I. Introduction
The invocation of the language of “conscience” in private law is controversial. On the one hand, courts frequently use the language of conscience and unconscionability in a wide range of common law and equitable doctrines. On the other hand, critics argue that such language is vague and likely to give rise to legal uncertainty and the unacceptable conflation of law and morality.Footnote 1 This article contributes to the debate by clarifying the meaning and significance of the language of conscience in private law doctrine. For these purposes, it draws on the etymology and ordinary meaning of conscience, and recent work on the distinction between obligations and liabilities in private law.Footnote 2 Adopting this analytical framework as a prism through which conscience may be explored arguably facilitates a clearer exposition of its role in private law.
The article argues that the idea of conscience in private law may be interpreted consistently with its ordinary meaning, and is closely associated with the incidence and breach of moral duties. It argues further that the significance and explanatory role of the language of conscience differs according to whether it is used in the context of: (1) equitable obligations, such as the duty of confidence, trustees’ duties and the duties of a knowing recipient; and (2) primary liabilities, which do not depend on the breach of a pre-existing legal or equitable duty, such as restitution and rescission for defective transfers, and promise-based estoppel.
In the context of equitable obligations, the language of conscience highlights the significance of factual knowledge as a prerequisite to their recognition and enforcement. Without such knowledge, the defendant cannot reason morally as to the correct course of action, and so equity will not compel her to take it. Thus, the language of conscience conveys the message that equitable obligations underwrite moral duties, namely duties with which the defendant really ought to comply (and not simply because the law requires her to do so).
By contrast, where the language of conscience is used in the context of primary liabilities, it indicates a reluctance on the part of the courts to restrict the defendant's exercise of her legal rights, unless they perceive there to be good moral reasons for doing so, such as because the defendant was morally at fault in the way in which she acquired those rights, or it would now be a breach of moral duty for her to exercise them fully. However, here the courts are not directly enforcing moral duties as legal or equitable obligations, and the explanatory force of the language of conscience varies according to the particular liability.
Because of the difference between obligations and primary liabilities, the indiscriminate invocation of conscience in both contexts can be problematic, as it makes it difficult to distinguish between moral duties which are directly enforced as equitable obligations and those which have different legal effects or, in some cases, arguably no legal effect at all. Nevertheless, the article concludes that if the distinctions argued for here are observed, it is right to say that the language of conscience has a valuable role to play in encouraging moral agency and contributing to the authority of private law.
II. Conscience – Etymology and Ordinary Meaning
The roots of the word “conscience” are to be found in the Greek word suneidesis and the Latin word conscientia, which were understood as “the state (or act) of sharing knowledge or else simply knowledge, awareness, apprehension”.Footnote 3 Our contemporary understanding of conscience derives from these roots and has been heavily influenced by Christian theology along the way,Footnote 4 particularly by the work of Aquinas. The idea of conscience refers to both factual and moral consciousness.Footnote 5 In turn, the idea of moral consciousness presupposes a human faculty to distinguish right from wrong. Aquinas referred to this faculty as “synderesis”,Footnote 6 which in his view described the inbuilt human capacity for understanding “the external, objective moral law”, namely the law of God.Footnote 7 The Thomist idea of conscience involves an act of applied knowledge, an internal process by which synderesis combines with factual knowledge of a relevant situation,Footnote 8 to enable individuals to reach conclusions as to the moral quality of their actions.
The contemporary definition of “conscience” includes the following descriptions: “(An) inward knowledge or consciousness”, “a moral sense of right or wrong” and “the faculty or principle that leads to the approval of right thought or action and condemnation of wrong”, “sense of guilt with regard to a thought or action”.Footnote 9 It also refers to “practice of or conformity with what is considered right”.Footnote 10 Consistently with the Thomist idea of conscience, therefore, our contemporary understanding of conscience refers to both the process of reasoning towards moral judgements and the standards by which we make them. It helps us to judge the moral quality of our past actions and to decide what we ought or ought not to do now or in the future.Footnote 11 “Unconscionable” means “showing no regard for conscience; not in accordance with what is right or reasonable … unreasonably excessive; egregious, blatant … having no conscience; not controlled by conscience; unscrupulous”.Footnote 12 This definition encompasses both a failure to act in accordance with what is morally right, and deliberate and flagrantly immoral behaviour. The ideas of unconscionability and unconscientiousness overlap to the extent that both terms may describe a failure to do what is morally right. However, in its more popular sense the term “unconscientious” tends to denote a lack of effort or scruple,Footnote 13 whilst it would be more usual to reserve the term, “unconscionable” to describe deliberate or particularly contumelious moral transgressions.
Any discussion of the idea of conscience or its meaning inevitably prompts questions of moral philosophy, which go well beyond the scope of this article. The idea of conscience cannot help us to choose between a virtue-based,Footnote 14 deontologicalFootnote 15 or consequentialistFootnote 16 conceptualisation of morality, and it can accommodate both subjectivistFootnote 17 and objectivistFootnote 18 approaches to the question of how we decide what is right or wrong. For example, A's religious or political beliefs may lead her to believe that she may rightly kill her neighbour. Having killed him, she may then say that she behaved morally because she acted in accordance with what her conscience tells her is right, and therefore her conscience is “clear”. If we take a more objectivist approach to morality, we would say that in fact her conscience was unsound, and that she failed to act “according to good conscience”.Footnote 19
Nevertheless, the language of conscience is helpful in describing the incidence of moral duties. There is support for the view that certain types of morally valuable behaviour, such as keeping our promisesFootnote 20 or returning something which does not belong to us, may be regarded as moral duties in the sense that they provide a reason to act with which we are “in some sense bound to conform”.Footnote 21 It seems harsh to treat an individual as bound by a moral duty unless she has sufficient knowledge of the facts which require her to act in a specific way. The idea of conscience as applied knowledge helps us to understand this. If an individual's conscience is affected by knowledge, namely if she has knowledge of the relevant facts, she can reason morally as to what she ought to do, and it is not unreasonable to treat her as bound by a moral duty to do it. Conversely, if, due to the absence of factual knowledge, she is not capable of reasoning morally as to what she ought to do, she should not be treated as being subject to a binding moral duty. Therefore, it does not seem inappropriate to say that a moral duty may be experienced as a “demand of conscience”.Footnote 22 Beyond this, the language of conscience tells us little about moral duties: we do not expect it to help us identify the moral principles upon which a particular moral duty is grounded, nor to give detailed content to the duty or indicate how much knowledge is required to trigger it.
