis is that, in order to resolve difficult questions relating to indefeasibility, more regard should be had to the terms of Torrens statutes than has typically been paid to date. As the preceding synopsis demonstrates, the private law terrain explored in this collection of essays is diverse and often difficult to navigate. Each essay seeks to provide markers for the legal traveller, whether she be judge, scholar, practitioner or student. The essays employ a wide variety of methods to develop these signposts: case-based, comparative, historical, economic, instrumentalist and jurisprudential forms of reasoning all assist in shedding light on the ground that must be travelled. Our hope is that this book will stand testament to the value of methodological pluralism when exploring private law, and will express the great regard that we and all the contributors have for the man who inspired its creation.

PA RT I Method

1 Do top-down and bottom-up reasoning ever meet? Keith Mason

Michael Bryan has always recognized the importance of legal theory in private law. And he understands the influence of broad categories or concepts upon judicial decision-making. In the tradition of Julius Stone, he has repeatedly demonstrated that those who claim to be doing no more than applying the apparent logic of specific precedent, or ‘reasoning from the bottom up’, are inevitably making choices about the premises and precedents used, and basing those choices upon extrapolated doctrines of broad import. Thus, in a recent analysis of the judgments of Callinan J, Michael stated:1 Maynard Keynes’s dictum that ‘[p]ractical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slave of some defunct economist’ is as applicable to practical lawyers as it is to practical business executives. The decisions made by ‘practical judges’ owe as much to legal philosophy as the decisions made by successful managing directors owe to economic theory. The only qualification we should make is that the ‘defunct’ economist or legal theorist is not necessarily discredited, even if he may no longer be fashionable. Legal theory leaves its mark on even the most routine legal decisions, not just in the much discussed ‘hard cases’, but most of the time the theory remains behind the scenes.

Michael’s thesis was that the particular judge showed a strong preference for achieving corrective justice, and a corresponding reluctance to take into account arguments based on considerations of distributive justice. The common law offers the decisions of past judges as its building blocks. But the judges of the present choose which blocks to use or to 1

M Bryan, ‘Justice Callinan’s Judgments in Private Law: Story Telling, Legal Coherence and Corrective Justice’ (2008) 27 UQLJ 29, 30.

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discard and they have considerable freedom to reshape them if they need adapting. In doing so, they (like their predecessors) bring to bear their own values, including their own understanding of broad categories and trends in the law. Having fairly belatedly determined that precedent is binding without further justification,2 our legal system has devised rules for identifying judicial hierarchies and the essential reasoning of authoritative cases. The High Court’s announcement of a unified Australian common law has proved the springboard for a significant tightening of the screws in recent years. The considered dicta of its justices (so long as they conform with long-established authority)3 and the decisions of any Australian intermediate appellate court on a widening range of topics are now required to be treated as binding, as well as (of course) decisions of the High Court itself.4 The High Court has also been at pains recently to emphasize the importance of following ‘strict’ or formal judicial method whereby propositions of law are derived from the reasoning and language of the canonical cases rather than ‘downwards’ from legal theories, particularly theories that may have only qualified acceptance. A tool in the judicial rhetoric has been a distinction, attributed to Judge Richard Posner, between ‘bottom-up’ (legitimate) judicial reasoning and ‘topdown’ (illegitimate) reasoning.5 As I pointed out in 2004, the expression ‘top-down legal reasoning’ is not a term of art, but it has over the last decade or so become a term of abuse in the High Court of Australia.6 For instance, in Lumbers v W Cook Builders Pty Ltd 7 Gummow, Hayne, Crennan and Kiefel JJ spoke of ‘top-down reasoning’ as having ‘inherent dangers’, sourcing this to the remarks of McHugh J in McGinty v Western Australia 8 and Gummow J in Roxborough v Rothmans of Pall 2

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See N Duxbury, The Nature and Authority of Precedent (Cambridge University Press, Cambridge 2008) ch 2. Pape v Commissioner of Taxation [2009] HCA 23, [474] (Heydon J). See Lipohar v Th e Queen (1999) 200 CLR 485, [43]–[59] (Gaudron, Gummow and Hayne JJ); Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 (‘Farah ’) [135]; Tillman v Attorney-General (NSW) (2007) 70 NSWLR 448; Gett v Tabet [2009] NSWCA 76. R Posner, ‘Legal Reasoning from the Top Down and from the Bottom Up: The Question of Unenumerated Constitutional Rights’ (1992) U Chi L Rev 433. K Mason, ‘What is Wrong with Top-Down Legal Reasoning?’ (2004) 78 ALJ 574. (2008) 232 CLR 635 (‘Lumbers’) [77]. Their Honours stated that ‘proper analysis of the legal relationships revealed by the evidence’ would illustrate those dangers. (1996) 186 CLR 140 (‘McGinty ’) 232.

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Mall Australia Ltd.9 All lower courts have been warned not to get too adventurous. In this chapter I seek to explore what the justices mean by the term ‘topdown’ reasoning and why this opprobrium has been aimed in some directions and not others. I demonstrate that the Court’s use of the concept of top-down reasoning is not uniform. Further, the use of this categorical distinction between the good and the bad in judicial method does not do justice to Posner, the legal polymath who is cited as the progenitor of the concept. Indeed, the High Court’s stance bears only a slender relationship to the views of Posner, who clearly endorsed top-down reasoning as playing an important and legitimate role in judicial method. Finally, I argue that the distinction does not do justice to the common law tradition itself. Top-down and bottom-up reasoning have always been part and parcel of sound judicial method and each balances the excesses of the other. The two areas where concerns about the evils of top-down reasoning have been enunciated in the recent judgments are the constitutional free speech implication that was declared in the Australian Capital Television Pty Ltd v The Commonwealth ,10 and in the castigation of ‘any allembracing theory of restitutionary rights and remedies founded upon a notion of “unjust enrichment”’.11 The charge of top-down reasoning that McHugh and Gummow JJ levelled at Deane and Toohey JJ in the Political Advertising Case was that they had drawn upon a doctrine underlying the Constitution as distinct from being an implication from it.12 A secondary level implication of a constitutional freedom of political discussion was said to have been derived from ‘political principles or theories that [were] not anchored in the text of the Constitution or [were] not necessarily implications from its structure’.13 I have pointed out elsewhere14 that the accusation was unjust, given that Deane and Toohey JJ had themselves fi rst referred to doctrines ‘which underlie the Constitution and form part of its structure’.15 But my present 9 10 11 12

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(2001) 208 CLR 516 (‘Roxborough ’) [73]. (1992) 177 CLR 106 (‘Political Advertising Case’). Roxborough (n 9) [72]. See also Farah (n 4) [154]. See McGinty (n 8) 231–2 where McHugh J, whose reasons were endorsed by Gummow J (at 291), branded as top-down, illegitimate reasoning the approach taken by Deane and Toohey JJ in Nationwide News Pty Ltd v Willis (1992) 177 CLR 1 (‘Nationwide News’). In their joint judgment in the Political Advertising Case (n 10), Deane and Toohey JJ had restated their reasoning in the earlier case. McGinty (n 8) 232 (McHugh J). 14 Mason (n 6) 576. Nationwide News (n 12) 70 (emphasis added).

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concern is to understand the indictment, not to question the verdict. McHugh and Gummow JJ were branding as illegitimate top-down reasoning, any process of deriving constitutional implications that was not clearly drawn from the text by the usual processes of statutory interpretation or, in the case of ‘structural implications’, implied because it was logically or practically necessary for the preservation of the integrity of that structure.16 The second sighting of the condemnation has been in a general law context, the field of unjust enrichment. Of course, talk of a ‘field’ itself invokes a provocative metaphor because it implies an area with a boundary that usually contains animals or plants with common features or which are at least compatible with each other. In contrast to fields such as ‘Equity’ that raise no eyebrows in the High Court,17 the field of unjust enrichment is a highly contested one, as regards its defining characteristics, its size and (particularly) the extent, if at all, that it includes matters equitable. Gummow J did not source his assertion about the advocacy of ‘an allembracing theory of restitutionary rights and remedies founded upon a notion of “unjust enrichment”’.18 By the date of Roxborough, Peter Birks had abandoned any notion of ‘perfect quadration’, ie the principle that restitution always responded to unjust enrichment.19 His earlier espousal of ‘perfect quadration’, and the continuing espousal of this position by Andrew Burrows, have always distinguished between restitution where unjust enrichment was the event to which restitution responded and restitution in response to an established wrong.20 Goff and Jones in the now seven editions of The Law of Restitution published between 1966 and 2007, Graham Virgo in his two editions of The Principles of the Law of Restitution published in 2000 and 2006, and Mason and Carter, whose 16

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In McGinty (n 8) 231, McHugh J cited with approval Mason CJ’s distinction between textual and structural implications in the Political Advertising Case (n 10). Mason CJ had said that, for structural implications, ‘the term sought to be implied must be logically or practically necessary for the preservation of the integrity of the structure’ (at 135). See also Austin v The Commonwealth (2003) 215 CLR 185 (‘Austin’) [113]. Despite the difficulties associated with defi ning that field or finding anything in common within it, apart from animals with an assumed but often spurious derivation: see generally K Mason, ‘Fusion: Fallacy, Future or Finished?’ in S Degeling and J Edelman (eds), Equity in Commercial Law (Lawbook Co, Sydney 2005) 42–4. Th is being the assertion made by Gummow J in Roxborough (n 9) [72] that was taken up by the Court in Farah (n 4) [154]. See P Birks, ‘The Law of Restitution at the End of an Epoch’ (1999) 28 UWALR 13, 19. See P Birks, An Introduction to the Law of Restitution (Clarendon Press, Oxford 1985) 26, 44–5; A Burrows, The Law of Restitution (2nd edn Butterworths, London 2002) 5–6.

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first edition of Restitution Law in Australia was published in 1995, have each included causes of action responsive to other triggers. Each of these, and other, restitution scholars did include matters equitable within the scope of unjust enrichment, but this does not appear to have been the basis for Gummow J’s attack springing from the allegation about an ‘all-embracing theory’ that I have quoted above. His Honour’s failure to demonstrate or even source an assertion that someone, somewhere was advocating the thesis he set out to attack raises its own questions about judicial rhetoric. Unattributed ‘straw man’ reasoning is a poor springboard for the frontal attack that was launched on the unjust enrichment concept in Roxborough. Once again, I want to concentrate on the major, rather than the minor, premise, ie the nature of the illegitimate judicial method condemned. I will, however, give passing consideration to whether there is anything about the unjust enrichment concept justifying condemnation on the basis that it is ‘inherently’ prone to top-down reasoning. Inappropriate top-down reasoning proceeding from the unjust enrichment concept has been identified by the High Court on two occasions. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd,21 the Court was highly critical of a proposition that recipient liability in the area seen to be occupied by the first limb of Barnes v Addy22 might be based on strict liability, 23 even if subjected to various defences including receipt in good faith and for valuable consideration. In reversing the New South Wales Court of Appeal, the High Court restated the proposition that unjust enrichment is not a ‘definitive legal principle according to its own terms’.24 The Court of Appeal’s misuse of the concept was found to be illustrative of Gummow J’s prediction in Roxborough ‘about the consequences of unjust enrichment for the distortion of equitable principles’.25 The High Court stated that the areas in which the concept of unjust enrichment ‘applies are specific and usually long-established. Recipient liability for breach of trust or fiduciary duty has not been one of them.’26 The error was thus identified as one involving the use of an accepted concept in an inappropriate context.

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22 Farah (n 4). (1874) 9 Ch App 244 (‘Barnes v Addy ’). As it is, for example, in claims to follow certain unauthorized payments from a deceased estate. Farah (n 4) [151], citing David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (‘David Securities’) 378–9. 26 Roxborough (n 9) [74]. Farah (n 4) [151].

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In Lumbers, the Full Court of the Supreme Court of South Australia was found to have erred in accepting a claim that had the effect of evading the consequences of corporate insolvency. An obligation to pay, deriving from the cause of action derived from quantum meruit, had been imposed on a company in a group other than the (insolvent) one that had placed the order. Invocation of the restitutionary concepts of ‘free acceptance’ and ‘incontrovertible benefit’ was found to have caused the court below to overlook the governing contractual and corporate framework and their true consequences. According to Gummow, Hayne, Crennan and Kiefel JJ:27 [p]roper analysis of the legal relationships revealed by the evidence [illustrated] the dangers inherent in ‘top-down reasoning’ … The application of a framework for analysis expressed only at the level of abstraction adopted in this case, by reference to ‘benefit’, ‘expense’ and ‘acceptance’ coupled with considerations of unconscionability, creates a serious risk of producing a result that is discordant with accepted principle, thus creating a lack of coherence with other branches of the law.

In summary, the error was of a combined nature, namely the use of (unstable) principles of high generality and the failure to recognize the hegemony of contract in the area in question. As I demonstrate below, when examining the High Court’s reasoning in greater detail, two separate themes can be detected. The primary motif is that arguments ‘top-down’ from general principles rather than ‘bottom-up’ from the constitutional text or the case law are wrong in themselves. The secondary motif is that some concepts (such as unjust enrichment) are ‘inherently’ or particularly unstable and ought therefore to be watched closely because of their capacity to generate top-down reasoning. I propose to examine these propositions in turn. My thesis is that judges engage in reasoning from the top down day in and day out. If they are found to err by an appellate court, that court will itself often resort to such reasoning as one of several judicial tools for keeping lower courts on track and promoting coherence in legal development. Reasoning by reference to broad principles, rules, concepts and categories that are secure in their acceptance is an everyday occurrence for courts at all levels. It is an essential concomitant of common law method. Choices about starting points are inevitable.28 27 28

Lumbers (n 7) [77]–[78]. See generally M Krygier, ‘Julius Stone: Leeways of Choice, Legal Tradition and the Declaratory Theory of Law’ (1986) 9 UNSWLJ 26.

