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Fortified by the fact that I haven't been laughed off the mailing list (at least not yet), may I make my point a little more strongly, so as to suggest the interceptive subtraction and trust solutions are not warranted. IF it is true that the comedian has a claim for unjust enrichment against the defendant credit card purchaser, AND the law in general does not require the perfection of imperfect gifts, then I do not see how this can count as a case of interceptive subtraction, because the plaintiff was never and is not entitled to the receipt of the money from the defendant, and surely such an entitlement would be a necessary precondition for such a claim. Such an argument, I think, applies a fortiori to the imposition of (what must be a constructive) trust upon the defendant in the plaintiff's favour, for if there is any argument for a trust here then it would presumably be of the kind (assuming again, the IF... and AND... above are correct) argued for and rejected in Westdeutsche. The case of the secret trusts (I confess a prejudice here, since I think secret trusts absent actual fraud on the part of the legatee are completely unjustified, if not incoherent) is special, because in the absence of the forward looking trust the intended gift could not take place, because the intended donor has popped his clogs and cannot try again to make the gift properly.

JEP

-----Original Message-----
From: Eoin O'Dell
Sent: Wednesday, 21 March 2001 14:43
Subject: [RDG:] Answers on a postcard

Hello all

This is neither an answer (raising as it does more questions) nor a postcard (typically for me, the message does go on a bit :) ), but here goes.

In Lionel's 'hypothetical', a third party makes a payment to the defendant which is then claimed by the plaintiff (in Ireland, as in Canada, we still call them plaintiffs not claimants). James Penner and Andrew Tettenborn argue that the plaintiff has no claim in unjust enrichment against the defendant in such circumstances. There is quite a body of law and commentary on the issues to which this fact structure gives rise.

On the one hand, there is an important series of cases in which the courts have perfected such gifts by rectification of a deed of gift(1); indeed, there are some Irish(2), Canadian(3) and American(4) cases on this fact structure in which trusts have been imposed on the defendant in favour of the plaintiff. Furthermore, there is an important parallel line of authority in which a similar personal action has been granted(5).

On the other hand, against these cases stand important objections similar to those voiced by James Penner. Prof Andrew Burrows and Graham Virgo argue that the absence of privity between the plaintiff and the defendant precludes the plaintiff's claim(6); Prof Lionel Smith argues that any enrichment of the defendant is at the expense of the third party payor and not of the plaintiff(7); and Prof Andrew Tettenborn has argued that in such circumstances, the fact that the defendant lawfully received from the third party provides him with a defence vis a vis the plaintiff(8). However, Prof Peter Birks has argued that the common law does not recognise this concept of privity, and that the enrichment of the defendant is at the expense of the plaintiff not by direct subtraction but by interceptive subtraction(9).

I have in the past agreed with the Birks side of this particular argument(10), and have just completed an article on whether the intended but disappointed beneficiary in a White v Jones(11) scenario can have a personal restitution action against the actual but unintended recipient, again agreeing with the Birks side of the argument(12) (all of the citations and references in this message are taken from that draft article). It would not therefore strike me as entirely unlikely if the Canadian arbitration held in favour of the plaintiff in the circumstances outlined in Lionel's 'hypothetical'.

On the terms of the Canadian principle against unjust enrichment, (i) the payment to the defendant by the third party would constitute the enrichment; (ii) the interceptive subtraction - that the third party intended that the enrichment reach the members of the audience, including the plaintiff - would constitute a corresponding deprivation on the part of the plaintiff, into which context would fall the arguments between Burrows, Penner, Smith, Tettenborn and Virgo, on the one hand, and Birks and me on the other; (iii) as to whether, on the one hand, there was 'an absence of juristic reason', the debate here would be as to whether the plaintiff's 'ignorance' of the defendant's enrichment would constitute an 'unjust factor' and thus deprive the defendant of a juristic reason for the enrichment, or, on the other hand, the gift made by the third party amounted to a juristic reason for the defendant's enrichment.

Why doesn't Lionel put those of us who are not familiar with the background to the hypothetical out of our misery and let us know how the arbitration turned out?

Eoin.

References

(1) Walker v Armstrong (1856) 8 DeGM&G 531; 44 ER 495; Thompson v Whitmore (1860) 1 J&H 748; 70 ER 748; Lister v Hodgson(1867) LR 4 Eq 30 (approved in White v Jones [1995] 2 AC 207, 262 per Lord Goff); Bonhote v Henderson [1895] 1 Ch 742; McMechan v Warburton [1896] 1 IR 435 (Chatterton VC); aff'd [1896] 1 IR 441 (CA Ir); Van Der Linde v Van Der Linde [1947] Ch 306; Craddock Brothers v Hunt [1923] 2 Ch 136 (CA).

(2) Shanahan v Redmond (High Court, unreported, 21 June 1994, Carroll J; noted [1997] LMCLQ 197); Lac Minerals v Chevron Mineral Corporation of Ireland and Ivernia [1995] 1 ILRM 161, 176-178 per Murphy J discussing Craddock Brothers v Hunt (above), Majestic Homes Property v Wise [1978] Qd R 225 and Shepheard v Graham (1947) 66 NZLR 654.

(3) In re the Estate of Tolin 622 So 2d 988 (1993; Florida SCt).

(4) Farquhar "Designated Insurance and Pension Beneficiaries and Unfulfilled Expectations" (1997) 14 Can JFL 63

(5) Jacob v Allen (1703) 1 Salk 27; 91 ER 26; Official Custodian for Charities v Mackey (No 2) [1985] 1 WLR 1308; In re PMPA Insurance [1986] ILRM 524 (Ir HC; Lynch J).

(6) Burrows The Law of Restitution (Butterworths, London, 1993) 46-54; Virgo Principles of the Law of Restitution (OUP, Oxford, 1999) 106; see also Fitzgerald "Ownership as the Proximity or Privity Principle in Unjust Enrichment Law" (1995) 18 UQLJ 166.

(7) Smith "Three-Party Restitution. A Critique of Birks' Theory of Interceptive Subtraction" (1991) 11 OJLS 481.

(8) by Tettenborn "Lawful Receipt - A Justifying Factor ?" [1997] RLR 1; His position on this debate is therefore unsurprising.

(9) Birks An Introduction to the Law of Restitution (Oxford, rev ed, 1989) 133-134; Birks "At the Expense of the Claimant: Direct and Indirect Enrichment in English Law" (2000) Oxford U Comparative Law Forum 1 at ouclf.iuscomp.org; Birks and Mitchell "Unjust Enrichment" in Birks (ed) English Private Law (OUP, Oxford, 2000) vol II, 525, 530, 538.

(10) O'Dell "Insurance Payments (Mis)Directed, Equitable Maxims (Mis)Used, and Restitution Doctrines Missed" [1997] LMCLQ 197; O'Dell "Restitution" in Byrne and Binchy (eds) Annual Review of Irish Law 1997 (Round Hall Sweet & Maxwell, Dublin, 1998) 607, 611-616.

(11)[1995] 2 AC 207 (HL).

(12) "Restitution, Rectification and Mitigation: Negligent Solicitors and Wills, Again" (electronic draft available to anyone who is interested).

EOIN O'DELL BCL(NUI) BCL(Oxon)
Editor, Dublin University Law Journal.
Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland.
(353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m)
(All opinions are personal. No legal responsibility whatsoever is accepted.)