Similarly, the term “unconscionable” is apt to describe breaches of moral duty. On the basis that an individual has the requisite factual knowledge for the duty to arise in the first place, she may breach it in one of two ways. Her conscience may misfire because her moral understanding is defective, and it does not alert her to the correct moral course of action. Therefore, her behaviour may be described as unconscionable in the very broadest sense of the word. She has failed to act in accordance with what is morally right. Alternatively, her conscience may work perfectly well, in the sense that she understands morally what the correct course of action is, but she simply ignores or overrides the signals her conscience is sending her.Footnote 23 In this instance, her behaviour is unconscionable in a narrower sense, as she has consciously and deliberately flouted moral standards. Although the term, “unconscionable” is wide enough to include both types of conduct, we tend to associate the adjective more closely with conscious and deliberate moral transgressions.
III. The Development of the Idea of Conscience in Private Law
The early development of the idea of conscience in equity seems to have been influenced by the Thomist understanding of conscience,Footnote 24 namely as a process of applied knowledge. Klinck suggests that the idea of conscience in equity presupposed an objective, external standard of morality, which was initially informed by divine law, and which subsequently infused the substantive doctrines of equity as they developed through precedent.Footnote 25 Although ecclesiastical ideas of conscience were also influential in the development of the common law,Footnote 26 a defining feature of the medieval Chancery jurisdiction was that it operated as a court of conscience, unhampered by the very limited common law rules of pleading and proof, and with access to the defendant's knowledge of the facts in a fashion denied to the common law judges,Footnote 27 such as through the writ of subpoena. This may explain why, although ideas of conscience do still appear in the common law,Footnote 28 in practice, the language of conscience tends not to feature in the courts’ treatment of common law duties, even where they are framed in moral terms.Footnote 29
Today, when the courts use the language of conscience in equity and (occasionally) at common law, they also appear to treat the idea of conscience as based on objective, rather than personal, standards,Footnote 30 derived through the process of legal reasoning from “settled rules and decided cases”.Footnote 31 They have rejected any suggestion that the idea of unconscionability provides a basis for the court to create a general power to relieve a party from her legal obligations.Footnote 32 Instead, what good conscience requires, and/or what is regarded as unconscionable, is informed by the principles and rationale of each doctrine.Footnote 33 As Samet explains,Footnote 34 the fact that the idea of conscience admits of the possibility of objective moral values is essential to its legal significance. Otherwise, conscience would merely be a synonym for sincerity,Footnote 35 and the legality of behaviour for the purposes of private law is rarely, if ever,Footnote 36 measured by reference to sincerity alone. The dominant idea of conscience in private law appears to be an objective one.Footnote 37
In English private law, the courts use the language of conscience and unconscionability in accordance with its ordinary meaning to describe the incidence of moral duties, and to indicate that a defendant is morally at fault. The doctrines in which the language of conscience is used tend to involve either the enforcement of equitable obligations or the restriction of legal rights through the imposition of primary liabilities. This distinction is explained in section IV. Sections V and VI go on to explain what the language of conscience means and how it is used in each context.
IV. The Distinction between Obligations and Primary Liabilities
In private law, there is a difference between obligations and liabilities. A duty or obligation involves “a genuine prescription or requirement for action (or inaction)”.Footnote 38 If the defendant is under a primary legal duty which corresponds to a right held by the claimant, and she breaches that duty, she commits a civil wrongFootnote 39 and must compensate for any loss and/or account for her gains. Even in cases where the breach of duty has caused no harm, damages are usually available in response to the wrong “precisely in order to make clear that a wrong has occurred”.Footnote 40 It follows that, as Smith argues, “duty-imposing rules tell citizens how to act (and how others should act towards them)”.Footnote 41 In his view, the actions required by legal duties tend to give effect to moral duties, and so any court orders made in such cases tend to replicate the pre-existing duty.Footnote 42
By contrast, a liability is a susceptibility to the alteration of one's legal position through the exercise of a power by another.Footnote 43 Some legal liabilities arise secondarily, namely because a legal duty has been breached by the defendant. However, this is not always the case. It is also possible for liabilities to be primary or free-standing,Footnote 44 in the sense that they do not depend on the existence or breach of a legal duty. Smith argues that by contrast with duty-imposing rules, “liability-imposing rules (or more strictly ‘liability to orders imposing rules’) tell citizens what the state may do to them (and what they may cause the state to do to others)”.Footnote 45 In his view, any orders made by the courts in such cases do not replicate existing duties and may be regarded as “creative”.Footnote 46 He also argues that when we try to explain creative orders which impose primary liabilities, they must be justified by reasons other than the idea that the law is giving effect to the defendant's moral duties.Footnote 47 As will be seen below, however, the courts tend to use the language of conscience in the context of equitable obligations, and also in relation to primary common law and equitable liabilities.
V. Conscience, Knowledge and the Incidence of Equitable Obligations
This section discusses how the courts use the language of conscience in relation to three examples of equitable obligations: the obligation of confidence, the trust obligation and the obligation of a knowing recipient.