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Accordingly, the use of the ‘top-down’ opprobrium to stigmatize no more than the misuse of some canonical principle, category or concept may be seen as a rhetorical makeweight, designed to deter others from blundering into protected areas. The limited history of the judicial use of the ‘top-down’ epithet also suggests that judges will reach for it when one established legal proposition is given a new application that threatens to invade or redefine the area occupied by another concept or category that is favoured by the judges who have authority to decide the matter in hand. I shall endeavour to show particular instances where top-down reasoning excited no adverse comment and where such reasoning produced outcomes that are pure orthodoxy. But first I need to identify more closely the meaning of this vituperative term offered by those who have used it in the High Court.

A.

The High Court’s understanding of top-down reasoning

In Roxborough, Gummow J identified the object of his criticism 29 and explained his concerns in the following passage, which was to receive the endorsement of the whole Court in Farah:30 To the lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writings of jurists not the decisions of judges. However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around.

Gummow J adopted in Roxborough31 Posner’s reference to the use of a theory by its adherents:32 to organize, criticize, accept or reject, explain or explain away, distinguish or amplify the existing decisions to make them conform to the theory and generate an outcome in each new case as it arises that will be consistent with the theory and with the canonical cases, that is, the cases accepted as authoritative within the theory.

Gummow J added that:33 As it happens, Lord Mansfi eld favoured the development of legal principle by a journey in the opposite direction. In Ringsted v Lady

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Roxborough (n 9) [72]. It is likely that he had the late Peter Birks in his direct sights. See also Hill v Van Erp (1997) 188 CLR 159 (‘Hill ’) 225–7. Farah (n 4) [154]. 31 Roxborough (n 9) [73]. 32 Posner (n 5). Roxborough (n 9) [73].

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Mason Lanesborough [(1783) 3 Dougl 197, 203; 99 ER 610, 613], his Lordship said: General rules are, however, varied by change of circumstances. Cases arise within the letter, yet not within the reason, of the rule; and exceptions are introduced, which, grafted upon the rule, form a system of law.

These passages suggest that the essential problem lies in the use of ‘theories’ as a basis for understanding the scope and correctness of earlier decisions, including those under review, as distinct from using cases as the basis for developing rules, concepts and theories. In other words, a dichotomy is presented between ‘top-down’ (unacceptable) judicial method and ‘bottom-up’ (acceptable) judicial method. The concluding sentence in the Roxborough passage that was adopted by the whole Court in Farah admits that general principles can emerge ‘over time’, no doubt when authoritative decisions announce or endorse their arrival. In the common law system, by contrast with the civil law system, the recognized gatekeepers are the judges and not the professors.34 This does not, of course, mean that judges never choose to adopt reasoning found in ‘the writings of [non-judicial] jurists’, although sometimes they choose not to acknowledge the source. I shall later seek to demonstrate that this suggested dichotomy between top-down and bottom-up fails to capture the dynamic of common law judicial method. But elsewhere the Court’s focus has been an apparently sharper one, directed at the ‘brutal’ manner in which a particular theory is promoted, brutality being measured by reference to its displacement effect upon theories, principles, rules and categories that are viewed as established. For example, dangers associated with the top-down use of concepts were identified in the following passage in Farah:35 [S]ubstance and dynamism may be restricted by dogma. In turn, the dogma will tend to generate new fictions in order to retain support for its thesis. It also may distort well settled principles in other fields, including those respecting equitable doctrines and remedies, so that they answer the newly mandated order of things. Then various theories will compete, each to deny the others.

And in Director of Public Prosecutions for the Northern Territory v WJI36 Gummow and Heydon JJ spoke of a ‘general principle [being] imposed by 34

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See generally RC van Caenegem, Judges, Legislators and Professors: Chapters In European Legal History (Cambridge University Press, Cambridge 1987). Farah (n 4) [151] quoting Gummow J in Roxborough (n 9) [74]. (2004) 219 CLR 43 (‘WJI ’) [30]. The passage from Roxborough (n 9) [72]–[74] was cited.

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a particular theory rather than derived from decisions upon particular instances’. Their Honours did not there use the term ‘top-down reasoning’, but the context and language used makes it clear that they had it in mind. It is also clear that Gummow and Heydon JJ saw the problem as one presenting in statutory as well as common law contexts. Th is emerges from their reference in WJI to a passage in the reasoning of Dixon CJ in Vallance v The Queen.37 Dixon CJ was there writing about certain kinds of legislative codes. He referred to a letter from Sir Frederick Pollock to Oliver Wendell Holmes admitting that ‘the consideration of case-law as a pure science tends to make one look on codes as a kind of brutal interference with the natural processes of legal reason’. Dixon CJ thought that the difficulty lay: in the use in the introductory part of the Code of wide abstract statements of principle about criminal responsibility framed rather to satisfy the analytical conscience of an Austinian jurist than to tell a judge at a criminal trial what he ought to do … In the Code … abstractions of doctrine are not the generalized deductions from the particular instances that follow: they come ab extra and speak upon the footing that they will restrain the operation of what follows.

Expressions like ‘dogma’, ‘mandated order of things’ and ‘imposed’ principles appear, at first blush, to clarify the charge. But one person’s dogma can be another’s fidelity to principle. A judgment using a phrase such as ‘it is a principle of contract that …’ or ‘equitable remedies are generally …’ would not be attacked for being ‘top-down’ even if the posited rule or principle was not an absolute one or even if the judge was mistaken about its ambit. Except perhaps for cases of extremely lead-footed reasoning by the court under review, it really comes back to the authoritative content of the doctrine or concept being applied.

B. Are these types of top-down reasoning contrary to accepted judicial method? The passages quoted suggest a sharp dichotomy between acceptable ‘bottom-up’ reasoning and unacceptable ‘top-down’ reasoning and they treat the latter as a new arrival that needs to be tagged and expelled. This section will demonstrate that the judges who have espoused this

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(1961) 108 CLR 56, 58.

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dichotomy overlook the near universality of reasoning based upon broad principles, theories and categories. Furthermore, any refi nement that focuses upon the ‘brutality’ with which a principle, theory or category is used is also elusive. Some principles, theories and categories need to be adhered to firmly. When they are, and when rivals are sent packing, the ‘top-down’ flea in the ear might as well be applied to the principle that endures as to its unsuccessful rival. This is not to advocate the overthrow of our system of precedent which is supported by reason as well as legal authority. Judicial humility, respect for the past and caution may not be the only virtues but they are virtues nonetheless. Respect for inherited tradition and appropriate use of incremental reasoning in the development of the law mean that bottom-up reasoning is itself entirely appropriate, so long as judges do not fall for the myth that this is all that takes place. Let me first address the proposition that any reasoning top-down is foreign to sound common law method. I intend to consider the proposition in three contexts: constitutional interpretation, statutory interpretation and common law decision-making.38 Sir Owen Dixon is extolled as the exemplar of strict judicial method. This does not mean that he is viewed as a slave to precedent or the constitutional text. His synthesis of the principles underlying estoppels in Grundt v Great Boulder Proprietary Gold Mines Ltd39 continues to be cited and applied. And his discovery of qualifying implications such as the Melbourne Corporation ‘doctrine’ is now entirely orthodox.40 I am not suggesting in any way that these contributions from this great jurist involved or encouraged reasoning of the top-down variety. But the 38

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I include decision-making in matters equitable, although there are mixed signals from authoritative sources as to whether Equity is as hide-bound to precedent as the common law. Cf Heydon JA in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 (‘Harris’) [454]–[458] (‘What individual judges did [in the era of Sir George Jessel MR] is not a sound guide to what modern Australian courts, at least at levels below the High Court, can do’); Gummow J in Roxborough (n 9) [84] (reference to ‘equitable doctrine[’s] flexibility and adaptability to modern needs, particularly commercial law … [E]quity is the spur to new thought and further remedy, and … provides a means of introducing new policies’) and in ‘Equity: Too Successful?’ (2003) 77 ALJ 30, 39–42; and Kirby J in ‘Overcoming Equity’s Australian Isolationism’ (2009) 3 J Eq 1. (1937) 59 CLR 641, 674–6. Dixon J said (at 674) that the ‘rules governing estoppel … work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another’. Th is would appear to endorse the legitimacy of testing matters from both the top and the bottom. Of course, the general theory must itself be recognized as a sound hypothesis. See eg, Austin (n 16).

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same cannot be said for Sir Owen Dixon’s contribution in some other areas of constitutional law. His influential decision that ‘excise’41 extended beyond a tax on production to one on distribution was a proposition that he derived from the idea that an Australian customs union betokened an integrated national economy.42 This view was (with refinements) to find acceptance by the majority of the High Court in Ha v New South Wales,43 but it could not be suggested that it was an inevitable implication from the word ‘excise’ or the structure of the Constitution. In Ha v New South Wales, when the extended Dixonian view of excise was advanced in argument by the Commonwealth Solicitor-General, Mr Griffith QC, there was the following exchange with one of the judges who would form part of the minority:44 daw s on j : That is top-down reasoning and you have no basis on which to support it except the assumption that Sir Owen Dixon made. m r gr i f f i t h : Your honour, our submission is it is not top-down reasoning. It is based on the words of the Constitution itself. daw s on j : That is to make an assumption as to their meaning.

Dixon CJ had warned against confusing ‘the unexpressed assumptions upon which the framers of the [Constitution] supposedly proceeded with the expressed meaning of [a constitutional] power’.45 But he was cautioning against sloppy thinking, not proscribing all assumptions. As I have shown elsewhere, he endorsed at least three of them as tools for constitutional interpretation.46 These are the concepts of the rule of law, parliamentary sovereignty and the supremacy of the Crown as a formal concept. In Australian Communist Party v The Commonwealth,47 Dixon CJ referred to the rule of law as a ‘traditional conception’ that was ‘simply assumed’.48 In his paper, ‘The Law and the Constitution’, he wrote:49 The fundamental conceptions, which a legal system embodies or expresses, are seldom grasped or understood in their entirety at the time when their actual influence is greatest. They are abstract ideas usually arrived at by 41

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Section 90 of the Australian Constitution confers on the federal parliament power to impose duties of customs and of excise that is exclusive of the States. See Parton v Milk Board (Vic) (1949) 80 CLR 229, 260. (1997) 189 CLR 465 (‘Ha v New South Wales’). [1997] HCA Trans 103 (18 March 1997). Australian National Airways Pty Ltd v The Commonwealth (1945) 71 CLR 29, 81, cited in McGinty (n 8) 184 (Dawson J). 47 48 Mason (n 6) 578–9. (1951) 83 CLR 1. Ibid 193. O Dixon, ‘The Law and the Constitution’ in O Dixon, Jesting Pilate (Lawbook Co, Melbourne 1995) 38.

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Mason generalisation and developed by analysis … Sometimes indeed they are but instinctive assumptions of which at the time few or none were aware. But afterwards they may be seen as defi nite principles contained within the ideas which provide the ground of action. Further, when such conceptions have once taken root they seldom disappear. They persist long after the conditions in which they originated have gone. They enter into combinations with other conceptions and contribute to the constructions of new systems of law and government.

Th is surely is authoritative recognition of top-down constitutional reasoning of the very sort attacked by McHugh and Gummow JJ in the aftermath of the Political Advertising Case. In the area of statutory interpretation, numerous ‘traditional conceptions’ have become embedded in the law and drive down upon statutory interpretation. We often describe them as presumptions, for example against denying procedural fairness or abrogating fundamental common law rights. There may be a fictional attribution to parliamentary intent not to override these rights without very clear language. But the reality is that the judges have collectively determined to ‘impose’ these principles upon parliament itself. Decisions of the highest authority require all judges to bring these assumptions to bear upon any task of statutory interpretation. A number of statements have been made in the High Court in recent years suggesting that the Constitution’s references to ‘judicial power’ and ‘courts’ may entrench minimum substantive requirements of independence and impartiality in those exercising the Commonwealth’s judicial power.50 No one could seriously contend that the implication arises automatically or inevitably from the language used. Rather, the judges are (in my respectful opinion, entirely appropriately) bringing to bear their values about how courts ought to behave and how, in the last couple of centuries, they have been generally required to behave by superior courts. Theories about the significance of free speech are well recognized in the common law and they take effect through aspects of the law of defamation. If (in the eyes of some) they were given inappropriate constitutional entrée in the Political Advertising Case, that reasoning was effectively reworked by the different justices who formed the majority in Lange v Australian Broadcasting Corporation.51 They retained the constitutional 50

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See Forge v Australian Securities and Investments Commission (2006) 228 CLR 45, [41], [64], [181] and other cases cited by M Aronson, B Dyer and M Groves, Judicial Review of Administrative Action (4th edn Lawbook Co, Pyrmont 2009) [2.90]. (1997) 189 CLR 520.

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implication but now sourced it primarily in the words ‘directly chosen by the people’ that are found in sections 7 and 24 of the Constitution.52 In my view, this slender textual base still left ample room for the play of assumptions which, had they been made by others, could well have elicited the ‘top-down’ opprobrium. Sir Owen Dixon’s discussion in the paper quoted about the means whereby ‘traditional’ and ‘fundamental conceptions’ of public law may enter legal discourse and legitimately affect the resolution of constitutional issues applies equally to judicial method relating to common law problems. Let me give two examples, the second of them being the very area chosen by the High Court for the identification and castigation of top-down reasoning. In Harris v Digital Pulse Pty Ltd,53 four judges wrestled with the question whether exemplary damages could be awarded for breach of an employee’s fiduciary duty of good faith. It was an express term of the defendant’s employment that he would not compete during his employment. In breach, he worked secretly for the benefit of his own business in competition with his employer. The employer dismissed him and sued for remedies that included exemplary damages for breach of fiduciary duty. Palmer J of the New South Wales Supreme Court made such an award, but the New South Wales Court of Appeal (by majority) held that it was not an available remedy in the circumstances, despite the breach being a flagrant one. All four judges satisfied themselves that there was no controlling Australian precedent. At the end of the day, they were also in agreement that exemplary damages were not precluded simply because that remedy had originated in the English common law courts. In other words, for the modern Supreme Court of New South Wales to contemplate the making of such an award did not entail some dreaded ‘ fusion fallacy’. The judges accepted that exemplary damages were not available for breach of contract as such and they proceeded from this point to debate the strength or otherwise of the contract analogy for the separate cause of action for breach of fiduciary duty. It was recognised that the concept of breach of fiduciary duty was equitable in derivation and there was much exploration of the meaning and consequences of that attribution. For the majority in the Court of Appeal, this was to prove the determining factor. Heydon JA, 52 53

Ibid 567. See Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 (Palmer J); Harris (n 38) (Spigelman CJ, Mason P and Heydon JA). I was the dissenting judge in the Court of Appeal.

