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Justice is the right of the weaker[**]
I am fully conscious of the honour of being invited to give the Harkness Henry Lecture. I am also alert to the fact that this lecture is the first Harkness Henry Lecture of the new millennium. In an attempt to do justice to the occasion, I have decided to take a cherished quotation which has accompanied me for much of my life, and which I have been intending to develop and write about for some time, and speak to it tonight.
The quotation is from Joseph Joubert, an 18th century philosopher, moralist and writer. It appears at the head of this lecture. It is simple enough, and bears repeating: “Justice is the right of the weaker”. It was with that quotation in mind that I concluded an address last year with this rhetorical musing:
It may well be that the law has no higher calling than to defend the poor against the mighty, the powerless against the powerful, and the weak against the strong.[1]
Tonight, I set out to answer that question, and I answer it in the affirmative. I refer, of course, to the common law; to judge-made law.[2]
At once, the notion that the law might be founded on an altruistic premise must cope with our perception of the judges who administer that law. By and large, they are perceived as a conservative, middle to upper class, frequently second or third generational privileged elite.[3] Irrespective of their professed judicial neutrality, judges, it is thought, mirror the attitudes, beliefs and prejudices of that elite. Professor Griffith concluded that judges are, like the rest of us, “not all of a piece”.[4] They are liable to be swayed by emotional prejudices. Their “inarticulate major premises” are not only inarticulated but are also sometimes unknown to themselves. Yet, those inarticulated and at times unknown premises may be strongly, if not passionately, felt.[5]
Justice Benjamin Cardozo made much the same point, although more benignly. He wrote that, throughout all their lives, forces which judges do not recognise and cannot name have been tugging at them – inherited instincts, traditional beliefs, and acquired convictions. The result is an outlook on life and a conception of social needs which, when reasons are nicely balanced, must determine where the judge’s choice will fall.[6]
Carried to an extreme, such views relegate judges to the status of marionettes administering a law at the deft hands of the dominant sector of the community. Did not Karl Marx take such a view? He portrayed the law as a set of rules and sanctions by which class relations are mediated in favour of the ruling class and which, ultimately, confirm and consolidate class power. Hence, the rule of law becomes a mask for the rule of a class.[7]
While we may reject this extreme, we can accept that judges tend to reflect their relatively privileged background, education, and social and economic grouping. They lean to the traditional, the conventional and the conforming view; they are concerned to preserve and protect the existing order; and they manifest, to a greater degree, perhaps, than is commonly recognised, the prejudices and emotional responses prevalent in the more advantaged and entrenched sections of the community from which they come. To suggest that such judges are imbued with the perception that “justice is the right of the weaker” would condemn us to oxymoronic oblivion - and therefore we will make no such suggestion.
Our quest is more profound. We do not look for a moral shibboleth grandly espoused by judges in carrying out their judicial task. Our search is for an imperative embedded in the law, greater than the temporal responses of mere judges, which can justify the claim to be the “conscience” of the law.
The thesis of this address is that there is such an imperative. A compunction underlies the whole spectrum of the common law which can be fittingly termed its conscience. It is the law’s ultimate abhorrence of exploitation: no person may exploit another in the sense of taking or obtaining an unfair advantage at the other’s expense. The law insists upon a conception of equality which precludes such exploitation. (I use and will continue to use the word “exploitation” in a sense which assumes that the advantage taken or obtained is unjust or unfair). A substantive part of our discourse tonight will reveal the deep and entrenched prevalence in all branches of the law of what we can call “the precept of non-exploitation”.[8]
The thesis is an extension of Aristotle’s conception of corrective justice. Corrective justice may be truly described as a function of conscience. It is concerned with the interactions of and between persons (what Aristotle calls “transactions”), and is limited to the parties to the interaction. Such persons are, for the purpose of the interaction, considered equal, no matter how unequal they may be in terms of their capability, capacity or any other comparative criterion. Thus, corrective justice involves a presumed equality of entitlement to the parties’ respective positions prior to the interaction.[9] If any interaction results in an unjust benefit for one or an unjust burden to the other, corrective justice requires that the pre-existing equality be restored. Either the benefit must be disgorged or the loss flowing from the burden must be compensated. Unjust gains or losses are thereby corrected.[10]
This presumption of the equality of entitlement in the interactions or interpersonal relationships of individuals is fundamental to the precept of non-exploitation. The law presumes an equality of deservedness. No-one may exploit or unfairly take advantage of another so as to vitiate that equal entitlement.
The precept does not necessarily require a deliberate intention or positive act on the part of one party to obtain an advantage at another’s expense. It is sufficient that the vulnerable party may suffer an unfair deprivation which, if uncorrected, will benefit the other. A marked example of such “passive exploitation” is unjust enrichment, where one party would obtain an unexpected windfall if the parties were not restored, as best the law can do, to their respective positions prior to their interaction.[11]
But is there a “conscience”? Notwithstanding or, perhaps, because of, its moral overtones, the use of the term conscience in relation to the law is not a misnomer. In holding that exploitation is “wrong”, the law reflects the expectations of the community as to what is fundamentally required of the law. It becomes an internal acknowledgement of the law’s essential function. The law has been made, moulded and adapted to give effect to the precept until it is so deeply embedded and entrenched in the corpus of the law that it is as much a part of the law as our own conscience is a part of us.
Of course, as with our own consciences, the law’s conscience will not impinge upon every situation. Cases arise requiring resolution which do not involve any element of exploitation but which nevertheless require regulation in an ordered society. But the existence of these situations does not mean that the law lacks a conscience or that this conscience is not the motivating and moral force in achieving justice according to law.
Further, just as the dictates of one’s conscience may be the unspoken premise of one’s actions, so, too, the conscience of the law may be an inarticulated premise of a legal rule or principle. When applying the rule or principle, individual judges will unconsciously or unwittingly, or even mechanically, give effect to the conscience of the law. In this sense, the precept of non-exploitation is ultimately larger than individual judges. They may be insensitive or indifferent to its command or they may at times spoil or prejudice its delivery, but they cannot destroy it any less than the occasional lapse in our personal behaviour banishes our troublesome conscience from contention.[12]
Let us, then, set about the quest to discover the law’s conscience. The quest must begin with a brief description of the society which the law is constrained to serve. It can be a harsh and ruthless place.
