The Hon Justice Mark Leeming (New South Wales Court of Appeal), ‘Statutes in the Law of Obligations — The Multidimensional Form/Substance Distinction’
Panel I: Room 108
Matt Dyson (Oxford), ‘Times a-changin: the relative appeal of formalism and substance in tortious legal development’
- Why might a legal system move from formal to substantive reasoning, or from substantive to formal reasoning? There are difficult questions about why legal change has happened in many areas of tort (and why it hasn't) and many of those display some shift in the balance of formal/substantive reasoning. Striking examples are the defence of illegality, shifts in the duty of care and bars to later civil claims, amongst other areas. There are also other changes of law where it might be questioned whether substantive/formal reasoning shifts are relevant. This paper collects and analyses examples of what legal systems do when law changes and explores the importance of the substantive/formal distinction to those changes. It argues that there is no single direction of travel, but that in terms of legal change /who/ is shaping the law, /when/ and /why/ are as important as the /form /that law takes.
Kylie Burns (Griffith), ‘Substance and Social Facts in Tort Cases in the UK Supreme Court’
- Tort law judging in the United Kingdom has always rested upon judicial ‘truth claims’ about the general nature of the world, society, institutional and human behaviour. Judicial statements about these matters can be called ‘social facts’. There are strong views expressed by corrective justice and rights tort theory scholars, that tort law, as a species of private law, must be viewed as autonomous and internally referential and judges must resist reference to external political policy concerns sourced from other disciplines. Despite this, there is evidence in recent tort cases in the Supreme Court, including Montgomery v Lanarkshire Health Board UKSC 11, that judicial appreciation of the changing nature of the complex world can be critical to the shape of formal legal doctrine. While there is some evidence of judicial use of empirical material in UK tort judgments (Blackham, 2016), many judicial social fact statements in tort cases in the United Kingdom Supreme Court remain based on judicial common sense and intuition. This paper will explore the role of social facts in substantive reasoning in tort cases in the UK Supreme Court. It will draw upon an empirical content analysis of recent UK Supreme Court cases to determine the contemporary role of social facts in tort reasons in the UK Supreme Court, including whether social facts are widely used as justifications for legal principles, to drive changes in legal doctrine or as part of consequence based reasoning. The paper will also consider the evidence base for social facts and whether there are strengths and weaknesses in the approach taken by the Court to the determination and application of social facts, and the implications of this for evolution of legal doctrine.
Panel II: Room 109
Chee Ho Tham (SMU), ‘Is the rule in Dearle v Hall a mandatorily formal rule?’
John Mee (Cork), ‘Justifying Restitutionary Liability for Mistaken Payments: Autonomy, Property and Nullity’
- So far as it is taken to operate by way of exception to the principle in Rice v Rice, that, in general, the party whose equitable interest was created first in time has a higher priority, the ‘rule’ in Dearle v Hall is often castigated as a mere rule of form, devoid of substantive merit. While damning it with faint praise, the House of Lords in Ward v Duncombe declined to overrule the ‘rule’ in Dearle v Hall, it being ‘settled law’. And no decision since has sought to challenge that position. Indeed, its operation was extended by statute in Eng.and and Wales under the Law of Property Act 1925. So the ‘rule’ in Dearle v Hall appears to have become a fixture in English law. The perception that the ‘rule’ in Dearle v Hall is incoherent arises from three errors, namely: (1) failing to fully account for the qualification to the rule in Phillips v Phillips in that the first in time shall prevail only if the equities between the competing assignees are otherwise equal; (2) failing to sufficiently recognise the substantive merit in the act of giving notice as would upset the equities between rival assignees; and (3) extending the operation of Lloyd v Banks beyond its proper remit. This presentation will seek to correct these errors and clarify the parameters and operation of the ‘rule’ in Dearle v Hall. Properly understood, the ‘rule’ in Dearle v Hall is no exception to the principle in Rice v Rice, but a working out of the qualification to the principle that the first in time has priority. The view that the ‘rule’ has mandatorily formalistic operation is, therefore, inaccurate.