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in particular, saw Equity as generally hostile to the notion of punitive remedies. Spigelman CJ, who was in general agreement with the reasons of Heydon JA, did not shut the door on exemplary damages being available for breach of fiduciary duty outside the employer/employee setting,54 but he ruled that the contract analogy was too strong for the particular (contractually derived) fiduciary relationship. This briefest of summaries shows the extent of the choices seen to be both open and foreclosed to the respective judges. It also shows the application of broad and contestable theories to the questions at hand. Did the fusion of the administration of law and Equity in New South Wales preclude ‘Equity’ from borrowing and adapting the ‘common law’ idea that ‘damages’ may aim to punish and deter as well as to compensate? In what sense are all fiduciary duties the same? Is an employee’s disloyalty more analogous to a tort or a breach of contract, to the extent that those categories offer guidance? What was the impact of the contractual ordering given that the plaintiff was bringing an alternative cause of action based on breach of fiduciary duty? The resolution of none of these higher level issues offered a conclusive answer to the matter at hand. For one thing, there was more than one of them competing for attention, and they presented in no particular order or hierarchy. For another, the scope and application of the various higher level issues were themselves each highly contestable. As the four judges worked their ways through the maze, they examined many individual precedents. Some were discarded as irrelevant, some were seen as too dated to be of assistance, and in respect of some there was disagreement as to the principles to be extrapolated from the specific case. There was inevitably discussion that focused upon the greater authority of dicta from High Court and senior appellate judges. Differing views were uttered about the conclusions to be drawn from English pre-Judicature Act cases and from jurisdictions other than England. In short, the judges frequently looked down at the cases. But they also looked upwards for guidance as to the questions to be asked, the categories to be identified, and the hierarchies to be respected. As they edged closer to the ultimate question, the judges spilt much ink analysing specific groups of cases to see if they could extrapolate answers as to the higher level issues that would bear upon resolving the specific matter. No one has, to my knowledge, accused any of the four judges in Harris of engaging in ‘top-down’ reasoning. 54

See Harris (n 38) [5].

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I have already referred to the two instances where the reasoning of the lower court and/or the submissions of counsel in relation to an application of the unjust enrichment concept drew forth condemnation as inherently flawed top-down reasoning. I was one of the errant Court of Appeal judges in Farah. For that and other reasons, I shall avoid any attempt to explain or justify what was written in that closed chapter. The case was one in which a person complaining about a fiduciary’s misuse of information sought to have a constructive trust remedy imposed over land acquired through the agency of the fiduciary in the names of his close relatives. The Court of Appeal held that, even if the relatives did not receive the ‘property’55 with notice of the fiduciary’s breach, there would still be a basis for imposing a constructive trust. The recipients were strictly liable simply because they had received ‘trust property’ and had not shown that they took as purchasers without notice. This was labelled a restitutionary case of unjust enrichment by receipt.56 The High Court rejected this approach after analysing some of the academic and judicial sources relied upon by the Court of Appeal. Reasons, based on authority and principle, were given for continued adherence to a wrongs-based approach to liability in accordance with the fi rst limb of Barnes v Addy.57 There was found to be no room for an alternative, inconsistent basis of strict liability stemming from the unjust enrichment concept. There was, with respect, nothing unusual in the High Court adopting such an approach and its analysis must necessarily be regarded by me as incontrovertibly right. For the purpose of this chapter I am only concerned to explain the Court’s reasoning so far as directed at what it saw as ‘top-down’ errors. In fact, that term was not used, although it was clearly identified in the second part of the following paragraph:58 Fourthly, the restitution basis is unhistorical. There is no sign of it in clear terms in any but the most recent authorities. It is inherent in the Court of Appeal’s conclusion that for many decades the courts have misunderstood the tests for satisfying the fi rst limb of Barnes v Addy : that is improbable. It is inherent in the conclusion advocated by Say-Dee that for many decades the courts have failed to notice the existence of a form of liability co-existing with the fi rst limb: that is equally improbable. The restitution basis reflects a mentality in which considerations of ideal 55

56 57

The High Court held that the Court of Appeal erred in treating the case as one involving the receipt of property. See Say-Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309, [216]–[234]. See Farah (n 4) [148]. 58 Ibid [154].

34

Mason taxonomy prevail over a pragmatic approach to legal development. As Gummow J said:59 To the lawyer whose mind has been moulded by civilian influences, the theory may come fi rst, and the source of the theory may be the writings of jurists not the decisions of judges. However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around. The restitution basis was imposed as a supposedly inevitable offshoot of an all-embracing theory. To do that was to bring about an abrupt and violent collision with received principles without any assigned justification.

Two broad points were being made: first, that the restitution basis effectively undermined the fi rst limb of Barnes v Addy without justification in principle or on the authorities; and second, that the restitution basis ‘reflected a mentality in which considerations of ideal taxonomy prevail[ed] over a pragmatic approach to legal development’ especially because it was ‘ imposed as a supposedly inevitable offshoot of an allembracing theory’.60 Here, I am concerned only with understanding the particular charge embodied in the second point. That charge drew an adverse inference about the mindset and reasoning of the judges without elaborating its basis beyond pointing to the error itself. For these and other obvious reasons I cannot comment on the accuracy of that inference. The second restitution case to elicit similar criticism from the High Court was Lumbers. Here the lower court’s error was to ignore the primacy of a contractual ordering. Goods and services had been ordered from a company in the group that later went into liquidation. It was held wrong, in those circumstances, to resort to restitutionary 61 or equitable62 notions to get at the company that received the benefit of goods and services ordered by the insolvent company where that created a ‘serious risk of producing a result that [was] discordant with accepted principle, thus creating a lack of coherence with other branches of the law’.63 The High Court also applied a fairly high level principle to the effect that conferral of a benefit was not enough to generate a claim in restitution.64 On my reading of the joint judgment, there was no further information why

59 61 62 64

60 Roxborough (n 9) [72]. Farah (n 4) [154] (emphasis added). Such as ‘benefit’, ‘expense’ and (free) ‘acceptance’. 63 Such as unconscionability. Lumbers (n 7) [78]. Ibid [80] citing Bowen LJ in Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234, 248. As the High Court recognized (at [80]) there are exceptions within the principles of necessitous intervention and maritime salvage.

Do top-down and bottom-up reasoning ever meet?

35

this situation illustrated the dangers ‘inherent’ in the restitutionary and equitable principles that were misapplied. Resort to a specific governing precedent or a narrow legal rule is preferable to reasoning that uses generalized concepts that are relatively controversial or relatively unknown.65 But the very matter at issue in Lumbers required the courts to apply reasoning of a higher order because the ultimate choice related to the category of reference. Neither the South Australian Full Court nor the High Court cited any precedent directly on point governing the interplay between contract, restitution and company law.66 One may readily accept that, in any development of the general law, precision is to be preferred if possible.67 Furthermore, since change can beget further change, any bold judge should carefully examine the downstream consequences of replacing one rule with another in the interests of mere coherence. If a satisfactory substitute cannot be formulated, it may be better to leave things as they are, hoping that light will emerge over time or that legislative intervention will address the issue. The tortuous history of the law of highway negligence post-Brodie v Singleton68 illustrates that a well-intentioned leap in a new direction in the interests of coherence can force courts and legislators into reformulating the newly applied rule as the need for further adjustment becomes apparent.69 The High Court’s decision in Lumbers to apply the ultimately determinative principle about the general70 primacy of a contractual ordering over a restitutionary or equitable one was itself a principle applied from the top down. No specific precedent mandated this course, nor was one cited. In this, I am not suggesting that the principle was misapplied or even ‘imposed’ in any vituperative sense. It was simply the governing rule applied by the governing court. 65

66

67

68 69

70

I am not conceding that the restitutionary concepts discussed by the South Australian Full Court were of this nature. The reasoning of Doyle CJ in Angelopoulos v Sabatino (1995) 65 SASR 1 was recognized as assisting, although the facts were distinguished. See Gala v Preston (1991) 172 CLR 243, 261–3 (Brennan J); Hill (n 29) 199 (Gaudron J), 238–9 (Gummow J). (2001) 206 CLR 512 (‘Brodie’). See Road Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330 and Civil Liability Act 2002 (NSW) Pt 5. It is not a universal proposition. Sometimes restitution may appear to trump contract: see K Mason, JW Carter and GJ Tolhurst, Mason and Carter’s Restitution Law in Australia (2nd edn LexisNexis, Sydney 2008) [215]. Equity has been trumping contracts, and even statutes, for centuries.

36

Mason

The study of legal history and of legal taxonomy reveals many situations where orthodox categories and concepts rise and fall, where they get trimmed and adjusted, and where they clash at the borders with other orthodox categories and concepts. While a rule, principle or concept71 is accepted as orthodox and useful it will be afforded such authority as its scope and terms permit, at least so long as it does not come up against some competing category. Within their appointed limits, some categories trump others, as is illustrated by the fact that liability in tort can generally be excluded by an appropriately drawn exclusion clause. But the respective roles of categories such as ‘contract’, ‘tort’, ‘Equity’ and ‘restitution’ are never self-evident, nor are their domains exclusive. In Lumbers, contract and company law simply pulled rank on restitution and Equity. I return to a related aspect of the High Court’s reasoning in Farah. The Court held that the principles respecting fiduciary duty were:72 foreign to unjust enrichment notions because the unjust factors [encountered in unjust enrichment analysis were] commonly concerned with vitiation or qualification of the intention of a claimant … The areas in which the concept of unjust enrichment applies are specific and usually longestablished. Recipient liability for breach of trust or fiduciary duty has not been one of them.

The Political Advertising Case and the restitution cases discussed show, in their different contexts, that accusations of top-down reasoning are likely to be made when a new idea is pressing for recognition in the form of a legal rule or where an accepted idea is seeking a new application. Being new, if not controversial, the idea or application is likely to be expressed broadly, if only because it has not been tested and refined in the fire of academic and/or judicial discourse.73 And if, as with unjust enrichment, it is seen to compete for some of the space already claimed by an older category, such as ‘contract’ or ‘Equity’, then it is hardly surprising that there may be resistance. 71

72

73

Most, if not all, non-statutory legal rules will be formulated in different ways by different authorities and most, if not all, will be subject to qualifications and exceptions. The same is true for less ‘controlling’ legal ideas such as principles and concepts. For a discussion about different types of ‘general concepts’ and the ways that judges give them content, see J Dietrich, ‘Giving Content To General Concepts’ (2005) 29 MULR 6. Farah (n 4) [150] (emphasis added) quoting a statement of James Edelman with apparent agreement. As has turned out to be the case as the constitutional free speech implication was assailed from various quarters since 1992.

Do top-down and bottom-up reasoning ever meet?

37

But the law does not subscribe to the theory that nothing should ever be done for the first time. ‘Rules’ such as that stipulating the non-recovery of money paid under mistake can become encrusted with exceptions and eventually fall. ‘Principles’ such as the notion of efficient breach in contract can for a time be seen as helpful only later to be assailed on all sides. Explanations for rules, such as the implied contract idea in quasi-contract, can be revealed as fictions and then abandoned. Equity can choose to back off and accept a common law rule in preference to continuing on its own separate path.74 Other categories, such as ‘constructive trust’ may, on close examination, prove to be little more than ‘a rag-bag of instances having nothing in common’.75 As Kirby J put it in Brodie, ‘[it] is obvious that the rules of the common law are in a constant process of alteration and re-expression. Far from this being a weakness of the legal system, its capacity to change is one of its greatest strengths.’76 How the judges move from one position to another is a most fascinating study. Different judges do things differently. There is, of course, a spectrum of attitudes. But no one works in a theory-free vacuum. Even the professed incrementalist is confronted with deciding what is ‘an increment too far’.77 The unjust enrichment concept has been authoritatively recognized in Australian law and it has proved a fruitful tool of legal analysis and a spur to its development,78 just as Deane J predicted in 1987.79 The High Court itself has acknowledged unjust enrichment as a ‘unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution of a benefit derived at the expense of a plaintiff ’.80 The concept has been endorsed as capable of ‘assisting in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing 74 75

76 77 78

79

80

See AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170, 191. RP Austin, ‘Constructive Trusts’ in PD Finn (ed), Essays in Equity (Lawbook Co, Sydney 1985) 196. Brodie (n 68) [203]. The phrase is that of Beldam LJ in Barrett v Ministry of Defence [1995] 3 All ER 87, 95. See generally J Edelman and E Bant, Unjust Enrichment in Australia (Oxford University Press, Melbourne 2006); Mason, Carter and Tolhurst (n 70) [135]–[138]. See Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 (‘Pavey & Matthews’) 257 (Mason and Wilson JJ agreed generally with Deane J’s reasons). See also Lumbers (n 7) [85]. Cf Farah (n 4) [151]. Pavey & Matthews (n 79) 256–7. See also David Securities (n 24) 375, 389, 406; Lumbers (n 7) [83].

38

Mason

category of case’.81 Its generative capacity extends to the recognition or rejection of various defences.82 Several claims, including the recovery of money paid under a mistake of fact or law, the award (and assessment) of reasonable remuneration following full performance of a contract unenforceable by statute, restitution based on failure of consideration, the award of an account of profits for a patent infringement, and the defence of change of position, have been authoritatively attributed to this concept and/or described as falling under its rubric. Dicta in the High Court and other superior Australian courts support the application of the concept even more widely.83 The concepts of ‘(free) acceptance’ and ‘incontrovertible benefit’ that were misapplied by the South Australian Full Court in Lumbers are also well established, 84 which is not to say that they are uncontroversial or to deny that they (like any legal rule) have the potential for misuse. In Lumbers, their erroneous application by the South Australian Full Court, in a particular attempt to side-step the consequences of a corporate insolvency, did not reveal any ‘inherent’ defect in the concept, let alone embody an attempted ‘imposition’ of a dogmatic theory. An erroneous application of a well-accepted concept in a controversial new area did not justify the High Court’s rebuke to the South Australian Full Court, expressed in the ‘top-down’ dialectic currently in vogue. And it provided no evidence of the inherent instability of the unjust enrichment concept.