The transcendent drive in western industrial society is the desire for freedom of choice and freedom of action. It reached its philosophical zenith in the 19th century but remained a powerful and resurgent force in the 20th century.[13] Freedom of choice and action has been proclaimed as the ideal by philosophers and political pundits alike. Thus, the dignity of the individual, on the one hand, and democracy, on the other, are perceived to be diminished to the extent that this freedom is curtailed.[14] Liberal individualism becomes the distinct ideology.
Under such an ideology the individual is afforded primacy over social or collective goals. Not being subordinate to society, each individual is autonomous and independent, enjoying equality of autonomy and an equal right to freedom from interference by other persons in the exercise of that autonomy.[15] Constraints on the freedom of the individual are antithetical to this prevalent and enduring creed.[16]
Liberal individualism therefore demands a political system which empowers the individual. Democracy serves this function. But the commitment to democracy cannot avert the imposition of the coercive power of the state. To the sturdy individual, the majority emerging in the political process may present a tyrannical presence and the machinery of government an overwhelming and intimidating bearing. The libertarian ideal also spawns an economic regime in which freedom of choice is endemic. Capitalism becomes the inevitable economic order. From the laissez faire economies of the 19th century, through the regulated or mixed economies of the mid-20th century, to the free market and global economies of today, freedom from interference has been and remains a fundamental premise. Market forces and competition, it is avowed, require freedom of choice and freedom from interference. But, if unrestrained, this freedom means that the strong and powerful will necessarily prevail over the weak and vulnerable. As Mason CJ and Wilson J have said, “competition by its very nature is deliberate and ruthless”.[17] The market place is not an accommodating place for the insecure and frangible.
And so the cult of individualism pervades our lives. Of course, the necessity of collective existence imposes many constraints. Freedom of choice and freedom from interference cannot go unrestrained in a civilised society. The plunderings of highwaymen are beyond the pale. But the underlying philosophy remains rooted in liberal individualism and the freedom and independence which it seeks to accord the individual.
At the same time, we all know that it is futile to ask “for whom the bell tolls”. We accept that we are all “involved in mankind”, and that the bell tolls for each of us.[18] It is a truism that individuals, however free and independent their aspirations, necessarily interact with one another at all levels; in the family, in social and community affairs, in commercial dealings and business relationships, and in political life and governmental activity. Interaction with others is part of the daily grist. It is equally a truism that in these interpersonal relationships there is both the potential for and reality of inequality. Individuals are not equal. A variety of factors, from the chance make-up of one’s genes to luckless ill-fortune, result in marked and, at times, gross disparities between the capacity and capabilities of people. In rank, capital, wealth and other material resources, disparities are self-evident. So, too, in wisdom, judgment, knowledge, personal skills, will-power, discipline, perception, common-sense and a host of other acknowledged personal attributes, some persons will be superior and some will be inferior. These disparities lead to an imbalance of power in the interaction and interpersonal relationships of individuals. Some will be in a position to assert power over others; yet others will be vulnerable to the assertion of that power.
So we arrive at a key point. By virtue of these discrepancies in interpersonal power, one person is or may be in a position to take unfair advantage of another. That other is in a position where he or she may be taken advantage of. The power may take many forms: it may be the coercive power of the state, it may be political power, it may be economic or commercial power, it may be the power of communication and persuasion, or it may simply be the power which any significant advantage invariably confers. But whatever form the power may take, it involves the potential for exploitation. It is here that the law takes a stand. It will call a halt to the pursuit of individual freedom, where that pursuit results in one person exploiting or taking unfair advantage of another as a result of an imbalance of power in their interpersonal relationship. The conscience of the law will not countenance the excesses of a social, political and economic order committed to liberal individualism. To the law, the weak and vulnerable as well as the strong and powerful are individuals having an equal entitlement to the freedom and autonomy innate to that ideology.
Obviously, it is now necessary to establish that this stand does in fact permeate the law. Equally obviously, we must begin with equity.
Equity can readily be equated with “conscience”. Conscience is the underlying principle.[19] The old Court of Chancery was a Court of conscience, and the standards imported into and developed in the law reflect standards of conscience, fairness and equality in interpersonal relationships. Equitable intervention in dealings between people is principally based on requirements of conscientious conduct. Equitable intervention arises where there is something in the conduct of the one which is exploitative of the other, or in the position of the other which is vulnerable to exploitation. Broad language to give effect to this conscience is favoured by equity and has so far resisted the attempts to suppress its flexibility with defined and definite rules.[20]
But the use of words or phrases such as “conscience”, “unconscionability”, “inequitable”, “unconscientious conduct”, “unfair and oppressive”, “fair dealing”, “good faith”, and the like, and the flexibility which they import, should not be permitted to obscure the fact that the common feature which these words or phrases share is equity’s concern to protect the weaker and more vulnerable from the exploitative actions of the stronger and more powerful. The historic basis of equity’s focus on fraud illustrates this point. At common law, fraud represented an act of wilful deceit by one to gain an advantage over another, but even that broad formula did not protect all those who were harmed as a result of another’s breach of an obligation which, as Viscount Haldane said, “is the sort of obligation which is enforced by a Court that from the beginning regarded itself as a Court of conscience”.[21] The concept of constructive “fraud” or “equitable fraud” emerged to embrace those who failed to take sufficient care to ensure that their actions did not unfairly take advantage of another.
