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Restitution of Non-Gratuitously Conferred Benefit in Malaysia: A Case for Sowing the Unjust Enrichment Seed

Published online by Cambridge University Press:  25 May 2016

Alvin W-L SEE
Alvin W-L SEE*
Affiliation:
Singapore Management University, [email protected]
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Abstract

This article draws on the common law of unjust enrichment to rationalize and develop the right to recover a non-gratuitously conferred benefit set out in section 71 of Malaysia’s Contracts Act 1950. This attempt at legal transplant and modern restatement is made in the hope of injecting principle and clarity into the antique section with the eventual goal of reviving it for practical and modern use.

Type
Articles
Information
Asian Journal of Comparative Law , Volume 11 , Issue 1 , July 2016 , pp. 141 - 162
Copyright
© National University of Singapore, 2016 

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Footnotes

*

BCL (Oxford); LLB (Leeds); Assistant Professor of Law, School of Law, Singapore Management University.

References

1. Contracts Act 1950 (Act 136) (Malaysia) [CA 1950].

2. In Mohamed Syedol Ariffin v Yeoh Ooi Gark [1916] 2 AC 575 (PC), the Privy Council held that in interpreting a statutory provision any accompanying illustration must be taken into account.

3. Perak Motor Co Sdn Bhd v Estate Pekebun Kecil Sdn Bhd [2006] 4 CLJ 603 at [10] (HC).

4. See e.g. Baylis v Bishop of London 1 [1913] 1 Ch 127 at 140, where Hamilton J said: “Whatever may have been the case 146 years ago, we are not now free in the twentieth century to administer that vague jurisprudence which is sometimes attractively styled ‘justice as between man and man”.

5. See Fong, CHEONG May, Civil Remedies in Malaysia (Petaling Jaya, Selangor: Sweet & Maxwell Asia, 2007)Google Scholar at c 7; David FUNG, “Restitution and Section 71 of the Contracts Act 1950” [1994] 2 MLJ lxxix.

6. Localized versions of the ICA 1872 are also presently in force in Bangladesh, Brunei, Myanmar, Pakistan, and Tanzania.

7. The Third Indian Law Commission was appointed in London in 1861.

8. Third Indian Law Commission, Second Report on the Substantive Law for India (1866) in Parliamentary Papers, House of Commons and Command, vol 49 (London: HMSO, 1868).

9. See AMES, JB, “The History of Assumpsit” (1888) 2 Harvard Law Review 53 CrossRefGoogle Scholar; JACKSON, RM, The History of Quasi-Contract in English Law (Cambridge: Cambridge University Press, 1936)Google Scholar; BAKER, JH, “The Use of Assumpsit for Restitutionary Money Claims 1600–1800” in E JH SCHRAGE, ed, Unjust Enrichment: The Comparative Legal History of the Law of Restitution (Berlin: Duncker & Humblot, 1995), 31 Google Scholar.

10. The Latin phrase ex quasi contractu, which means “as though upon a contract”, is obviously less misleading. See BIRKS, Peter, An Introduction to the Law of Restitution (Oxford: Oxford University Press, 1985) at 34 Google Scholar [Birks, An Introduction].

11. See POTHIER, R, A Treatise on the Law of Obligations or Contracts, trans by William David EVANS, vol I (London: Joseph Butterworth, 1806) at 85 Google Scholar; MAINE, Henry, Ancient Law (London: John Murray, 1861) at 343–344 Google Scholar; LEAKE, Stephen Martin, Elements of the Law of Contracts (London: Stevens and Sons, 1867) at 39–40 Google Scholar; POLLOCK, Frederick, Principles of Contract at Law and in Equity (London: Stevens and Sons, 1876) at 29 Google Scholar; ANSON, William R, Principles of the English Law of Contract (Oxford: Clarendon Press, 1879) at 321 Google Scholar, 324; MAITLAND, FW, Equity, also the Forms of Action at Common Law, ed by AH CHAYTOR and WJ WHITTAKER (Cambridge: Cambridge University Press, 1910) at 364 Google Scholar.

