Robert Coshott v Michael Lenin

Robert Coshott v Michael Lenin - [2006] NSWDC 139 - NSWDC 1998 case summary — Zoe

[41]

"It is clear from these cases that, though in an indebitatus assumpsit a promise to pay was supposed to have been made, the promise was very much of a fiction. It is clear, therefore that Holt's objections on this score to allowing the action for breaches of bye-laws and customary duties could hardly be sustained. The action had come to be regarded as the proper remedy for a mass of miscellaneous duties imposed by law. But what was the principle upon which these duties were thus enforced? The form of the action implied that they were enforced because the party liable had agreed to pay. But that was notoriously false. Blackstone, it is true, by the help of the original contract, tried to give some colour to this fiction. A person was liable to be sued in debt on a judgment or a penal statue, or in indebitatus assumpsit on a bye-law, because of "an implied original contract to submit to the rules of the community whereof we are members." In other cases an agreement was implied "from natural reason and the just construction of the law." For instance, it is on this ground that we are liable to pay for work done at our request, or to pay over money received to another's use, or to remunerate a person who has spent his own money for our benefit at our request, or to pay what is due on an account stated, or to show adequate skill in any office or employment. It is clear that Blackstone, in thus endeavouring to give colour to this fiction of agreement, hopelessly mixed up cases where there is a real but an implied contract, with cases where there is no real contract, but merely an obligation implied by law - in other words, a quasi-contract. But the fact that Blackstone could seriously put forward such a theory, both illustrates the somewhat haphazard way in which these various duties has come to be enforced, either by the actions of debt or account, or by successive expansions of various forms of assumpsit, and shows that, owing to this haphazard development, the law has not attained a coherent theory of quasi-contract.

[42]

It was easy enough to see that in many of these cases the obligation, being imposed by law, had nothing contractual about it. It was obvious, for instance, that the obligation to make a customary payment, or to pay a penalty for the breach of a bye-law, was simply imposed by law; and the same fact was equally obvious in many of these cases in which the law imposed an obligation to pay, in order to remedy an unjust enrichment. But these cases were numerous and varied, and the principle which underlay them badly needed to be stated. Here Lord Mansfield had his chance. He was not faced by a coherent body of principles like the doctrine of consideration, or the rules as to disseisin, or the rule in Shelly's Case. He found an incoherent set of rules stated in a number of heterogeneous cases; and if there was any one principle at their back, it was the innate feeling of judges that it was just and equitable that a convenient remedy should be given in these cases. This was a situation with which he was eminently qualified to deal. In the passage on his judgment in Moses v Macferlan, in which he laid down the conditions under which an action would lie for these cases of unjust enrichment, he summed up and thereby gave precision to the principle underlying the earlier cases. The actual decision in the case is erroneous; but the principles there laid down are the starting point of the modern development of what is the largest and most important part of the law of quasi-contract; and their acceptance has done much to liberalise the common law. "This kind of equitable action", he said, "to recover back money which ought not be in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which, ex aeqo et bono, the defendant ought to refund: it does not lie for money paid by the plaintiff, which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him in any course of law; as in payment of a debt barred by the statute of Limitations, or contracted during his infancy, or to the extent of principal and legal interest upon an usurious contract, or for money fairly lost at play: because in all these cases the defendant may retain it with a safe conscience, though by positive law, he was barred from recovering. But it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition (express or implied); or extortion; or oppression; or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money." It was thus in the action of indebitatus assumpsit that the larger part of our modern law of quasi-contract has originated. But as we have seen, there are also a certain number of quasi-contractual obligations which had never come within its sphere. On a judgment only debt could be brought; and there were a certain number of obligations still only remediable by actions on the case. It is not till forms of action are things of the past, that the products of these various parallel developments will be able to be grouped together into a uniform law of quasi-contract. It is not till these procedural changes have taken place that the fiction of a promise, and with it the confusion between implied contracts and contracts implied by law, will be got rid of, and the law of quasi-contract will be able to emerge as a distinct branch of the law."

[46]

In this work most of the instances of restitution discussed are those which have traditionally been described as quasi-contractual and based on an implied contract between the parties to the action. Thus, where it is held that a defendant must repay money received by the defendant, the traditional approach has been to treat the defendant's liability as based on a notional or fictional promise analogous to a contractual promise. The promise may be described as a fiction because there is no real or genuine promise to pay. The courts recognised this, but continue, for historical reasons, to treat the promise as an essential element of the recovery. In truth the concept is a legacy of the time when the plaintiff had to plead one of the forms of action, such as indebitatus assumpsit or debt, in order to succeed. Or to put the same point in a less technical way, the assumption that all liability is either contractual or tortious requires the basis for recovery to be in the nature of contract. But as Lord Atkin explained in United Australia Ltd v Barclays Bank Ltd, these 'fantastic resemblances of contracts invented in order to meet requirements of the law as to the forms of action which have now disappeared should not in these days be allowed to affect actual rights'. Accordingly, in the context of an action to recover money after a total failure of consideration, Lord Wright said in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd, that the 'gist of the action is a debt or obligation implied or, more accurately, imposed, by the law in much the same way as the law enforces as a debt the obligation to pay a statutory or customary impost'. To the same effect is a statement by Griffith CJ in R v Brown that the action for money lay 'whenever the defendant had received money which in justice and in equity belonged to the plaintiff'. It is not necessary to give an exhaustive account of the principles of restitution in this chapter. The connection between restitution and contract is frequently rather tenuous. For example, the claim may be based simply on the receipt of money paid under a mistake of fact, where there is no suggestion that the money was paid pursuant to a contract or in the belief that a contract existed."

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Judgment (78 paragraphs)

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Cases Cited (8)