C.

Posner’s epithet but not his thesis

In McGinty, when fi rst asserting that top-down reasoning is an illegitimate method of interpreting the Constitution, McHugh J cited Judge Posner’s well-known law review article. 85 His Honour quoted the following as Posner’s explanation of top-down and bottom-up reasoning: In top-down reasoning, the judge or other legal analyst invents or adopts a theory about an area of law – perhaps about all law – and uses it to organise, criticise, accept or reject, explain or explain away, distinguish or amplify the existing decisions to make them conform to 81 82 84

85

Pavey & Matthews (n 79) 257 cited in Lumbers (n 7) [85]. See generally Mason, Carter and Tolhurst (n 70) [136]. 83 See ibid [138]. See generally ibid [157]–[158]. Authorities include Re Universal Distributing Co Ltd (1933) 48 CLR 171 (Dixon J); Pavey & Matthews (n 79) esp 227–8, 229, 255–6, 257, 259, 260, 262–3, 264; Damberg v Damberg (2002) 52 NSWLR 492, 529, 530 (Heydon JA). McGinty (n 8) 232 quoting from Posner (n 5) 433.

Do top-down and bottom-up reasoning ever meet?

39

the theory and generate an outcome in each new case as it arises that will be consistent with the theory and with the canonical cases, that is, the cases accepted as authoritative within the theory. The theory need not be, perhaps never can be, drawn ‘from’ the law; it surely need not be articulated in lawyer’s jargon. In bottom-up reasoning, which encompasses such familiar lawyers’ techniques as ‘plain meaning’ and ‘reasoning by analogy’, one starts with the words of a statute or other enactment, or with a case or mass of cases, and moves from there – but doesn’t move far, as we shall see. The top-downer and the bottomupper do not meet.

Posner’s article as a whole does not support the use to which the High Court has put it. For one thing, Posner did not decry top-down reasoning. He pointed out his own association with several top-down theories. And he certainly did not suggest that bottom-up reasoning operates in a vacuum. Indeed, as to bottom-up reasoning, he wrote:86 [T]here isn’t much to bottom-up reasoning. We don’t ever really ‘start’ from a mass of cases or from a statute or from a clause of the Constitution. To read a case, to read a statute, a rule, or a constitutional clause presupposes a vast linguistic, cultural, and conceptual apparatus … [If], as is so common, the case or statute or other enactment is unclear, and maybe even when it seems quite clear, the reader, to extract or more precisely to impute its meaning, must interpret it; and interpretation, we now know, is as much creation as discovery.

Later he stated that:87 even after we acknowledge that bottom-up reasoning is not reasoning but is at best preparatory to reasoning and that legal reasoning worthy of the name inescapably involves the creation of theories to guide decisions, we are left with the question of the appropriate scope of such theories.

Away from the law, ‘top-down’ and ‘bottom-up’ are used to label two types of logical reasoning. Deductive or top-down reasoning works from the more general to the specific. In science or philosophy, the process may, but need not, start at the generality of a theory and then be narrowed to more specific hypotheses. Observations may be collected to test and confi rm (or disprove) the original theory. Inductive or bottom-up reasoning works the other way, moving from specific observations to broader generalizations and theories. Each method has its uses and neither is derided at the expense of the other. In The Ethics of 86

Posner (n 5) 435 (emphasis in original).

87

Ibid 439.

40

Mason

Memory,88 Avishai Margalit referred to this distinction, as it applies to philosophy, as follows:89 There are two styles of philosophers: e.g. philosophers and i.e. philosophers – illustrators and explicators. Illustrators trust, first and foremost, striking examples, in contrast with explicators, who trust, first and foremost, defi nitions and general principles. Explicators may use examples, but their examples are stylized and are more like those that appear after i.e. than the genuine examples that follow e.g. The illustrators, for their part, run the risk of using examples as little anecdotes that serve no philosophical purpose. The dangers of each style in philosophy are clear and almost unavoidable; yet, I believe that style in philosophy matters greatly. When examples are apt, they are illuminations, not just didactic illustrations. When definitions are good, they are explications, not mere stipulations. I see merit in both styles, but in temperament if not by conviction I subscribe to e.g. philosophy.

The law is not observable like nature, and unlike philosophy it refuses to be pushed to logical extremes. It is a system of practical justice. But justice demands levels of certainty and consistency. Like cases should be decided alike and genuine differences given effect. To perceive relevant likenesses or dissimilarities requires organizing principles, theories and concepts, many of them stated in terms of broad generality. It does not follow that those principles, theories and concepts are all-embracing, or unconditional, or timeless. Nor does it follow that judges who apply them are driven by (prohibited) desire for taxonomic purity as distinct from (acceptable) application of traditional common law method and concern for coherence and consistency in the law. Top-down and bottom-up reasoning may in theory be poles apart. But the two concepts inevitably meet in the day-to-day exertions of any conscientious judge, whether or not he or she is prepared to admit it. 88 89

A Margalit, The Ethics of Memory (Harvard University Press, Cambridge MA 2002). Ibid ix.

2 Internationalization or isolation: the Australian cul de sac? The case of contract law Paul Finn

My purpose is to stand back a little and to question the extent of Australia’s participation in what to some are seen today as convergences in the laws and legal systems of the international community.1 I rather suspect my conclusions may be a little surprising. The titles of three recently published articles are presently arresting. The first two are both concerned with significant areas of judge-made law. They are Professor Michael Taggart’s ‘“Australian Exceptionalism” in Judicial Review’2 and the then Justice Michael Kirby’s ‘Overcoming Equity’s Australian Isolationism’.3 The short title of the third, authored by Lisa Spagnolo, is ‘The Last Outpost’.4 It is about Australia’s studied disregard to our cost of the Convention on Contracts for the International Sale of Goods5 and of its jurisprudence. What I have to say betrays a like mix of pessimism and optimism for our law as is conveyed in each of these pieces. I will suggest that there are significant, though I hope not insuperable, barriers to Australian engagement in those areas of international legal thought that have the potential to bear upon the shaping and development of Australia’s common law. I will disregard those parts of the common law that are intrinsically international or transnational in character as, for example, 1

2 3 4

5

Paper originally prepared for the Twentieth Anniversary Symposium, ‘The Internationalisation of Law: Legislating, Decision-Making, Practice and Education’ (Bond University, 2009), and published in M Hiscock and W van Caenegem (eds), The Internationalisation of Law (Edward Elgar, Cheltenham UK and Northampton US 2010). M Taggart, ‘“Australian Exceptionalism” in Judicial Review’ (2008) 36 FL Rev 1. M Kirby, ‘Overcoming Equity’s Australian Isolationism’ (2009) 3 J Eq 1. L Spagnalo, ‘The Last Outpost: CISG Opt Outs, Misapplications and the Costs of Ignoring the Vienna Sales Convention for Australian Lawyers’ (2009) 10(1) Melb J Int’l L 141. (opened for signature on 10 April 1980, entered into force 1 January 1988) 1489 UNTS 3 (‘CISG’).

41

42

Finn

maritime law,6 private international law 7 and, save in relation to the Convention on Contracts for the International Sale of Goods, those areas of statute law that incorporate international conventions. Why select contract law? My reasons for this choice are various. First, obviously, contract is a foundational subject in our law. It is the primary vehicle the law provides for giving legal consequence to our voluntarily assumed relationships and dealings with others. Importantly, it tells us much about what is or is not permissible in how we in this country can conduct ourselves in, or despite, such relationships and dealings. Second, the international dimension of contract is self-evident. It is, for the most part, the glue of international trade and economic relations. Th is international dimension is becoming of increasing importance as international commercial law falls increasingly under the influence of internationally accepted general principles and trade practices and usages, particularly in the context of international commercial arbitration.8 The following is in three parts. The first recounts, briefly, Australia’s journey from legal colonialism to, for the moment, a belated and relatively straitened form of legal nationalism. The second surveys briefly the contemporary international context of contract at least insofar as it evidences internationalizing influences, trends and policy choices and Australian contrasts. The third part suggests present idiosyncrasies in, and distinctive features of, the Australian legal context which may well inhibit our ability or preparedness to locate our contract law in an increasingly instructive international setting.

A.

From legal colonialism to legal nationalism

Aspects of this story have been well told elsewhere.9 I need only highlight the following. 6

7

8

9

See J Allsop, ‘Maritime Law: The Nature and Importance of Its International Character’ (William Tetley Lecture, Tulane University, 15 April 2009). See eg, TS Production LLC v Drew Pictures Pty Ltd (2008) 172 FCR 433 on anti-suit injunctions. See eg, R Goode, ‘International Restatements and National Law’ in WJ Swadling and GH Jones (eds), The Search for Principle: Essays in Honour of Lord Goff of Chieveley (Oxford University Press, Oxford 1999) 46. I would refer in particular to A Mason, ‘The Break with the Privy Council and the Internationalisation of the “Common Law”’ in P Cane (ed), Centenary Essays for the High Court of Australia (LexisNexis, Sydney 2004). See also K Mason, ‘President Mason’s Farewell Speech’ (2008) 82 ALJ 768, 768−9; Kirby (n 3) 29−34. For the colonial period, see P Finn, Law and Government in Colonial Australia (Oxford University Press, Oxford 1987).

Internationalization or isolation

1.

43

The colonial period

Writing in colonial Victoria in 1876, the lawyer TT A’Beckett observed: Our system of jurisprudence corresponds in theory and practice to that of England, and in the administration of justice we have adopted its principles, and given effect to the decisions of its courts.10

England’s common law was the Australian colonists’ inheritance. Though they had some capacity to accommodate that body of law to local conditions and circumstances,11 the local judiciary showed little propensity outside Victoria to do so. While that was unsurprising, it stood in sharp contrast to the extensive innovation and international outlook that was characteristic of much colonial legislation.12 The ‘distant tribunal’,13 the Privy Council was, in any event, the ultimate colonial court of appeal. While its decisions evoked occasional local dissension because of its failure to understand colonial conditions,14 its policy as stated in 1879 in Trimble v Hill15 was that: It is of the utmost importance that in all parts of the Empire where English law prevails the interpretation of that law by the courts should be as nearly as possible the same.16

2.

To 1983

Throughout the first six decades of the twentieth century, the High Court was to insist that Australian courts (including the High Court) ought to follow decisions both of the House of Lords and of the English Court of Appeal.17 The assumption in this was that there was but one common 10 11 12

13 14

15 16

17

TT A’Beckett, ‘A Twenty-Five Years’ Retrospect’ (1876) 1 Melbourne Review 280, 291. See Australian Courts Act 1828 (UK) (9 Geo 4 c 83) s 24. The surviving testament to this is the colonial law library of Victoria’s Attorney-General’s Department now housed in the Law Library of University of Notre Dame in Fremantle. Inglis Clarke’s description at the time of federation. See eg, Jaques v Stafford (1890) 11 NSWLR 127, 133; Tooth v Power (1890) 10 NSWLR 143, 158−9; Peacock v Powell (1886) 7 NSWLR 139, 145. (1879) 5 App Cas 342. Ibid 345. The sad story of the colonists’ attempts to abolish Privy Council appeals on federating has been told by JA La Nauze, The Making of the Australian Constitution (Melbourne University Press, Melbourne 1972). What is truly lamentable is the influence a number of the colonial chief justices were to assert to thwart abolition: see for one account, RB Joyce, Samuel Walker Griffith (University of Queensland Press, Queensland 1984) 211 ff. See generally A Mason (n 9) 69.

44

Finn

law, that of England. Its obvious consequence was that Australia’s judges were not the custodians of the values, choices, empirical propositions and ideology that animated common law doctrine. The Australian judicial function was that of doctrinal technician. Privy Council appeals from all Australian courts were abolished progressively between 1966 and 1986. To use Sir Anthony Mason’s description,18 we had become ‘the masters of our own legal destiny’. What this presaged had already been prefigured in a distinctive trilogy of contract-related equity decisions of the High Court in 1983 – Commercial Bank of Australia Ltd v Amadio,19 Taylor v Johnson,20 and Legione v Hateley21 – which, through the rejuvenated principle of preventing an unconscionable insistence on strict legal rights, gave added impetus in Australian law to the twin themes of controlling the abuse of power and of protecting the vulnerable.22 These decisions are more notable for the reason that not only had they no resonance in decisions of the House of Lords, they struck out in quite new directions.

3.

1983−1995

Much has been written of the evolution in Australia’s common law and legal method from 1983 until the retirement of Mason CJ in 1995.23 Of that latter event, McHugh J was to observe that: When [Mason CJ] left the Court, he had been a party to more judgments making more dramatic changes in the common law than any judge in the history of Australia.24 18 19 22

23

24

A Mason, ‘Future Directions in Australian Law’ (1987) 13 Mon U L Rev 149, 151. 20 (1983) 151 CLR 447. (1983) 151 CLR 422. 21 (1983) 152 CLR 406. I dealt with these matters at some length in P Finn ‘Commerce, The Common Law and Morality’ (1989) 17 MULR 87 and P Finn, ‘Controlling the Exercise of Power’ (1996) 7 Public L Rev 86. I refer, as bookend examples, to C Saunders (ed), Courts of Final Jurisdiction: The Mason Court in Australia (Federation Press, Sydney 1996) and R Gray, The Constitutional Jurisprudence and Judicial Method of the High Court of Australia: The Dixon, Mason and Gleeson Eras (Presdian Legal Publications, Adelaide 2008). I would also note that Sir Anthony Mason was, and remains, a prolific author of extra-curial articles. These provide an important window on his ideas, ideals and purposes. Some number of these are referred to elsewhere in this paper. See also G Lindell (ed), The Mason Papers (Federation Press, Sydney 2007). M McHugh, ‘The Constitutional Jurisprudence of the High Court: 1989−2004’ (Inaugural Sir Anthony Mason Lecture in Constitutional Law, Sydney, 26 November 2004).