12. See e.g. Leake, supra note 11; Jr, Joseph CHITTY, A Treatise on the Law of Contracts, and Upon The Defences to Actions Thereon, 6th edn ed by John A RUSSELL (London: S Sweet, 1857)Google Scholar.

13. Mohamed Yusoof v Murugappa Chettiar [1941] MLJ 240 (FMSCA) [Mohamed Yusoof].

14. Siow Wong Fatt v Susur Rotan Mining Ltd [1967] 2 AC 269 (PC) [Siow Wong Fatt].

15. See particularly American Law Institute, Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts (St Paul: ALI Publishers, 1937)Google Scholar. For an overview, see Alvin W-L SEE, “An Introduction to the Law of Unjust Enrichment” [2013] 5 MLJ I [See, “An Introduction”].

16. Law Commission of India, Thirteenth Report (Contract Act, 1872) (New Delhi: Ministry of Law, 1958) at 11–13 Google Scholar. In the same report, the Law Commission also said that section 70 of the ICA 1872, which is identical to section 71 of the CA 1950, goes beyond English law in that it would cover situations that are not covered under the common law (Ibid at 42). Unfortunately, the Law Commission did not hint at any similar English principle.

17. State of West Bengal v M/S BK Mondal & Sons (1962) AIR SC 779 at 789 (Indian SC) [Mondal & Sons].

18. Mulamchand v State of Madhya Pradesh (1968) AIR SC 1218 at 1222–1223 (Indian SC) [Mulamchand].

19. For an examination of section 70 of the ICA 1872, see SEE, Alvin W-L, “Recovery of Non-Gratuitously Conferred Benefit Under Section 70 of the India’s Contract Act 1872” in Andrew ROBERTSON and Michael TILBURY, eds, Divergences in Private Law (Oxford: Hart, 2016), 201 Google Scholar.

20. New Kok Ann Realty Sdn Bhd v Development & Commercial Bank Ltd, New Hebrides [1987] 2 MLJ 57 (HC, CA) [New Kok Ann Realty].

21. Ibid.

22. Sediperak Sdn Bhd v Baboo Chowdhury [1999] 5 MLJ 229 at 249 (HC) [Sediperak]. See also Kumpulan Teknik Sdn Bhd v Murad Hashim Communications Sdn Bhd [2012] 8 MLJ 573 at 581–582 (HC) [Kumpulan Teknik]; Air Express International (M) Sdn Bhd v MISC Agencies Sdn Bhd [2014] 4 MLJ 59 at 70 (CA) [Air Express]; Hazama Corporation v KMS Builders Sdn Bhd [2004] 2 AMR 612 at 617 (HC) [Hazama].

23. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 CLJ 453 (FC) [Dream Property (FC)]; Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2013] 7 CLJ 969 (CA) [Dream Property (CA)]; Atlas Housing Sdn Bhd v Dream Property Sdn Bhd [2012] 1 LNS 1355 (HC) [Dream Property (HC)].

24. Dream Property (HC), supra note 23 at [125]–[129].

25. Ibid at [130].

26. Dream Property (CA), supra note 23 at [44].

27. Dream Property (FC), supra note 23 at [101].

28. For an analysis of the Federal court’s judgment, see Alvin SEE, “Restitution for the Mistaken Improver of Land” [2016] The Conveyancer and Property Lawyer 61 [See, “Mistaken Improver”].

29. Although statutory illustration (a) points to a case of mistake.

30. CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 at 720 (EWCA) [Cash and Carry].

31. Dream Property (FC), supra note 23 at [117], [119].

32. Ibid at [121] (FC); Peter v Beblow [1993] 1 SCR 980 at 990 (Canadian SC). See also BIRKS, Peter, Unjust Enrichment, 2nd edn (Oxford: Oxford University Press, 2005) at 50–52 CrossRefGoogle Scholar [Birks, Unjust Enrichment].

