Date: Fri, 1 Jun 2007 02:13

From: Neil Foster

Subject: Say-Dee in the High Court of Australia

Dear Duncan et al

I was surprised to read you suggest that the cognition requirement for the first limb had "crept in" to the discussion of the second limb. On re-reading para [177] I see this is literally what the judgement says:

The result is that Consul supports the proposition that circumstances falling within any of the first four categories of Baden are sufficient to answer the requirement of knowledge in the first limb of Barnes v Addy.

BUT this must be a typo! The whole context of the discussion in paras [171]-[178] is the second limb ("knowing assistance" rather than "knowing receipt"). And the next para, [178] says:

These conclusions in Consul as to what is involved in "knowledge" for the second limb represent the law in Australia.

So I would maintain that the intention of the Court was not to discuss the first limb at all in this section of the judgement, and the word "first" in para [177] must be read as "second"!

{By the way, in my downloaded version of the judgement some of the paragraph numbers don't line up with the paragraphs in the online version, so I am using the online version here.}

And I think I agree with you (though I'm not sure that James Edelman does) that if the proprietary claim against the land is knocked out because of indefeasibility, then the personal claim is also knocked out, but I am still having problems finding enough time out from my pile of marking to spend working out why!

Regards
Neil Foster

Neil Foster
Newcastle Law School
Faculty of Business & Law
University of Newcastle
Callaghan NSW 2308
AUSTRALIA
ph 02 4921 7430
fax 02 4921 6931

>>> "Duncan Sheehan (LAW)" 31/05/07 6:56 >>>

Bear with me if this doesn't make much sense; I'm trying to come to at least an intelligible view. As I understood Say-Dee (paras 174-178) the cognition requirement in Australia for knowing assistance goes down to point 4 on the Baden Delvaux scale. The first limb of Barnes v Addy seems to creep in to those paras as well suggesting the cognition requirements for knowing receipt and assistance are the same. I have doubts about whether that can be right (certainly it isn't in England), but if it is then if one fits into the fraud exception, the other must and vice versa).

Secondly in an assistance case, you don't ever need to get hold of the assets necessarily, so there seems no reason to invoke any indefeasibility provisions; nobody's attacking anybody's title to anything. It's purely personal liability, and maybe therefore calling it constructive trusteeship is a little misleading. If knowing receipt is the same type of constructive trusteeship does the same not apply? Indeed if it is a personal unjust enrichment claim I can't see why indefeasibility matters at all. It will matter though if constructive trusteeship is seen as being contingent on taking some management responsibility for the asset. Once the proprietary claim is knocked out, the personal claim must be (unless the fraud exception applies, in which case neither is knocked out). It's a shame then that the HCA didn't produce any real argument as to what type of liability knowing receipt is. I'm especially fond of para 148 here; a better example of ducking the question I'd be hard pressed to find.

I wonder though if the CA in Say-Dee really were invoking "strict liability knowing receipt" (somebody has to think of a better name!). It was a proprietary claim - a real trust, albeit constructive - dependent already on being able to trace. There's some difficulty in that you're tracing information, but I have no particular difficulty with that. If that's right then if there's no claim to the land (because title's indefeasible) there can't be a claim to the proceeds of sale.

Am I seriously off-beam here?

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