A. Meaning
The exclusive equitable jurisdiction to restrain a breach of confidence has been said to lie in “the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained”.Footnote 48 Originally, this obligation depended on a relationship of confidence between the parties.Footnote 49 Now, a primary equitable duty of confidence arises once the defendant knows or has notice that the information is confidential,Footnote 50 in the sense that it is information to which a reasonable expectation of privacy attaches.Footnote 51 If she then uses it inconsistently with its confidential nature,Footnote 52 she will have breached her duty of confidence. Lord Neuberger recently described the action as “based ultimately on conscience”.Footnote 53 The defendant's conscience is affected “if she agreed, or knows that the information is confidential”.Footnote 54 Thus, from the moment the defendant “is told, or otherwise appreciates that it is in fact confidential … it can be said that her conscience is affected in such a way which should be recognized by equity”.Footnote 55
Trust obligations are also said to be based on conscience. According to Lord Browne-Wilkinson:
Since the equitable jurisdiction to enforce trusts depends upon the conscience of the holder of the legal interest being affected, he cannot be a trustee of the property if and so long as he is ignorant of the facts alleged to affect his conscience, i.e., until he is aware that he is intended to hold the property for the benefit of others in the case of an express or implied trust, or, in the case of a constructive trust, of the factors which are alleged to affect his conscience.Footnote 56
Express trustees are “conscience-bound” to hold “legal title to the property for the benefit of the beneficiaries in accordance with [the] trust instrument”.Footnote 57 It has been held that the recipient of money paid under a contract pursuant to innocent misrepresentation would not be treated as a non-express trustee of the money “so long as he was ignorant of the facts which brought his authority to an end, for those are the facts which are alleged to affect his conscience and subject him to an obligation to return the money to [the claimant]”.Footnote 58 Similarly, the courts’ jurisdiction to treat a fiduciary as holding a bribe on constructive trust for his or her principal has been described as a case “where equity, acting on the defendant's conscience, enforces a personal obligation in relation to property”.Footnote 59
It is said that in cases of knowing receipt, “equity is concerned with [the recipient's] knowledge of equitable interests because it is concerned with fastening upon the conscience of the person with that knowledge”.Footnote 60 Historically, the fundamental question was said to be “whether the conscience of the recipient is bound in such a way as to justify equity in imposing a trust on him”.Footnote 61 The characterisation of knowing recipients as constructive trustees still has its championsFootnote 62 but has fallen out of favour with the courts.Footnote 63 However, it is clear that the recipient is regarded as being subject to an equitable obligation to restore the assets to the claimant,Footnote 64 or not to part with the property or use it for her own benefit.Footnote 65 Thus, the key question is whether the recipient's “conscience … became sufficiently affected for it to be right to treat him as bound by obligations in equity giving rise to an in personam claim against him as recipient to account for the money which came into his hands”.Footnote 66 This will be the case if she has sufficient knowledge of the material facts, namely that the property was traceable to a breach of trust.Footnote 67
In the absence of any indication that the term “conscience” is being given a specific legal definition in these doctrines, it may be interpreted consistently with its ordinary meaning. In all three cases, the language of conscience suggests that if the defendant has knowledge of the relevant facts, this activates her capacity for moral reasoning. It is only through the process of moral reasoning – namely through the operation of her conscience – that she can work out what she ought, morally, to do in the circumstances. At this point, but not before, it becomes reasonable to treat her as being subject to an “obligation of conscience”, namely a positive moral duty, which equity underwrites as an enforceable equitable obligation. Thus, the language of conscience tells us that the courts regard the relevant equitable obligation as a moral duty,Footnote 68 which will only arise if the defendant has the requisite factual knowledge.
B. Explanatory Role
The language of conscience plays a distinctive explanatory role in relation to equitable obligations. In the three examples referred to above, knowledge is an ingredient of the cause of action in the sense that it is a prerequisite to the recognition and enforcement of the relevant obligation. The courts do not need to use the language of conscience to tell us this, and thus it might appear to be superfluous at doctrinal level. However, in fact the language of conscience tells us something about why factual knowledge is a doctrinal requirement, namely because, without it, the individual is not able to reason morally as to what she ought to do, and it is only when she can do this that equity will treat her as being subject to an enforceable equitable obligation. When the language of conscience is used in this way, equity is looking forwards: it asks if the defendant is capable of complying with a particular moral standard. If so, it will treat her as bound by a contiguous equitable duty, and require her to take positive action to comply with it.
That said, the language of conscience has three obvious limitations, which means that its explanatory role in relation to equitable obligations operates at a high level of generality. First, and most obviously, it cannot help us to identify the principles or values which underpin an equitable obligation. This requires direct discussion about those principles or values themselves. For example, although the language of conscience may tell us there are good moral reasons to enforce trust obligations, it does not tell us what they are. This will depend on the type of trust and the principles on which it is based. And merely to say that a knowing recipient will be subject to an equitable obligation if her conscience is sufficiently affected suggests that there are good moral reasons for imposing the obligation, but it does not tell us what those reasons are.
Second, of itself the language of conscience cannot give detailed content to the relevant obligation. For example, if B obtains information in confidence, she must not use it inconsistently with its confidential nature,Footnote 69 nor may she use it as a spring-board for activities which might cause detriment to A. However, the language of conscience itself cannot help us to work out how “a conscientious recipient” of technical information which is partly public and partly private is “to comply with the requirements that equity lays on him”,Footnote 70 just as it does not identify the type of duty or duties to which a trustee is subject. An express trustee may have custodial, administrative and fiduciary duties,Footnote 71 whereas the effect of the imposition of a constructive trust over a bribe received by a fiduciary seems to be primarily to obligate the fiduciary to deliver up the bribe and any profits made from it to her principal in specie.Footnote 72 Both may be described as obligations of conscience.