Internationalization or isolation

45

This is not the place to examine the dimensions and well-springs of those changes in doctrine and methodology, although it is important to note that they were not unique to Australia.25 For present purposes, though, there are two matters to which I should refer. First, the then members of the High Court quite self-consciously engaged in a process of developing solutions suited to ‘Australian circumstances, needs and values’ rather than, as before, simply embracing ‘ready made solutions from abroad’.26 Inevitably policy considerations were now more openly to be acknowledged as operative factors in judicial decision. Correspondingly, precedent was accorded diminished weight.27 The move was perceptibly one from legal formalism to a species of legal realism.28 The process thus engaged in was Janus-like. While its object was to develop an Australian common law, it was well appreciated both that we were not self-sufficient in legal inspiration and that our legal development was uneven in its range and depth. There was, in consequence, a deliberate resort to comparative developments in other common law jurisdictions notably the US, Canada and New Zealand as well as in England. As Mason CJ was to acknowledge, the contemporaneous expansion in legal publishing and the growing availability of foreign journals etc, facilitated this process.29 English law was no longer privileged: comparative materials were persuasive to the extent that they could persuade. In this sense, the common law was being internationalized and, for a time, it fostered some degree of convergence between jurisdictions. I should add that legal scholarship in Australia began to reflect the same comparative common law trend. Th is again was openly encouraged by Mason CJ.30 The second matter to which I need refer is today of no little importance. It was not assumed in the period of the Mason court that intermediate 25

26 28

29

A like process was occurring in New Zealand and Canada: for New Zealand see P Rishworth (ed), The Struggle for Simplicity in the Law : Essays for Lord Cooke of Thorndon (LexisNexis Butterworths, New Zealand 1997). As Cheryl Saunders has noted: ‘Many of the influences on Australian legal development in the latter part of the 20th century have affected other countries with equal or greater force: the internationalisation of law and strengthening of international norms; the communications revolution; the pressure for a greater measure of popular sovereignty’: C Saunders, ‘The Mason Court in Context’ in Saunders (n 23) 7. A Mason, ‘Australian Contract Law’ (1988) 1 JCL 1, 2. 27 See Gray (n 23) 70. See A Mason, ‘The Evolving Role and Function of the High Court’ in B Opeskin and F Wheeler (eds), The Australian Federal Judicial System (Melbourne University Press, Melbourne 2000) 118−19. This matter is considered in detail in Gray (n 23). See A Mason (n 9) 72. 30 See Mason (n 26) 7.

46

Finn

courts of appeal – or, for that matter, even trial judges in appropriate cases – did not have a law-making role.31 As Kirby J later indicated, 32 intermediate appellate courts then acted on the view that they had a substantive and important role in developing the law. I will return to this matter below.

4.

To the present

It was in a sense predictable that the period immediately following Sir Anthony Mason’s retirement would be one of ‘consolidation’33 and reflection – the more so as the composition of the High Court itself changed markedly. What has since become clear is that there were to be significant discontinuities and that the Court would not be reticent either in declining to build upon, or in departing from, what had so recently preceded it. In one presently important respect there was an obvious, and more exaggerated, continuity. This relates to the Australianization of the common law. A constant refrain in High Court decisions especially since 1995 has been the insistence that there is a ‘common law of Australia’34 and that it is a ‘single and unified one’.35 The most obvious discontinuities have been in methodology, a subject recently analysed by Rachael Gray in The Constitutional Jurisprudence and Judicial Method of the High Court of Australia.36 Though it inevitably suffers from the vice of a generalization when applied to a group of judges collectively, Gray’s conclusion on the last decade – that of the ‘Gleeson Court’ – encapsulates much in what has been said by earlier commentators:37 The Gleeson Court offered a largely untheorised form of legalism that embraced neither the theoretical assumptions of Dixonian legalism nor the realist based jurisprudence of the Mason era.38 31

32 34 35

36 37

38

See Nguyen v Nguyen (1990) 169 CLR 245, 269−70; M McHugh, ‘Law Making in an Intermediate Appellate Court: The NSW Court of Appeal’ (1986−88) 11 Syd L Rev 183, 188. 33 Kirby (n 3) 31−2. G Brennan, ‘Looking at the Future’ in Saunders (n 23). The formula is to be found in over 90 cases since 1995. Cf Stuart v Kirkland-Veenstra [2009] HCA 15 (‘Stuart ’) [102]; Lipohar v The Queen (1999) 200 CLR 485 (‘Lipohar ’) [43] ff. Gray (n 23). See in particular B Selway, ‘Methodologies of Constitutional Interpretation in the High Court of Australia’ (2003) 14 PLR 234, esp 250; L Zines, ‘Legalism, Realism and Judicial Rhetoric in Constitutional Law’ (2002) 5 CLPR 21. See also L Zines, The High Court and the Constitution (5th edn Federation Press, Sydney 2008). Gray (n 23) 78.

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What is readily apparent in High Court decisions of the past decade are (i) a marked preoccupation with doctrine and close doctrinal analysis not overtly influenced by policy considerations; (ii) a corresponding retreat from open consideration of ‘values’ – ‘[l]egal reasoning that commands respect does so upon the basis of adherence to legal principle’;39 (iii) a varying but diminished regard for consequentialist considerations in shaping doctrine;40 and (iv) affording greater weight to precedent. It needs to be emphasized, though, that the renewed emphasis upon doctrine has not precluded innovation. But given innovation is rooted in doctrine, it has a particular orientation which is contrived by doctrinal analysis. The perceived potential of individual doctrines themselves provides the impetus to development. Gone are the imperatives of inspiring ideas: ‘popular sovereignty’, ‘good administration’, ‘fairness’, ‘unjust enrichment’ and the like. To the extent that policy informs judicial reasoning, it is left unspoken. It should be added that, while the level of regard given to the decisions and literature of foreign jurisdictions41 remains relatively similar to that of the Mason era, it too is markedly doctrinal in character. I would note in passing of the Taggart and Kirby articles I mentioned at the outset, that it is probably the inexorable consequence of this rigid technique of logical doctrinal analysis that has isolated both Australian administrative law (in its common law form) and Australian equity from the thought of much of both the common law and civil law worlds.42 There is one additional matter of methodological technique to which I should refer. Of recent times the High Court has sought to put on a more principled basis the manner in which statutes may be used analogically in the development of the common law.43 Before statutes will be so used it will be necessary to demonstrate a consistent pattern of legislation in the States (or, where relevant, in the Commonwealth in matters of federal 39

40

41

42 43

See M Gleeson, The Rule of Law and the Constitution (Boyer Lectures, ABC Books 2000) 97−8; cf MA Eisenberg, ‘The Theory of Contracts’ in P Benson (ed), The Theory of Contract Law: New Essays (Cambridge University Press, Cambridge 2001) 209: ‘No significant doctrinal proposition can ultimately be justified either on the ground that it is self-evident or on the basis of another doctrinal proposition. Doctrinal propositions can ultimately be justified only by social propositions.’ See Re Wakim, ex p McNally (1999) 198 CLR 511; but contrast Re Governor, Goulburn Correctional Centre, ex p Eastman (1999) 200 CLR 322, [9]. Again, mostly common law. But see, refreshingly, the reference to German law in Stuart (n 35) [141]. See nn 2 and 3. See Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49, 61−3.

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jurisdiction) before the common law can be developed so as to parallel or harmonize with that statutory pattern.44 In relation to the development of contract law, such a pattern does exist in provisions of the Trade Practices Act 1974 (Cth) and State fair trading acts. Given that, in the last 30 years, much of the creative burden of what is in essence contractual litigation has been made to fall upon provisions of the Trade Practices Act (and its State counterparts) and especially upon section 52 and the unconscionable dealings provisions,45 it would seem at least that the qualifying conditions for bringing significant parts of Australian contract law into harmony with the requirements of the Trade Practices Act as it bears upon contractual behaviour would have been satisfied. To take this step, though, will require an open embrace of legislative policy as encapsulated in such statutes and its infusion into the policy informing contract doctrine. It would also bring us closer to some of the ideas that animate the international themes to which I will refer. I earlier mentioned the role of intermediate courts of appeal in lawmaking. It is the case that such courts had over time gone some distance in settling (if not necessarily honouring) the principles they would apply both in departing from earlier decisions of their own particular court, and in following or refusing to follow, decisions of an intermediate court of another Australian jurisdiction.46 What, though, has now been made abundantly plain by the High Court are the rules of precedent and stare decisis henceforth to be followed. These, it is fair to say, have been greeted with a deal of dismay.47 They bear directly upon what I have to say. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd,48 the Court in a joint judgment indicated: Intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is plainly wrong. Since there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non-statutory law.49 44

45 46

47

I refer for convenience to P Finn, ‘Statutes and the Common Law’ in S Corcoran and S Bottomley (eds), Interpreting Statutes (Federation Press, Sydney 2005) 61−2. See ss 51AA, 51AB and 51AC. See eg, N O’Bryan and C Young, ‘A View from Outside the Vortex on Keith Mason’s Retirement Speech and the Australian Doctrine of Judicial Precedent’ (2008) 82 ALJ 771. See K Mason (n 9). 48 (2007) 230 CLR 89. 49 Ibid [135].

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The Court had earlier said that an intermediate court of appeal should not depart from ‘long established authority’ or ‘seriously considered dicta of a majority of [the High Court]’.50 The Australian way is not to be one in which the potential for diversity in ideas below the High Court is to be fostered. Th at potential, I have always considered, was a distinct virtue of a system of federalism having its ultimate court of appeal as both a unifying force and an arbiter of difference. 51 Such was Australia’s advantage over England. The rejection of this has quite obvious implications for Australian judicial scholarship.

B.

The international setting

Twentieth-century developments affecting contract law outside Australia provide a necessary backdrop to what I have to say. The emphasis will be upon harmonization, modernization and, to a lesser extent, uniformity of contract laws. Though they are of particular significance to how Australian contract law might evolve, I will here say little specifically about the two monumental works of United States contract law, the Restatement (Second) of the Law of Contracts,52 and the Uniform Commercial Code (‘UCC’).53 Their influence, though, is writ large in the developments to be described. I should, nonetheless, emphasize three of their characteristics. First, the Restatement is a ‘soft law’ instrument. It propounded general principles of contract law, albeit principles which, where appropriate, have incorporated analogically legislative changes in contract law (including the ‘profound impact’ of the UCC).54 The Restatement ’s purpose was to harmonize, not reconcile, the separate contract laws of the then 48 States of the USA. This necessarily involved selection and innovation. As one contemporary commentator observed: On many questions of law there either is no weight of authority, or none established beyond the peradventure of a doubt. In such a case one chooses the law that one thinks ought to be.55

50 52

53

54 55

Ibid [134]. 51 Cf Lipohar (n 35) [45]. American Law Institute, Restatement (Second) of the Law of Contracts (American Law Institute Publishers, St Paul 1981) (‘Restatement ’). The American Law Institute and National Conference of Commissioners on Uniform State Law, Uniform Commercial Code (2007 edn, Thomson/West). See Restatement (n 52) §2. W Patterson, ‘The Restatement of the Law of Contracts’ (1933) 33 Colum L Rev 397, 400.

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Second, the UCC was formulated designedly to be legislative in character. Its underlying purposes and policies, as declared in article 1–103, were (inter alia): (1) to simplify, clarify, and modernize the law governing commercial transactions; (2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties. Most of its provisions, though, are not mandatory and can be varied or displaced altogether.56 Third, both instruments were prepared by distinguished scholars. Their work involved wide consultation and was subjected to rigorous examination by experts, judges and practitioners.57 That is how the Americans do things. It is how the major continental European countries do things. It is not how we do things. Now let me turn to modern comparative law. From the late nineteenth century, a staple of comparative legal scholarship has been the study of contract law in general and of the similarities and dissonances between the common law and civil law systems in particular. One manifestation of this – driven more by the practical needs of the business community – has been the pursuit of some level of harmonization of the rules of contract which could be expressed in international or transnational instruments. 58 An early participant in that endeavour was the International Institute for the Unification of Private Law (UNIDROIT).59 The unification of the law of international sales was an aspect of its early activities and was reflected in its conventions on the international sale of goods. These were superseded by the United Nations Commission on International Trade Law (UNCITRAL) 1980 Convention on Contracts for the International Sale of Goods (‘CISG’)60 56

57

58

59

60

See JJ White and RS Summers, Hornbook on the Uniform Commercial Code (5th edn West Group, Eagan 2000) 8. In the case of the UCC, see the three Reports of the Permanent Editorial Board for the Uniform Commercial Code reproduced in the 2007 Edition XV−XXV (Thomson, West 2007). On the above see generally, EA Farnsworth, ‘Comparative Contract Law’ in R Zimmerman and M Reimann (eds), Oxford Handbook of Comparative Law (Oxford University Press, Oxford 2006) 900−3. Th is is an international organization created by a statute of the League of Nations in 1926. Australia is one of its now 61 members drawn from all over the world. On UNIDROIT see generally ‘UNIDROIT’ in International Encyclopaedia of Laws, Intergovernmental Organisations (Vol 2) (Kluwer Law International, The Hague 2005) [2]−[39]. See P Schlechtriem and I Schwenzer (eds), Commentary on the UN Convention on International Sale of Goods (2nd edn Oxford University Press, Oxford 2005).

