APL Exam Notes - Charles Rickett PDF

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APL Exam Notes: Kelly v Solari (1841) - X paid $500 to Y in discharge of a debt, unaware that X’s partner Z had paid the same debt last week. If money paid under the impression of truth or fact which is untrue it may be recovered however careless the party paying may have been to inquire into the fact. Receiver was not entitled or intended to have it, it cannot be otherwise than unconscientious to retain the money. Money paid under influence of a mistake where if true facts known money would never have been paid, an action lies to recover the money. Barclays Bank Ltd v W J Simms, Son & Cooke (Southern) Ltd [1980] Z issued a cheque for $24,000 in favour of Y as payment for work done. Z directed X Bank to stop payment on the cheque. X Bank overlooked the instruction and paid out on the cheque. Relating to recovery of payment mistakenly made by bank after customer countermanded cheque. Earlier cases in relation to modern development of law of restitution in relation to payments made under mistake of fact and defence of change of position. Virgo Graham, commentator in the principles of law of restitution has gone so far as to say decision should be considered to be the Donoghue and Stevenson of restitution for mistake. Mistake of Fact: (1) If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact. (2) His claim may however fail if (a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or (b) the payment is made for good consideration, in particular if the money is paid to discharge and does discharge a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or (c) the payee has changed his position in good faith or is deemed in law to have done so. He also noted that if the payment had been made by the bank under a contract then there could be no recovery unless the contract itself was void for mistake. However, in this case there was no contract between Barclays and W J Simms - only a putative mandate from their customer to pay money over. Change of Position: The judge then reviewed the various cases suggesting that where a payee has changed their position in good faith in reliance upon the payment, they should not be required to repay sums where it would be inequitable to do so. Noting a number of technical rules which had evolved in the judgments, Robert Goff J confined himself to saying "if, in due course, full recognition is given to the defence of change of position, there will be no further need for any such stringent rule and the law can be reformulated on a more rational and less technical basis." Ratio: Held that (1) the mistake of the bank in overlooking the instruction to stop the cheque caused the payment; that (2) as the bank was acting without mandate, no obligation of the Association to the payee was discharge, and it follows from this that the payee gave no consideration to the bank for payment; (3) there was no evidence of any change of position by the recipient. Accordingly, the court ordered that the sums be repaid to the bank. Bell v Lever Bros [1932] - X employed Y and Z. X wished to sell his business to A. This required the removal of Y and Z. X paid Y and Z a total of $50,000 in compensation for loss of their positions. X later discovered that Y and Z had committed a repudiatory breach of their employment contract that would have allowed X to dismiss them without compensation. Contract law case within field of mistake in law. Holds that common mistake does not lead to a void contract unless the mistake is fundamental to the identity of the contract. Lever brought claim for rescession of compensation on grounds of mistake of fact. On appeal, the House of Lords found that there was no mistake and the contract could not be rescinded nor was it void on mistake. The Court identified the mistake as a common mistake. “

A mutual mistake as to some fact which, by the common intention of the parties to a contract, whether expressed or implied, constitutes the underlying assumption without which the parties would not have made the contract they did, and which, therefore, affects the substance of the whole consideration, is sufficient to render the contract void.

The mistake must nullify or negative consent of the parties in order for the agreement to be void.

”