Similarly, although the language of conscience tends to suggest that a knowing recipient ought not to keep the property for her own benefit, further work is required to clarify the precise nature of the equitable obligation. On one analysis, the recipient is subject to a primary duty not to interfere with another's equitable property rights, the breach of which is akin to conversion and triggers a (secondary) obligation to account.Footnote 73 On another analysis, the recipient's knowledge triggers a primary custodial duty, which resembles an express trustee's duty to account.Footnote 74 She is therefore properly described as a constructive trustee, her continued retention of the property is unauthorised, and she must immediately restore it. Substitutive performance of the custodial duty is achieved through an order that the defendant pay over the value of the property. No proof of breach of duty is required, and so the defendant's liability to pay is primary, rather than secondary.Footnote 75 On a third, slightly different analysis, the defendant's liability to pay is regarded as responding to the breach of her primary custodial duty.Footnote 76
Third, the idea of conscience does not mandate a specific level of knowledge which must be present before a moral obligation will arise. Most obviously, an individual's conscience may be said to be affected where she is consciously aware of all the relevant facts. However, it is not linguistically inaccurate to say that her conscience is affected, even where she only has very limited knowledge, such as would prompt a reasonable person to make enquiries which would reveal the relevant facts. This knowledge makes it possible for her, through the process of moral reasoning, to work out what she ought to do, namely make further enquiries, which in turn would reveal the information necessary for her to decide how she ought ultimately to behave. In such a case, her conscience may still be said to be affected, albeit less strongly than in a case of actual knowledge.
The authorities support the view that the degree of knowledge necessary to trigger an equitable obligation is itself a question of principle, the answer to which depends on the nature of the duty and the defendant's specific circumstances. For example, the courts regard the defendant's conscience as sufficiently affected for the duty of confidence to arise if she has any one of the five levels of knowledge on the Baden Delvaux Footnote 77 scale, namely if she knows enough to prompt the reasonable person to make enquiries which would reveal the information's confidential nature, but fails to make those enquiries herself.Footnote 78 By contrast, the threshold of knowledge required to trigger the duties of trusteeship is higher, and varies according to the type of trust.
There has also been extensive debate about the degree of knowledge required to trigger a finding that the defendant is a knowing recipient of trust property. On the one hand, it has been said that the defendant “cannot conscientiously retain” the property where she receives it with actual or constructive knowledge of the breach of trust,Footnote 79 and, historically, the standard of knowledge required extended to all five Baden categories.Footnote 80 On the other hand, it has been stated that to hold the defendant liable because she ought to know the relevant facts would be “to disregard equity's concern for the state of the conscience of the defendant”.Footnote 81 Such language tends to suggest that the idea of conscience is more closely associated with the first three categories on the Baden scale, and the preponderance of recent high level English authority supports the view that this level of knowledge is probably required.Footnote 82 However, any conclusion about the requisite level of knowledge should be informed by relevant factors of principle and/or policy, such as the extent to which it is reasonable to expect a volunteer or a purchaser to make enquiries about the provenance of the property and subject her to a custodial obligation if she fails to do so.Footnote 83 It is not, and should not be treated as, an inevitable conclusion arising from the language of conscience.
VI. Unconscionability and Moral Fault in the Breach of Equitable Obligations
The term “unconscionable” is also sometimes used to describe the breach of an equitable obligation. Here, it signifies, retrospectively, that the defendant has breached an obligation which has both moral and legal significance. However, its invocation in this way may give rise confusion and legal uncertainty at doctrinal level if its explanatory limits are not properly understood and respected. Its use in the doctrine of knowing receipt illustrates this point well.Footnote 84
A knowing recipient is guilty of “unconscionable conduct” if she retains the property.Footnote 85 If the explanatory limits of unconscionability are properly understood, its invocation is not too problematic, as it simply reinforces the idea that her retention of the property despite her knowledge constitutes a breach of moral duty, which is enforceable in equity. But the language of unconscionability has also crept into the cause of action: the recipient will be liable if her state of knowledge is “such as to make it unconscionable for [her] to retain the benefit of the receipt” of the trust property.Footnote 86 It has been argued that the language of unconscionability obscures the question whether the defendant had sufficient knowledge to justify the imposition of a binding equitable duty, and shifts our focus to whether her conduct may be regarded as wrongful.Footnote 87 In response, it might be said that this simply indicates that the defendant has enough knowledge to justify the imposition of the duty when she has enough knowledge to be morally guilty, and this is an issue that, given our capacity for moral understanding, we are all capable of answering.
In any event, if the correct analysis is that the defendant's liability takes the form of substitutive performance of a primary custodial obligation,Footnote 88 the presence of the language of unconscionability in the cause of action is otiose and misleading insofar as it suggests that a breach of that obligation is a prerequisite to relief. Even if the recipient's liability is properly regarded as secondary in that it responds to a breach of an equitable obligation, the presence of the term “unconscionable” still muddies the waters, as it may lead us to think that proof of conscious moral wrongdoing is required to justify a remedy for breach. Although it may be easy to infer bad faith from the defendant's failure to restore the property,Footnote 89 all that need be proved is that her conscience is affected by factual knowledge, and this goes to the incidence of the duty in the first place, rather than to any question of breach. Once factual knowledge is established and the duty arises, the defendant may breach it either because she fails to understand morally that she ought not to keep the property for her own benefit, or because she understands this but decides to keep the property anyway. For this reason, it is fair to say that her liability for breach does not depend on deliberate or conscious moral wrongdoing. Her moral understanding is equally irrelevant to her liability for breach of fiduciary dutyFootnote 90 or the duty of confidence.Footnote 91
It follows that if the language of unconscionability is to be used to signify that a breach of equitable obligation is also a breach of a moral duty, two things are necessary to avoid confusion and legal uncertainty at doctrinal level. First, we must disentangle the question of whether a duty arises in the first place from the question of breach. Whether the defendant's conscience is affected by knowledge of the relevant facts is relevant to the incidence of the duty, but the term “unconscionable” adds little to our understanding of this point. It is better confined to a description of the defendant's moral fault in breaching the obligation. And if it is to be used in this latter sense, we must be clear as to whether it is to be used generally, to remind us that every breach of an equitable obligation is a breach of moral duty, or, more narrowly, to describe a specific type of breach of equitable obligation, namely where the defendant understands morally that she is doing wrong.
