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James Lee
Wed, 28 Nov 2007 23:50:28 -0000
Birksian/sine causa approach to enrichment law


Dear All,

I think that there may well be something to be gained from a focus on the recipient's state of mind in changing his position. We should that way hold the defendant to the same standard as the claimant. Taking a paradigm mistaken payment as our example, If the claimant is able to recover even when he has been careless as to the reason for the transfer in the first place (Kelly v Solari), it seems to me that there would be an attractive symmetry in applying the same standard to the defendant's "mistake" in believing that he was entitled to the enrichment and changing his position as a result of that belief. The facts of and approach to the defence in Dextra Bank v Bank of Jamaica give an example of such an approach to the defence (albeit that the Privy Council found that Dextra had not made a mistake in the first place).

But it should be clear that such an approach would go to what constitutes a "good faith change of position" for the purposes of establishing a defence to the claim in unjust enrichment. It is not therefore, in English law, a question of relative fault (rejected by the Privy Council in Dextra Bank), as the establishment of the claimant's initial mistake must surely precede the question of the defence to the claim. Whilst I do not presume to speak on his behalf, Prof McInnes has, I believe, suggested an analysis along these lines ("Enrichments, expenses and restitutionary defences" (2002) 118 LQR 209-214; and "Enrichments and Reasons for Restitution: Protecting Freedom of Choice" (2003) 48 McGill Law 419, 453-456) and I offer a similar view in "Changing Position on Change of Position" [2007] 15 RLR 135-141 (please forgive the self-referencing).


Best wishes,
James Lee

James Lee
Teaching Fellow
School of Law
University of Reading
Foxhill House, rm. 2.09
Whiteknights Road, Earley
Reading RG6 7BA
United Kingdom

Phone: +44 (0) 118 3785643
Fax: +44 (0) 118 3784543
Web: www.reading.ac.uk/law



From: Florian Mohs
Sent: Wed 28/11/2007 22:37
Subject: Re: [RDG] Birksian/sine causa approach to enrichment law

Dear all

I agree that there is a certain interrelation between the issues of mistake and change of position as to the relevant standard of knowledge of the transferor and the transferee.

But is it a risk that we look to both sides of the transaction and inquire into both sides' state of mind? I think no. In my view, it is rather a chance.

For me, a compelling example of a case against an absence of basis-analysis without regard to the transferor’s state of mind is:

National Bank of New Zealand v Waitaki International Processing (NI) Ltd [1999] 2 NZLR 211 (CA).

Summarized the facts of this case are as follows:

The defendant, Waitaki, had been paid money by the plaintiff, National Bank of New Zealand, under the mistaken assumption that the bank owed the money to Waitaki. The defendant knew that the payment lacked a legal basis and objected to the payment. The bank insisted and, finally, the defendant accepted the payment. The defendant then invested the money, at first in government stocks, and then in the property market, where the money was lost. On evidence, the defendant Waitaki had positive knowledge of the mistake of the plaintiff bank. This alone, however, did not suffice to disqualify the defendant from invoking the defence of change of position. The Court of Appeal entered into a balancing of equities and took into consideration the relative fault of both the plaintiff and the defendant.

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