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Sutton, R --- "Restitution: Commentary and Materials" [2003] OtaLawRw 10; (2003) 10 Otago Law Review 449

Restitution: Commentary and Materials

(by Ross B Grantham and Charles E F Rickett, Brookers, Wellington, 2001; li + 610 pp, $153.00.)

In 2000, Professors Grantham and Rickett produced an important text on the law of restitution called Enrichment and Restitution in New Zealand (Hart, Oxford). The book developed some novel and valuable perspectives on the theory of the law of unjust (or, as they prefer to call it, “restorable”) enrichment. As Lord Goff said in his foreword to that book (“Enrichment”), it is a “remarkable” work, which “departs from what they call the dominant model of the law of restitution” found in a number of English texts on the subject. The authors have now followed their text with a collection of readings (“Commentary”). This last is the subject of my review.

The authors assure their readers, in the preface, that the cases and materials have not been collected with a view to the “slavish” presentation of their own theory. And indeed — though the structure of the Commentary follows closely that of Enrichment they have allowed a wide range of voices to speak from their pages. Yes, they overstate the position when they claim to offer “all the competing arguments, analyses and viewpoints”: no one book could do that. But there is a lot here.

As to the authors’ disclaimer of service to their theoretical views, some readers will still find the presence of those views, both in direct commentary and in frequent quotation from Enrichment, a little overbearing. But many more, I am sure, will find this a welcome imposition of order and sanity. In any event, the theory deserves serious attention.

The importance of the authors’ theory has to be assessed against the present state of the law of restitution in New Zealand. According to the general modern understanding, the law of “restitution” applies wherever the plaintiff alleges that the defendant has acquired a benefit unjustly, at the plaintiff’s expense or in a wrongful way. The concept of “unjust enrichment” is narrower, applying only where the benefit consists of a thing the plaintiff once had or enjoyed. That benefit (or, in the case of the plaintiff’s services, its product) must have come into the hands of the defendant. (So money paid by a plaintiff to a defendant under a mistake is an “unjust enrichment”; money acquired by the defendant from a third party, in breach of a fiduciary duty owed by the defendant to the plaintiff, is not an “unjust enrichment” but the plaintiff is still entitled to a “restitutionary” remedy.) Theory now concentrates on unjust enrichment, not restitution.

In New Zealand, the courts have not shown a great interest in the theory or inner workings of the law of restitution. They tend to see it as one of many principles and/or remedies available to private law claimants. Academics, with a few notable exceptions, do the same. This lack of warmth to theoretical issues is evidenced in the Commentary itself. The first 93 pages deal with commentaries on the abstract theory of the subject. By my count, (apart from the authors’ own contributions) only about six or seven pages of the passages quoted came from New Zealand case law, or from works published in New Zealand. Four of those seven pages were from the pen of Professor Birks, the highly regarded leader of English academic opinion, writing for a New Zealand journal.

In England they take a very different view. The structure of the law of unjust enrichment is subjected to rigorous enquiry and definition. While this can be a mixed blessing, it has produced some remarkable writing and fresh new insights into the legal issues which arise in restitutionary settings. It is good to see some of these writings (along with very perceptive judicial contributions) featuring in the Commentary. It is also good that the authors have not confined their selection to the work of senior English academics, such as Peter Birks, Andrew Burrows, and Jack Beatson. They have also drawn from the writings of talented academics of the next generation. Kit Barker, Robert Nolan and Graham Virgo feature strongly, as do the Canadian Mitchell McInnes, and “our own” David Fox and Rick Bigwood. There are of course others who equally deserve attention, but this is a good start.

The difference in intellectual climate to which I have referred puts New Zealand legal academic writers at a cross-roads. They are at once drawn to the intellectual challenges of English academic writing, and at the same time to the opposing realities of the New Zealand legal environment. We could be in a 1950s time warp, but for the fact that the New Zealand scene is no less fascinating than the English, though in a different way.

It is no coincidence, therefore, that Enrichment is a New Zealand legal text, yet it is published from Oxford by an international publisher. The authors engage with both traditions. They have largely succeeded in this endeavour, subject to a qualification I will make later. The text and the Commentary (published in New Zealand) together stand as a major contribution to New Zealand legal thinking in this most academic, yet at the same time most practical, of law subjects.

I would therefore highly recommended both books to their chosen audiences — which, in the case of the Commentary, includes law students learning the subject, and practitioners seeking to gain some understanding of the debate, and get a feel for the voices which can be heard within it. In many cases, the authors give us substantial extracts from the case law — along with synopses of the relevant facts — and the academic writing. These are not snippets, they are substantial extracts the reader can enjoy and wrestle with. And the authors’ selection shows a concern, not just for the detail of decision, but mainly for those abstract and difficult issues which can easily get lost in the minutiae of a legal dispute. These things, once they emerge, can easily turn the result in one direction or the other.