VII. Conscience and the Restriction of Legal Rights through Primary Liabilities
The courts also use the language of conscience and unconscionability in accordance with its ordinary meaning to indicate that the moral quality of the defendant's behavior is relevant to the imposition of a primary common law or equitable liability, which restricts the exercise of her legal rights. Three examples are considered below: restitution and rescission for defective transfers, and estoppel.
A. Restitution for Defective Transfers
1. Meaning
The English courts have used the language of conscience to indicate that a defendant who (knowingly) retains a mistaken payment is morally at fault.Footnote 92 More recently, the Australian courts have suggested that the common law action for money had and received is based on “good conscience” and has equitable roots.Footnote 93 In their view, it has been absorbed into the common law, so as to prevent the exercise of a legal right where its exercise “would constitute unconscionable conduct”.Footnote 94 Thus, recovery of a mistaken payment is said to depend on whether the defendant's retention of it would be “against conscience”.Footnote 95 Furthermore, the change of position defence is said to be “grounded in that body of equitable doctrine that prevents the unconscientious assertion of what are said to be legal rights”, so that the question is “whether it would be unconscionable for a recipient who has changed its position on the faith of the receipt to be required to pay”.Footnote 96 This language suggests that the defendant breaches a moral duty if she insists on her legal title to the money despite the mistake.
2. Explanatory role
There is strong academic support for the view that personal claims arising out of defective transfers are free-standing liabilities rather than duty-based claims.Footnote 97 This leads Smith to argue that the explanation of such claims cannot be “about the defendant's moral obligations”.Footnote 98 In his view, restitution for defective transfers is more properly justified by the fact that relief is necessary to deal with some problems caused by the strict legal rules on title, such as where the defendant obtains legal title to the money even though the claimant did not properly intend her to have it.Footnote 99 This must be right. The common law action for money had and received has never been regarded as fault-based,Footnote 100 and the cause of action arises even if the defendant was wholly unaware of the mistake at the date of receipt. Because the claim arises even if the defendant was wholly unaware of the mistake at the date of receipt, her liability cannot be said to depend on a failure to comply with a moral or legal duty to make restitution, and thus the language of conscience tells us nothing about how that liability arises.
It follows that language of conscience sheds no light on why or how the defendant's liability to make restitution arises. At most, it suggests that, in view of the claimant's mistake, it would now be morally unacceptable for the defendant not to make restitution.Footnote 101 Nevertheless, its presence helps us to understand that the extent of the defendant's liability is informed by the extent to which she owes the claimant a moral duty in respect of the money. For example, in the case of a mistaken payment, the fact that the defendant acquired legal title to the money on receipt is inconsistent with any legal duty to return it before the date of judgment,Footnote 102 but there is nothing to prevent a moral duty arising in the meantime. If the defendant learns of the claimant's mistake and her conscience is affected by that knowledge, she comes under a moral duty not to use or dispose of the money any further for her own benefit.Footnote 103 Until then, at most she bears the risk that the claimant did not consent properly to the paymentFootnote 104 and may demand that she repay it or an equivalent sum. This is reflected in the change of position defence, which permits her to assert legal title to money she spends before acquiring such knowledge. If she pays some of the money away after she acquires knowledge,Footnote 105 she breaches a moral duty by dissipating it and becomes personally liable to make restitution in full. Thus, the language of conscience reminds us that the extent of the defendant's ultimate liability will be commensurate with the value of the enrichment surviving at the date on which she becomes subject to a moral duty towards the claimant.
In addition, once the defendant acquires knowledge of the mistake, equity recognises the defendant's moral duty and immediately underwrites it by treating the defendant as a non-express trustee of the money.Footnote 106 This means that from the date of knowledge, the defendant is subject to the core trust obligation not to dispose of the property other than for the benefit of the claimant.Footnote 107 As in the case of trust obligations generally, here the language of conscience helps to explain how the defendant's obligation arises.
B. Rescission for Defective Transfers
1. Meaning
The availability of rescission for unilateral mistake in equityFootnote 108 has been said to depend on whether it is “unconscionable for the non-mistaken party to insist that the contract be performed”.Footnote 109 For these purposes, unconscionability presupposes some “impropriety” on her part at the time the contract was formed, such as deliberately not alerting the mistaken party to her mistake.Footnote 110 The clear implication is that the defendant's knowledge of the claimant's mistake triggers a moral duty to correct it, the breach of which justifies the defendant's liability.
It is said to be “unconscientious”Footnote 111 for the defendant to avail of her contractual rights after making an innocent misrepresentation, either because she ought reasonably to have known that her statement was untrue when she made it, or because it is “a moral delinquency” for her to take the benefit of the contract once she becomes aware of the falsity of her statement.Footnote 112 This language suggests that the fact that the defendant has reason to know whether her statement was true is sufficient to subject her to a moral duty not to mislead the claimant; further or alternatively, that when the defendant acquires knowledge that her statement was false, she comes under a moral duty not to exercise her legal rights against the claimant. Fraudulent misrepresentation is also sometimes referred to as an example of unconscionability which affects the defendant's conscience.Footnote 113
In cases of relational undue influence, reference has been made to “the obligations which are imposed on the conscience of the donee by the principles of this court”,Footnote 114 which may include “an equitable duty” to encourage the claimant to take independent advice.Footnote 115 It is also said that equity intervenes to relieve for undue influence “whenever one party has acted unconscionably by exploiting the influence to direct the conduct of another which he has obtained from the relationship between them”.Footnote 116 Proof that the defendant was aware of her influence over the claimant is unnecessary, though it may be implicit.Footnote 117 Here, the language of conscience suggests a moral duty to ensure the claimant receives advice and/or not to exploit her bargaining weakness.