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though, as has been acknowledged, they clearly influenced ‘the basic structure and key concepts’ of the CISG.61 There are now 73 parties to the CISG including Australia. The two notable abstentions amongst Australia’s main trading partners are the United Kingdom and India.62 The Convention has been incorporated into Australian Law through State and Territory legislation.63 The object of the CISG was to provide a neutral, uniform and harmonized international sales law. As with the UCC, the CISG allows parties to derogate from its provisions in whole or in part. According to Spagnolo, Australia has a ‘culture’ of opting out of the CISG. There are only thirteen Australian cases which make mention of the Convention.64 Unsurprisingly, the CISG has had barely perceptible impact on Australian contract jurisprudence.65 Nonetheless it has been commented, perhaps optimistically, that: it is to be expected that because the Convention operates in conjunction with Australian contract law it may lead to a reconsideration of some aspects of our (domestic) law.66

There are two features of the CISG to which reference should be made given what I have later to say. First, it does not impose a duty of good faith and fair dealing as such upon parties to contracts to which it applies, the only explicit reference to ‘good faith’ being the article 7(1) requirement that, in the interpretation of the CISG, regard is to be had ‘to the need to promote uniformity in its application and the observance of good faith in international trade’.67 Second, the CISG reflected in some degree the compromises necessarily to be expected of an international instrument prepared in the form of a convention.68 61 62

63 65

66

67 68

Ibid 1−2. On the UK attitude, see Department of Trade and Industry, United Nations Convention on Contracts for the International Sale of Goods (the Vienna Sales Convention): A Consultation Document (October 1997). Note also that Japan ratified the Convention in August 2008. See generally Spagnolo (n 4). 64 They are analysed by Spagnolo, ibid. Notwithstanding notable Australian scholarly contributions: see eg, J Felemegas (ed), An International Approach to the Interpretation of the United Nations Convention of Contracts for the International Sale of Goods (1980) as Uniform Sales Law (Cambridge University Press, Cambridge 2007). J Carter, E Peden and GJ Tolhurst, Contract Law in Australia (5th edn LexisNexis Butterworths, Sydney 2007) [1−20]. See Schlechtriem and Schwenzer (n 60) 1−5; Felemegas (n 65) 45−8. As MJ Bonell observed in An International Restatement of Contract Law: The UNIDROIT Principles of International Commercial Contracts (3rd edn Transnational Publishers, New York 2005) 303: ‘[T]he option in favour of uniform legislation inevitably restricted

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In 1971, UNIDROIT returned again, though with quite some diffidence, to international commercial contract law. What it now proposed was the preparation of a restatement of principles of contract law, having a like harmonization purpose as the Restatement, though in this instance, it was harmonization of the domestic laws of nations. Its ultimate product, a ‘soft law’ instrument, was the Principles of International Commercial Contracts (‘UNIDROIT Principles’).69 A parallel initiative to prepare a restatement of European (including English) contract law was commenced in the 1980s by a private group chaired by the distinguished Danish comparatist, Ole Lando. It resulted in the publication between 1995 and 2003 of the Lando Commission’s threevolume Principles of European Contract Law (‘PECL’).70 Again, as with UNIDROIT’s Principles, it was intended to be ‘soft law’ and adopted the style of presentation of the Restatement. Both the UNIDROIT Principles and PECL were prepared by experts (scholars and practitioners) who, importantly, did not represent their home country. In UNIDROIT’s case the experts were drawn from five continents. There is considerable similarity between the two sets of Principles,71 although UNIDROIT deals only with commercial contracts while PECL’s coverage encompasses consumer contracts as well. Their similarity, though, is unsurprising. Both were influenced markedly by the CISG.72 I should further note in passing that PECL has been advanced as a prominent example of harmonization

69

70

71

the drafters’ room for manoeuvre. Due to the differences in legal tradition and at times, even more significantly, in the social and economic structures prevalent in the States participating in the negotiations, some issues had to be excluded at the outset from the scope of the envisaged instrument, while with respect to a number of other items the confl icting views could only be overcome by compromise solutions leaving matters more or less undecided.’ UNIDROIT, Principles of International Commercial Contracts, (Rome, 1994); Principles of International Commercial Contracts 2004 (Rome 2004). The Principles, in both editions, have generated a large and diverse international literature; see eg, Bonell (n 68) which refers to much of the literature: MJ Bonell (ed), The UNIDROIT Principles in Practice : Caselaw and Bibliography on the UNIDROIT Principles of International Commercial Contracts (2nd edn Martinus Nijhoff, The Hague 2006); S Vogenauer and J Kleinheisterkamp, Commentary on the Unidroit Principles of International Commercial Contracts (PICC) (Oxford University Press, Oxford 2009); M Heideman, Methodology of Uniform Contract Law (Springer, Berlin 2007); D Oser, The Unidroit Principles of International Commercial Contracts: A Governing Law? (Martinus Nijhoff, The Hague 2008). There is a significant number of articles on the Principles published in the Uniform Law Review. O Lando and H Beale (eds) Principles of European Contract Law, Parts I and II (Kluwer Law, The Hague, 2000); Part III (Kluwer Law, The Hague, 2003). See Bonell (n 68) ch 8. 72 Ibid ch 7.

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in the debate within the European Union on the desirability of a new European civil code.73 For present purposes, that debate and its possible denouement is another story.74 I will later return to the UNIDROIT Principles and PECL but before doing so, I should comment briefly on two further and distinct influences upon how contract law is being shaped internationally which are relevant to the burdens of this chapter. First, and for a variety of reasons which are unnecessary to explore here, very many nations across the world have sought to modernize, or are in the process of modernizing, their contract laws75 and, in the case of members of trading blocs, harmonizing them as well. I need only give one example to make the readily demonstrable point that the UCC, the CISG and the UNIDROIT Principles have been, and are, perceptible influences in these processes of modernization and harmonization.76 In 1999, the People’s Republic of China passed a new Contract Law.77 The Law unified what were previously disparate contract laws and ended the practice (which prevails in Australian sales law where the CISG applies) of treating domestic and foreign contracts differently. In his Introduction to the 1999 translation of the Contract Law, Wei Luo commented on the genesis of, and influences upon, this Law in the following terms: After the twenty years of economic reform, the Chinese economy has been integrated with the world economy. Chinese legislators realized that they 73

74

75

76

77

PECL has been incorporated into what is described as the Draft Common Frame of Reference (or ‘DCFR’) for such a code: see C von Bar, E Clive and H Schulte Nölke (eds), Principles, Definitions and Model Rules of European Private Law: Draft Common Frame of Reference (DCFR) (interim outline edn Sellier, Munich 2008). For a not unexpected UK assessment of the DCFR which provides a history of its genesis and changing purposes, see S Whittaker, The ‘Draft Common Frame of Reference’: An Assessment (November 2008) at http://www.justice.gov.uk/publications/eu-contract-law-common-frame-reference.htm; S Whittaker, ‘A Framework of Principle for European Contract Law’ (2009) 125 LQR 616. See eg, R Zimmerman, ‘Comparative Law and the Europeanization of Private Law’ in Zimmerman and Reimann (n 58). At the moment, in our region, Japan, Indonesia and South Korea are engaged in this process. They may as well be developing their own symbiotic relationship with the latest instrument, the UNIDROIT Principles, acting as a complement or as a supplement to the other two: see Bonell (n 68) 269 esp fn 23 (on the UCC) and 314–4 (on the CISG). UNCITRAL, while commending the use of the Principles ‘for their intended purposes’, has not unqualifiedly taken the view that the Principles can be taken as expressing the lex mercatoria. For instances where the Principles have influenced the modernization or harmonization of contract laws, see Bonell (n 68) 268–70 and the Uniform Law Review articles footnoted there. See also Comment 2 to art 1–302 of the UCC. For a translated version see L Wei (ed), The Contract Law of the People’s Republic of China (Chinese Law Series Vol 2) (William S Hein & Co, New York 1999).

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Finn had to adopt some general contract principles that are accepted internationally. Therefore, the new contract law is incorporated with many of contract principles and legal terms of civil law, some of the contract principles of common law, and some terms used in the United Nations Convention on the International Sale of Goods and in the American Uniform Commercial Code. The major principles adopted in the new contract law are: equality, fairness, honesty and faithfulness, and limited freedom of contract.78

The Introduction could as well have referred to the influence of the UNIDROIT Principles, the extent of which is palpable in the Law’s ‘General Principles’.79 The second international influence of note is that of international commercial arbitration. All I wish to say here can be put shortly. First, as Roy Goode crisply put it, ‘contract law lies at the heart of international commercial arbitration’;80 second, such arbitration is proving a remarkably powerful motive force in developing ‘principles and rules of transnational commercial law’ with a corresponding diminution in the role of private international law; and third, it is said, we again are witnessing ‘the evolution of a new lex mercatoria, albeit one the boundaries and content of which are uncertain and controversial’.81 Turning now to what can be drawn from the various materials and developments to which I have referred, the first and most obvious comment to make is that we now have available to us a remarkable body of accessible, coherent and instructive source material on contract principles which, in the case of CISG, the UNIDROIT Principles, PECL and, in some degree, the UCC, transcend the common law-civil law divide. Second and more importantly what is clearly discernible in all of these, as well as in the national systems they have influenced, are themes and policy choices which have secured, or else are securing, wide acceptance as expressions of appropriate standards and practices in international 78

79

80 81

Ibid 12. The ‘major principles’ referred to are found in arts 3–6 and 8 of the Law. For an overview of Chinese contract law, see P Blazey and K Chan (eds), The Chinese Commercial Legal System (LawBook Co, Pyrmont 2008) ch 8. See Y Zhang and D Huang, ‘The New Contract Law in the People’s Republic of China and the UNIDROIT Principles of International Commercial Contracts: A Brief Comparison’ (2000) 5 Unif L Rev 429. Goode (n 8) 46, 47. I would note that for the purposes of art 28.1 of the 1985 UNCITRAL Model Law on International Commercial Arbitration, the reference to ‘rules of law’ encompasses a reference to the UNIDROIT Principles. The Model Law has the force of law in Australia: see International Arbitration Act 1974 (Cth) s 16.

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and national contract law systems.82 As Lord Steyn observed,83 from such instruments one can discern a ‘common core of solutions for issues of contract law’. Because they usefully illustrate what is idiosyncratic, different and wanting in Australian law, I will refer to three themes and policy choices revealed in these instruments. In providing illustrations I will in the main rely, as a matter of convenience, upon the UNIDROIT Principles. I preface what I have to say with two matters of comment. First, one must acknowledge that significant doctrinal differences exist between the contract laws of common law and of civil law systems and that such differences can constitute impediments to the transposition to a common law system of a concept from the civil law, or from an international instrument utilizing that civil law concept. Simply by way of illustration, the UNIDROIT Principles article 3.2 provides that: A contract is concluded, modified or terminated by the mere agreement of the parties without further requirement.84

There is no requirement of consideration such as generally obtains in common law systems.85 But as is well recognized in common law systems, the impediment posed by the consideration requirement becomes most apparent in practice in relation to modification (or variation) of a contract and especially of long-term or complex contracts – hence the attempts to manufacture consideration or else the resort to such expedients as reliance upon the doctrines of estoppel, election or waiver where contracting parties have apparently departed from the strict terms of their contract.86 It is unsurprising that the consideration requirement for agreements to modify has been criticized;87 has been abolished in the UCC in relation

82

83

84 85

86

87

See MP Furmston (ed), The Law of Contract (3rd edn LexisNexis Butterworths, London 2007) [1.141]–[1.164]. J Steyn, ‘A Kind of Esperanto?’ in P Birks (ed), The Frontiers of Liability (Vol 2) (Oxford University Press, Oxford 1994) 45. PECL art 2:101 is similar in effect. For the varying requirements in the countries of the European Union, see Lando and Beale, Principles of European Contract Law: Parts 1 and II (n 70) 139–43. See eg, GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2000) 128 FCR 1 (‘GEC Marconi ’) [226]–[231] (contract of variation), [352]–[390] (election), [424]– [466] (estoppel) and [467]–[477] (waiver). For a recent reaffi rmation by the High Court of the need to which I have referred, see Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 251 ALR 322 (‘Agricultural and Rural Finance ’). See NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th Australian edn LexisNexis Butterworths, Chatswood 2008) [4.35]; Farnsworth (n 58) §4.21–§4.22.

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to contracts for the sale of goods;88 and has no place in relations to sales governed by the CISG.89 The second, prefatory comment is this. The provisions of the CISG,90 the UCC,91 the UNIDROIT Principles92 and PECL93 can be excluded, modified or varied, subject to certain stipulated exceptions.94 This facility highlights both that the provisions of these instruments have the character of default rules and that the instruments themselves place a high value on party autonomy, albeit not an unqualified one.95 To enlarge slightly on the utility to Australian practitioners of default rules to be found in international and foreign laws, it should be appreciated that these are a rich source of model clauses available to be incorporated directly into Australian contracts.96 I would instance, for example, the UNIDROIT Principles’ provisions on ‘Hardship’97 and ‘Force Majeure’98 and §314 of the German Civil Code (Bürgerliches Gesetzbuch) (BGB) on ‘Termination of Contracts for Just Cause’.99 Of the themes and policy choices evident in these instruments which I wish to emphasize, the fi rst is that of good faith and fair dealing. The UCC, the UNIDROIT Principles and PECL each impose a mandatory duty of good faith and fair dealing on contracting parties,100 as does

88

89 92 94

95 96 97

98

99

100

UCC art 2–209(i): ‘An agreement modifying a contract within this Article needs no consideration to be binding.’ 91 See CISG art 29(i). 90 See ibid art 3. UCC §1–302. 93 UNIDROIT Principles art 1.5. PECL art 1.102. In the UCC, UNIDROIT Principles and PECL, one such exception, I would emphasize, is the duty of good faith and fair dealing. See UCC §1–302; UNIDROIT Principles art 1.7, and PECL art 1:201. On party autonomy see eg, UNIDROIT Principles art 1.1 and PECL art 1:102. See D Robertson, ‘Force Majeure Clauses’ (2009) 25 JCL 62, 69–73. UNIDROIT Principles art 6.2. For a discussion of this article, see AD Doudko, ‘Hardship in Contract: The Approach of the UNIDROIT Principles and Legal Developments in Russia’ (2004) Unif L Rev 483. UNIDROIT Principles art 7.1.7; and see C Brunner, Force Majeure and Hardship Under General Contract Principles (Kluwer Law International, The Hague 2009). A typical instance of ‘just cause’ is irreparable breakdown in mutual trust and confidence between parties to a long-term contract. UCC §1–304. ‘Good faith’ is defi ned in UCC §1–201(b)(20); UNIDROIT Principles art 1.7; PECL art 1:201. The good faith requirement of art 7 of the CISG is primarily an interpretation provision, but because it also has a gap-fi lling function – see Schlechtriem and Schwenzer (n 60) 6–8 – it has been suggested that it functions in essentially the same way as UNIDROIT Principles art 1.7. See Felemegas (n 65) 45–8; J Lookofsky, Understanding the CISG: A Compact Guide to the 1980 United Nations Convention on Contracts for the International Sale of Goods (3rd worldwide edn Kluwer Law International, The Hague 2008) §2.10.

