Restatement (Third) of Restitution and Unjust Enrichment, vols.1-2.

• Jurisdiction: Australia
• Author: Kremer, Ben
• Date: 01 December 2011

Restatement (Third) of Restitution and Unjust Enrichment by the American Law Institute (St Paul: American Law Institute, 2011) vol 1, pages v-xxxvi, 1-670; vol 2, pages iii-xxxii, 3-745. Price US$131.00 (hardcover) each. ISBNs 978-0-314-02062-4 and 978-0-314-60468-2.

One unfortunate feature of Commonwealth restitution jurisprudence is its scant use of American scholarship. It is not often appreciated just how much the present law owes to academic work performed in America over the last century, and the wealth of that learning remains significantly under-utilised. The publication by the American Law Institute of the Restatement (Third) of Restitution and Unjust Enrichment ('Third Restatement') (1)--under the direction of reporter Professor Andrew Kull--should, it is hoped, assist in redressing matters.

As is well known, Lord Mansfield in Moses v Macferlan injected into the action for money had and received the Roman notion of a contract 'quasi ex contractu', (2) and used it to structure the action around notions of conscience and the 'right to retain' the monies in issue. However, few efforts at any formal systematisation followed this jurisprudential innovation. The work of Sir Williams Evans, writing in 1802, is probably the most notable attempt, although it was limited to the action in money had and received and did not attempt to draw together the other common counts. (3) Justice Gummow has remarked upon the factors making the milieu in England unfavourable to such a process, (4) and so

it is not at all surprising that the first significant steps towards the creation of restitution jurisprudence were taken in America.

The seminal work was Dean William Keener's 1893 masterpiece, A Treatise on the Law of Quasi-Contracts, (5) in which the author clinically analysed the deficiencies in the concept of a 'contract implied in law' and advanced in its place a doctrine based upon unjust enrichment. (6) Setting, perhaps, a pattern for many future book reviews of contributions on the subject of restitution, a reviewer first noted approvingly the analytical work undertaken, observing that Keener 'brought to the exploding point the uneasy consciousness of many legal writers that the usual division of obligations into those of contract and those of which the violation is a tort is inadequate, if not erroneous', (7) before offering criticism based upon personal differences of opinion as to specific points of private law covered.

The utility of Keener's analysis was enhanced by Frederic Woodward. (8) Woodward's treatise appeared in 1913, a year before the House of Lords delivered its judgment in Sinclair v Brougham, (9) a case that may well constitute the nadir of English jurisprudence on the topic of restitution. Its well-criticised confusion between a contract implied in law and an obligation implied in (or, rather, imposed by operation of) law is all the more surprising given Viscount Haldane LC's quotation of Professor James Ames' observations as to 'the essentially equitable quasi-contracts growing out of the principle of unjust enrichment.' (10)

In 1937, following a period in which the most notable English contribution to the subject may have been Scrutton LJ's oft-quoted remark in Holt v Markham, (11) the American Law Institute published the Restatement of the Law of Restitution ('First Restatement'), (12) for which Professors Austin Scott and Warren Seavey were the reporters. This work, for the first time, collected common threads behind a collection of seemingly disparate corners of the law and arranged them thoughtfully, all the while expressed with the reporters' characteristic lucidity. (13) It appears not often to be appreciated just how much of an influence the First Restatement had upon Commonwealth law. Two illustrations ought to suffice.

The first is Lord Wright's celebrated speech in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd ('Fibrosa'), (14) the reasoning of which is pervaded by the analysis set out in the First Restatement even though the work itself is cited only once. (15) Lord Wright endorsed 'a third category of the common law which has been called quasi-contract or restitution', (16) highlighted its fundamental place in a civilised legal system, (17) emphasised its separateness from contract and tort, (18) and cemented its rationale as the avoidance of unjust enrichment. (19) All of these fundamental points, which set the stage for the orderly development of the subject, are traceable directly to the First Restatement.

