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Excising Estoppel by Representation as a Defence to Restitution

Published online by Cambridge University Press:  16 January 2009

Paul Key
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Extract

Both the existence of and theoretical justification for defences to an action in unjust enrichment have been the source of controversy since the action was first recognised in Moses v. Macferlam.* The House of Lords' recognition of a defence of change of position in Lipkin Gorman v. Karpnale Ltd1 goes some way towards meeting the criticisms levelled at the courts' general failure to develop and clarify the defences to restitution. The judgments of Lord Goff and Lord Templeman have properly been acclaimed for imposing some measure of order upon an important aspect of the law of restitution. However, problems remain. Lipkin Gorman does not provide an exhaustive analysis of either change of position or its inter-relationship with other defences.

Type
Shorter Articles
Information
The Cambridge Law Journal , Volume 54 , Issue 3 , November 1995 , pp. 525 - 535
Copyright
Copyright © Cambridge Law Journal and Contributors 1995

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References

1 (1760) 2 Burr. 1005; 97 E.R. 676Google Scholar

2 [1991] 2 AC. 548 (hereafter Lipkin Gorman)Google Scholar.

3 E.g., Skyring v. Greenwood & Cox (1825) 4 B & C 281; 107 ER. 1064Google Scholar.

4 E.g., Deutsche Bank (London Agency) v. Beriro and Co [1895] 73 L.T. 669Google Scholar

5 See, e.g.. United Overseas Bank v. Jiwani [1976] 1 W.L.R. 964 and Lamer v. London City Council [1949] 2 KB. 683 where failure to establish detrimental reliance precluded an estoppelGoogle Scholar.

6 [1983] 1 W.L.R. 605 (hereafter Avon County Council).

7 See, e.g., Rural Municipality of Storthoaks v. Mobil Oil of Canada Ltd. [976] 2 S.C.R. 147; Lipkin Gorman [1991] 2 A.C. 548; David Securities Ply. Ltd. v. Commonwealth Bank of Australia (1992) 175 C.L.R. 353. See generally P. Key, "Change of Position" (1995) 58 M.L.R. 505.

8 [1991] 2 AC. 548, 580.

9 See generally Goff, and Jones, , The Law of Restitution (London, 4th ed., 1993) pp. 739–745Google Scholar; Burrows, A., The Law of Restitution (London, 1993) pp. 421–431Google Scholar.

10 See also In re Exchange Securities & Commodities Ltd. [1988] 1 Ch. 46, 56, per Harman, J.Google Scholar

11 [1981] I.R.L.R. 447.

12 See Gorman, Lipkin [1991] 2 AC 548, 579, per Goff, LordGoogle Scholar.

13 (1994) 111 D.L.R. (4th) 230.

14 Ibid., 237.

15 Other Canadian authorities appear to recognise the continuing existence of a separate defence of estoppel: Rural Municipality of Storlhoaks v. Mobil Oil Canada Ltd. [1976]Google Scholar 2 S.C.R. 147; Kenora (Town) Hydro Electric Commission v. Vacationland Dairy Co-operative Ltd. [1994]Google Scholar 1 S.C.R. 80.

16 Note that the English Law Commission favoured the retention of a separate defence of estoppel which would provide a complete defence: Law Commission, Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments (Law Com. No. 227, London, 1994), pp. 48–49Google Scholar and 141. The English judiciary have been more equivocal. Lord Goff in Lipkin Gorman [1991] 2 A.C. 548, 578 observed that the requirement of a representation and the failure to offer a protanto defence “provide a strong indication that, in many cases, estoppel is not an appropriate concept to deal with the problem”. See also South Tyneside Metropolitan Borough Council v. Svenska International plc [1995] 1 All ER 545, 565–568, per Clarke J.

17 Birks, P., Restitution—The Future (Sydney, 1992) pp. 145–147Google Scholar. Note that Professor Birks suggests that the courts are “unlikely to be astute to find that the recipient does rely on an operative misrepresentation” (p. 145) and that the “enrichment–related version of change of position is more attractive” (p. 146). See also Klippert, G., Unjust Enrichment (Toronto, 1983) pp. 244–253Google Scholar; Fridman, G., Restitution (Toronto, 1992) pp. 454–459Google Scholar; Beatson, J. and Bishop, W.Google Scholar, “Mistaken Payments in the Law of Restitution” (1986) 36 Univ. of Toronto L.J. 149, 181–183 (republished in Beatson, J., The Use and Abuse of Unjust Enrichment (1991) 137, pp. 169–171)Google Scholar; Tettenborn, A., Law of Restitution (London, 1993) p. 164Google Scholar.