- C makes a mistaken payment to D. The law of unjust enrichment requires D to repay the money. Why? The Kantian conception of autonomy is a negative one, with persons being entitled to pursue their own projects without wrongful interference from others but also without any right to compel others to assist them, e.g. by undoing their mistakes. This paper points out that when C transfers property, or a chose in action like ‘money in the bank’, she is utilising a facilitative rule of law. The consequence of not meeting the requirements of a valid transfer is, in principle, ‘nullity’, i.e. C retains her original rights. In setting the content of rules of this nature, the law protects the autonomy of C in a non-Kantian sense, regarding C’s choice to give up her rights as being undermined by a mistake of the required type. As ‘property theorists’ have pointed out, to avoid prejudicing third parties, the law nullifies the transaction indirectly, allowing title to pass but requiring D to make restitution. The paper rebuts the recent counter-arguments of Wilmot-Smith and of Penner, suggesting that they unjustifiably attribute normative weight to the rule of positive law that title passes to D. The paper also points out, however, that property theorists have often overplayed their hand by arguing that C somehow retains a property interest after the mistaken payment. Although C’s original entitlement to the relevant property or chose in action is clearly relevant, (non-Kantian) autonomy is a wider value which does crucial justificatory work. A better understanding of the normative underpinnings of the law may help to focus attention on the type of mistake that is sufficient to justify liability, possibly suggesting a more restrained approach to the reversal of mistaken gifts than has been favoured by some scholars.
Panel III: Room 102
Elise Bant & Jeannie Paterson (Melbourne), ‘Misleading Conduct through the Lens of Form and Substance: Statutory Damages and Non-Reliance Clauses Revisited'
- The Misrepresentation Act 1967 has failed to live up to its promise of rationalising the law as to the consequences of misleading conduct. It is commonly neglected in both judicial decisions and scholarly accounts of both remedies and attempts to contract out of liability. We suggest that one way of understanding the English courts’ approach to the statute is in terms of Atiyah and Summers’ distinction between form and substance in law and legal reasoning and their observation that English law is, in general, highly formal.The narrow form of the legislative prescription means the Act has failed to keep pace with legal developments and invites evasive contract drafting. The English courts’ preference for formal rather than substantive styles of reasoning has compounded these tendencies. The formal nature of both the English statute and the judicial response to the statute is highlighted through a contrast with the Australian statutory regime applying to misleading conduct. Australian courts have responded to an open textured prohibition and a regime that offers a smorgasbord of remedies with an interpretative approach that has enabled the statutory scheme to form an integrated part of the overall statutory, common law and equitable regulation of misleading conduct in Australia. Ultimately, the contrast between the English and Australian approaches on both fronts is eloquent on the benefits of re-engaging with substance over form.
Rachel Leow (NUS), ‘The Unity of Agency?’
- The common law contains many tripartite relationships that are superficially known, but poorly understood. Agency is one of these. Solicitors, property agents, individuals who act on behalf of companies, and the brother you send to the corner shop to buy milk may all be described by the law as ‘agents’. Agents play an important role in every category of private law. Through agents, principals can enter into contracts with a counter-party, may be held vicariously liable for the torts of their agents, and may receive benefits from third parties that can be recovered in the law of unjust enrichment. Agency law is thus inextricably woven throughout the law of obligations. But what is agency law about? Is there anything that holds the law of agency together apart from the binding of agency law books? In this paper, I argue that – contrary to orthodoxy – there isa unity to the law of agency. What unites agency is its legal form, not its substantive justification. A relationship is one of agency where the agent A has a power to exercise the powers of another, his principal P, in dealing with some other party X. A has what I call a ‘proxy power’. The proxy power model of agency explains many core features of agency law, shows how agency relationships arise for multiple reasons, and helps us understand the role that agency plays in private law.
