Lloyd's Maritime and Commercial Law Quarterly
THE ACCEPTANCE WORLD
Angelopoulos v. Sabatino
The decision of the High Court of Australia in Pavey & Matthews Ltd v. Paul
1 transformed the Australian law of restitution. Negatively, it freed quantum meruit claims from their previous dependence on the notion of implied contract. Positively, a majority of the court recognized unjust enrichment to be, in the words of Deane, J., “a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff”.2 Even the judges who held back from accepting the principle of unjust enrichment in Pavey have come, with varying degrees of conviction, to embrace the concept in later decisions.3
The emblematic significance of the Pavey decision in authoritatively establishing unjust enrichment as the central organizing principle for restitutionary claims has, however, obscured difficulties in applying the reasoning of the judgment to later cases. Hopes that the decision would clarify analysis of benefits conferred under ineffective contracts4 have not been fulfilled. Deane, J., awarded the plaintiff a quantum meruit on the basis of Mrs Paul’s acceptance of their building work: “the law recognises an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted”.5 It is unclear from the judgments whether the acceptance of the benefit went to the “justness” of the plaintiff’s claim or to whether an enrichment had been conferred on Mrs Paul. Professor Birks has already noted that the High Court in Pavey failed to articulate a sufficient “unjust” factor to support a cause of action in unjust enrichment.6 Later High Court decisions have consolidated the place of the unjust enrichment principle in Australian law but have failed to remedy the analytical deficiencies of Pavey.7
Lower courts, unlike the highest appellate courts, do not enjoy the freedom to alter paradigms. They have to work with what they have got, namely the framework established by binding authority. In a series of post-Pavey decisions on benefits conferred under ineffective contracts, or under anticipated contracts which fail to eventuate, State courts have conscientiously applied the notion of “acceptance” to restitutionary claims. The result has been a very mixed body of restitution jurisprudence. Pavey has been applied mechanically without any careful analysis of the place of acceptance in the scheme of
1. (1987) 162 C.L.R. 221.
2. (1987) 162 C.L.R. 221, 256–257.
3. David Securities Pty Ltd v. Commonwealth Bank of Australia (1992) 175 C.L.R. 353, 389 (Brennan, J.), 401 (Dawson, J.).
4. The implications of the decision for non-contractual transactions have been largely overlooked in later Australian decisions. See Nelson v. Nelson (1995) 132 A.L.R. 133, where a distinctively equitable approach of doing “equity according to the requirements of good conscience” (Deane & Gummow, JJ., at 159) was preferred where the return of property under an illegal trust was sought.
5. (1987) 162 C.L.R. 221, 257.
6. P. Birks, “In Defence of Free Acceptance”, Chap. 5 of a A. Burrows (ed.), Essays on the Law of Restitution (Oxford, 1991), 105, 111.
7. David Securities Pty Ltd v. Commonwealth Bank of Australia (1992) 175 C.L.R. 353; Baltic Shipping Co. v. Dillon (The Mikhael Lermontov) (1993) 176 C.L.R. 344; Commissioner of State Revenue v. Royal Insurance Australia Ltd (1994) 182 C.L.R. 51.
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