The language of conscience is used the same way in relation to unconscionable bargains. For example, it has been held that if the defendant knows of the claimant's special disability, she “has an obligation to say to the weaker party: no, I cannot in all conscience accept the benefit of this transaction in these circumstances either at all or unless you have full independent advice”.Footnote 118 If she proceeds with the transaction without doing so, and the transaction is “manifestly unfair” to the claimant, her conduct may be described as “unconscientious”,Footnote 119 namely she has breached her moral duty. More recent English and Australian authority suggests that a deliberately exploitative intentionFootnote 120 or a “predatory state of mind”Footnote 121 is now required before the defendant's conduct will be described as unconscionable.
Finally, a threat to do something lawful will only constitute illegitimate pressure for the purposes of the common law doctrine of economic duressFootnote 122 if the defendant's conduct can be described as “morally or socially unacceptable”,Footnote 123 or “immoral or unconscionable”.Footnote 124 The authorities suggest that the defendant's conduct will be morally unacceptable if she acts with an improper motive, namely by deliberately placing the claimant in a position where she has no realistic option but to agree to a bargain, which the defendant knows is inimical to the claimant's interests.Footnote 125
2. Explanatory role
It seems right to say that a claim for rescission arising out of a defective transfer takes the form of a primary liability. Although in some cases the defendant's conduct will involve a breach of legal duty – such as where she is also guilty of deceit (fraudulent misrepresentation) or intimidation (an illegitimate threat to do something unlawful) – the fact that the courts are sometimes prepared to grant rescission for lawful act duress at common law suggests that a breach of legal duty is not always necessary.
Rescission on equitable grounds does not depend on a breach of prior duty either. It has been suggested that the conduct involved in undue influence involves a breach of an equitable duty to protect her from harm,Footnote 126 and that, at least when the defendant has been at fault,Footnote 127 it should be treated as an equitable wrong. However, recent authority does not support this viewFootnote 128; and it has been held that the purpose of relief for undue influence is to prevent the unjust enrichment of the defendant.Footnote 129 Even though there are signs that the Australian High Court may be prepared to recognise the conduct involved in unconscionable bargains and lawful act duress as an equitable wrongFootnote 130 (i.e. a breach of a primary equitable obligation), they have not given a reliable indication of what this would entail,Footnote 131 and English law has yet to take this step.
In any case, the availability of rescission in equity for innocent misrepresentation clearly demonstrates that a prior breach of equitable duty is unnecessary to ground relief. All that is necessary is that the defendant caused the impairment of the claimant's consent.Footnote 132 The fact that rescission is available even though she neither knew nor had reason to know her statement was false when the contract was formed suggests that she cannot have been under any equitable or moral duty at that time. The nature of an order for rescission also supports this view. It does not replicate or underwrite a pre-existing duty. Rather, it excuses the claimant from performance of her legal obligations, and disablesFootnote 133 the defendant from exercising her legal rights.
The explanatory role of the language of conscience at doctrinal level in relation to rescission for defective transfers has been a matter of debate. Certainly, its presence suggests that the courts regard a breach of moral duty by the defendant as doctrinally relevant to the availability of rescission. In cases of unilateral mistake, unconscionable bargains and lawful act duress, it may be argued that if the defendant knows of the problem with the claimant's consent, this is sufficient to subject her to a moral duty not to go ahead with the contract. Undue influence might be explained in the same way on the basis that the defendant's implicit knowledge of her position of influence is also sufficient to generate such a duty.Footnote 134
On this analysis, the language of conscience and unconscionability might be said to do some explanatory work by reminding us that moral fault on the part of the defendant is necessary before relief in the form of rescission is available.Footnote 135 However, this analysis cannot adequately take account of rescission for innocent misrepresentation, which does not require proof of knowledge and therefore cannot depend on the defendant's breach of a pre-existing moral duty. Rather, the claimant is entitled to rescind because her consent was impaired or distorted, and the defendant (innocently) caused that impairment. It follows that in such cases, the language of conscience tells us nothing about the cause of actionFootnote 136 or why the defendant's liability arises. Rather, it emphasises that at the date of judgment, it would now be a breach of moral duty for her to insist on her contractual rights, and thus she will not be permitted to do so.
The alternative argument is that rescission for defective transfers responds to the problem with the claimant's consent, and the existence and/or breach of a moral duty by the defendant is incidental to the grant of relief. Proponents of this view suggest that by analogy with restitution for mistaken payments, rescission for unilateral mistake may be explained on the ground of lack of consent, but that where there is a contract, relief is restricted “in the interest of upholding bargains”Footnote 137 to cases where the defendant knows about the mistake and cannot reasonably rely on the appearance of a consensus. In cases of undue influence the fact that claimant's “decision-making capacity was crippled by undue influence” is sufficient to justify relief.Footnote 138 Either the defendant's implicit knowledge of the problem with consent or the fact that her relationship with the claimant caused it is sufficient to make it unreasonable for her to rely on the appearance of consensus.Footnote 139 Although knowledge is a necessary element of the cause of action in cases of unconscionable bargains, this is explained away as merely displacing the defendant's interest in security of receipt.Footnote 140 It has also been argued that rescission for lawful act duress may be justified by reference to consent alone,Footnote 141 and again, the defendant's knowledge of the claimant's lack of choice goes simply to the question whether it is reasonable for the defendant to rely on the lack of consensus.
On the consent-based analysis, it follows that even if the defendant's knowledge of the problem with consent gives rise to a moral duty, the existence and breach of any such duty by the defendant is incidental to the grant of relief, and so the language of conscience and unconscionability does no explanatory work at all. However, the courts clearly regard impaired consent as insufficient to justify relief in cases of unconscionable bargainsFootnote 142 and lawful act duress, perhaps because as a matter of policy sometimes actors must expect their consent to transactions to be “legitimately” impaired,Footnote 143 so that a breach of moral duty by the defendant is required before any relief will be granted. If this is right, then it is difficult to argue that the language of conscience and unconscionability is entirely redundant in such cases.