18 Goff, and Jones, , op. cit., pp. 141 and 746–750Google Scholar; Jones, G., “A Topography of the Law of Restitution” in Finn, P. (ed.), Essays on Restitution (Sydney, 1990) 1, p. 17Google Scholar; Burrows, A., op. cit., pp. 423 and 436–439Google Scholar; Burrows, A., “Mistaken Payments and Estoppel” (1984)Google Scholar 100 L.Q.R. 31. See also Stoljar, S., The Law of Quasi-Contract (Sydney, 2nd ed., 1989) pp. 38–39Google Scholar; Englard, I., “Restitution of Benefits Conferred Without Obligation” (1991) in Schlectriem, P. (ed.), International Encyclopaedia of Comparative Law, Volume X, Restitution—Unjust Enrichment and Negotiorum Gestio; J. Davies, “Developing Equitable Remedies” (1984) 4 O.J.L.S. 142, 144–147Google Scholar; Beatson, and Bishop, , “Mistaken Payments in the Law of Restitution” (1986) 36 Univ. of Toronto.J. 149, 182–183Google Scholar; R.B.C. Dominion Securities Inc. v. Dawson (1994) 111 D.L.R. 230Google Scholar.

19 A useful background to this enquiry is Law Commission (England), Aggravated, Exemplary and Restitutionary Damages (London, 1993Google Scholar) Consultation Paper No. 132.

20 See Turner, A., Spencer Bower and Turner, Estoppel by Representation (London, 3rd ed., 1977) pp. 7–8 and 112–114Google Scholar.

21 See, e.g., Skyringv. Greenwood & Cox (1825) 4 B. & C. 281; 97 E.R. 676; Deutsche Bank (London Agency) v. Beriro [1895] 73 L.T. 669; Holt v. Markham [1923] 1 K.B. 504; Lloyds Bank v. Brooks (1950) 6 Legal Decisions Affecting Bankers 161. Note that in R.E. Jones Ltd. v. Waring and Gillow Ltd. [1926] AC 670 the defendant's voluntary undertaking to return any enrichment that it retained appears to have been an important factor in the dissenting judgment of Viscount Cave L.C. at 685 allowing an estoppel.

22 See in particular Eveleigh L.J. in Avon County Council [1983] 1 W.L.R. 605, 611 and the cases cited therein.

23 Ibid., 608.

24 Ibid., 611–612.

25 Ibid. 621 and 624–625.

26 Cf. the analysis of waiver in Commonwealth of Australia v. Verwayen (1990) 170 C.L.R. 394 (hereafter Verwayen), 422–428Google Scholar, per Brennan, J.; 467–475Google Scholar, per Toohey, J.; 480–487Google Scholar, per Gaudron, J.Google Scholar And see Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (The “Kanchenpnga” ) [ 1990] 2 Lloyd's Rep. 391, 397–399Google Scholar, per Lord Goff.

27 See also Law Commission (England), Aggravated, Exemplary, and Restitutionary Damages (London, 1993) Consultation Paper N o. 132, § 3.85, in regard to the award of exemplary damagesGoogle Scholar.

28 Verwayen (1990) 170 C.L.R. 394 is a good example of the difficulties that courts face in drawing the "distinction, in both a factual and a legal sense, between waiver and estoppel. See also Berno v. Green's Steel Construction Pty. Ltd (1991) 103 F.L.R. 133Google Scholar.

29 (1988) 164 C.L.R. 387 (hereafter ”Waltons Stores”)Google Scholar.

30 (1990) 170 C.L.R. 394. Both Verwayen and Waltons Stores were noted, with apparent approval, the Privy Council in In re Goldcorp Exchange Ltd. [1995] 1 A.C. 74, 92Google Scholar.

31 VerwayenGoogle Scholar, ibid., 410–411, per Mason C.J. and the citations therein. See generally the judgment of Deane J. in the same case.

32 Waltons Stores (1988) 164 C.L.R. 387, 419, per Brennan, J.Google Scholar. See also 404, per Mason, C.J. and Wilson, J.Google Scholar; Verwayen, ibid., 409, per Mason, C.J.; Grundt v. Great Boulder Ply. Gold Mines Ltd. (1937) 59 C.L.R. 641, 674–675Google Scholar, per Dixon, J.Cf. South Tyneside Metropolitan Borough Council v. Svenska International plc [1995] 1 All ER 545, 567–568Google Scholar, per Clarke J.

33 VerwayenGoogle Scholar, ibid., 411–413, per Mason, C.J.; cf. 441–443Google Scholar and 445–446, per Deane, J.Google Scholar.

34 VerwayenGoogle Scholar, ibid., 412. See also Meagher, R., Gummow, W., and Lehane, J., Equity: Doctrines and Remedies (Sydney, 3rd ed., 1992) pp. 417–420Google Scholar; but cf. pp. 430–431Google Scholar.

35 VerwayenGoogle Scholar, ibid., 413, per Mason C.J..

36 Note that Gray, J. in McCraith v. Fraser (1991) 104 F.L.R. 227, 236–237Google Scholar regarded these judgments as an insufficient basis for a lower court judge to ignore the traditional view of estoppel by representation. See also the cautious approach advocated in Verwayen, 454, per Dawson, J.; 499–500Google Scholar, per McHugh, J.; Silovi Ply. Ltd. v. Barbaro (1988) 13 N.S.W.L.R. 466, 472Google Scholar, per Priestley J.A.; Parkinson, P., "Equitable Estoppel: Developments After Waltons Stores (Interstate) Ltd. v. Maher (1990) 3 J.C.L. 50, 60–63Google Scholar.

37 Note also the comments of Wood, J. in Home Office v. Ayres [1992] I.C.R. 175, 180Google Scholar.