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A statute says that a tenant is "not liable to pay rent" until he receives a disclosure statement from his landlord. No disclosure statement is provided to a tenant. In ignorance of the statute, the tenant pays rent for some time. When informed of the statute, the tenant sues the landlord seeking to recover all the rent paid on the basis of mistake. The landlord defends the claim, raising one defence only - namely, that the tenant received good consideration for the rent (namely, the use and occupation of the premises).

Change of position is not relied on by the landlord. Nor does the landlord argue that, as a condition of recovery, the tenant must give counter-restitution for the value of the benefit he received in return for the rent. Who wins?

According to the Court of Appeal of Victoria, the landlord: Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6.

Two of the judges (Chernov and Ashley JJA) say that the defence of good consideration succeeds. The availability of the defence was not excluded by the terms of the statute. The third judge, Nettle JA, seems to say that the tenant had no claim in the first place, because there was no total failure of consideration.

I agree with the majority. Total failure is surely dead.

All three judges seem to believe (wrongly) that Gummow J in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 was speaking for the entire Court, for there is much reference in Ovidio Carrideo to Gummow J's "unconscionability", anti-unjust enrichment, explanation of restitutionary claims. I have tried elsewhere to show that Gummow J's view is against High Court and House of Lords authority: (2005) 29 MULR 573.

As to the defence of good consideration, until this case I had some real doubts about the existence of such a defence. The proper analysis, I thought, was that either:

(a) the defendant had available the defence of change of position; and / or

(b) the plaintiff was required to make counter-restitution.

But two things suggest that the defence exists. First, it seems to me that the landlord should have a defence without having to positively show a change of position on the faith of the receipt of rent. Such a change of position might be established by evidence from the landlord that "when I got the rent, I thought was entitled to it, so I let the tenant keep occupying the premises", or "if I had not been paid the rent, I would have found out why, and I then would have given the tenant a disclosure statement". But should such evidence really be necessary in order for the landlord to succeed?

Secondly, several cases talk of the existence of a separate defence of good consideration - Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695 per Goff J; ANZ v Westpac (1988) 164 CLR 662 at 673; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-9.

It might be possible to say that the true principle in play is counter-restitution. But it may be better simply to say that, when a benefit is given to the plaintiff by the defendant in return for the money or thing that the plaintiff seeks to recover in unjust enrichment, the defendant has a defence of good consideration to the extent of the value of that benefit.

Regards

Jonathon Moore

PS. Disclaimer of interest: I was junior counsel for the landlord, led by Cliff Pannam QC, on appeal (neither of us appeared for the landlord at trial). It is possible, although, because of a change in the legislation, unlikely, that the tenant will seek to bring the case before the High Court of Australia.