The conscience of equity is expressed in a range of different doctrines. Patrick Parkinson says that it is possible to discern five broad categories, at times overlapping, into which these doctrines may be placed. They are:
- the exploitation of vulnerability or weakness;
- the abuse of positions of trust or confidence;
- the insistence upon rights in circumstances which makes such an insistence harsh or oppressive;
- the inequitable denial of obligations; and
- the unjust retention of property.[22]
Thus, the exploitation of a person’s special vulnerability is regularly treated as unconscionable conduct. The same principle underlies the doctrines of unconscionable dealing and undue influence. Relief against unconscionable bargains is granted where in all the circumstances a transaction is so unconscionable that it cannot be allowed to stand. In respect of such dealings Sir Edward Somers’ description of equity is apt: “It is a jurisdiction protecting those under a disadvantage from those who take advantage of that fact...”.[23]
So, too, with undue influence. Undue influence represents the illicit pressure of one person over another. The oppressor benefits at the expense of the victim. Protection of the vulnerable from victimisation is the object of the doctrine.[24]
The fiduciary relationship, of course, has been equity’s main means of preventing persons abusing a position of dominance or influence. Fiduciaries are required to act in the best interests of their beneficiaries. They are not permitted to place themselves in a situation where their interests conflict with that duty; nor are they allowed to profit from the opportunities gained in the course of their fiduciary task; and nor are they able to use or disclose confidential information acquired as a fiduciary. The common element underlying these obligations is the imbalance of power between the fiduciary and the beneficiary. A fiduciary is in a position to exploit the relationship, and the beneficiary is vulnerable to the fiduciary’s departure from his or her obligation of loyalty. In the fiduciary relationship, the beneficiary is uniquely susceptible to being unfairly disadvantaged.
A further illustration of this principle is equity’s treatment of agents, attorneys and company directors. Standing in a position of trust with regard to their principal, such persons are held liable to account for any abuse of their position. They cannot exploit their appointed capacity to the detriment of their principal.[25]
Similarly, a power given to one person to affect another person’s property must be exercised honestly and for the purposes it was given. Otherwise, it is a fraud on a power and is void. Equity will not countenance the exploitation of the power.[26]
Equity also requires a person to forego the strict application of his or her legal rights where insistence on those rights would be harsh or oppressive to the weaker party. Estoppel, for example, precludes such insistence on legal rights where in the circumstances it would be exploitative for the possessor of those rights to enforce them. By his or her words or conduct, they will have led the other party to rely upon their non-enforcement. The possessor of the rights is not then permitted to take advantage of his or her rights at the expense of the person who has acted upon that forbearance.[27]
Promissory estoppel falls into the same broad category. The maker of a voluntary promise cannot exploit the promisee by reneging on the assumption which he or she has created that the promise will be fulfilled, thereby disregarding the promise to the promisee’s detriment.[28] Such other concepts as equitable set-off and the prevention of reliance upon rights in relation to stipulations of time can be explained in the same way. Equitable set-off is motivated by equity’s concern to prevent the harsh exercise of rights. A set-off is permitted where it would be unconscionable to allow the plaintiff to proceed to judgment when a countervailing claim seriously diminishes the merits of the plaintiff’s claim without being a substantive defence to that claim. So, too, a plaintiff may not unfairly insist upon his or her rights in relation to a stipulation as to time in a contract where time has not been made of the essence. To allow the plaintiff to succeed would be to allow him or her to obtain an unconscionable advantage.[29]
The repudiation of obligations also attracts relief in equity. Thus, the Statute of Frauds cannot be used as an instrument to shield fraud. The fields in which this general approach has been adopted include the doctrine of part performance; the rule that parol evidence is admissible to show that an absolute conveyance was in truth by way of security only; the principle that oral evidence can establish that a person has taken a transfer of property as trustee or agent for another; and the principle whereby equity will compel beneficiaries who have agreed to accept their interests under communicated trusts to perform those trusts.[30] In all these situations equity will not permit a person in a position of relative power to exploit that power to the disadvantage of the other person involved in the interaction.
Finally, equity will not permit a person to retain property in circumstances in which it was not intended that he or she should have the benefit of it. A constructive trust may be imposed on the property on the basis that the acquisitive holder should be required to share the benefit of it with another having a less formal but nonetheless meritorious claim. Constructive trusts and, possibly, to an even greater extent the courts’ proud invention, the remedial trust, are the means by which equity prevents a person exploiting another person’s inferior title or interest.
Closely related to the underlying justification of a constructive trust is the concept of unjust enrichment and its consequential product, restitution. Juristic attempts to redefine “conscience” in terms of an independent principle of unjust enrichment can, at least for present purposes, be disregarded. The element which makes the enrichment of one at the expense of another “unjust” invariably reflects the fact that to allow the enrichment to stand would be to permit the defendant to obtain unfairly a benefit at the expense of the plaintiff. This perception is so whether one takes the English approach of presupposing, one, an enrichment of the defendant; two, that the enrichment is at the expense of the plaintiff; and, three, that the enrichment is unjust;[31] or the broader Canadian formulation of, one, an enrichment of the defendant; two, a corresponding deprivation on the part of the plaintiff; and, three, an absence of juristic reason for the enrichment.[32]
All the above doctrines represent different applications of equity’s conscience. All have in common a situation in which one person is in a position of relative strength or power and the other is in a position of relevant weakness or vulnerability. It is the conscience of the law which prevents the one exploiting or taking unfair advantage of the other.
Establishing that the principle of non-exploitation is the basic scruple underlying equity’s many excursions in the law is not difficult. But it is an essential plank of the thesis we are pursuing that the precept of non-exploitation also permeates the common law. Indeed, a number of causes of action have a basis in both common law and equity. Actual fraud, breach of confidence and waiver are in this category.
Actual fraud can be pursued at common law in deceit, and also in equity. The same is true of fraudulent misrepresentation, which is both a common law and an equitable wrong.
In like fashion, the uncertain antecedents of breach of confidence straddle both common law and equity. At common law, the cause of action has been analysed by some as being based on either a property right in the confidential information or an implied contractual term.[33] Others have preferred to view breach of confidence as an equitable doctrine arising out of breach of trust.[34] But, for present purposes, the point is that the underlying objective of the cause of action, whether resting in the common law or equity, is to prevent the person who possesses the ability to appropriate confidential information from doing so at the expense of the person who is exposed to the risk of having his or her confidence abused.
Again, views as to the status of waiver differ. Some commentators argue that waiver is not an independent doctrine but a diffuse concept used in different senses to mean either a variation by contractual novation at common law, or an estoppel in both common law and equity, or an election in equity only.[35] Other writers contend that waiver is a distinct concept which operates in equity.[36] But whether waiver is viewed as a doctrine common to both common law and equity,[37] or as a distinct equitable concept,[38] its foundation is essentially the same: to prevent one person taking advantage of another by seeking to enforce a right which he or she has earlier released.