Morning tea, first floor
Panel I: Room 108
Lusina Ho (Hong Kong), ‘The Substance of Equitable Accounting and Proprietary Claims’
- It is well accepted that the remedial architecture of the law of trusts is dramatically different in form if not also in substance from that of the law of contracts. Three points of comparison are obvious. First, compensation for breach of trust is mediated through equitable accounting, which, in the 16thcentury, metamorphosed from the common law writ of account so successfully it rendered the latter moribund. Second, account of profits is regularly awarded to disgorge profits obtained by the use of fiduciary position, but has only recently been made available exceptionally for a breach of contract. Third, all fiduciary gains and their traceable products are subject to the beneficiary’s equitable proprietary claim.I argue in this paper that equity’s technical form belies the substantial goal of trust remedies, namely to protect, as far as possible, the performance interest of the beneficiary, and in turn the institution of trust that is core to the fiduciary relationship. In particular, I argue for two propositions. First, once we clear the thickets of technicalities shrouding equitable accounting and tracing, we will see that unlike the law of contracts, which gives priority to protecting the claimant’s right to the benefit of performancethrough compensation, Equity insists on protecting his legal right to performance. This fundamental goal runs through equity’s compensatory, disgorgement, and proprietary remedies for breaches of trust and fiduciary duties. Second, appreciation of this underlying basis of liability calls into question some emerging as well as long-established approaches in equitable remedies. These include: the subsuming of traditional accounting rules under common law compensation; the lack of nuanced, transparent, and principled rules governing the disgorgement offiduciary profits; and the failure to distinguish innocent recipients from defaulting trustees for the purposes of equitable proprietary claim.
Samuel Williams (Oxford), ‘Non-Counterfactual Claims Against Trustees’
- A trustee holds £1m on trust, and is obligated to invest the entirety of the money in shares X on 1st January. The trustee breaches this obligation, investing in shares Y. Shares Y are now worthless. Shares X are now worth £400k. The House of Lords decision in Target, and the Supreme Court decision in AIB, suggest liability for breach of trust should be £400k. Commentators frequently make two claims in response to this. The first claim is that Target and AIB ignored or departed from previous authority that supports liability of £1m. I argue that the authorities relied upon by those commentators do not support this claim. The second claim is that for reasons other than authority liability should be £1m. I argue that the reasons provided for this claim are either mistaken or under-developed, and develop my own reasons supporting the claim.
Katy Barnett (Melbourne), ‘Constructive Trusts over Bribes - Substance over Form Should be Preferred’
- This paper looks at form and substance in the context of constructive trusts over bribes. It is suggested that while these cases do not involve a conflict between formalities versus substantive law, they do involve a conflict between form and substance in the broader senses identified by Atiyah and Kennedy. The English approach (in FHR v Mankarious) is more formalist because it proposes a general rule with a formal consequence, whereas the Australian approach (in Grimaldi) focuses more on substance because it proposes a general rule with a detailed standard determining the consequence. It is suggested in this paper that the Australian approach is preferable because it more accurately deals with the problem of ‘recalcitrant experiences’ that is, a specific fact scenario which undermines the general rule. A standard can adapt to circumstances. However, for reasons of clarity and predictability, it is necessary that such a rule be a detailed standard, as is currently the situation in Australian law.
Panel II: Room 109
Nick Sage (LSE), ‘The Significance of Contracting Inter Absentes’
- There is a widely held and apparently plausible conception of ‘agreement’ that seems to underpin the contractual doctrines of offer and acceptance. However, reflection on the process of contract formation between parties who are not in each other’s presence (inter absentes) reveals this conception to be paradoxical. Moreover, further reflection shows that the same paradox is latently present in all cases of contract formation—even contracts concluded face to face. Therefore we must give up the standard conception of agreement, and develop another, better view.
Sirko Harder (Sussex), ‘The Requirement of Consideration for One-Sided Contract Modifications’
- The consideration requirement creates problems where the parties to an existing contract agree that the obligations of one of the parties (but not of the other) are to be modified. For a long time, formal reasoning prevailed, and one-sided contract modifications were considered unenforceable for lack of consideration. It is now widely recognised that the formal reasoning fails to give effect to the parties’ autonomy and intention, and while the formal reasoning may in the past have been necessary to provide protection against coercion, this function can now be fulfilled by the doctrine of economic duress. Substantive reasoning has prevailed. However, the application of substantive reasoning has created two different approaches. One approach is to continue to apply the consideration requirement to contract modifications, but then to find consideration for a one-sided modification promise in a practical benefit obtained by the promisor. The other approach is to abolish the consideration requirement for contract modifications altogether. This paper investigates both approaches.
