Owen v Tate
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE SCARMAN,LORD JUSTICE ORMROD |
| Judgment Date | 28 November 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J1128-1 |
| Date | 28 November 1974 |
| Court | Court of Appeal (Civil Division) |
[1974] EWCA Civ J1128-1
In The Supreme Court of Judicature
Court of Appeal
(Appeal of Plaintiff from Order of His Honour Judge Sharpe, Gateshead County Court, February 28, 1974.)
Lord Justice Stephenson,
Lord Justice Scarman and
Lord Justice Ormrod.
MR D. UNWIN, (instructed by Messrs. Anderson & Haggie of Newcastle-upon-Tyne) appeared on behalf of the Appellant (plaintiff).
MR J. STEPHENSON, (instructed by Messrs. Sinton & Co. of Newcastle-upon-Tyne) appeared on behalf of the Respondents (Defendants).
I will ask Lord Justice Scarman to deliver the first judgment.
At the outset of this judgment I should like to express my personal gratitude for the admirably presented arguments by counsel on both sides.
Mr. Unwin, who argued the case for the plaintiff, Mr. Norman Owen, the appellant in this court, makes this submission. He says that one who without being asked to do so guarantees payment of another's debt is entitled upon paying the debt to be indemnified, and he submits that this is a rule that brooks of no exceptions. He gives as the reason for the rule that, at the time when the obligation to pay arises, that is to say, when the guarantor is called upon by the creditor to pay the debt, he, the guarantor, is compelled by law to make the payment sought by the creditor. He relies on a dictum of Lord Justice Greene which is to be found in the case of ( In re a Debtor 1937 1 Ch.D. p. 156). Lord Justice Greene (at p. 166) said; "A question may arise as to the application of the subsection" - that is the subsection being considered in that case - "where a guarantee is given without any antecedent request on the part of the debtor. That case is merely one example of a number of cases where the law raises an obligation to indemnify irrespective of any actual antecedent contractual relationship between the parties."
Mr. Stephenson, who has argued the case for the defendants, Mr. and Mrs. Tate, who are the respondents to this appeal, says that there is no such general rule as that for which Mr. Unwin contends. He takes his stand upon the general rule that a volunteer cannot claim repayment of that which he has purely voluntarily paid, or inrespect of which he has purely voluntarily assumed the obligation to pay.
The case was tried in the Gateshead County Court by His Honour Judge Sharp, and on the 12th March of this year the judge gave judgment dismissing the plaintiff's claim for reimbursement. He based himself simply upon the ground that, in his view of the facts and the law, the plaintiff was properly to be considered as a volunteer.
I can take the facts from the very succinct statement to be found in the county court judge's judgment. He said (and I now quote the facts from his judgment, leaving out only the immaterial matters) that "On the 26th February 1965 the Defendants obtained a loan from Lloyds Bank, Sunderland. This loan was secured by a charge by way of legal mortgage upon the property of a Miss Lightfoot. The plaintiff was in no way concerned with this transaction, and received no money from the Defendants. In 1969 Miss Lightfoot became concerned that her Deeds were being held by the Bank to secure the Defendants' loan, She consulted the Plaintiff, who offered to help her to get her Deeds back. Miss Lightfoot was a former employee of the Plaintiff, The plaintiff knew that Miss Lightfoot had cohabited with a Mr. Russell, who had a dispute with the Defendants concerning money. Mr. Russell is now deceased. In order to oblige Miss Lightfoot, and in order to obtain her Deeds and keep them in a safe place, the Plaintiff deposited £350 with Lloyds Bank and signed a Form of Guarantee by which he guaranteed payment of all money limited to £350, due, owing or incurred to Lloyds Bank by the Defendants. He did not consult the Defendants before doing this. He was not asked to do this bythe Defendants. His motive was only to help Miss Lightfoot. He did not speak to the Defendants at all about the matter. On the 17th December 1970 Lloyds Bank applied £350, held by them in support of the Plaintiff's said guarantee, in repayment of the Defendants' debt. On 15th January 1971 the Plaintiff's solicitor demanded fro the Defendants reimbursement of this sum. The Defendants refused and the battle was joined." Such in outline is the history of the matter.