33. Kerajaan Malaysia v Tanjung Teras Sdn Bhd (Tanjung Teras) [2014] 8 MLJ 259 (HC) [Tanjung Teras].

34. Sempra Metals Ltd v IRC [2008] 1 AC 56 (UKHL); Benedetti v Sawiris [2013] 3 WLR 351 (UKSC) [Benedetti].

35. An example is Tanjung Teras, supra note 33.

36. Discussed in the next two paragraphs.

37. Mohamed Yusoof, supra note 13.

38. Peter BIRKS, An Introduction, supra note 10 at 116.

39. Dream Property (FC), supra note 23. The Federal Court said that the shopping mall was an “indisputable benefit” (Ibid at [123]), thus hinting at the realizable benefit test. See also Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775 at [34]–[37] (EWCA); Harrison v Madejski,Coys of Kensington (A Firm) [2014] EWCA Civ 361 at [58]–[59] (EWCA).

40. Sediperak, supra note 22. See also Yogambal Boyee Ammani Ammal v Naina Pillai Markayar (1909) 3 Ind Cas 110 at 112 (Indian HC), followed in Challa Appayya v Desetti Chandra Ayya (1950) AIR Mad 817 (Indian HC) [Challa Appayya].

41. BURROWS, Andrew, “Free Acceptance and the Law of Restitution” (1988) 104 Law Quarterly Review 576 Google Scholar [Burrows, “Free Acceptance”].

42. BIRKS, Peter, “In Defence of Free Acceptance” in Andrew BURROWS, ed, Essays on the Law of Restitution (Oxford: Oxford University Press, 1991), 105 Google Scholar [Birks, “Free Acceptance”]; GOFF, Robert and JONES, Gareth, The Law of Unjust Enrichment, 8th edn ed by Charles MITCHELL, Paul MITCHELL, and Stephen WATTERSON (London: Sweet & Maxwell, 2011)Google Scholar at [4-29] [Goff and Jones, Unjust Enrichment (8th edn)].

43. Littlewoods Ltd v Revenue and Customs Commissioners [2015] 3 WLR 1748 (EWCA).

44. Siow Wong Fatt, supra note 14 at 276, cited with approval in Sediperak, supra note 22 at 248.

45. See Benedetti, supra note 34 at [14]; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 386 (UKHL). See also Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at [4-34]–[4–42].

46. Siow Wong Fatt, supra note 14.

47. Ibid at 276–277.

48. Mohamed Yusoof, supra note 13.

49. Raja Viswanadha Vijia Kumara v RG Orr (1918) 45 Ind Cas 786 (Indian HC).

50. Ibid.

51. Damodara Mudaliar v Secretary of State for India (1895) ILR 18 Mad 88 (Indian HC); Saptharishi Reddiar (Now Minor) v The Secretary of State for India (1915) 28 Mad LJ 384 (Indian HC).

52. Ruabon Steamship Co v The London Assurance [1900] AC 6 at 12 (UKHL) [Ruabon Steamship] (cited in Suchand Ghosal vs Balaram Mardana (1911) ILR 38 Cal 1 at [19] (Indian HC)).

53. Ruabon Steamship, supra note 52 at 12.

54. Ulmer v Farnsworth 15 A 65 (Me 1888) (Maine SC, USA).

55. Edinburgh and District Tramways Co Ltd v James Watts Courtenay (1909) SC 99 at 105 (Scottish Court of Session). See also Birks, Unjust Enrichment, supra note 32 at 158.

56. TFL Management Ltd v Lloyds TSB Bank Plc [2014] 1 WLR 2006 (EWCA), noted in VIRGO, Graham, “Incidental Benefit: Charting the Outer Limits of Unjust Enrichment” (2014) 73 Cambridge Law Journal 21 CrossRefGoogle Scholar.

57. See e.g. Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at [4–52].

58. VIRGO, Graham, The Principles of the Law of Restitution, 3rd edn (Oxford: Oxford University Press, 2015) at 114–115 CrossRefGoogle Scholar; BURROWS, Andrew, The Law of Restitution, 3rd edn (Oxford: Oxford University Press, 2011) at 108 Google Scholar [Burrows, Restitution].

