Lloyd's Maritime and Commercial Law Quarterly
MISTAKEN PAYMENTS AND THE LAW OF RESTITUTION
HONOURS
The Quarterly congratulates Professor Francesco Berlingieri, a member of the Editorial Board, on having become an Honorary Officer of the Order of the British Empire and Professor Francis Reynolds, Consultant Editor and previously General Editor, on having become a Queen’s Counsel honoris causa.
MISTAKEN PAYMENTS AND THE LAW OF RESTITUTION
David Securities v. Commonwealth Bank of Australia
Several important points of the law of restitution were recently considered by the High Court of Australia in David Securities Pty. Ltd. v. Commonwealth Bank of Australia.1 While it is doubtful whether the case required that all receive the attention bestowed, it was necessary to determine whether a payment made as a result of a mistake of law is recoverable. The court sat as a full court, presumably because an affirmative answer to this question was being sought in the face of a number of the court’s previous decisions which appeared to take the opposite position.
The mistake of law rule
Mason, C.J., Deane, Toohey, Gaudron and McHugh, JJ., in a joint judgment, gave the prayed-for affirmative answer, explaining the earlier authorities as containing obiter dicta only or as being instances where the payment had been made voluntarily. Voluntariness amounts to indifference on the part of the payer as to where the truth lies in respect of the relevant question of fact or law or to a failure to contest the point in the face of a clear contrary assertion by the payee.2 In such cases the payer cannot be said to be mistaken at all. One might assume that evidence of a payer’s voluntariness is more likely to arise in respect of points of law than of fact. Their Honours were persuaded to their conclusion by what they perceived as persistent difficulty in drawing a distinction between issues of fact and law, and a number of incidental factors, including the fact that the leading English case to the contrary (Bilbie v. Lumley
3) seemed itself a change from the original position of the common law, the weight of recent appellate authority around the
1. (1992) 109 A.L.R. 57.
2. For a wider view of “voluntariness” in this context, see S. Arrowsmith, “Mistake and the Role of the ‘Submission to an Honest Claim’”, Chap. 2 of A. S. Burrows (ed.), Essays on the Law of Restitution (1991). See also F. C. Woodward, The Law of Quasi Contracts (Boston, 1913), 18–19; N. H. Andrews, “Mistaken Settlements of Disputable Claims” [1989] LMCLQ 431; P. A. Butler, “Mistaken Payments, Change of Position and Restitution”, Chap. 4 of P. D. Finn (ed.), Essays on Restitution (Sydney, 1990), 102–106; and Law Commission, Restitution of Payments Made Under a Mistake of Law, L.C.C.P. No. 120(1991), 102–109.
3. (1802) 2 East. 469; 102 E.R. 448.
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