Tim Rogan (Cambridge), ‘Form, Substance and Fairness in Contract’
- Recent decisions on penalties disclose significant divergence between English and Australian authorities concerning the role of courts in reviewing the fairness of contractual exchange. The High Court of Australia now examines the substance of the agreement (Andrews v ANZ; Paciocco), while the UK Supreme Court remains focussed on form, reluctant to admit of a role for courts in reviewing bargains for fear of introducing too much uncertainty into commercial law (Cavendish Square Holding BV v Makdessi). This paper argues that the reasons of certainty in commercial law invoked by the UK Supreme Court in criticising Andrewsare misconceived. The degree of uncertainty involved in judicial scrutiny of the substance of agreements according to Andrewsis no higher than that introduced by the ‘commercial common sense’ approach to construction (ICS v West Bromwich) – now widely applied without introducing unacceptable uncertainty. The UK Supreme Court’s rejection of Andrewsonly arises through the Court’s refusal to apply accepted ‘commercial common sense’ principles of construction to penal stipulations. By suspending normal approaches to construction in applying the penalty rule, English courts contribute to the uncertainty they are seeking to avoid. ‘Commercial common sense’ principles of construction put courts in a position akin to that which the jury occupied before its abolition in civil litigation, giving judges flexible but acceptably disciplined means of determining where the merits lie in a given case. Seeing judges disposing of fairness arguments in commercial disputes in this light – as legatees of the civil jury, rather than as individuals measuring justice by the length of their own feet – might serve to simplify some of the conceptual complexity, uncertainty and inconsistency across the common law world which the striving after fair exchange in contract in recent decades has generated.
Panel III: Room 102
Hanna Wilberg (Auckland), ‘The Interplay Between Formal and Substantive Reasoning in the Duty of Care Enquiry in Negligence’
- My claim in this paper is that in the duty of care inquiry in negligence claims, formal and substantive reasoning not only are both necessary, but also are integrally related and interdependent. The formal part of the duty inquiry takes the form of proximity tests and/or reliance on established categories of duty, while substantive reasoning is found most obviously in recourse to policy considerations. The legitimacy of the latter has, of course, been a subject of debate, but I will largely assume that policy considerations do play some legitimate part. I will focus on examining the close and necessary interplay between these two aspects of the duty inquiry. On the one hand, substantive policy concerns underpin and shape both the formulation and the application of proximity tests or duty categories. In omissions cases, for example, confining liability to certain special categories addresses policy concerns about liberty and autonomy; and the stringency with which these special categories are applied in each case depends on factors such as the type of harm and the importance of the interest affected (see my article on omissions, (2011) 19 Torts LJ 159). Whether a particular case is within one of those special categories, therefore, cannot be determined entirely without recourse to the underlying policy considerations. The limits which the majority in Robinson v Chief Constable of West Yorkshire Police UKSC 4sought to place on the use of policy considerations are open to doubt on this basis. While the majority judgment is to be welcomed for its clarification of several important points, on this point I suggest Lord Mance’s view is to be preferred. On the other hand, once courts turn to policy concerns, the strength of those concerns often depends partly on proximity. For instance, the concern about defensive practice may be given much less weight in cases that involve a relationship of close proximity (see Stapleton (1995) 111 LQR 301).
Sarah Fulham-McQuillan (Trinity College Dublin), ‘Is there a Sufficient Balance Between Substance and Form in Duty of Care and Damage in Negligence Law?’