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the Restatement101 and, for example, the Contract Law of the People’s Republic of China102 and the legal systems of almost all member States of the European Union.103 Its foothold in Australian law in contrast is uneasy.104 I should acknowledge immediately that the scope and depth of this duty varies significantly both between instruments and between national systems. To illustrate the point, the UNIDROIT Principles article 1.7(1) provides: Each party must act in accordance with good faith and fair dealing in international trade.

The UCC’s §1–304, by way of contrast, stipulates: Every contract or duty within [the UCC] imposes an obligation of good faith in its performance and enforcement.

‘Good faith’ in turn is defi ned to mean ‘honesty in fact and the observance of reasonable commercial standards of fair dealing’.105 Within its particular province, the UNIDROIT provision is clearly wider and more fundamental in character than that of the UCC. As the comments to article 1.7 indicate, while the principle of good faith informs many of the provisions of the UNIDROIT Principles, the article makes clear that: even in the absence of special provisions in the Principles the parties’ behaviour throughout the life of the contract, including the negotiation process, must conform to good faith and fair dealing.106

As there is now a vast English language literature on good faith in national and international settings, I will limit what I have to say upon it to a few comments which, it seems to me, are apposite given the reticent state of Australian law on this subject. I begin with the proposition that, if contract as an institution is to have integrity, if Australian contract law is to maintain its standing in the global arena, it must, in my view, have effective legal safeguards against undue exploitation and advantage-taking in 101 103

104 105 106

Restatement (n 52) §205. 102 In art 6. See Wei (n 77). See Lando and Beale, Principles of European Contract Law: Parts I and II (n 70) 116–19; R Zimmerman and S Whittaker, Good Faith in European Contract Law (Cambridge University Press, Cambridge 2000). See P Finn, ‘Good Faith and Fair Dealing: Australia’ (2005) NZ Bus Law Q 378. UCC art 1–201. Contrast the Official Comment to §1–304 of the UCC, which makes plain that the provision does not create a separate duty of fairness and reasonableness which can be independently breached.

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contract formation. It must secure fair dealing in contract performance and enforcement. The need for such safeguards and standards, as I have indicated, is widely accepted internationally in international instruments and in civil and common law countries. There are four specific applications of the good faith principle in the UNIDROIT Principles to which it is instructive to refer. They are in the main replicated in provisions in PECL. My reasons for labouring good faith in particular are to provide both some sense of its burden and some appreciation of its coherence in transnational commercial law. The first two can be mentioned together. The one – on inconsistent behaviour – should come as no surprise to an Australian audience, save that it involves that form of creativity that some would describe as the ‘ fusion fallacy’; the other – on negotiations in bad faith – involves essentially tortious behaviour and in our law would be caught, if at all, by fraud, equitable estoppel or by the misleading or deceptive conduct provisions of section 52 of the Trade Practices Act 1974 (Cth).107 Article 1.8 (Inconsistent behaviour) A party cannot act inconsistently with an understanding it has caused the other party to have and upon which that other party reasonably has acted in reliance to its detriment. Article 2.1.15 (Negotiations in bad faith) (1) A party is free to negotiate and is not liable for failure to reach an agreement. (2) However, a party who negotiates or breaks off negotiations in bad faith is liable for the losses caused to the other party. (3) It is bad faith, in particular, for a party to enter into or continue negotiations when intending not to reach an agreement with the other party.108

The third noteworthy application of good faith relates to interpretation. What is of interest here are the interpretative criteria. The basic rule of interpretation is primarily subjective: a contract is to be interpreted according to the common intention of the parties and if such intention cannot be established, the contract is to be interpreted according to the meaning that reasonable persons of the same kind as the parties would 107

108

See generally J Dietrich, ‘Classifying Precontractual Liability: A Comparative Analysis’ (2001) 21 LS 153. UNIDROIT Principles art 2.1.15. PECL art 2:301 has a similar provision.

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give to it in the circumstances.109 Th is is not our objective theory of contract, but the difference does not matter for present purposes. What is noteworthy is that in applying that basic rule, article 4.3 requires that: regard shall be had to all the circumstances, including (a) preliminary negotiations between the parties; (b) practices which the parties have established between themselves; (c) the conduct of the parties subsequent to the conclusion of the contract; (d) the nature and purpose of the contract; (e) the meaning commonly given to terms and expressions in the trade concerned; (f) usages.110

The CISG article 8(3) and article 5:102 of PECL are to like effect. Despite the welcome advances that have recently been made in Australia’s principles of contract interpretation,111 the departure in article 4.3 from what is permissible in our law is as marked as it is, in my respectful view, commendable. The orthodoxy in this country – and the orthodoxy recently reaffi rmed in English law112 – is that the negotiations of the parties prior to their contracting and their statements of their subjective intentions are, as a general rule, excluded by the parol evidence rule and cannot be used in the interpretation of the contract.113 Given the recent decision of the House of Lords, I would note without disrespect that this rule does not as of course commend itself in all parts of the common law world and, in particular, in parts of the United States.114 I would comment that in a case where there are both a dispute as to whether the contract is or is not partly oral and claims as well of misleading or deceptive conduct in the negotiations for the contract, the evidence 109 111

112 113

114

See UNIDROIT Principles arts 4.1 and 4.2. 110 Ibid art 4.3. Especially in relation to purposive and contextual considerations: see Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, [22]; see generally D McLauchlan, ‘Plain Meaning and Commercial Construction: Has Australia Adopted the ICS Principles’ (2009) 25 JCL 7; J Steyn, ‘The Intractable Problem of the Interpretation of Legal Texts’ (2003) 25 Syd L Rev 5, esp 10. See Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 3 WLR 267. See generally K Lewison, The Interpretation of Contracts (4th edn Sweet & Maxwell, London 2006) 3.08. See Restatement (n 52) §214(c) and generally Farnsworth (n 58); Yoshimoto v Canterbury Golf International Ltd [2001] NZLR 523, [76]–[78].

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of the parties’ negotiations can be admitted on those issues and can result in the court obtaining an informed appreciation not only of the actual object and intent of the contract itself but also of individual clauses of it. Where it is found that the contract is, in fact, wholly written, to require the parol evidence rule to be applied to the construction of the contract in disregard of that informed appreciation does sit rather oddly with the concept of party autonomy. This country’s law has recently been settled on whether postcontractual conduct can be used as an aid to construction of a written contract. It cannot.115 The criticisms of this view have, in the main, been directed at its inflexibility particularly in relational contract settings.116 Speaking extra-curially of the exclusion from consideration of the parties’ post-contractual conduct and of article 4.3 (and its CISG equivalent), Lord Steyn made the now well-known comment:117 Business people and, for that matter, ordinary people, simply do not understand a rule which excludes from consideration how the parties have in the course of performance interpreted their contract. The law must not be allowed to drift too far from the intuitive reactions of justice of men and women of good sense: the rule about subsequent conduct may have to be re-examined.

The fourth, presently noteworthy, good faith application relates to the implication of terms in article 5.1.2 of the UNIDROIT Principles.118 Having indicated (in article 5.1.1) that the contractual obligations of the parties may be ‘expressed or implied’, article 5.1.2 provides: Implied obligations stem from (a) the nature and purpose of the contract; (b) practices established between the parties and usages; (c) good faith and fair dealing; (d) reasonableness.

The approach here to implication (as in PECL’s provision to relatively similar effect)119 is to the ‘sources of implied obligations’. This is far removed 115

116 117 118

119

Agricultural and Rural Finance (n 86) at [35] and [163]; see generally Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at [306]–[328]. See eg, GEC Marconi (n 86) [351]. See also UNIDROIT Principles art 4.3. Steyn (n 111) 10. There is also a provision for supplying omitted terms: UNIDROIT Principles art 4.8. Both provisions deal essentially with the same subject-matter: see Vogenauer and Kleinheisterkamp (n 69) 534–9. PECL art 6:102. See also Lando and Beale, Principles of European Contract Law: Parts I and II (n 70) 305.

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from our own approach. I would suggest, though, that to some degree we use these very same sources but we conceal this with remarkably arcane tests of implication. The second general theme manifest in the instruments considered in this paper is the significance accorded to ‘practices and usages’. The CISG,120 the UNIDROIT Principles,121 and PECL,122 for their respective purposes, have kindred general provisions dealing with practices and usages. The UCC’s §1–303, though more detailed, is relatively similar in scope and purpose. The UNIDROIT Principles article 1.9 provides: (1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. (2) The parties are bound by a usage that is widely known to and regularly observed in international trade by parties in the particular trade concerned except where the application of such a usage would be unreasonable. My reason for emphasizing such provisions is that they give substance to the practice and usage criteria used both in interpretation and in the implication of terms.123 Section 1–303(d) of the UCC explicitly acknowledges this. The third theme is that of ‘policing against unfairness’.124 It should be indicated at the outset that, in this respect, the CISG is exceptional in that it was not designed to police sales agreements for unfairness.125 This said, the Restatement, the UCC and the UNIDROIT Principles are replete with provisions (predictable and novel) which are designed in a variety of ways to relieve against unfairness manifest both in bargaining behaviour and in the substance of the agreement or aspects of it. Despite their interest they are too numerous to mention. However, there are several matters of substance to which I should refer. The first is that PECL alone makes general provision for unfair terms, albeit limited to unfair terms not individually negotiated. Because of the proposals in Australia for national legislation on such terms,126 the provisions of PECL’s article 4:110 are worthy of note – the more so because, unlike the Australian proposal, 120 123 124 125 126

CISG art 9. 121 UNIDROIT Principles art 1.9. 122 PECL art 1.105. See above UNIDROIT Principles arts 4.1.3 and 5.1.2. This apt description is drawn from Bonell (n 68) 151. See also Farnsworth (n 58) ch 4. Cf CISG art 4. See Trade Practices Amendment (Australian Consumer Law) Bill 2009 (Cth) Sch 1, Pts 1 and 2.

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they more closely harmonize with principles of contract that are widely accepted internationally. Article 4:110: Unfair terms not individually negotiated (1) A party may avoid a term which has not been individually negotiated if, contrary to the requirements of good faith and fair dealing, it causes a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of that party, taking into account the nature of the performance to be rendered under the contract, all the other terms of the contract and the circumstances at the time the contract was concluded. (2) This Article does not apply to: (a) a term which defi nes the main subject matter of the contract, provided the term is in plain and intelligible language; or to (b) the adequacy in value of one party’s obligations compared to the value of the obligations of the other party.

As the comment to this article indicates, it extends the scope of application of the general clause of the EC Council Directive 93/13 of 5 April 1993 on unfair terms in consumer contracts127 to commercial contracts and contracts between private persons. I would add that mercifully the present Australian bill retreats from what was proposed in the Exposure Draft which extended to business-to-business transactions. I would note additionally PECL in article 4:109 (excessive benefit or unfair advantage), the UNIDROIT Principles in article 3.10 (gross disparity), the UCC in §2–302 (unconscionable contract or term), and the Restatement §208,128 all proscribe contracts and terms which involve gross or unconscionable advantage taking. The next matter of substance to be mentioned, which is reflected in the four provisions I have just referred to, relates to adaptation of a contract. This is best illustrated in the UNIDROIT Principles’ article 3.10. It provides that a party may avoid a contract or a term if, at the time of the conclusion of the contract, the contract or term unjustifiably gave the other party an excessive advantage. It goes on: (2) Upon the request of the party entitled to avoidance, a court may adapt the contract or term in order to make it accord with reasonable commercial standards of fair dealing. (3) A court may also adapt the contract or term upon the request of the party receiving notice of avoidance, provided that that party informs the other party of its request promptly after receiving such notice and before the other party has reasonably acted in reliance on it. 127

[1993] OJ L95/29.

128

See generally Farnsworth (n 58) §4.28.

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Both PECL and the UNIDROIT Principles in their respective innovative provisions on contractual hardship129 give a similar power to terminate or to adapt a contract where renegotiation has failed to produce a contract variation. What I would emphasize about these powers to adapt is that they are aspects of a larger policy to be found to varying degrees in the CISG, the UCC and the two sets of Principles, of favouring the preservation of a contract and its performance over facilitating its termination. Distinctly, but consistent with this policy of ‘ favor contractus’,130 express provision is made in all four instruments permitting a party in breach to cure its non-performance.131 However, to revert to powers to adapt contracts, what I wish to emphasize is that they are not novel and they are well accepted in international instruments. The reason for my emphasis is that Australian courts have far more wide-ranging powers to adapt contractual provisions under, for example, sections 87(2)(b) and 87(3) of the Trade Practices Act. These provisions have been remarkably underused.132 While there may be a variety of reasons to account for this, one, I would suggest, is the absence of ‘ favor contractus’ as an informing idea in Australian contract doctrine. To conclude what I have to say about international and comparative contract law, it is in my view fair to say that our common law stands at quite some remove from the converging bodies of law with which I have been concerned. The comparison is, in a sense, unfair because it is being made between judge-made law and instruments (whether or not statutory) prepared by experts over years which have been subject to rigorous review. Necessarily they reflect a coherence and betray a consistency in informing ideas to which the common law can hardly aspire. More importantly for present purposes, if there continues to be a gradual convergence of the contract laws of the civilian and common law systems133 that now is commonly noted, and if instruments such as the CISG, the UNIDROIT Principles and PECL continue to provide guidance in the modernization and harmonization of national and transnational contract laws, those instruments seem likely in quite some degree to embody the future with which Australian contract law will inevitably have to contend. For this reason I return to considering matters Australian. 129 130 131 132

133

PECL art 6:111; UNIDROIT Principles art 6.2.1. See Bonell (n 68) 102–26. CISG art 48; UCC §2–508; UNIDROIT Principles art 7.1.4; PECL art 8:104. See BG Donald and JD Heydon, Trade Practices Law (Vol 2) (Law Book, looseleaf) [18.1934]–[18.1935], [18.1980]. Cf Farnsworth (n 58).

