#6788 - Alf Vaughan And Co. V. Royscott - Restitution of Unjust Enrichment BCL

Alf Vaughan and Co. v. Royscott Trust

Facts

The defendant owned a number of vehicles which were held by the plaintiff company under various hire-purchase and lease agreements. The hire-purchase agreements included options to purchase, and the lease agreements gave the plaintiff to the right to sell the vehicles as the defendant's agent subject to certain conditions. The defendant was entitled to terminate the agreements and recover possession of the vehicles on the appointment of an administrative receiver of any of the plaintiff's assets. The plaintiff subsequently went into administrative receivership, and the receivers wanted to sell its business, including the vehicles, as a going concern. They therefore offered to pay the defendant the remaining sums due under the hire-purchase and lease agreements, totalling approximately 34,000 (the settlement figure). However, the defendant terminated the agreements, and threatened to take possession of the vehicles unless the plaintiff paid it 82,000. The receivers accepted under protest, and duly paid the sum demanded by the defendant. In subsequent proceedings, the plaintiff sought to recover the difference between the settlement figure and the amount actually paid, contending that its agreement to pay the higher sum had been induced by duress to goods.

Receiver’s intention to sell as a going concern: It was the receivers' intention to sell the company's business as a going concern for which purpose they desired to be able to give any purchaser title to the vehicles, the subject of these agreements. This, the defendant understood. By 23 June 1997 the receivers had, indeed, obtained an offer for the business from Schreiber Filters Ltd (Schreiber) on the basis that they procure title to any lease or hire-purchase assets.

Defendant’s entitlement to possession: Each of the agreements did, indeed, entitle the defendant to terminate the order with or without notice upon the appointment of an administrative receiver of any of the company's assets. On the following day, therefore, the defendant sent agents to the company's premises to repossess the vehicles.

Holding

Causation

I have no doubt and find as a fact that the defendant's threat to recover the vehicles was a significant cause inducing the receiver to authorise Mr Nuttall's undertaking to pay 82,000. It is clear that but for the need to obtain a withdrawal of the recovery agents in time to complete the sale on 30 June the receiver would not have agreed to pay 82,000.

Payment was not voluntary

Nevertheless, having heard the evidence, I would find as a fact that the note made by Mr Wilson of the telephone conversation between Mr Delley and Mr Thomas is an accurate and sufficient account of the extent to which Mr Delley reserved the plaintiff's rights. He noted from what he was then told:

'Dave [Mr Thomas] told the receiver the full facts re. the undertaking, Royal Bank of Scotland, terms of agreement, etc. Receiver not happy, but says will pay by telegraphic transfer today and then send letter of complaint.'

This is in my judgment enough to show at least that the payment was not voluntary.

Was the pressure illegitimate?

Plaintiff did not have sufficient proprietary interest in the goods as against the defendants: The plaintiff's case, although not strictly as pleaded, is that the agreement under which the payment was made was obtained by duress of goods and was, therefore, avoidable. That is framed on the grounds that the pressure was illegitimate. That must be at the date when the agreement was obtained, namely 26 June. If the agreements had been restored at that date, the vehicles were still in the company's possession and unsold. Restoration of the agreement would, therefore, give the opportunity to exercise the options without re-writing their terms.

It seems to me, therefore, that the plaintiff's claim depends upon the question whether as at the date of the agreement on 26 June the plaintiff's right to apply for relief from forfeiture of the agreements arising from the appointment of receivers is such an interest in the vehicles as to render illegitimate the defendant's threat to retake their own goods from the possession of the plaintiffs, its consent to such possession having been abrogated by the appointment of the receivers.

Defendant’s were entitled to possession – no unlawful act: In the present case I would hold that the plaintiff would have been entitled to recover possession of the vehicles if they had been taken away by a stranger, but that is not in my judgment sufficient to give the plaintiff any title to possession as against the defendant. The defendant coming to take the vehicles is merely coming to take its own property in respect of which it is entitled to possession. The pressure arising therefrom may be severe, but I do not think that it can be said to fall within any category of duress of goods so far determined by the courts.

Plaintiff should have applied for interim relief

I am conscious that the law of restitution is a developing field of law, but I think that as the law stands it is essential that the threat must, if not tortious in itself, at least be immoral or unconscionable (see Goff and Jones, pp 309–310). The decision in the Dimskal case depended on whether under the relevant law the blacking of the ship was tortious. Identical acts if not tortious would not be characterised as illegitimate. If the plaintiff in the present case had made an application for relief from...