59. Burrows, Restitution, supra note 58 at 69–85; EDELMAN, James and BANT, Elise, Unjust Enrichment in Australia (Melbourne: Oxford University Press, 2006) at 138–141 Google Scholar. Cf MITCHELL, Charles, “Liability Chains” in Simone DEGELING and James EDELMAN, eds, Unjust Enrichment in Commercial Law (Sydney: Lawbook Co, 2008), 131 Google Scholar at 135–138.

60. Hazama, supra note 22.

61. See also Burrows, Restitution, supra note 58 at c 4.

62. See Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 (Australian HC); MacDonald, Dickens & Macklin v Costello [2011] 3 WLR 1341 (EWCA). See also WILLIAMS, Robert, “Three Quarrelling Parties, Two Oral Contracts and a Claim in Restitution” [2010] Restitution Law Review 51 Google Scholar; EDELMAN, James, “Unjust Enrichment and Contract” [2008] Lloyd’s Maritime and Commercial Law Quarterly 444 Google Scholar; YIP, Man, “Suing the Third Party for Improvements to Land: Costello v Macdonald [2011] EWCA Civ 930, [2011] 3 WLR 1341” (2011) 11 Oxford University Commonwealth Law Journal 217 CrossRefGoogle Scholar; DAVIES, Paul, “No Leapfrogging of Contract in Unjust Enrichment” (2012) 71 Cambridge Law Journal 37 CrossRefGoogle Scholar; SEE, Alvin W-L, “Contract, Unjust Enrichment and Leapfrogging” [2012] Restitution Law Review 125 Google Scholar.

63. Tanjung Teras, supra note 33.

64. For a but-for analysis of the “at the plaintiff’s expense” inquiry, see Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at [6–25]–[6–27], [6–35]; BIRKS, Peter, “‘At the Expense of the Claimant’: Direct and Indirect Enrichment in English Law” in David JOHNSTON and Reinhard ZIMMERMANN, eds, Unjustified Enrichment: Key Issues in Comparative Perspective (Cambridge: Cambridge University Press, 2002), 493 at 524 Google Scholar.

65. See Cash and Carry, supra note 30 at 720.

66. Dream Property (FC), supra note 23 at [129]. Contra Deutsche Morgan Grenfell v IRC [2007] 1 AC 558, where the UK House of Lords resisted the invitation to change direction.

67. The Federal Court itself acknowledged the underdevelopment of Malaysian law on this area: Dream Property (FC), supra note 23 at [118], approving the observation of See, “An Introduction”, supra note 15. For discussion of the Federal court’s decision, see See “Mistaken Improver”, supra note 28.

68. Burrows, “Free Acceptance”, supra note 41; MEAD, Geofrey, “Free Acceptance: Some Further Considerations” (1989) 105 Law Quarterly Review 460 Google Scholar.

69. Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at c 17. See also Birks, An Introduction, supra note 10 at c VIII; Birks, “Free Acceptance”, supra note 42 at 105.

70. Benedetti v Sawiris [2009] EWHC 1330 at [574] (EWHC). See also Rowe v Vale of White Horse DC [2003] 1 Lloyd ’ s Rep 418 (EWHC).

71. AV Palinivelu Mudaliar v Neelavathi Ammal (1937) 39 Bomb LR 720 (PC); Mondal & Sons, supra note 17 at 793.

72. See Leigh v Dickeson (1884) 15 QBD 60 (EWCA); Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 (EWCA); Re Cleadon Trust Ltd [1939] 1 Ch 286 (EWCA).

73. The term “free acceptance” was coined by Goff and Jones: GOFF, Robert and JONES, Gareth, The Law of Restitution (London: Sweet & Maxwell, 1966) at 4 Google Scholar.

74. Sediperak, supra note 22 at 248.

75. Siow Wong Fatt, supra note 14.

76. Aw Yong Wai Choo v Arief Trading Sdn Bhd [1992] 1 MLJ 166 (HC).

77. Kuan Leong Hin v The State of Johore [1941] MLJ 190 (FMSSC).

78. Peter Birks, “Free Acceptance”, supra note 42 at 105.

79. CA 1950, supra note 1. See also generally See SEE, Alvin W-L, “Restitution of Mistaken Enrichment under Section 73 of Malaysia’s Contracts Act 1950” (2014) 31 Journal of Contract Law 206 Google Scholar.

