(v) Unconscionability

In Avon CC v Howlett⁴⁸ Eveleigh LJ suggested that in certain circumstances it might be unconscionable for the defendant to retain that part of the benefit in respect of which his or her position had not changed, but he did not identify what these circumstances might be. Cumming-Bruce LJ also recognized that restitution might still lie on the ground that it would be inequitable for the defendant to retain part of the benefit which he or she had received, but he declined to rule on when such an equity would be recognized.^{[1] [2] [3]} Slade LJ was much less certain about the relevance of broad concepts of justice and equity, which he considered to be misleading and uncertain in application.^{[4] [5]}

The application of this test of unconscionability was considered further by the Court of Appeal in National Westminster Bank plc v Somer International (UK) Ltd.⁵¹ In this case over ?54,000 was mistakenly transferred by the claimant bank to the defendant company’s bank account. The defendant had informed the claimant that it expected the receipt of a sum of about this amount. The claimant informed the defendant that the sum had been credited to its account. In reliance on this representation the defendant dispatched shipments of goods to a company to the value of over ?13,000. Subsequently, this company ceased to trade. The claimant informed the defendant of the mistaken payment and sought repayment of the money. The trial judge recognized that the defendant could rely on the defence of estoppel, but only to the extent of its detrimental reliance. The Court of Appeal considered the operation of the defence of estoppel and concluded that there was scope for the operation of Equity^[6] to ensure that the defence only applied to the extent of the detriment suffered.^[7] Potter LJ held that the court would look at the matter broadly and would not require the defendant to demonstrate in detail the precise degree or value of the detriment suffered. On the facts of the case it was held that it was unconscionable for the defendant to retain the balance above the value of the goods which had been shipped. But this characterization of ‘unconscionability’ is interesting; the relative proportions are significant. The defendant had received ?54,179 and had spent ?13,180. This was effectively a ratio of 4:1 which was considered to be a sufficient disparity to prevent the estoppel defence from operating as a complete bar to the restitutionary claim. So how much must the defendant spend for there to be no disparity? Clarke LJ recog- nized⁵⁴ that the operation of the defence will depend on all the circumstances of the case, including the nature of the representation and the steps taken in reliance on it. He considered this to be an example of the principles of Equity being employed to mitigate the rigours of the Common Law. But he also emphasized that this reliance on unconscion- ability is principled and does not involve the exercise of discretion,^{[8] [9] [10]} although he gave no indication as to why the defence should operate pro tanto on the facts of this case.

• [1] [1983] 1 WLR605, 609. 48 Ibid, 612. 49 Ibid, 608. 50 Ibid, 621.
• [2] 51 [2001] EWCA Civ 970, [2002] 1 All ER 198.
• [3] 52 See Jorden v Money (1854) 5 HL Cas 185, 210 (Lord Cranworth).
• [4] 53 National Westminster Bank plc v Somer International (UK) Ltd [2001] EWCA Civ 970, [2002] 1 All ER
• [5] 198, 215 (Potter LJ).
• [6] 54 Ibid, 217. Relying in particular on the judgment of Eveleigh LJ in Avon CC v Howlett [1983] 1 WLR 605,
• [7] 611. See also Johnson v Gore-Wood and Co [2001] 2 WLR 72, 99 (Lord Goff).
• [8] National Westminster Bank plc v Somer International (UK) Ltd [2001] EWCA Civ 970, [2002] 1 All ER198, 218.
• [9] RBC Dominion Securities Inc v Dawson (1994) 111 DLR (4th) 230.
• [10] [1991] 2 AC 548, 578 (Lord Goff). In South Tyneside Metropolitan BC v Svenska International plc [1995]1 All ER 545 Clarke J assumed that the defence ofestoppel continued to be applicable despite the recognition ofthe defence of change of position.