From: Matthew Hoyle <MHoyle@oeclaw.co.uk>

Sent: Monday 14 December 2020 19:32

To: 'Robert Stevens'; obligations@uwo.ca

Subject: RE: Mistake in the Privy Council

As far as I knew, counsel did not advise on the legality of swaps one way or the other until 1989, shortly before Hazell commenced proceedings against Hammersmith. Most of the councils seem to have just assumed they could do it on the portfolio management basis, and Hammersmith and Fulham were just plain reckless.

As to the point on mistake it seems clear to me that the parties did make a mistake here. Like Hammersmith, this isn t even a hard case of an ultimate appellate court overturning its own previous decision, or even an ultimate court overturning an appellate court. It is an erroneous first instance judgment being overturned by an appellate court. Given that courts of coordinate jurisdiction are free to (and do) take different views on the same point of law, there clearly is some unwritten law (the applicable principles of the common law?) which the later court is able to apply (and a party is able to be mistake about, even if following the first judgment). The law cannot be both at once, but there is no question that the second court has somehow retrospectively changed the law.

It seems difficult to me that if a first instance judge has erroneously decides that you are free to punch me in the face if I insult you, that your conduct is not unlawful until a second court retrospectively makes it so. It is always unlawful to punch me, and any person familiar with the relevant case law could reach that conclusion and determine that the first judge was mistaken without a second judge saying so.

I m not sure per incuriam can bear such weight. If I cite a determinative statute to a judge and they irrationally ignore it, that cannot somehow render their decision more correct than if I simply didn t cite the authority to them.

I also struggle with the equivalence between overruling an erroneous decision and a retrospective act of legislation. More needs to be done to establish the two are comparable I m not sure any legal system adopts such an equivalence (though interestingly it seems some systems permit interpretative changes to laws by a legislature but not innovative changes e.g. Peruvian law: Minera Las Bambas [2020] EWHC 108 (Comm) at [11]).

Best,

Matthew

From: Robert Stevens <robert.stevens@law.ox.ac.uk>
Sent: 14 December 2020 18:32
To: obligations@uwo.ca
Subject: Mistake in the Privy Council

An interesting decision of the Privy Council on restitution, with the lead judgment given by Lord Burrows, in an appeal from Trinidad and Tobago.

Samsoondar v Capital Insrance.

https://www.jcpc.uk/cases/jcpc-2018-0021.html

Samsoondar (Appellant) v Capital Insurance Co Ltd (Respondent) (T & T) - Judicial Committee of the Privy Council - JCPC

Samsoondar (Appellant) v Capital Insurance Co Ltd (Respondent) (T & T) Case ID: JCPC 2018/0021 Jurisdiction: Court of Appeal of the Republic of Trinidad and Tobago

www.jcpc.uk

As presently advised, I think it is wrong, and that it exemplifies a problem with unjust enrichment orthodoxy.

The claimant was the third party loss insurer of the defendant s vehicle. The policy between them was owner driver only. In 2005 the defendant s lorry was in an accident damaging a third party s vehicle, whilst being driven by an employee of the defendant.

The defendant sent a claim form under the insurance policy, and the claimants informed the defendant that they were settling the matter with the third party, but that he would have to pay the excess, which he did

In a T&T judgment of 9 June 2006 Selwyn Benjamin v Stephen Kokaram J had held that owner driver only covered cases of those driving with the permission of the driver, such as this one.

By a letter of 10 April 2007 the claimants disputed their liability under the policy on the basis that the defendant had not been personally driving, but then on 21 June 2007 told the defendant that they had paid $43k in settlement of the claim.

In 2012 the Privy Council in President Insurance Co Ltd v Resha St Hill [2012] UKPC 33 the overturned the earlier interpretation of policies of this kind, so that cover did not extend to drivers authorised by the owner.

Amongst a number of other claims, the claimants sought restitution of the money paid. The Privy Council overturned the T&T Court of Appeal and denied the claim.

First thing of note is that the court thought this was a case about the discharge of another s liability. After all, the payment made had discharged the defendant s liability in tort.

This seems mistaken, and the analysis of the Court of Appeal preferable.

There was a contract between the claimants and defendant. The claimants were, at the request of the defendant, performing their contractual obligations to the defendant. If a bank makes a payment authorised by its customer to a third party, where it does so by mistake the correct defendant (if any) is its customer, not the third party. If the customer is making a mistake, it may have a claim against the third party, because the payment was made by it through the agency of its bank.