In order for the contract to be void by common mistake the mistake must involve the actual subject-matter of the agreement and must be of such a "fundamental character as to constitute an underlying assumption without which the parties would not have entered into the agreements". Must be an integral and essential part of the contract. Personal trading not related to subject matter of the contract. From the facts the Court found that the mistake was not sufficiently close to the actual subject-matter of the agreement. The parties got exactly what they had bargained for. Rowland v Divall [1923] 2 KB 500; Yeoman Credit Ltd v Apps [1962] purchased a motorcar from Y. X had had possession and use of the car for four months when it was found that the car had numerous mechanical defects and was stolen. The car was returned to its owner Z. Rowland A car dealer had bought a car to which the seller had no title. Held: The dealer succeeded in his claim to recover the purchase price on the ground of total failure of consideration. The vendor had gone through the motions of performance of his contract by handing over a car, but in the eyes of the law that was no performance because the car was stolen. In the case of a theft the title acquired by the thief or later possessor is frail, and of likely limited value, but nonetheless remains a title to which the law can afford protection. Atkin LJ said: ‘It seems to me that in this case there has been a total failure of consideration, that is to say that the buyer has not got any part of that for which he paid the purchase money. He paid the money in order that he might get the property, and he has not got it. It is true that the seller delivered to him the de facto possession, but the seller had not got the right to possession and consequently could not give it to the buyer. . There can be no sale at all of goods which the seller has no right to sell. The whole object of a sale is to transfer property from one person to another . . can it make any difference that the buyer had used the car before he found out that there was a breach of the condition? To my mind it makes no difference at all. The buyer accepted the car in the representation of the seller that he had a right to sell it, and in as much as the seller had no such right he is not entitled to say that the buyer has enjoyed a benefit under the contract. In fact the buyer has not received any part of that which he contracted to receive, namely the property and right to possession – and that being so there has been a total failure of consideration.’ Barton v Armstrong [1976] - X and Y were shareholders in a company. The company was failing, and Y wanted to get out. To this end, Y threatened to have X murdered if X did not agree buy Y’s shares. X bought Y’s shares. The court held that a person who agrees to a contract under physical duress may avoid the contract, even if the duress was not the main reason for agreeing to the bargain. The Privy Council advised that Barton could avoid the contract for being under duress, and it did not matter that he may have agreed to the deal anyway. Lord Cross, Lord Kilbrandon and Sir Garfield Barwick held that physical duress does not need to be the main reason, it must merely be one reason for entering an agreement. Lord Cross said the same rule should apply for duress as in misrepresentation, 'that if Armstrong's threats were 'a' reason for Barton’s executing the deed he is entitled to relief even though he might well have entered into the contract if Armstrong had uttered no threats to induce him to do so...' T A Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1956) X agreed to purchase a quantity of iron from Y. Some months later Y notified X that the price of iron had increased and requested an increase in the price. Y made it clear that unless X agreed she would lose the iron. X eventually agreed to pay more. D argued that the contract had been superseded by a new one. This argument has to fail as there was no consideration for the increased letter of credit. D Also argued that practical compulsion did not extend to nonenforcement of contractual rights. This argument also fails. [NB This case indicates that Australian courts would be likely to allow recovery of such an excess payment, viewing the threat to break a contract as a form of economic duress even in the presence of nominal consideration. This view would be consistent with the views of Denning (D & C Builders v Rees (1966)) that "no person can insist on a settlement procured by intimidation".It could also be said that if there is a genuine shift in prices, and the purchaser is unable to acquire goods elsewhere at a cheaper price, then there might be a public interest in allowing a price adjustment rather than require people to supply at a loss. Unscrupulous dealing can be dealt with by way of economic duress, so this aspect only confused by the artificiality of the consideration rules].