80. STOKES, Whitley, The Anglo-Indian Codes, vol I (Oxford: Clarendon Press, 1887) at 533 Google Scholar.

81. See generally Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at c 18; Burrows, Restitution, supra note 58 at c 18; KORTMANN, Jeroen, Altruism in Private Law: Liability for Nonfeasance and Negotiorum Gestio (Oxford: Oxford University Press, 2005)CrossRefGoogle Scholar; SHEEHAN, Duncan, “ Negotiorum Gestio: A Civilian Concept in the Common Law?” (2006) 55 International and Comparative Law Quarterly 253 CrossRefGoogle Scholar.

82. Burrows, Restitution, supra note 58 at 480–483.

83. Gajapathi Kristna Chandra Deo Garu v P Srinivasa Charlu (1913) 25 Mad LJ 433 (Indian SC).

84. See Mondal & Sons, supra note 17; KRSV Muthayya Chetti v Narayanan Chetti (1928) AIR Mad 317 (Indian HC); Challa Appayya, supra note 40; Venkatakrishnamacharlu v Arunachala Pillai [1919] MWN 244 (Indian HC).

85. Rakurti Manikyam v Medidi Satyanarayana (1972) AIR AP 367 (Indian HC).

86. Burrows, Restitution, supra note 58 at 488; Goff and Jones, Unjust Enrichment (8th edn), supra note 42 at 35.

87. Mohamed Yusoof, supra note 13.

88. Bank Bumiputra (M) Bhd v Hashbudin bin Hashim [1998] 3 MLJ 262 (HC); Green Continental Furniture (M) Sdn Bhd lwn Tenaga Nasional Bhd [2011] 8 MLJ 394 (HC); The Royal Bank of Scotland Bhd v Seng Huah Hua [2013] 9 MLJ 681 (HC). See also Sri Sri Shiba Prasad Singh v Maharaja Srish Chandra Nandi (1949) AIR PC 297 (PC); Mafatlal Industries v Union of India (1997) 5 SCC 536 (Indian SC).

89. The term “restitution” was first referred to extensively in Abbot’s review of Keener’s treatise: ABBOT, EV, “Keener on Quasi-Contracts. II.” (1897) 10 Harvard Law Review 479 CrossRefGoogle Scholar.

90. Sediperak, supra note 22 at 248–249; Hazama, supra note 22 at 617. See also Mulamchand, supra note 18; Govindarajulu Naidu v SS Naidu (1958) 2 Mad LJ 148 (Indian HC).

91. Teras Kimia Sdn Bhd v Kerajaan Malaysia [2013] 6 CLJ 219 (HC).

92. Kumpulan Teknik, supra note 22.

93. Sediperak, supra note 22.

94. New Kok Ann Realty, supra note 20.

95. Multi-Purpose Credit Sdn Bhd v Tan Sri Dato’ Paduka (Dr) Ting Pek Khing [2006] 5 MLJ 589 (HC).

96. Inch Kenneth Kajang Rubber Public Ltd Co v Tor Peng Sie [2014] 1 MLJ 118 (CA).

97. See Birks, Unjust Enrichment, supra note 32 at 5.

98. Air Express, supra note 22.

99. Tenaga Nasional Bhd v Arkitek Urbanisma Sdn Bhd [2011] 10 CLJ 796 (HC).

100. Poomani v Associated Finance Corporation Sdn Bhd [1974] 1 LNS 115 (HC) [Poomani].

101. Associated Finance Corporation Ltd v Poomani [1971] 1 LNS 8 (HC).

102. Poomani, supra note 100.

103. CA 1950, supra note 1.

104. Ibid.

105. See Burrows, Restitution, supra note 58 at 381–385.

106. Dream Property (FC), supra note 23, noted in See, “Mistaken Improver”, supra note 28.

107. Wright, Lord, “Restatement of the Law of Restitution” (1937) 51 Harvard Law Review 369 CrossRefGoogle Scholar.