Ultimately, therefore, the extent to which the language of conscience is regarded as doing any explanatory work depends on one's view as to the proper justification for rescission. On the one hand, its ubiquity tends to suggest that the courts regard a prior or prospective breach of moral duty by the defendant as relevant to the restriction of the defendant's legal rights through rescission. On the other hand, if the consent-based analysis of rescission for defective transfers is correct in principle, it explains nothing about how or why the defendant's liability arises: all it tells us is that in light of the problem with the claimant's consent, it would now be a breach of duty for the defendant to insist on her legal rights. Moreover, because of the close association between the idea of conscience and moral duties, the presence of the language of conscience may suggest that relief responds to prior wrongdoing by the defendant,Footnote 144 when this is not necessarily the case.
However, again, the language of conscience does help to explain how the defendant may become a non-express trustee of any property received under the contract,Footnote 145 as in the case of trust obligations generally. Once the defendant's conscience is affected by knowledge that the claimant's consent was defective, arguably she comes under a moral duty not to retain or dispose of the property for her own benefit. The date on which this duty arises varies. In a case of deceit, it arises on or before the date the contract is formed, whereas in a case of innocent misrepresentation it may arise only at the date of election. In all cases, however, the courts postpone the enforcement of the moral duty as a positive equitable obligation to the date of election.Footnote 146 Various reasons have been suggested for this postponement, namely that it protects third parties,Footnote 147 and avoids any inconsistency between the equitable obligation and the defendant's contractual rightsFootnote 148 in the meantime.
B. Estoppel
1. Meaning
The language of conscience and unconscionability is widely used in the common law doctrine of estoppel by convention and the equitable doctrines of promissory and proprietary estoppel. An estoppel by convention arises where it would be unconscionable for one of the parties to resile from a shared assumption, which formed the basis of their dealings (but which does not reflect their strict legal rights).Footnote 149 The court looks at the parties’ position at the date of the hearingFootnote 150 and asks whether it would now be unconscionable for A to resile from the shared assumption, and this depends on whether B would suffer detriment,Footnote 151 or A has gained a benefit from the parties’ reliance on it.Footnote 152 If so, then A is precluded from denying the truth of the facts underlying the assumption.Footnote 153
The language of unconscionability is also used in equitable estoppel claims arising from promises to describe the fact that it would be morally unacceptable for A to exercise her strict legal rights against B.Footnote 154 The moral tone is clear: the term “unconscionable” refers to “one party “ought not, in conscience as between [the parties] to be allowed’ to do” and whether her insistence upon the strict legal position “affronts ordinary minimum standards of fair dealing”.Footnote 155 For these purposes, a promise by A that she will not exercise her strict legal rights against her,Footnote 156 or that she will grant her an interest in A's land,Footnote 157 and detrimental reliance by B, are required. If they are proved, it becomes unconscionable, namely a breach of moral duty for A to resile from the promise and exercise her legal rights without making good any detriment to B that may result.Footnote 158 Proprietary estoppel by acquiescence arises where A allows B to act on a belief, which A knows to be mistaken, that by her actions she as acquired or is in the process of requiring a right over A's land.Footnote 159 If A fails to correct B's mistake, it is regarded as unconscionable, or morally unacceptable, for A to insist on her legal rights.Footnote 160
2. Explanatory role
For A to be bound by an estoppel by convention, she must have assumed an element of responsibility, “in the sense of conveying to [B] an understanding that [she] expected [B] to rely on it”,Footnote 161 but the estoppel may arise even where both parties share the mistaken belief that the assumption is true.Footnote 162 Even if the effect of the parties’ communications is to subject A to a positive moral duty not to resile from the assumption,Footnote 163 the common law does not immediately underwrite such a moral duty with a contiguous legal duty to abide by the assumption, the breach of which triggers the estoppel. Therefore, estoppel by convention may properly be described as a primary liability rather than a duty-based claim.
Views differ as to whether equitable estoppel arising from promises is a duty-based claim or another example of a primary liability. Samet argues that in cases of proprietary estoppel by promise, relief responds to a breach by A of a moral duty, which arises when she makes her promise to grant B an interest in land. The duty is not to honour the promise, but to warn B not to rely on it or, failing that, to compensate her for any detrimental change of position she incurs by relying on it.Footnote 164 The breach of this duty involves “a moral wrong that taints [A's] conscience”,Footnote 165 which requires A to compensate B to the extent of her reliance loss only.Footnote 166 Samet does not expressly state whether she regards the moral duty as a primary equitable duty, but her analysis would seem to suggest this. If so, the language of unconscionability would play a similar role here to that which it plays in relation to the breach of other primary equitable obligations, and this analysis could also potentially apply to cases of promissory estoppel.
McFarlane argues that the need for detrimental reliance to be proved before relief will be granted, and the fact that even then A's promise is not inevitably enforced,Footnote 167 suggests that neither form of equitable estoppel responds to the breach of a pre-existing equitable duty by A to keep her promise. In his view, both doctrines impose primary liabilities to address a potential injustice caused by the unmitigated application of the common law rules of property and contract.Footnote 168 Even if the making of the promise by A generates a moral duty to honour it, the courts do not underwrite this moral duty as a positive equitable obligation, and there is no conflict with the common law rules of contract.Footnote 169 On this analysis, whilst it may be a breach of moral duty for A not to honour her promise, the breach only becomes unconscionable in a legally significant sense in the light of what has happened since A made her promise. Thus, the language of unconscionability describes the fact that it would now be a breach of moral duty for A to resile from it.Footnote 170 If it is right that estoppel by convention and equitable estoppel arising from a promise are primary liabilities, the language of conscience and unconscionability does not do the same explanatory work that it does in relation to equitable obligations. Rather, it unifies and confirms “the other elements of the cause of action”,Footnote 171 by emphasising that if they are established, and assuming there are no countervailing factors,Footnote 172 it will now be a breach of moral duty for A to exercise her legal rights.