In other areas equitable doctrines can be said to have a common law counterpart or genesis. Thus, at common law, a cause of action for interference with a property right is extended by equity to cover interference with an equitable interest, such as an equitable lease.[39] Estoppel by conduct in common law is expanded by proprietary estoppel and promissory estoppel in equity. Then, duress at common law may amount to undue influence in equity. Yet, again, the precept of non-exploitation is the unifying theme.
Common mistake at common law is extended to other types of mistake in equity, including mutual mistake and unilateral mistake where the other party is aware of the mistake.[40] Unilateral mistake may be understood as a doctrine which seeks to correct the unconscionable exploitation of another’s position of weakness. In such cases, the vulnerability arises from one’s own mistake. With common and mutual mistake, both parties are vulnerable as a result of the mistake or mistakes, but one party will in the circumstances obtain an unfair advantage at the expense of the other party if the contract is allowed to stand.
Although supported by equity, agency and powers of attorney are common law concepts.[41] If an agent acts other than in accordance with the terms of his or her authority or in breach of the duty of loyalty or care owed to his or her principal, he or she will be liable for any loss. In some cases, a third party suffering a loss will also have a right of redress against the agent by way of damages for breach of an implied warranty of authority.[42] In either case, the agent cannot trespass beyond the boundaries of the power conferred on him or her at the expense of another.
A prime example of related causes of action in common law and equity which are clearly founded on the precept of non-exploitation are actions for money had and received at common law and actions for unjust enrichment in equity. Neither will permit the fortuitous recipient to retain the windfall at the expense of the rightful owner.
Finally, reference may be made to legal and equitable set-off. The former, which is statutory in origin, provides a right to set off liquidated mutual debts.[43] The latter is much broader.[44] There is no strict need for mutuality, and unliquidated amounts may be claimed.
In all these cases, while the protection of the common law may not be as potent as that provided by equity, the common law causes of action reflect the same compunction which moved equity to protect the weak and vulnerable from the predations of the strong and powerful.
In pursuing our examination of the common law further, we can usefully focus on contract, tort and administrative law. Criminal law and property law have been largely overtaken and codified by statute. But it is not difficult to discern the precept of non-exploitation in the common law which preceded legislation. The criminal law always subjected a wide variety of activity to penal sanctions where one person exploited or sought to exploit another’s person or property. In property, the common law protected the owner’s property rights from being diminished by anyone who did not possess or share those rights. Detailed land rights were one of the main legacies of the Norman conquest. The property rights granted under the sophisticated system of tenure were zealously protected so as to prevent one person exploiting the ownership of another, first by customs as applied in local feudal jurisdictions, and later by a common body of principles and a centralised justice system.[45]
Greater attention can be directed to contract for it is the law of contract which has the greatest impact on interactions where freedom of choice and action and freedom from interference are most coveted.
Adams and Brownsword have stated that contract law in the modern world prescribes good faith and conscionable dealing, confining the parties’ freedom to take unfair advantage of one another.[46] That freedom is apparent in the interaction between persons when negotiating a deal. Indeed, the bargaining process is the primary example of interpersonal activity which can give rise to an inequality of power or advantage as between the parties. The conscience of the law prohibits the unfair exploitation of that inequality.
We must quickly clarify, of course, that it is not every bargain which might be said to be “unfair” which the law declines to enforce. Self-interest in contract is a fact of life. The law cannot seek to correct all the inequalities that inevitably affect contracting parties according to their circumstances. Its conscience does not seek to assist those who enter into an imprudent or improvident deal. Paternalism is eschewed and forms no part in the law’s prescription of contract law. The law is not, to quote Lord Radcliffe, “a panacea for adjusting any contract between persons when it shows a rough edge to one side or the other”.[47]
This rejection of paternalism is consonant with the autonomy of the individual. As Rick Bigwood has said:
if we are to take autonomy seriously, we must respect the bad bargains that people make as well as the good ones, since to interfere with bad bargains entered into voluntarily is to deny someone the right to self-determination, and hence to deny that person’s absolute and equal status as a ‘freely choosing, rationally valuing, specially efficacious moral personality’.[48]
For this reason, of course, the great majority of contracts will never be challenged. As between the parties, the bargaining power or negotiating strength will be equal, or roughly equal, or will even out. The parties will have entered into the contract with their eyes open. Indeed, some eminent jurists have referred to the position between bargaining parties as involving mutual “coercion”. Hale argues that scarce resources necessitate bargaining, which in turn requires parties to give up some legal rights in exchange for others. He points out that a bargain, once struck, obtains the force of law.[49] Philips observes that “coerced” agreements are “an inevitability of our social life”.[50]
Consequently, to attract the attention of the law’s conscience the vulnerability of the disadvantaged party must be of a particular kind. It must bear on the parties’ capacity to consent genuinely and voluntarily to the agreement.
A binding contract is grounded in the notion of consent. Doctrines such as non est factum and consensus ad idem testify to this rudimentary requirement. It is through this requirement that the precept of non-exploitation principally makes itself felt in contract. For, just as liberal individualism requires that people be permitted to enter into binding agreements, it also demands that binding agreements reflect their free and voluntary choices.[51] Thus, the various rules and principles which govern the formation of contracts are essentially designed to deter one party from failing to obtain the other party’s genuine and voluntary consent. Such a failure may result in an injustice against the latter party which warrants annulment in the form of corrective justice.[52] So it is that the law sets limits on what constitutes a contract, on when a contract is formed, and on the implication of terms in a contract, all of which leaves without contractual force or redress a significant range of interaction by and between parties purporting to deal consensually with each other.[53]
Voluntariness may be defective in a number of ways. Genuine and voluntary consent is absent where one party induces the other to enter into the contract by fraud, force, or economic duress. In each of these cases the offending party has sought to exploit a position of power or advantage over the other party who, if that party is to succumb, is vulnerable to that fraud, force or duress.