Brook’s Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534)Y imported from Russia a quantity of squirrel skins that she had stored in X’s bonded warehouse. The skins were stolen from the warehouse. Y was liable to pay import duties on the skins. However, the Customs demanded payment from X. The Customs Act permitted the Customs to demand payment from the owner of a bonded warehouse in respect of any goods removed from the warehouse. X paid the duty. The dfdt’s counterclaim fails as the plaintiff’s took reasonable and prudent precautions. In Leake on Contracts, the principle is stated that: where the plaintiff has been compelled by law to pay money that the dfdt is ultimately liable to pay such that the latter obtains the benefit of the payment by the discharge of his liability, the dfdt is held to be indebted to the plaintiff. This principle has been applied in a great variety of circumstances. It is analogous to the case of payment by a surety which has the effect of discharging the principal’s debt and which then gives a right of indemnity against the principal. In Moule v. Garrett (LR 7 Ex 101) the original lessee was compelled to pay for a breach of a repairing covenant, however he was entitled to recover the amount from a subsequent assignee since the breach was due to the default of the assignee and the payment by the lessee was under legal compulsion which relieved the assignee of liability. In Dawson v. Linton (1822), a tax was due from the landlord but there was power to enforce payment by the tenant. The plaintiff-tenant was entitled to repayment since the tax must ultimately fall on the landlord. Note: these statements of principle do not ground the obligation in implied contract or constructive or notional contract. The obligation is imposed by the court in the circumstances of the case and on what the Court decides is just and reasonable having regard to the relationship of the parties. It is a debt constituted by the act of the law, apart from any consent or intention of the parties. In this case, the dfdts would be unjustly benefited at the cost of the plaintiffs if the latter, who received no extra consideration and made no express bargain, should be left out of pocket by having to discharge what was the dfdt’s debt. The duties were due from the importer and the Customs Act did not remove this liability when the warehousemen paid the duties as they were compelled to do under s. 85. The payment relieved the importer of his obgs but the liability primarily rested on the dfdts as between the plaintiff and dfdt. The dfdt obtained the benefit of the payment by the plaintiffs and was discharged from the duties which otherwise would have been payable by them. X was an elderly man who suffered from chronic alcoholism. Shortly before he died, and while on a drinking binge, X gave away the bulk of his assets to his “drinking buddy” Y. X later recovered from his alcoholism and realised what he had done. (Scott v Wise [1986] 2 NZLR 484; Brusewitz v Brown [1923] NZLR 1106; O’Connor v Hart [1985] 1 NZLR 159) Scott Scott: Although the Court found that Wise lacked mental capacity at the time of the transfer, as the terms were deemed fair, the Court refused to set aside the transaction. Brusewitz The mere fact that a transaction is based on an inadequate consideration or is otherwise improvident, unreasonable, or unjust in not in itself any ground on which this court can set it aside as invalid. The law in general leaves every man at liberty to make such bargains as he chooses, they are binding on every party to them unless he can prove affirmatively the existence of one of the recognised invalidating circumstances, such as fraud or undue influence. O’Connor: The Court noted that if a person lacking mental capacity subsequently regains capacity (even temporarily) they may ratify a contract entered into when insane. IMPAIREMENTS SHORT OF INCAPACITY: The Privy Council said in relation to above case Hart v. O’Connor (1985) that an insane person who appears sane can rely on the independent and separate ground of unconscionability which relieves abnormal mental weakness even short of incapacity. CONTRACT CAPABLE OF BINDING A MINOR: Contracts to purchase necessaries are capable of binding a minor. According to the s 3 of the Sale of Goods Act 1979, ‘Necessaries’ are defined as ‘goods suitable to the condition in life of the minor and to his actual requirements at the time of sale and delivery’.

CONTRACT FOR NECESSARIES: Necessaries are those things a person immediately needs, such as food; drink; clothing; accommodation; medicines. Necessaries are not confined to those things which are absolutely required to keep him alive but they extend to all such things as are reasonably necessary for him in the station in life to which he belongs. They exclude luxuries, and also a surplus of- necessary items; e.g. a contract to buy two shirts would, probably, be binding but one for a dozen would not be. X joined a survivalist Cult. By the rules of the Cult she was required to divest herself of her property. X transferred her entire estate to Y, the leader of the Cult. X acted without independent advice, as the seeking of advice outside the Cult was forbidden. Upon leaving the Cult some five years later, X realised what she had done. (Allcard v Skinner (1887) 36 Ch D 145) Lindley LJ, held that she was unduly influenced but barred by laches from getting restitution. And in any case she would only have been able to recover as much of the gift as remained in the defendant’s hands after some of it had been spent in accordance with her wishes.[1] Cotton LJ said; first ehre the court has been satisfied that the gift was the result of influence expressly used by the done for the purpose, second where the relations between the donor and the donee have at or shortly before the execution of the gift been such as to raise a presumption that the done had influence over the donee. X, and her husband Y, executed a mortgage over their family home in favour of Bank Z. Y would not let X read the mortgage documents on the basis that “surely she trusted him”! Y also told X (incorrectly) that the mortgage covered only the debts of the business. The mortgage in fact secured all moneys that the mortgagors might owe to Bank Z. Bank Z sought to enforce its rights against X and Y. (Garcia v National Australia Bank Ltd (1998) 194 CLR 395) Determined the circumstances under which it is unconscionable for a lender to enforce a transaction against a wife. It is considered a very important case in Australian Equity (law), as it continues to be the leading case in spouse-surety cases X agreed to sell his farm to Y. At the time of the contract, X was mentally unsound to the extent that he was unable to make a decision as to where his own best interests lay. Y did not know X was mentally unbalanced. On X’s death, his personal representatives sought to have the sale set aside. (O’Connor v Hart [1985] 1 NZLR 159) Could the contract be set aside due to unconscionable conduct or mental incapacity Decision - Yes, for mental incapacity, not unconscionable conduct Reasoning - Unconscionable conduct was not present as Hart did not know of the dementia and the terms were set out by Hart’s solicitor and merely accepted by Hart, then in turn O’Connor

Unjust Enrichment Overview: United Australia Ltd v Barclays Bank Ltd [1941] AC 1 (26-28) A person whose goods were wrongfully converted by another had a choice of two remedies against the wrongdoer. He could recover damages, in respect of the loss he had sustained by the conversion, or he could recover the proceeds of the conversion obtained by the defendant. It is necessary to distinguish election between remedies from election between rights. The House could hear ‘ghosts clanking their mediaeval chains.’