Samet argues that proprietary estoppel by acquiescence is a duty-based claim. In her view, once A learns that B is incurring detriment in the belief that she has or is thereby acquiring an interest in A's land, she comes under a positive equitable duty actively to disabuse B of her mistake and state her adverse title.Footnote 173 She may discharge this duty by informing B of her contrary rights, and authority suggests that if she does this it will not be unconscionable for her to insist on those rights.Footnote 174 Absent knowledge, however, no duty arises, and it will not be unconscionable for A to insist on her legal rights.Footnote 175 If this analysis is correct (and authority seems to support itFootnote 176), the language of conscience plays the same explanatory role here that it plays in relation to other equitable obligations.
VII. The Significance of the Language of Conscience
In private law, the language of conscience is used in accordance with its ordinary meaning to explain how moral duties arise and to describe moral fault in the breach of such duties. The presence of this language in the context of equitable obligations draws our attention to the moral significance of factual knowledge as a prerequisite to their recognition and enforcement. In doing so, it reveals that equity requires that defendants engage in moral reasoning before it will compel them to act in a particular way, and it suggests that when the courts give effect to equitable obligations, they are directly enforcing moral duties. Therefore, the language of conscience may be said to have some explanatory significance in relation to equitable obligations, albeit at a very general level.
In the context of primary liabilities, the language of conscience indicates that the courts are reluctant to grant relief unless there are good moral reasons for doing so, such as because she breached a moral duty in the acquisition of those rights or it would now be a breach of moral duty for her to exercise them fully. However, the explanatory work which the language of conscience does in this context is different, as the courts are not directly enforcing moral duties as equitable (or legal) duties; rather they are concerned with whether the exercise of the defendant's legal rights should be restricted. Moreover, as we have seen, the explanatory force of conscience varies according to the nature of the liability in question. In some cases (e.g. restitution for mistaken payments, and on the consent-based analysis of defective transfers), it adds nothing to our understanding about how the liability arises. In others (e.g. unconscionable bargains) it suggests that the courts regard a breach of a pre-existing moral duty by the defendant as a prerequisite to relief. And in others still, it indicates a concern to prevent a breach of moral duty by the defendant (e.g. estoppel by promise).
The value of the work done by the language of conscience must depend, at least in part, on the proper relationship between law and morality. A full exploration of this question is beyond the scope of this article, but it is submitted that it does have a valuable role to play in private law, so long as its explanatory limits are properly understood and respected. Even a positivist such as Hart accepts that “[I]n all communities, there is a partial overlap in content between legal and moral obligation”Footnote 177 and the development of law has been “profoundly influenced both by the conventional morality and ideals of particular social groups” and by enlightened moral criticism.Footnote 178 He also takes the view that a legal system may be rendered more stable to the extent to which the law reflects morality.Footnote 179 It is therefore arguable that there are good reasons for treating the law and morality as mutually reinforcing, rather than entirely separate, “normative domains”.Footnote 180 Thus, to the extent that the language of conscience indicates that the courts are replicating moral standards which apply outside the law, arguably this is no bad thing.
Although the language of conscience is sometimes criticised for inviting judicial moral subjectivism,Footnote 181 the reality is that when judges make decisions, they are often making moral value judgments anyway, which are based on “normative practices and understandings that already exist in society and outside the law”.Footnote 182 Dworkin suggests that even when working from first principles, judges perceive themselves to be elucidating and interpreting external standards of morality “presupposed by the laws and institutions of the community”.Footnote 183 Of course, they may be wrong (or misleading us) about what they are in fact doing, and it is difficult to argue that subjectivism can be avoided completely whenever open-textured concepts such as conscience, or reasonableness, are invoked. However, that may be as much to do with the outer limits of the doctrine of precedent, as with the language of conscience per se.
Arguably, as Harding has suggested, the language of conscience can play a valuable “expressive”Footnote 184 role in private law. As far as obligations are concerned, it is true to say that not all moral duties are enforced as legal and equitable obligations,Footnote 185 and views differ as to whether legal obligations always and invariably give effect to moral duties.Footnote 186 However, if the argument that the language of conscience strongly suggests that equitable obligations underwrite and enforce moral duties is accepted, then when such an obligation is imposed, the language of conscience conveys the message that the defendant is being compelled to do she “really ought to do”, and not simply what she “ought to do according to law”.Footnote 187 Furthermore, because the defendant will not be bound by an equitable obligation unless she first has the opportunity to reason morally as to the right course of action, the language of conscience can be said to encourage active moral agency by inviting us as citizens to work out what we ought (morally) to do in any given situation.Footnote 188
No system of law can anticipate every eventuality, and each requires an adjustment mechanism to protect its formal rules from being opportunistically exploited. In English private law, it is generally equity which performs this function by acting as a gloss or supplement to the common law.Footnote 189 There is nothing new in this idea, nor in the idea that the adjustment of the rules should take place by reference to extra-legal standards.Footnote 190 Indeed, Henry Smith has recently argued that there are good economic reasons why equity should operate in this way.Footnote 191 Where the language of conscience appears in the context of primary liabilities, it signifies that that the courts are adjusting the defendant's strict legal rights for good moral reasons, which we are all capable of understanding. This conveys the message that the courts are concerned not just with what the law says, but also with what Gardner describes as its “moral clarity”.Footnote 192 In these ways, the language of conscience contributes to the conditions under which private law is regarded as having moral legitimacy,Footnote 193 which in turn makes it easier for people to accept its authority.Footnote 194
This leaves us with the charge that the presence of the language of conscience in the law can lead to confusion and engender legal uncertainty. Certainly, the indiscriminate invocation of the language of conscience in the context of both equitable obligations and primary liabilities can be confusing, as without further explanation it tends to obscure the difference between moral duties which are directly underwritten as equitable obligations, and moral duties, which, if legally relevant at all, go only to the question of whether the defendant should be disabled from exercising her legal rights. Nevertheless, it is possible to address this concern by being more precise about the explanatory limits of the language of conscience and the context in which it appears, as argued for in this article. The alternative is to abandon the language of conscience entirely, but then something valuable would be lost.