Yet, in other cases, the apparent voluntariness of a party is belied by his or her ignorance, mistake, incapacity, drunkenness, or need.[54] In such cases, the stronger party may not intend to take advantage of the defect in the other party’s capacity, but the element of exploitation is present and complete should the contract be enforced. The stronger party, for example, obtains an advantage at the expense of the other party whether or not he or she knows of that party’s particular incapacity. To permit the contract to be enforced in such circumstances would be to give effect to the passive exploitation inherent in the weaker party’s vulnerability. As Bigwood has said, that the defendant should be identified as an “exploiter” relative to the plaintiff is the only publicly convincing way of bringing coherency to the plaintiff-defendant relationship consistent with the major features and true purposes of the liberal conception of contract.[55]
A special category of contract in which the precept of non-exploitation is conspicuously present is the contract of employment. Employment situations are, perhaps, the archtypical example of human interactions where the relatively powerful, be it the employer or the employee’s organisation, may exploit or take advantage of the other. Because of the potential for exploitation, the common law has recognised the special nature of the relationship between the employer and the employee. It is a relationship under which the employer and the employee have mutual obligations of confidence, trust and fair dealing.[56] Lord Browne Wilkinson, when Vice Chancellor, called this implied term “the implied obligation of good faith”.[57] Thus, the unequal power of the employer and the employee is mitigated by the law’s insistence that each demonstrate good faith to the other.[58]
Let Professor Kronman have the last say. Speaking of cases where one party claims that his or her promise was not voluntarily given, he stated:
the promisee enjoys an advantage of some sort which he has attempted to exploit for his own benefit. The advantage may consist in his superior information, intellect, or judgment, in the monopoly he enjoys with regard to a particular resource, or in his possession of a powerful instrument of violence or a gift or deception. In each of these cases, the fundamental question is whether the promisee should be permitted to exploit his advantage to the detriment of the other party, or whether permitting him to do so will deprive that other party of the freedom that is necessary, from a libertarian point of view, to make his promise truly voluntary and therefore binding.[59]
Many jurists would have it that no single normative basis can be attributed to tort law. A plurality of competing norms, such as loss spreading, efficient deterrence, retribution, corrective justice, distributive justice, autonomy and community may be invoked to explain or justify the law.[60] Having regard to the diversity of torts, there can be no easy answer. Nonetheless, we can again assert that the precept of non-exploitation provides the law of torts with a universal conscience.
In many cases, of course, the law’s core concern to prevent and deter exploitation is openly apparent. Thus, one person may not use his or her power to harm another by physically assailing that person; a person may not take advantage of the gullibility of another by perpetuating a deliberate deceit; a person may not trespass on another’s land to the detriment of the owner’s property rights; a person with special skills may not make a careless representation likely to be relied upon by another person to that person’s detriment;[61] and a publisher may not utilise the advantage possessed by the disseminator of information to publish a defamatory comment at the expense of a person’s reputation. But the concrete situations in which these torts arise do not always disclose exploitation in the sense that an apparently stronger party has taken unjust advantage of another. On occasion, indeed, the wrongdoer may appear to be the weaker party as, for example, where a needy person steals from a relatively well-off person.[62]
It is necessary for us to dig deeper into the foundation of tort liability to uncover the precept of non-exploitation. Tort law protects the individual against actual or threatened injury to one’s person or property by condemning in damages or other relief the person who exerts his or her freedom at the expense of the freedom of the injured party. The parties possess an equality of entitlement regardless of their relative wealth, merit or need. Hence, if one person affects or threatens to affect the person or resources of another by means of an interaction which is inconsistent with that equality, the latter will have a claim for the correction or prevention of that adverse effect.[63] In short, the exploitation lies in the wrongdoer asserting his or her autonomous freedom at the expense of the autonomy and freedom of the other party to the interaction, thereby causing him or her loss.[64]
This abstract perception may be given concrete meaning by referring to the pervasive tortious concept of neighbourhood. One person to the interaction will assert his or her autonomy in a way which interferes with the autonomy of another. Where the power of one or the vulnerability of another in that interaction is such that the one has the capacity to cause harm to the other (which in tort is almost invariably economic harm), the law will impose a “duty of care” on the possessor of the power to avert or refrain from inflicting that harm.[65] The possessor of the power must respect, and thereby refrain from exploiting, the freedom of other autonomous individuals to be “free” from such interference.
The concept that the law is essentially concerned to prevent abuse of power is also clearly evident in administrative law. As is frequently proclaimed, no area of the law has developed so magnificently as administrative law in the 20th century. Lord Diplock’s famous statement that the progress made towards developing a comprehensive system of administrative law was the greatest achievement of the English courts in his lifetime is invariably quoted.[66] It has been served well by the principle of ultra vires.[67] There are clear signs, however, that a substantive principle of common law is evolving to take the place of the ultra vires principle which is essentially an adjunct of statutory interpretation.[68] But, however the framework of administrative law is viewed, its essential function is to protect the citizen from the abuse or misuse of governmental or coercive power.[69]
In that relationship, whether described as the interaction between the state and the individual or the government and the citizen, the state or government official is self-evidently in a position of power and able to assert that power. The conscience of the law is therefore at the heart of a system of administrative law designed to prevent or curb the exploitation of power over citizens, many or most of whom are relatively powerless within the political process.[70]
Have we in our lightning survey unearthed the answer to the perennial question of what is fair or unfair? The answer is both yes and no.
The question, “but what is fair?” is repeatedly posed by those who perceive the notion of fairness as notoriously vague and imprecise. Judicial expressions of “fair dealing”, “reasonableness”, “good faith”, “unconscionable and unconscientious conduct”, “unfair and oppressive conduct”, “reasonable and legitimate expectations”, “unjust enrichment”, and so on, evoke the same response.[71] These critics, whom we may without mordancy describe as legal fundamentalists, yearn for an impersonal law. They are acutely uncomfortable with and distrustful of the discretion any notion of fairness vests in the judges. The problem which they perceive is essentially one of translation. How is the sense of fairness immanent in the community to be discerned by a judge and, if it is discerned, how can his or her fidelity to that evaluation be assured?[72]
We need not canvass this issue tonight.[73] It must suffice simply to point to the reality of judicial reasoning, and to query what credibility these commentators would obtain if they framed their question in terms of “what is justice?” Yet, how can fairness be differentiated from justice itself? Law exists to do justice. Justice is its primary goal. Judges are sworn to do justice according to law.[74] The community expects justice to be done in the courts and is vocal in its criticism if it considers justice is not done.[75] By the simple artifice of substituting the word “fairness” for “justice”, these critics obtain an audience which would otherwise be quickly dismissive of their claims.
