Form, substance and recharacterisation

• Main Author: LEE, Pey Woan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Characterisation; recharacterisation; form; substance; formal reasoning; substantive reasoning; tenancy; employment; trust; floating charge; retention of title; Common Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/3102; https://search.library.smu.edu.sg/discovery/fulldisplay?docid=alma99329012202601&context=L&vid=65SMU_INST:SMU_NUI&lang=en&search_scope=Everything&adaptor=Local%20Search%20Engine&tab=Everything&query=any,contains,Form%20and%20substance%20in%20the%20law%20of%20obligations&offset=0
• Institution: Singapore Management University

This chapterexamines the jurisprudence of recharacterisations in the selective areas of tenancy, employment,trusts and financing arrangements. It argues that the characterisation of atransaction is always a question of law informed by policy considerations. Specifically,recharacterisations are concerned with avoidancesso the central question is whetherand to what extent parties are legally permitted to ‘contract out’ of astatutory regime or the legal incidents of a relationship. As such, the processof recharacterisation is not reducible to the application of narrow legaldoctrines, nor is it merely an exercise in contractual interpretation. As willbe observed, English courts generally incorporate policy considerations in thisdiscourse but are accustomed to presenting them as ancillary (rather than primary)justifications in their reasoning. Only in legislative contexts (such as thoseprotecting tenants or employees) where the policy underpinnings are unambiguousis a court likely to base a decision squarely on the pursuit of the legislativegoal. In other cases, they are wont to retreat to the sanctuary of rules and doctrines.On the whole, therefore, the English judicial method in this context is moreformal than substantive. This predilection is not objectionable or detrimentalwhere the relevant substantive concerns are balanced and embedded in the formalrules. But formal reasoning may descendinto formalistic reasoning if the rules so harden as to eclipse importantsubstantive concerns. This chapter contends that this risk subsists inrecharacterisation cases. To minimise that risk, it is critical that judges articulatethe interplay of values, policies and doctrines resulting in a particularcharacterisation. By the same token, courts should develop the broad techniquesof recharacterisation (viz, shams andconstruction) more flexibly to make room for the evaluation of substantivereasons.