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C.

An Australian response?

It is unreasonable and unrealistic to expect the High Court systematically to renovate Australian contract law. That is beyond its function and its capacity. In any event, there is a range of renovations which probably could and should only be secured through legislation. This is particularly so where, as with consumer protection measures, inroads are to be made into party autonomy. It is reasonable, though, to expect the Court when suitable opportunities are presented, to rise above the making of mere doctrinal adjustments and to provide appropriate bearings for our contract law in the modern world. There are, I consider, real risks to contract law itself and real costs to Australia and Australians in failing to do so. Australian contract law, unhelpfully, has six potential sources – the common law, equity, Commonwealth statute, State or Territory statute, incorporated international instruments, for example, the CISG and, finally, the terms of contracts themselves. Having such diverse sources has, in my view, been a recipe for incoherence and for inertia in the legal development of contract law as such. Just as importantly, only the High Court on the one hand, or all of Australia’s legislatures acting together on the other, is capable of reforming contract doctrine as such. Twenty years ago, a United States reviewer of Essays on Contract,134 described Australian contract law as it emerged from that volume as being ‘interesting for its own sake. It appears to be a living museum of an earlier and simpler age of the common law.’135 I simply leave the question: Is this unjust? I think not if one considers only the common law and leaves out of account those statutory provisions such as Part V of the Trade Practices Act which, though not directed at contract doctrine as such, impact heavily on contractual behaviour. To some extent the legal practitioner has at least part of the remedy for this state of affairs in his or her own hands. Our commitment to party autonomy provides parties with the facility to mould contractual terms which are inconsistent with contract law’s default rules or which fill the gaps and silences in contract doctrine. This is now a commonplace practice and has become standardized in many fields of contractual activity (both national and international).136 Valuable as this facility is, though, it 134 135 136

P Finn (ed), Essays on Contract (Law Book Co, Sydney 1987). P Maggs, ‘Book Review’ (1987) 17 Int’l J Legal Info 53, 55–6. A recognized usage of the UNIDROIT Principles is that of providing model clauses for incorporation into a contract as terms of that contract: see Bonell (n 68) 248–56.

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does not address directly the modern adequacy and utility either of what can be called the general principles of Australian contract law, or of the default rules that apply in the absence of agreement to the contrary. The drafting solution favours the well advised. It leaves casualties in its wake. And it is predicated on a prescience so often found wanting especially in long-term and relational contracts. More importantly, it privileges expertise because it presupposes an adequate appreciation that there are choices that can be made. This brings one to the important subject of legal education. I would not suggest that contract be taught unrelievedly as comparative law. Necessarily it must have a significant domestic doctrinal dimension, but a questioning one.137 The latter point is rather nicely made by Reinhard Zimmerman in writing on the Europeanization of private law:138 if students continue to be taught the niceties of their national legal systems without being made to appreciate the extent to which the relevant doctrines, or case law, constitute idiosyncracies explicable only as a matter of historical accident, or misunderstanding, rather than rational design, and without being made to consider how else a legal problem may be solved, a national particularization of legal scholarship that takes … the abracadabra of conditions, warranties, and intermediate terms for granted,139 threatens to imprint itself also on the next generation of lawyers.

My apprehension remains that we tend still, with notable exceptions, to do this to ‘the next generation of lawyers’. That we have done it in the past is evident often enough in the argument of counsel in contract cases. How we teach contract law can be a significant aspect of our solution. What needs to be guarded against is that we do not let how we teach remain part of the problem.140 It is not in our national interest to permit this. This brings me to my final point. I have for the most part asserted both that our law of contract stands apart in some degree from what is, or is becoming, internationally orthodox and that, in any event, it warrants systematic reappraisal in its own right. The influence of the international upon it is slight. One lesson is, I consider, obvious from the international developments I have mentioned. It is that the sensitive and successful 137 139

140

See Goode (n 8). 138 Zimmerman (n 74). Cf Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; but cf NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract (8th Australian edn LexisNexis Butterworths, Chatswood 2002) [21.29]. In saying this, I am conscious that the flexibility given to teachers of contract law, particularly when the subject is taught early in a law course and in a semesterized system, is narrow indeed.

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reformation of contract is likely best to be achieved if the task is undertaken in the first instance by experts, subject to rigorous review by judges and practitioners knowledgeable in the discipline – and this irrespective of whether the final product is or is not to be legislative in form. I emphasize this matter for this reason. A significant reappraisal of Australian contract law is needed but it needs first and foremost to be systematic; the law needs to be simplified and clarified; and it needs to be better aligned with international commercial law. If the ultimate vehicle must necessarily be national legislation because of the quirks of our federation, the process itself should not be left simply in the hands of governments.141 Australian contract law as a system is too important for that. 141

In the mid 1980s I proposed to the Law Council of Australia that a restatement of Australian contract law be formulated under its aegis. Though the proposal was greeted with real interest, it ultimately lapsed for understandable reasons to which it is unnecessary to refer here. Any future initiative to systematically consider our contract law should, in my view, proceed only with the very significant involvement of the Law Council and of the Australian judiciary.

3 The Australian law of restitution: has the High Court lost its way? Andrew Burrows *

A.

Introduction

When I first taught the BCL restitution course in Oxford in the late 1980s and early 1990s, and when I first came to Australia in 1994,1 we looked across with admiration, and not a little envy, at the wonderful judgments on the law of restitution of the High Court of Australia. We were enthralled by the decisions and reasoning in cases such as: Pavey & Matthews Pty Ltd v Paul,2 rejecting the implied contract theory and awarding a quantum meruit for work done under an unenforceable contract; David Securities Property Ltd v Commonwealth Bank of Australia3 allowing restitution *

Over the years I have been a great admirer of the scholarship of Michael Bryan. The hallmarks of his work are its clarity, practical common sense and careful attention to the details of the case law, combined with penetrating insights. It has also been a huge pleasure to know Michael as a person. His vast knowledge and his calm, modest and kind manner make him one of the very best people to talk to about private law. I am therefore delighted to contribute this chapter, which is a lightly amended version of my Hearn Lecture delivered at the University of Melbourne on 23 April 2009, in honour of Michael. I would like to thank the Melbourne Law School, especially Elise Bant, Michael Bryan and Simon Evans, for making my stay in Melbourne so enjoyable. A version of the Hearn Lecture was also given in Brisbane on 30 April 2009 as a Current Legal Issues seminar organized by the University of Queensland Law School and the Bar Association of Queensland. I would particularly like to thank Kit Barker and Dominic O’Sullivan for extending me that invitation. I would also like to thank David JS Jackson QC for his very interesting reply, prepared for that seminar, entitled ‘The Australian Law of Restitution: Is Andrew Burrows Right that the High Court Has Lost Its Way?’. Finally, I am grateful to James Edelman for his helpful comments on an earlier draft of this chapter.

1

It has been pointed out to me that there is an interesting contrast between this essay and the one I wrote during my Australian visit in 1994: A Burrows, ‘Understanding the Law of Restitution: A Map Through the Th icket’ (1995) 18 UQLJ 149 reprinted, with light updating, in A Burrows, Understanding the Law of Obligations: Essays on Contract, Tort and Restitution (Hart Publishing, Oxford 1998) 45–71. (1987) 162 CLR 221 (‘Pavey & Matthews’). 3 (1992) 175 CLR 353.

2

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for mistake of law and recognizing the change of position defence; and Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd4 rejecting a passing on defence to a claim for restitution of mistakenly overpaid stamp duty. At that time Australia led the way in its development and application of a principled law of restitution and England lagged woefully behind. How times have changed. The English law of restitution over the last fifteen years has seen the most remarkable transformation. The reasoning of the courts at all levels has been characterized by rigorous and enlightened analysis. The growth has been accelerated by two dramatic bursts of litigation, factually so fortunate for the law of restitution: the swaps litigation in the mid-1990s; and more recently, and ongoing, the so-called Hoechst litigation on the consequences of the striking down of UK advanced corporation tax legislation by the European Court of Justice.5 Both spates of litigation have spawned a series of path-breaking decisions on the law of restitution. It has been a thrilling time to be a restitution lawyer in England. Not so in Australia: for while excellent books on the Australian law of restitution have been written,6 the post-Mason High Court has produced little to inspire us. On the contrary, the leading recent cases – of which I will be focusing on three – have been a profound disappointment in attacking unjust enrichment theory as unwanted top-down reasoning. This looks both odd and backward when one compares the approach of the English courts to this area. In exploring these issues, I first want to outline very briefly five features of where we are with the English law of restitution before moving on to examine in detail the three leading High Court of Australia decisions since 2000 which, taken together, present a perplexing picture.

B.

The English law of restitution

The five features of today’s English law of restitution that I would like to draw to your attention are as follows.

4 5

6

(1994) 182 CLR 51. In Joined Cases C-397/98 and C-410/98 Metallgesellschaft Ltd and Hoechst AG v Commissioners of Inland Revenue [2000] ECR I-1727. J Edelman and E Bant, Unjust Enrichment in Australia (Oxford University Press, Melbourne 2006); K Mason, JW Carter and GJ Tolhurst, Mason and Carter’s Restitution Law in Australia (2nd edn LexisNexis, Sydney 2008).

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First, English law is close to having a settled conceptual framework for approaching restitutionary questions. Lord Nicholls and Lord Mance in Sempra Metals Ltd v IRC 7 have recently accepted the importance of the distinction drawn by many commentators between, on the one hand, restitution of an unjust enrichment where the cause of action is the unjust enrichment;8 and, on the other hand, restitution for wrongs, where a tort or breach of contract or an equitable wrong is the cause of action and restitution, if available at all, is an alternative remedy to compensation. The former – restitution of an unjust enrichment where there is no wrong – is what most of the subject is concerned with. It includes, for example, restitution of payments made by mistake, restitution of payments made for a consideration that has failed, restitution for the compulsory discharge of another’s debt, restitution of taxes demanded ultra vires by the Revenue, and restitution for the value of services rendered, or other non-money benefits supplied, under anticipated or invalid contracts. And in relation to restitution of an unjust enrichment, it is a crucial development, enhancing efficient, rational and transparent decision-making, that courts at all levels in England have found it helpful to rely on the four-step analysis advocated by commentators: benefit; at the expense of the claimant; an unjust factor; and defences.9 Second, this does not mean that, as a matter of pleading, it is sufficient in England simply to plead one’s cause of action for restitution as unjust enrichment. That is as inadequate as pleading compensation for tort without specifying the precise tort in question and its ingredients; or pleading damages for breach of contract without clarifying what constitutes the agreement, the consideration and the alleged breach. Therefore for unjust enrichment, as made clear in Uren v First National Home Finance Ltd,10 one has to plead one of the established categories, such as money paid by mistake or for a failure of consideration, or an incremental development from them. Third, as the scope of some of the unjust factors has been widened, so the courts have had to focus more carefully on the defences to restitution 7 8

9

10

[2007] UKHL 34, [2007] 3 WLR 354, [116], [230]–[231] (‘Sempra Metals’). This expresses the cause of action at a high level of generality. As we shall see in the next paragraph, the elements of the cause of action must be spelt out in the pleadings. See eg, Banque Financière de la Cité v Parc (Battersea) Ltd [1998] UKHL 7, [1999] 1 AC 221 (‘Banque Financière’) (Lord Steyn); Rowe v Vale of White Horse DC [2003] EWHC 388 (Admin), [2003] 1 Lloyd’s Rep 418 (Lightman J); Cressman v Coys of Kensington (Sales) Ltd [2004] EWCA Civ 47, [2004] 1 WLR 2775 (Mance LJ). [2005] EWHC 2529 (Ch).

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in order to protect security of receipt. Most importantly, since its recognition by the House of Lords in 1991 in Lipkin Gorman (a firm) v Karpnale Ltd,11 there have been many cases working out the precise elements of the change of position defence. We now know, for example, that a change of position in anticipation of an enrichment, as well as subsequent to an enrichment, can count; that the defence does not involve comparing the fault of the parties; but that change of position cannot be invoked by someone who has been objectively dishonest or has changed his or her position by conduct that is criminal. I should interject here that the importance of the change of position defence, which is a defence unique to unjust enrichment, cannot be overstated. In its fully developed form, unjust enrichment imposes strict liability in the sense that a person who receives an unjust enrichment is bound to make restitution even though he or she is not at fault. Strict liability, while so difficult to defend in, for example, tort law, is here justified precisely because unjust enrichment does not leave the defendant with any loss to bear. Prima facie one is merely taking away a gain that the defendant should not have had; and it is the change of position defence that precisely ensures that, overall, the defendant is made no worse off than it otherwise would have been by having to make restitution. Fourth, the English courts have regarded restitution of an unjust enrichment as integrating areas of equity as well as common law. For example, in Banque Financière de la Cité v Parc (Battersea) Ltd12 the House of Lords recognized that non-contractual equitable subrogation exemplifies restitution of an unjust enrichment; and in Sempra Metals their Lordships awarded compound interest, traditionally awarded only for breach of fiduciary duty, as the measure of the defendant’s unjust enrichment for invalidly demanded advanced corporation tax. Fift h and finally, while the overall picture is one of dramatic progressive development over the last fi fteen years, this is not to say that the English position is the fi nished article. On the contrary, it remains very much a work in progress. Most importantly, and disappointingly, the law on proprietary rights after equitable tracing was said by the House of Lords in Foskett v McKeown13 to be explicable within traditional opaque property reasoning without resort to unjust enrichment; and the House of Lords has still not had the opportunity since Lipkin Gorman to decide whether what is often referred to as ‘knowing receipt’, or the fi rst limb 1