The same was true here. There were two transactions. The insurer was performing its contractual obligations to its counterparty. The defendant was paying the third party, through its insurer, the money it owed because of the tort.

The insurer was performing to its insured. In the language preferred by the English Restatement, the third party received an incidental benefit from the performance rendered by the insurer to the insured.

Put another way, this should have been seen as a straightforward Kelly v Solari case. The insurer was paying the insured the money.

Second, the claim is primarily ruled out because of the lack of any unjust factor . Narine JA in the Court of Appeal had stated

the existence of the contract of insurance; (ii) breach of the contract by permitting a person not authorised under the policy of insurance to drive the vehicle; (iii) the accident which gave rise to the third party claim, and the liability of the appellant for same;(iv) the request of the appellant to Capital to handle the claim of the third party, (demonstrated on the evidence by his approach to Capital after the accident via his employee, the completion of a claim form in which his driver indicated that he was the party in the wrong, and his payment of the uninsured excess); (v) the consequential payment thereafter by Capital of the third party claim; (vi) the inability of Capital on the state of the law as it then stood, to avoid payment of the third party s claim against the appellant; (vii) the appellant's obtaining, by Capital s payment, the benefit of his discharge from legal liability to the third party; and (viii) the unconscionable refusal of the appellant to make restitution to Capital in circumstances in which he had accepted liability by having his employee fill out the claim form to this effect, and paid the excess under the policy, while yet retaining the benefit of Capital s payment on his behalf.

The Privy Council understood Narine JA to be invoking the unjust factor of legal compulsion, exemplified by cases such as Moule v Garrett, where a claimant is legally compelled to discharge an obligation that is primarily owed by the defendant. But that obviously doesn t apply here as the claimant was not under any legal obligation to the third party.

A possible alternative on the orthodox account in the textbooks would be to invoke a mistake but the claimants had not claimed that they were mistaken in their pleadings. As they hadn t pleaded and proved that, their claim was rejected.

But why hadn t the claimants said that they were, as a matter of fact, making a mistake?

For the obvious reason that they weren t.

They had paid because the positive law in 2007 in Trinidad and Tobago was that they were obliged to do so. They made no mistake at all. If those with legal authority (ie the judges) say The Law is X then the law is X. The only exception to this in a system of binding precedent is where a judge gives a decision without having the relevant binding legal materials cited to her (ie it is per incuriam and so not the law). There isn t a kind of shadow law un-posited somewhere in the ether. The law back in 2007 was that the money was due.

So the claimant s pleadings just told the truth. In 2012 when the Privy Council overturned the earlier decision the law was changed. It did so with retrospective effect, but in the words of Birks that cannot falsify history.

This was a small claim, $43,500. Those responsible for the pleadings just pleaded the facts as they were. Unversed in unjust enrichment theory, they had no idea that they were expected to invoke a fictional mistake. They just said what had happened: they paid because that is what the law in 2007 required of them.

In England decades ago, the various parties in the interest rate swap contracts entered into by banks and local authorities in order to escape caps on local government borrowing were doing so on the basis of a pretty dubious advice from senior counsel that it was all valid. This advice obviously turned out to be wrong in Hazel & Hammersmith. Restitution was allowed on the basis of mistakes that the Supreme Court (differently constituted) in FII recently described accurately as "deemed"

In this case, there was judicial authority saying what the law was. The money was due. Until it was reversed, that was the law.

The more authoritative the legal source the more implausible the mistake analysis becomes. (Eg a statute overturned with retrospective effect.) But the more authoritative the law is at the time the payment is made, the more deserving the claimant is as it is implausible to describe him as a risk runner.

If the claimants in this case had paid on 21 June 2007 knowing full well that the claim was dubious and that the authority of Kokaram J was doubtful, but did so in order to settle any dispute, then no claim should succeed. They have consented to the position they find themselves in, and the law should not come to their assistance.

But where money has been paid for no reason, who should have to plead that the claimant, rather unusually, consented to this state of affairs? It should be the defendant.

The claimants didn t do so because unaware of the theoretical baggage that expected them to plead that they didn t consent to this unjust result.

[Lots of other things of interest, including discussion of enrichment, and an attempt to revive the "three stage test."]

Rob

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