But accepting that the notion of fairness is a reality in judicial decision-making does not mean that efforts to reduce its apparent vagueness should be neglected. The search remains vital to the essential function of the law to serve the community of which it is part. Identifying the moral sentiment which is universal to all branches of the law must therefore make a worthwhile contribution to that objective. The law’s underlying antagonism to the exploitation by one person of another becomes the key prescription in discerning what is fair or unfair in any particular context. In this way the precept of non-exploitation provides the framework within which the question, or any question, of fairness may be resolved. It reduces the perceived abstractness of the question and assists to channel argumentation and reason into a principled frame of reference.
That perception, then, is the affirmative part of the answer to the question, “what is fair?” But, of course, within the framework provided, a subjective element remains. It is inherent in the question whether the advantage taken or obtained by the one person over the other in a particular case is unfair or not. An assessment of the circumstances, including the strength and power of the defendant, the weakness and vulnerability of the plaintiff, and the relative position of the two must be made. Eventually, a value judgment is required.[76]
But this qualification is largely to miss the point of our quest. Except where the issue involves an equitable test giving overt and substantive expression to the precept of non-exploitation, the judge does not ask whether in the particular case the exploitation is unacceptable or whether one person has used his or her superior strength or power unfairly to obtain an advantage at the expense of another. The question before the court may be whether a contract has been part performed, or whether an agent has acted within the scope of his or her authority, or whether the defendant is estopped from asserting his or her rights or has waived those rights, or it may be any one of the myriad of other questions which come before the courts. Those questions will be determined in accordance with the relevant body of law. The law’s compunction against exploitation underlies these particular questions but does not comprise the particular question itself.
In this way justice, or the concept of fairness, is given effect in accordance with conventional legal methodology. The judge in deciding that a contract is unenforceable, or that liability exists in tort, or that a governmental agency has acted ultra vires, will do so having regard to accepted rules, principles and precedent. It is the accepted rules, principles and precedent which manifest the law’s underlying aversion to exploitation.
Are we not confirmed in our earlier view? There is a sense in which the law’s conscience is larger than the judges. It is embedded in the law which they are called upon to administer in accordance with a self-perpetuating legal methodology and a self-imposed judicial discipline.[77] Of course, the law which reflects this conscience is judge-made, much of it having been made by the judges of old who placed principles before precedent. Equally certain is the inevitability of change and development in the law. But there is no mystery as to how the law was made, or how it is developed, so as to reflect the underlying precept that a person may not use his or her superior strength or power to take or obtain an unfair advantage at another’s expense. Judges reflect this sense of fairness which is immanent in the community.[78]
While liberal individualism may hold sway, our society is sufficiently homogeneous to be underpinned by some common mores and enduring values, and the precept of non-exploitation is an integral part of those mores and values. Fuller has made the point in these terms:
[In] a sufficiently homogenous society certain ‘values’ will develop automatically and without anyone intending or directing their development. In such a society it is assumed that the legal rules developed and enforced by courts will reflect those prevailing ‘values’.[79]
It is for this reason that the notion of an altruistic premise underlying the law cannot be debunked. It stems from the community itself. The tension inherent in liberal individualism between the freedom and autonomy of the individual to pursue his or her own ends without interference, on the one hand, and the fact that in the pursuit of his or her own ends the individual must interact with other individuals who also seek to assert their freedom and autonomy, on the other, cannot be resolved by reference to a morally neutral criteria. A balance must be struck between the two and, unless the arbitrary will of the stronger and more powerful is to prevail, the balance can only be struck by resorting to a premise which will meet the community’s sense of what is just and fair. The precept of non-exploitation serves that purpose. The law intervenes when in the course of an interaction between two people the interference amounts to the exploitation by one of the other. Determining when the advantage taken or obtained is unfair requires a judgement, but it is a judgement which, as we have seen above, the law itself has already made. The judges implement that judgement in applying the legal rules and principles which make up the law.
Of course, the application of the legal rules and principles will vary at the hands of individual judges. But the precept of exploitation remains a constant principle and restricts the scope for judicial diversion or distortion. A progressive or enlightened judge may seek to develop the law in accord with its dictates. But even a conservative or indifferent judge, who rigorously utilises the doctrine of precedent and adheres to the “logic” of formalism, simply reinforces and strengthens this longstanding bias in favour of the weak and vulnerable embedded in the law. It is a voice which cannot be stilled in the service of justice according to law.
This, then, is the conscience of the law. As we have seen, it infuses and informs all fields of judge-made law. It is now so deeply entrenched in the law as to be intractable. It vests the law with an irreversible altruistic premise.
If we accept, as surely we must, that the law is not an end in itself but exists to serve the needs of society, the conscious or unconscious implementation of the law’s conscience becomes part of the judicial function. The law as administered by judges gives effect to the precept of non-exploitation. This design forms part of the expectations of the community and becomes the community’s mandate to the judges. That mandate and the judicial function therefore merge at the core of the law’s stretch to render to all the justice that is their due.
In this task it is the conscience of the law, larger and more enduring than its dedicated servants, which condemns the inequities of exploitation in all its forms. It will, as I forecast at the outset, defend the poor against the mighty, the powerless against the powerful, and the weak against the strong.
Justice, after all, is the right of the weaker.
[*] A Judge of the Court of Appeal of New Zealand. The author wishes to thank Daniel Kalderimis for his invaluable research and assistance in the preparation of this Lecture.
[**] Joseph Joubert (1754–1824).
[1] “The Relationship of Parliament and the Courts: A Tentative Thought or Two for the New Millennium” (2000) 31(1) VUWLR 5, 36.
[2] I do not refer to statutory law, which carries its own dynamics.
[3] See Lord Justice Scrutton in an address to the University of Cambridge Law Society on 18 November 1920: “The Work of the Commercial Courts” (1923) 1 Camb LJ 6, 8. See also Richardson “The Role of the Appellate Judge” (1981) 15 VUWLR 46, 51.
[4] Griffith, J A G The Politics of the Judiciary (1st ed, 1977) 180.
[5] Ibid.
