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BCL Law Notes Restitution of Unjust Enrichment BCL Notes

Smith V. William Charlick Notes

Updated Smith V. William Charlick Notes

Restitution of Unjust Enrichment BCL Notes

Restitution of Unjust Enrichment BCL

Approximately 620 pages

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Smith v. William Charlick

Facts

The South Australian Wheat Harvest Board, having made contracts with the plaintiff company to sell to it wheat at 5s. and 6s. 6d. per bushel, and having delivered the wheat and received payment, required the company to pay an additional sum representing the difference between the contract price and 7s. 8d. per bushel for such wheat as was delivered after 30th January 1920. The Wheat Harvest Act 1917, sec. 5, forbade the sale of wheat by any one other than the Board; and the Board told the company that it would sell to the company no more wheat unless the additional sum were paid. The company carries on the business of milling, and, the wheat being essential for the business, the company paid the additional sum under protest. The Board made no pretence of any legal right to the payment, but relied on its (assumed) power to sell to whom it pleased.

Holding

Knox CJ

It is admitted by the formal admission put in at the trial that the petitioner was at all material times unable to purchase any wheat except from the Board, and that if the Board had not supplied the plaintiff with any wheat the plaintiff would have been unable to continue to carry on its business of a miller. It is clear that under the contracts no further money was due than that which had been paid, and that the Government could not have recovered one penny of the surcharge in an action or other legal proceeding. It is clear also that it did not represent that it had any legal right to the surcharge. On the contrary, it disclaimed any legal right to it. It is clear also that when the petitioner paid it he knew that the Board was not asserting the claim as a legal claim.

In the present case there was no mistake of fact, no threat of unauthorized interference with the person or the property or any legal right of the respondent, and no demand made under colour of office. The payment was made with full knowledge of all material facts. The respondent knew that the Board was not, and did not claim to be, legally entitled to demand the money. It was paid, not in order to have that done which the Board was legally bound to do, but in order to induce the Board to do that which it was under no legal obligation to do.

In my opinion none of the cases relied on by the respondent extends far enough to support the claim made in this case, and the appeal should be allowed.

Issacs J.

There was no new contract, and no consideration was given for the payment. But there is no doubt the Board honestly believed, not only in the moral justice of its demand, but also that it had the legal right to refuse to deal any longer with the respondent unless he acceded to the demand.

It is interpreted by the decision to cover a case where a party pays what is demanded on grounds not morally reprehensible, and merely as a condition of the other party's present willingness to deal with him in the future, no present contract or obligation whatever being made or entered into. The "great evil" to be averted would in terms include the refusal of a bank to increase the limit of a customer's credit or of a wholesale merchant to supply a retailer—the result being financial ruin, and the demand being for a sum of which, however just the demand might be or might be thought to be, strict law, as is recognized, would not compel the payment. As the learned Judge demonstrated, no case other than the three mentioned would support so wide a proposition. In my opinion those cases do not authorize it.

It is conceded that the only ground on which the promise to repay could be implied is "compulsion." The payment is said by the respondent not to have been "voluntary" but "forced" from it within the contemplation of the law. Leaving aside, for the present, the question whether in law the payment was "forced" from the respondent by some undue advantage taken of its situation having regard to the Wheat Harvest legislation, the point is whether the Board's insistence was what is regarded as "compulsion" from the simple standpoint of common law. "Compulsion" in relation to a payment of which refund is sought, and whether it is also variously called "coercion," "extortion," "exaction," or "force," includes every species of duress or conduct analogous to duress, actual or threatened, exerted by or on behalf of the payee and applied to the person or the property or any right of the person who pays or, in some cases, of a person related to or in affinity with him. Such compulsion is a legal wrong, and the law provides a remedy by raising a fictional promise to repay. Apart from any additional feature presented by the relevant...

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