Nevertheless (and I am sure the authors would assent to this) we are still a long way from achieving a theory of restitution which will command unqualified assent in New Zealand. If I may express a personal view, I believe that the following features of the so-called “dominant model” stand in the way:

1.It is unduly pre-occupied with definition and taxonomy. Theorists do not see the concept of “unjust enrichment” as a general principle, or a “flag” around which particular groups of rules can be clustered for certain purposes. Rather they insist that each particular rule must be classified, once and for all, either as an “unjust enrichment “ rule or as some other kind of rule.
2.The result has been that writers encounter difficulties at the supposed “borderline” between unjust enrichment and property, which they have been unable to resolve. The courts are beginning to follow them into this trap, with somewhat surprising and counter-intuitive results (e.g. Foskett v McKeown [2000] UKHL 29; [2001] 1 AC 102, though that case could, and probably should, be given a very narrow reading).
3.Similar unresolved issues have arisen in relation to the difference between unjust enrichment and contract. This is very significant for New Zealand law, which has tended to proceed (especially in the so-called “contract statutes”) on the assumption that significant areas of contract law are applications of a principle of unjust enrichment as well.
4.This last problem leads us to another, more systemic one. The rationalisation brought by theory applies, it seems, only to the common law, and not to statutes. Legislative contributions to the building up of the subject are all too frequently ignored, or seen as parallel enterprises that cannot be expected to achieve the same high standards of consistency as the common law. (This disowning of law reform, which I see as a significant aspect of academic endeavour, is something I have done my best not to feel upset about.)
5.Finally, there is the question about how legal textbooks are to be structured. Most legal texts are “contextual” in direction (that is to say, they centre on some particular form of human activity, and “flows” in the case-law dealing with that activity — whether it be making agreements, or burying human remains). Not so in the case of restitution. The tried and true method has been forsaken by the followers of the dominant model, whose fashion it is to break up their books according to the different “unjust factors” encountered in the theory of the law of restitution. This has led, in my observation, to some very bulky and ill-assorted chapters, in which it is difficult to locate what you want. Moreover, there is a large measure of disagreement about what the list of unjust factors contains and how it should be ordered — it’s a veritable academic MMP!

The present authors have made progress in dealing with the first two of these issues. They reject the theory of events and responses that is the foundation of the dominant model (and is to be found in its most extended form in Birks, “Rights, Wrongs and Remedies” (2000) 20 Ox J L S 1). The particular obligations found in legal rules are not, say Grantham and Rickett, an unmediated response to the particular events stated in a statement of claim. They are mediated through “primary rights”, that is to say, rights of ownership, contract, unjust enrichment, and personal status (infringement of which gives rise to “wrongs”). The ascertainment of these primary rights is an essential legal prerequisite in the formation and application of the detailed legal obligations that follow. This is a position of impeccable breeding. Professor Birks (who nevertheless rejects it) traces it back to the great English jurist Blackstone.

The authors’ theory is not without difficulty, however, especially if one insists (as they do) that the primary rights are themselves the foundation for a classification of the subordinate rules. I found it difficult to work out, for example, whether the action for negligent damage to goods will invoke, in the authors’ scheme, a property rule or a “wrongs” rule. I suspect it is irrevocably and incurably both, in which case the classification simply does not work, though I may be wrong.

But what I like, and thoroughly approve, about their argument is that it sees the supposed classification process as involving legal symbols, aka “primary rights”. These symbols rise above the minutiae of legal rules, and tell us something useful about the intelligibility and generality of our system. They influence our thoughts, even if they do not cash out, through a direct logical process, into any particular rule or common pattern of legal elements. It is possible that the dominant model’s classification system, based on the supposition that they do, is doomed to failure; we do not know. But even if it is, the symbols themselves will remain as an important aid to our legal understanding.

As to the other three problems I raised about the dominant model, I would have liked to see the authors make a greater effort to avoid its pitfalls. Particularly as regards problems 3 and 4, I felt disappointed that they presented very little on the flourishing jurisdiction under the contract statutes.

For example, in the Commentary, the Contractual Remedies Act 1979 gets a few pages for section 9, but nothing on misrepresentation at all. The authors reproduce the text of sections 5, 6 and 7 of the Contractual Mistakes Act 1977, but provide no examples from the substantial case law and academic writing - a commentary from their own book, it seems, is enough. The treatment of the Illegal Contracts Act 1970 is confined to some rather arcane reasoning about the legal consequences of a transaction rendered “of no effect” by section 6; but there is a perfectly adequate “restitution” provision in section 7. I suspect that, if the authors turned their very considerable analytical and theoretical powers to these subjects, they would learn something to their — and our — advantage.

On the property side, equally invisible (in both Enrichment and the Commentary), are the statutory remedies open to mistaken improvers of land (Property Law Act 1952, s 129A). So too is the remedy available to claimants of trust funds that have been incorrectly distributed to innocent recipients, under the Administration Act 1969, ss49-51. “I cannot see you, Mr So-and-so, you are a statute.”

But that is a personal view and I am sure that others, who have invested more effort in studying the English tradition than I, will disagree with me. What is important about the authors’ reasoning is that it may provide, at last, a way out of the dilemma in which New Zealand lawyers have been placed since the publication of Professor Birks’ celebrated Introduction to the Law of Restitution in 1985. Enrichment and the Commentary are significant New Zealand works which deserve a place on the lawyer’s working bookshelf, both in their own right, and for what they show us of the future.

Richard Sutton,
Faculty of Law,
University of Otago.

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