[6] Cardozo, “The Nature of the Judicial Process” (1921) in Hall, M (ed) Selected Writings of Benjamin Nathan Cardozo (1947) 109-110; also cited in Henry, “Pinochet: In Search of the Perfect Judge” (1999) 21 Sydney LR 667, 673.
[7] Thompson, E P Whigs and Hunters (1975) 259, cited in Griffith, supra note 4, at 204-205.
[8] Exploitation commonly connotes an oppressive form of taking advantage of another for one’s own ends. I use the phrase more broadly. The focus is on unfairly taking or obtaining an advantage at another’s expense.
[9] See Wright, “Right, Justice and Tort Law”, in Owen, David G (ed) Philosophical Foundations of Tort Law (1995) 166-174; and “Substantive Corrective Justice” (1992) 77 Iowa LR 624, 691.
[10] “Corrective justice” is to be distinguished from “distributive justice”. The former applies to individual transactions and requires that the effects of such interactions on the interacting parties’ resources be consistent with each party’s “equal negative freedom”. Distributive justice focuses more broadly on a person’s status as a member of the political community and requires that the community’s resources be distributed to promote the equal positive freedom of each person in the community. See Owen, Foreword to Philosophical Foundations of Tort Law, supra note 9, at 12.
[11] See also below pp 14ff as to the basis of the law relating to contractual capacity.
[12] There are, perhaps, shades of Ronald Dworkin’s soundest theory of law in the assertion of a moral premise larger than individual judges. But I would reject the suggestion. See my criticism of Dworkin in A Return to Principle in Judicial Reasoning and an Acclamation of Judicial Autonomy (1993) VUW Law Review Monograph 5, 36-51.
[13] Seddon, “Compulsion in Commercial Dealings”, in Finn, P D (ed) Essays on Restitution (1990) 139-142. See generally Atiyah, P S The Rise and Fall of Freedom of Contract (1979).
[14] Seddon, ibid, 139-142.
[15] Rosenfeld, “Contract and Justice: The Relationship Between Classical Contract Law and Social Contract Theory” (1985) 70 Iowa LR 769, 778, cited in Bigwood, “Conscience and the Liberal Conception of Contract: Observing Basic Distinctions” (2000) 6 NZBLQ 1, 20.
[16] This creed is, as I have stated, the ideal of a western industrial society. It is not the only, or necessarily the best, ideal. Compare for instance traditional MŠori society which was based on concepts of unity, community, solidarity and hapu or tribal identity.
[17] Queensland Wine Industries Pty Ltd v Broken Hill Proprietary Co Ltd [1989] HCA 6; (1989) 63 ALJR 181, 186.
[18] “No man is an island, entire of itself, every man is a piece of the continent, a part of the Main... Any man’s death diminishes me, because I am involved in Mankind; And therefore never send to know for whom the bell tolls; It tolls for thee” (John Donne (1571-1631), “For Whom the Bell Tolls”).
[19] Halliwell, Margaret Equity & Good Conscience in a Contemporary Context (1977) 1.
[20] Not that the attempt has not been made. See eg, Meagher, R P, Gummow, W M C and Lehane, J R F Equity Doctrines and Remedies (3rd ed, 1992) for a comprehensive endeavour to reduce equity to a set of concrete rules.
[21] Nocton v Lord Ashburton [1914] UKLawRpAC 31; [1914] AC 932, 954.
[22] Parkinson “The Conscience of Equity”, in Parkinson, Patrick (ed) The Principles of Equity (1996) 34.
[23] Nichols v Jessop [1986] NZCA 84; [1986] 1 NZLR 226, 235.
[24] Allcard v Skinner [1887] UKLawRpCh 151; (1887) 36 Ch D 145, 182-183. See also the cases cited in Wilkinson v ASB Bank [1998] 1 NZLR 674, and especially the comments of Tipping J at 694-695. See generally Birks and Yin, “On the Nature of Undue Influence”, in Beatson, J and Friedmann, D (eds) Good Faith and Fault in Contract Law (1995).
[25] Pearce, R and Stevens, J The Law of Trusts and Equitable Obligations (1995) 118; and Friedman, G Law of Agency (1996) 174-188.
[26] Laws NZ, “Powers”, para 101.
[27] See Jorden v Money (1854) 5 HLC 185; NB Hunt & Sons Ltd v MŠori Trustee [1986] NZCA 3; [1986] 2 NZLR 641, 655-657; and Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507, 547. These cases relate to estoppel by conduct. For an authority on estoppel by deed, see McCathie v McCathie [1971] NZLR 58, 59. See generally Lindgren, “Estoppel in Contract (1989) 12 NSWLJ 153, 155-156.
[28] See Central London Property Trust Ltd v High Trees House Ltd [1946] EWHC KB 1; [1947] 1 KB 130; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; and Gilles v Keogh [1989] NZCA 168; [1989] 2 NZLR 327.
[29] See Parkinson, supra note 22, at 40.
[30] Last v Rosenfeld [1972] 2 NSWLR 923, 927-928. See generally Rochefoucald v Boustead [1896] UKLawRpCh 180; [1897] 1 Ch 196, 206, and Dal Pont, G E and Chalmers, D R C Equity and Trusts in Australia and New Zealand (1996) 329-330.
[31] Goff, Lord R and Jones, G The Law of Restitution (4th ed, 1993) 16; and Grantham, R B and Rickett, C E F Enrichment and Restitution in New Zealand (2000) 9-10.
[32] Pettkus v Becker (1980) 117 DLR (3d) 257, 254; and Sorochan v Sorochan [1986] 2 SCR 38.
[33] Linda Chih Ling Koo v Lam Tai Hing (1992) 23 IPR 607, 633.
[34] Duchess of Argyll v Duke of Argyll [1967] Ch 302. See generally Lac Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14; and Dal Pont and Chalmers, supra note 30, at 80-81.
[35] See Meagher, Gummow and Lehane, supra note 20, at 433-435.
[36] See Dal Pont and Chalmers, supra n 30, at 567-570.
[37] See Cheshire, G C, Fifoot, C H S and Furmston, M P Law of Contract (12th ed, 1991) 562-565.
[38] See Dal Pont and Chalmers, supra n 30, at 567-570.