- Duty of care in negligence law contains significant scope for substantive reasoning. The tripartite Caparotest provides sufficient form to ensure consistency, yet substantive reasoning is in-built, particularly with the fair, just and reasonable limb. Damage, on the other hand, is applied formalistically with strict adherence to physical injury or, less often, economic injury. When judicial substantive reasoning indicates that the relationship between parties, actions within it, or circumstances surrounding it, warrant a departure from traditional rules (eg protection of autonomy as opposed to only bodily integrity) the formalistic application of damage stymies attempts. For example, a doctor’s duty is normally recognised as a duty not to negligently injure but the injury that counts is physical injury. Whilst duty accommodates substantive reasoning, damage acts as an artificial brake. Some might argue that this is a necessary constraint on the wide scope of substantive reasoning afforded in duty of care. Rather than formalistic reasoning it might be argued to be substantive reasoning at its best (justified by justice, convenience, cost, etc.). But this paper suggests that even if the damage rule evolved from substantive reasoning and has ‘minimal content formality’ it generates formal reasons, has come to be applied formalistically, and is over-inclusive as a rule. Courts have also indicated the need to alter the type of obligation in certain relationships for substantive reasons: assumption of responsibility is often employed. However, this paper identifies widespread uncertainty as to how and when assumption of responsibility arises, and what it means, which leaves it open to vague application with excessive judicial discretion. The types of relationships that have invited courts to employ substantive reasoning in seeking to alter damage and/or the obligation are examined. A solution is sought to balance form and substance in duty and damage in some of those particular relationships.
Kay Young & Michèle Ducharme (Dept of Justice, Canada), ‘Public authority liability in Canada – bringing substance back into formal duty of care analysis’
- In Canadian law, public authorities are frequently sued in negligence for the consequences of their exercise of statutory discretion, and it is well established that there is no blanket immunity with respect to such claims. Duty of care reasoning in these cases typically uses formal and abstract language, resulting in decisions that are criticized as unclear and irreconcilable. As a result, our public authority clients have become obsessed with the question of whether they owe a duty of care at private law, believing that this duty imposes additional obligations that are completely different from what they are already tasked by statute to do. If courts more openly confronted the essential substantive task of the duty of care analysis, it would become clear that this is not the case. The task of the duty of care test is to identify whether it is just and fair to conclude that the plaintiff’s harm was caused by behaviour falling short of what is reasonably expected of a public authority in the same circumstances. Behavioural expectations of public authorities derive primarily from governing statutes and public law principles. We believe courts implicitly evaluate duty of care issues with reference to such expectations already, although they do not acknowledge it. Recognizing this makes their decisions easier to understand and demonstrates their coherence. A better articulation of how the key duty of care concepts of proximity and immunity for bona fide policy decisions function in public authority liability cases is needed. This would accomplish a dual purpose: reconciling the existing caselaw and providing more meaningful guidance to public authorities about the kinds of behaviour that might lead to liability.
Lunch, first floor
Panel I: Room 108
Zhong Xing Tan (NUS), ‘From Form to Substance: The Cautious Emergence of the Proportionality Principle in Contract Law’
- In this paper I argue that the emerging idea of proportionality in contract law, in particular as expressed in the jurisprudence on illegality, penalties, and cost of cure damages, embodies a movement away from formalism towards a substantive justificatory framework for the accommodation of plural and competing values. I explore the promise and perils of proportionality, addressing the challenges of maintaining the public-private boundary, rights erosion and commensuration in legal reasoning.
Judith Skillen (KCL), ‘Proportionality in Private Law’
Panel II: Room 102
Ben McFarlane (UCL), ‘Substance and Form in Equity’
- The idea that equity looks to substance not form, if not quite a maxim, is certainly a cliché. The focus of this paper is on what, if anything, is distinctive about equitable, as opposed to common law, rules. The main argument is that such distinctiveness lies in the form, not the substance, of equitable rules. Unfortunately, this point is often hidden by the language used to describe such rules (e.g. equitable ownership; equitable assignment; equitable estoppel) which suggests that such rules are simply extensions of common law counterparts. Such terminology necessarily leads to the thought that it might be better to have just one, fused set of rules on such topics. Paying attention to the specific form of equitable rules, however, means that we should be cautious about such unification. Building on important recent scholarship as to the broader aims and role of equity, this paper argues that whilst some equitable rules may have a function shared by particular common law rules, their different form justifies applying different tests to those applied at common law. A key point is that equity, consistent with its second-order or supplementary role, recognises rights that relate to other rights, and rules that modify the effect of other rules. Indeed, as will be seen by considering unjust enrichment, the ultimate distinction is not between common law and equity as bodies of law emanating from different jurisdictions, but rather between first-order and second-order rules.
Yip Man (SMU), ‘Modern Equity: At the Edge of Formal Reasoning?’