Indeed, the depth of Lord Wright's familiarity with the First Restatement can be seen in his earlier article on Sinclair v Brougham (20) (itself cited in United Australia Ltd v Barclays Bank Ltd) (21) and in his extensive review of the First Restatement, written some six years before Fibrosa. (22) His approval of its contents is clear. The comment that the English authorities in the area, 'though never fully analyzed or classified in any English textbook ... seem, on the whole, to agree with the American law' (23) is telling. Of note also is the prophetic comment, made after contrasting the then current English scholarship on restitution with that of the United States, that:

I feel some hope that the Restatement will induce English lawyers to produce a reasoned treatise on the subject, and to classify, analyze and rationalize the large mass of authority in English case law. They will find an admirable model and example in the Restatement. (24) One particularly important aspect of Lord Wright's speech in Fibrosa was its emphasis upon the lack of any right in the defendant to retain the monies in issue as generating the 'unjust enrichment':

The claim for repayment is not based on the contract which is dissolved on the frustration but on the fact that the defendant has received the money and has on the events which have supervened no right to keep it. The same event which automatically renders performance of the consideration for the payment impossible, not only terminates the contract as to the future, but terminates the right of the payee to retain the money which he has received only on the terms of the contract performance. (25) Lord Wright's analysis is consonant with the First Restatement (26) (and with present Australian law), (27) although it has not always been maintained in some later English scholarship (particularly that which has tended not to analyse or cite directly from the First Restatement). (28)

It would not be overstating matters to suggest that the decision in Fibrosa was the springboard for the development of restitution scholarship in England and then the Commonwealth, despite some early suspicions from the bench. (29) A good deal of the reason for this is the clarity and sense with which Lord Wright was able to introduce and explain the new doctrinal structure he was creating in English law.

The second illustration of the importance of the First Restatement is its prominence in the analyses of the earliest persuasive Commonwealth texts in the area. The very first footnote in the first edition of Goff and Jones' work refers to the First Restatement, (30) and the doctrinal analysis adopted, commencing with the selection of the avoidance of unjust enrichment as the underlying principle explaining why actions lay, (31) is traceable to that work. The First Restatement figures prominently in the elaboration of the basics of the topic, (32) and is frequently cited (along with other American material) when the work deals with particular instances of claims, often in those areas where there was either no direct or no clearly settled English authority. (33) A good understanding of the First Restatement is also evident in works by Winfield (34) and Stoljar, (35) which guided Australian courts before the topic reached vogue. (36)

Later Commonwealth scholarship has never fully acknowledged its analytical debt to its American roots. One reason may be the unfortunate tendency away from use of comparative law, given the growing insularity of practitioners and academics, who focus (often out of necessity) upon their legal system alone. Another is probably the decline in popularity of American restitution scholarship that occurred in the latter part of the 20th century, just as Commonwealth interest picked up. (37) Professor Kull himself has offered as a reason for that decline the subject ceasing to be taught as a discrete unit in American law schools, with the result that practitioners never became familiar with its principles and in turn simply failed to recognise restitutionary situations when encountered in practice. (38) It might also be that the quality of the First Restatement contributed to this somewhat paradoxical result, as it so well settled the field in American law as perhaps to give the impression that there was little left to do academically other than tinker at the edges. However, it is testament to the regard in which the First Restatement has been held in Australia that no less an authority and scholar than Windeyer J was content to cite it, with unelaborated approval, in support of a proposition of law in the unlawful exaction case of Mason v New South Wales. (39) Later references to the First Restatement by the High Court in a series of important cases are to similar effect. (40)

It is quite clear that any attempt to update or replace the First Restatement would always have faced formidable obstacles. For one, Professors Scott and Seavey left large shoes to fill. (41) For another, the subject is (at least in the Commonwealth) usually never short of academic opinions that are often as mutually exclusive as they are forceful. (42) Thankfully, the American Law Institute has amply met the challenge in the form of the Third Restatement. (43)

The first notable change in the Third Restatement is a fundamental reorganisation of its content. One unusual aspect of the First Restatement was its division into two parts. The first...