Moses v Macferlan (1760) 2 Burr 1005 (1012) [ 1] ChapmanJacobhadmadeoutf ourpr omi ssor ynot est oMosesf or30seach. Mosesowed Macf er l an£26,di dnotpayhi m andwassued.Aset t l ementwasr eachedatar bi t r at i onwher eby Moseswoul dpayMacf er l an£20;andendor set oMacf er l ant hef ourpr omi ssor ynot eshehad [ 2] r ecei vedf r om Jacob. Moses,endor sedt hesenot est oMacf er l an,t hust r ansf er r i ngoverr i ght st o t hemoney .Pr i ort oMosesendor sement ,Macf er l anassur edhi mt hathi sendor sementwoul dnot pr ej udi cehi m.I not herwor ds,Macf er l anwoul dnotseekt ogett heval ueoft henot esf r om Moses.

Ther ewasal soanagr eementsi gnedbyMacf er l ant hatMosesshoul d" notbel i abl et ot he paymentoft hemoneyoranypar tofi t " . Despi t eMacf er l an' sassur ancesandagr eementwi t hMoses;hesummonedMosesi nt o [ 1] ddl esexCour tofConsci enceast heendor seroft hef ourpr omi ssor ynot es. t heMi Thel awyerf orMosesputt heagr eementbef or et hecour tandoffer edt ogi veevi denceofi ti n [ 3] Mosesdef ence. However ,t heCour tr ej ect edt hi sdef enceasbeyondi t sj ur i sdi ct i on,r ef usedt o r ecei veevi denceofi tandgavej udgmentagai nstMoses;hol di ngt hathi sendor sement est abl i shi nghi sl i abi l i t y .Mosespai dt hemoney ,t ot heval ueoft hef ourpr omi ssor ynot es,i nt o [ 3] cour t .Macf er l ant henwi t hdr ewt hemoneyatt heor deroft hecour t . Ont hesubsequentact i onofMosesi nt heKi ng' sBenchcour tt or ecovert he£6,t hej ur yf ound t hatMoseswasent i t l edt ot hemoneysubj ectt ot heopi ni onoft hecour tont hequest i on, " Whet hert hemoneycoul dber ecov er edi nt hepr esentf or m ofact i on,orwhet heri tmustbe [ 4] r ecov er edbyanact i onbr oughtupont hespeci alagr eementonl y" . i sedt hepr obl em t hatt hecour thadt odealwi t h; Wi l l i am Gummowhassummar " Ther ootoft hedoct r i nalpr obl em pr es ent edt ot heKi ng’ sBenchi nMosesv .Macf er l anwast he ecei ved.Lor dMansfiel dgav ea absenceofanaccept edbasi sf ort heact i onf ormoneyhadandr numberofset t l edi nst anceswher et heact i onl ay ,butt hei ns t antcas edi dnotf al lwi t hi nanyof t hem.Lor dMans fiel dal sosoughtt ofindapr i nc i pl ewi t hi nwhi chpast ,pr esent ,andf ut ur ecases mi ghtbeaccommodat ed.Gi venwhathesawast her i gi di t i esoft hecommonl aw,Lor dMansfiel d [ 5] l ook edt oequi t yf oranappr opr i at eanal ogyuponwhi cht hecommonl awshoul ddr aw. "

Judgment Lor dMansfiel dCJdeal twi t hanumberofobj ect i onst oal l owi ngt hepl ai nt i ff' sact i oni nAssumpsi t . twi l l Fi r s t l y ,henot edt heobj ect i on" ThatanAct i onofDebtwoul dnotl i eher eandnoAssumpsi l i e,wher eanAct i onofDebtmaynotbebr ought " ;andr espondedt hatt her ul ewas" Thatan [ 4] Ac t i onofAs sumpsi tWI LLl i ei nmanycaseswher eDebtl i esandi nmanywher ei tdoesnotl i e. " Secondl y ,hedeal twi t ht heobj ect i on," ThatnoAs sumpsi tl i es,ex ceptupon anex pr es sori mpl i edCont r act " ;answer i ng" I ft heDef endantb...