[39] Walsh v Lonsdale [1882] UKLawRpCh 85; (1882) 21 ChD 9.
[40] Seddon, N C and Ellinghaus, M P Cheshire and Fifoot’s Law of Contract (7th ed, 1997) 471.
[41] Pearce and Stevens, supra note 25, at 118; Friedman, supra note 25, at 174; and Laws NZ, “Agency”, paras 7 and 34.
[42] Friedman, supra note 25, at 233-234; and Laws NZ, ibid, para 140.
[43] See the Statutes of Set-Off, comprising the Insolvent Debtors Relief Act 1728 (Imp) and the Set-off Act 1734 (Imp), in force in New Zealand by virtue of s 3(1) of the Imperial Laws Application Act 1988. The principles in these statutes have long since been absorbed into the common law. See eg Felt and Textiles of New Zealand Ltd v R Hubric Ltd (in receivership) [1968] NZLR 716, 713-718.
[44] See Rawson v Samuel (1841) Cr & Ph 161, and Grant v NZMC Ltd [1988] 1 NZLR 8, 11-13.
[45] The Statute Quia Emptores, refining the rights of tenants and sub-tenants, was passed in 1290. Actions in seisin and right, and writs of entry and novel disseisin - legal mechanisms supporting the system of tenure - were available from relatively early times in both the lords’ and the king’s courts. See generally Milsom, S F C Historical Foundations of the Common Law (2nd ed, 1981) 99-150; and Van Caenegam, R C The Birth of the English Common Law (2nd ed, 1988) chapter 2.
[46] Adams, J N and Brownsword, R Key Issues in Contract (1995) 355.
[47] Bridge v Campbell Discount Co Ltd [1962] AC 600, 626.
[48] Bigwood, supra note 15, at 21. See also the comments of Salmon J in Brusewitz v Brown [1923] NZGazLawRp 219; [1923] NZLR 1106, 1109. Bigwood makes an outstanding contribution to legal theory in elaborating the law’s antithesis to exploitation in contract law. See also notes 50 and 51.
[49] “Bargaining, Duress and Economic Liberty” 43 Colum LR 603, 604.
[50] “Are Coerced Agreements Involuntary?” (1984) 3 Law and Phil 133, 134. See also the comments to like effect in Bigwood, “Coercion in Contract: the Theoretical Constructs of Duress” (1996) 46 U Tor LJ 201, 201-203; Farnsworth, “Coercion in Contract Law” (1982) U Ark at Little Rock LJ 329, 332-333; and Atiyah, supra note 13, at 734-735.
[51] Bigwood, “Undue Influence: ‘Impaired Consent’ or ‘Wicked Exploitation’?” (1996) 16 OJLS 503, 505.
[52] Bigwood, supra note 15, at 45.
[53] Finn, “Unconscionable Conduct” (1994) 8 Jnl of Contract Law 37, 40. Note particularly in this regard the courts’ special approach to the interpretation of exemption clauses in standard form contracts: as to this see Treitel, G H The Law of Contract (1999) chapter 7.
[54] Bigwood, supra note 51, at 507.
[55] Bigwood, supra note 15, at 14.
[56] Telecom South Ltd v Post Office Union (1992) 1 ERNZ 711, 722, and Lowe Walker Paeroa Ltd v Bennett (1998) 2 ERNZ 558, 582.
[57] Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd (1991) 2 All ER 596, 606. For a recent application, see Mahmud v Bank of Credit and Commerce International SA (in liq) [1997] UKHL 23; [1998] AC 20 (HL).
[58] The implied term suffered a statutory eclipse during the period that the Employment Contracts Act 1991 was in force. A novel counterpart has been reinstated by s 4 of the Employment Relations Act 2000.
[59] Kronman, “Contract Law and Distributive Justice” (1980) 89 Yale LJ 473, 480.
[60] Wright, supra note 9, at 159-160. See also my observations in Daniels v Thompson [1998] NZCA 3; [1998] 3 NZLR 22, 68.
[61] Hedley Byrne & Co v Heller and Partners Ltd [1963] UKHL 4; [1964] AC 465.
[62] To sanction this as “fair” is, however, to revert to distributive justice.
[63] Wright, supra note 9, at 167.
[64] Wright uses the language of each party’s “equal negative freedom” to explain the outcome.
[65] Finn, supra note 53, at 42.
[66] Inland Revenue Comrs v National Federation of Self-Employed and Small Businesses Ltd [1981] UKHL 2; [1981] 2 All ER 93, 104. This sentiment applies equally to New Zealand.
[67] Thomas, “Administrative Law and the Rule of Law” (1987) NZ Law Conference Papers 172.
[68] Ibid; Thomas, supra note 1, at 13-14; and Craig, “Ultra Vires and the Foundations of Judicial Review” (1998) 57 Camb LJ 63.
[69] See eg R v North and East Devon Health Authority, Ex parte Coughlan [1999] EWCA Civ 1871; [2000] 2 WLR 622.
[70] Thomas, supra note 1, at 12-13.
[71] See Bigwood, supra note 15, at 4.
[72] Thomas, “Fairness and Certainty in Adjudication: Formalism v Substantialism” [1999] OtaLawRw 3; (1999) 9 Otago LR 459, 470.
[73] But see Thomas, supra note 12; Thomas, supra, note 71; and “The ‘Invisible Hand’ Prompts a Response” [1999] NZ Law Rev 227.
[74] Thomas, supra note 71, at 468; that is, to “do right to all manner of people after the laws and usages of the realm...”.
[75] I am familiar with the theoretical discourse as to whether justice can be distinguished from fairness. See Thomas, supra note 71, at 468; and supra note 72, at 230. Any such distinction would be futile in the present context.
[76] Richardson, “Changing Needs for Judicial Decision-making” (1991) 1 JJA 61, 64. See also South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282, 316, per Richardson J.
[77] Thomas, supra note 12. See also Feeney, M and Rubin, E Judicial Policy Making and the Modern State (1998) 246.
[78] Thomas, supra note 12, at 56-58; supra note 71, at 470-473; and “Judging in the Twenty-First Century” [2000] NZLJ 228, 230.
[79] Fuller, “The Forms and Limits of Adjudication” (1978) 92 Harv L Rev 353, 378.
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