… we are not concerned in this case with what a hypothetical, experienced commercial person believed he or she was contracting for; in order to decide whether the appellants in this case have received consideration for payment of the additional moneys, we must ask what these particular appellants, in all the circumstances, thought they were receiving as consideration. In this context, consideration means the matter considered in forming the decision to do the act, "the state of affairs contemplated as the basis or reason for the payment" [citing Birks, An Introduction to the Law of Restitution (1989) p223 . And, as we have stated, the "state of affairs" existing in the appellants' minds was that the withholding tax was their liability.
229 Einstein J cited this passage at J105. As he observed at J106, the passage quoted from Professor Birks' work was expressly approved in the joint judgment of Gleeson CJ, Gaudron and Hayne JJ in Roxborough at 525[16] and the larger passage from David Securities was approved by Gummow J in the same case at 557[104].
230 Before Einstein J, as in this Court, Mr Gageler SC submitted that it was a misconception to analyse the cause of action identified in Roxborough as having turned on the existence of the payer's subjective intention. He submitted that a proper reading of Roxborough was that the High Court had applied an objective test to ascertain the consideration that ultimately failed in light of Ha. The passage in David Securities dealt with the defence available to a payee sued on the basis of the payer's mistake (or some other restitutionary cause of action), being a defence that the payer had received good consideration for the payments sought to be recovered (see David Securities at 379-80 and generally Mason & Carter, Restitution Law in Australia at [2518]-[2522]).
231 It is sufficient for the appellants to demonstrate that there is a genuine common issue of substance about the juristic grundnorm of the cause of action to recover money on the basis of a consideration that failed. This they have done, assisted by the vigorous joinder of issue on the matter by the respondents who adopted the submissions of Mr Jackman SC on this point.
232 Since, however, the trial judge expressed views on the matter with which I disagree I think it necessary to outline my understanding of the topic. I do so tentatively in light of what I perceive to be differences within the various judgments in Roxborough. These appear to turn upon differing views about the application of equitable doctrines of unconscionability in this area (see generally Ross Grantham, "The Equitable Basis of the Law of Restitution" paper delivered at Conference on Fusion: The Interaction of Law and Equity in Commercial Law in December 2004, to be published under a book of that title edited by Simone Degeling and James Edelman).
233 I accept Mr Gageler's submission as to the nature of the Roxborough cause of action and as to the misapplication of the passage from David Securities.
234 On my reading of Roxborough, there is some disagreement in the High Court about the juridical grundnorm of the cause of action to recover money paid upon a failure of consideration. Callinan J squarely rejected any suggestion that the claim is equitable (at 589[202]-[203]). Kirby J (who dissented) also spoke of the cause of action as a common law right (at 578[167-]-[170]). The joint judgment of Gleeson CJ, Gaudron and Hayne JJ acknowledge the influence of general equitable notions in what they described as a common law count (at 525[16]). Gummow J also described the claim for money had and received as a common law right, nevertheless placing greater emphasis upon the continuing influence of traditional doctrines of equity (see esp at 554[100] and 557[104]). To his Honour, the ultimate question or trigger for liability was the unconscionability of the defendant retaining and enjoying the payments with respect to the licence fee in the events that had happened.
235 Each justice in the majority in Roxborough applied essentially similar reasoning, for present purposes. The action to recovery money paid on the basis of the failure of the whole or a severable part of the consideration is not confined to money paid under contract (see Roxborough at 525[16], 555[102]). But Roxborough, like the present case, involved contracts. The contracts were valid and made no provision for the consequence of Ha. But the state of affairs under which the plaintiffs had paid money became falsified by the decision in Ha invalidating the legislative schemes dealing with licensing fees. The common intention of the parties as manifested in their contractual arrangements had been falsified and the state of affairs concerning tax liability had altered in a manner that generated the restitutionary right of recovery, whatever its ultimate juridical basis. One would think that, even on Gummow J's focus upon the conscience of the recipient payee, an identical result will apply across the board if the triggering circumstances are relevantly identical. What is known at the present stage of these proceedings indicates that they are.
236 The point taken by the primary judge and supported by the respondents was, however a slightly different one.
237 As indicated, Einstein J held that in the present case the viability of each plaintiff's cause of action would turn upon his, her or its state of mind at the time when the invoiced payments with respect to tobacco licence fees were made. His Honour rejected the submission that the contractually-identified consideration was to be discerned in each case by an objective test applied to the various contracts which were assumed to be common in presently material respects.
238 In the restitutionary cause of action to recover money paid on the basis of total failure of consideration, "consideration" is not the criterion for enforceability of contractual promises. For one thing, the cause of action may be available in a non-contractual context. The word "consideration" in this context refers to the defendant's failure to perform what was promised (Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 350-1, 389), the failure to render the agreed return for the plaintiff's payment (Carter on Contract at [44-050]).
239 The failure is judged from the perspective of the payer (David Securities at 382, citing Rover International Limited v Cannon Film Limited [1989] 1 WLR 912 at 923). That person is the party to the contract who is seeking restitution. But, for present purposes, the critical point is that it is the benefit bargained for as distinct from that subjectively contemplated by the plaintiff/payer that is critical. In other words, one must determine, in a contractual situation, what was "the state of affairs, which was within the contemplation of the parties as the basis of their dealings" (Roxborough at 526[17] per Gleeson CJ, Gaudron and Hayne JJ); or "the state of affairs contemplated as a basis for the payments [sought to be recovered]" (id at 557[104] per Gummow J). The right to restitution only arose when Ha falsified the common, objectively discernible basis of the earlier transaction.
240 In the joint judgment, the materiality of the objective contractual manifestations is made quite explicit in the explanation why the licence fee component could be treated separately for the purpose of the law's requirement of a "total failure" of consideration. Their Honours said at 527[21] (emphasis added):