- The historical development of Equity demonstrates that equitable jurisprudence was, in its inception, more inclined towards substantive reasoning and progressively retreated towards formal reasoning, in conformity with the English vision of “law” and judicial function over time. Equity’s traditional inclination can be explained by its historical function to supplement common law and mitigate its harshness. Today, equity is alive and as Lord Neuberger commented on English equity, extra-judicially, “not only alive, but kicking – or being kicked”. I argue that landmark decisions demonstrate that the balance between form and substance is undergoing readjustment, evidencing retreat from formal reasoning. I highlight three symptoms of Equity’s struggle to maintain a more formal approach. First, courts have, on various occasions, changed the law, with greater boldness than before in disregarding contrary authorities. Second, the courts are replacing “hard and fast rules” with approaches that have in-built flexibility. Third, in some areas of the law, the courts are finding it difficult to come to the “right” outcome without openly relying on distinctions between “commercial” and “non-commercial” cases. I argue that context-based reasoning is a rough form of fact-specific inquiry, as well as a gateway to a different set of policy considerations (substantive reasons) to justify the court’s conclusions. The second part of my paper investigates the underlying causes of the symptoms, focusing on the second and third symptoms. I put forward three main causes of modern Equity’s retreat from formal reasoning: complexity, diversity and pragmatism. In the third part of my paper, I set out a number of reflections on the themes of equity’s renewal and harmonisation of equitable principles, drawing from a comparative review of other common law jurisdictions: Australia, Hong Kong and Singapore.
Afternoon tea, first floor
William Swadling (Oxford), ‘In Defence of Formalism’
- It is undoubtedly the case that form should not triumph over substance. Thus, in United Australia Ltd v Barclays Bank Ltd(1941), Lord Atkin famously said of the long abolished forms of action that they ‘should not in these days be allowed to affect actual rights. When these ghosts of the past stand in the path of justice clanking their mediæval chains the proper course for the judge is to pass through them undeterred.’ Similar thinking can be seen in the rule that if a contract of mortgage is dressed up as a sale so as to avoid the protection given to the mortgagor by the clogs and fetters doctrine, the court will see through the pretence and treat the contract for what it is, a contract of mortgage. Likewise, a contract to occupy land drafted in terms of a licence so as to avoid the occupier being given the statutory protections of a tenant will nevertheless be seen as a lease if the substantive requirements of a tenancy are present: Street v Moutford(1985). These two senses of form over substance arguments are well-known and uncontroversial. More difficult is a third, where the distinction is used by courts to eradicate certain rules of substantive law. Two examples are discussed in this paper, Shell UK Ltd v Total UK Ltd(2010), where beneficiaries of a trust of a title to land were allowed to sue third parties who damaged the land in the common law tort of negligence, and Menelaou v Bank of Cyprus(2015), where the UK Supreme Court dispensed with the requirement that there be a transfer of value from claimant to defendant in the law of unjust enrichment. Both cases relied on appeals to substance over form in order to achieve their results. The question this paper will address is whether the use of the form/substance divide by English courts in this third sense is anything more than a rhetorical device, allowing them to sidestep inconvenient rules of substantive law without detailed analysis. How, for example, are we to tell on which side of the line a particular rule falls? If it is not possible to do so, and if this device simply camouflages a lack of rigour in judicial reasoning, then it must be rejected. In this sense, formalism must be defended.
Robert Stevens (Oxford), ‘The Priority of Form over Substance’
- The form of private law controls its substance. First I shall consider the nature of private law, and argue that civil recourse, the ability to sue, is not central to it. Rights are. Second I shall give three examples of the central proposition that the kind of reasons that can justify the rules of private law must be of the requisite form. Third I shall seek to establish that the predominant academic approach to the law of restitution does not conform with the required form of justifications, and that this has led the courts, in England but not Australia, into error.
Closing plenary panel: Reflections on form and substance in the law of obligations
The Rt Hon Sir Jack Beatson FBA (former Lord Justice of Appeal, England and Wales)
Professor Lusina Ho (Hong Kong)
Professor Barbara McDonald (Sydney)
Professor Kit Barker (Queensland)
Closing drinks, first floor