The evidence that was before the county court judge consiste of the oral evidence of Mr. Owen, the plaintiff, and a number of documents, including Miss Lightfoot's legal charge, the plaintiff's guarantee and some letters. It will be necessary in the course of my judgment to refer to three of the letters, but for the moment I leave the facts where I have stated them.
I turn to consider the law. As I understand the law, there are two general rules, both of them well-known. The first is conveniently set out in Chitt on Contracts in the 23rd edition at paragraph 1736, a paragraph on which Mr. Stephenson, for the defendants, naturally strongly relies. There it is said; "If the payment is regarded by the law as voluntary, it cannot be recovered." The learned editors then quote a passage from the judgment of Mr. Justice Swinfen Eady in ( In re National Motor Rail Coach Co. Ltd. 1908 2 Ch. p. 520). I quote from that judgment one sentence. The judge said: "If A voluntarily pays B's debt, B is under no obligation to repay A." That is the first of the two general rules.
The second general rule which calls for consideration in this appeal was stated authoritatively by Lord Wright, Master of theRolls, in Brook's Wharf and Bull Wharf, Limited -v- Goodman Brothers (1937 1 K.B. p. 534). The rule applied in that case was formulated by Lord Tenterden in an earlier case in language which received the express approval of Lord Wright. I take Lord Tenterden's words from page 545 of the report in the Brook's Wharf case. Lord Tenterden said: "…. one man, who is compelled to pay money which another is bound by law to pay, is entitled to be reimbursed by the latter."
This appeal requires us to consider the interaction of the two rules in the particular circumstances of this case. Before turning to those circumstances, I would add that neither rule can be treated as one to which there can conceivably be no exception. The first rule, that a volunteer who makes a payment on behalf of another cannot obtain repayment, does appear to me to have been one to which over the centuries the common law recognised exceptions. The exceptions have been constructed by the judges through a readiness to imply from the circumstances of the case a request or an authority to make the payment. Good illustrations of that readiness are to be found in the books. I would refer only to a decision of Lord Kenyon in Exall -v- Partridge (1799 8 T.R. p. 308). There is another illustration in the comment of Lord Justice Lindley in Edmunds -v- Wallingford (1884 14 Q.B.D. p. 811) upon England -v- Marsden (1866 L.R. 1 C.P. p. 529). I need not at this stage do more than just refer to those two cases, in each of which one sees the point being considered whether in the circumstances of the case the law could imply a request, consent or some sort of authority for the payment made.
When one turns to the second general rule, namely, the rule that where a person is compelled by law to make a payment for whichanother is primarily liable he is entitled to be indemnified, notwithstanding the lack of any request or consent, one again finds that the law recognises exceptions. This rule has been subjected to very careful treatment in the leading textbook on The Law of Restitution, Goff and Jones, in chapter 12. of the current edition, which begins at page 207. The rule is stated. Then the learned authors say, after stating the rule in general terms: "To succeed in his claim, however, the plaintiff must satisfy certain conditions. He must show (1) that he has been compelled by law to make the payment; (2) that he did not officiously expose himself to the liability to make the payment; (3) that his payment discharged a liability of the defendant; and (4) that both he and the defendant were subject to a common demand by a third party, for which, as between the plaintiff and the defendant, the latter was primarily responsible." In the present case we are very much concerned with the first two of those conditions: whether the plaintiff had been compelled by law to make the payment, and whether he did or did not officiously expose himself to the liability to make the payment.
At page 214 the learned editors discuss the exceptions to the general rule which fall under their second condition, namely, the officious assumption of a liability to make the payment. If they are right - as I think they are, and as I think the cases show they are - then there are exceptions to the second general rule; that is to say, the law does recognise that there may be exceptions, even when a man is legally liable to pay the debt of another, to the general rule that he has a right to an indemnity.
I think that the case law supporting the existence of such exceptions is really epitomised in the Brook's Wharf case to which Ihave already referred. At page 545 of the report, Lord Wright, having quoted the passage from Lord Tenterden's judgment that I have already quoted, explains the principle of the matter in these words: "These statements of the principle do not put the obligation on any ground of implied contract or a constructive or notional contract. The obligation is imposed by the court simply under the circumstances of the case and on what the court decides is just and reasonable having regard to the relationship of the parties. It is a debt or obligation constituted by the act of the law, apart from any consent or intention...
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