He wrote:

"We will have to see what the full report says -- I can't agree with your interpretation of the Times law report on that point. The report says merely that

His Lordship accepted that even an authorised payment might leave Independent enriched at Lloyds's expense.

which is a rather less sweeping proposition."

Fair enough. Let's wait and see.

2) I wrote:

The case is another illustration of the fact that the courts disregard questions of fault in the context of claims in UE to recover mistaken payments - it was no bar to the bank's claim that its mistake had arisen from its own negligence.

He wrote:

a) "This point would be a little stronger if Lloyds had won !"

Agreed.

b) "As it is, I never suggested that the courts did, or should, impose an express defence of contributory negligence. There is more than one way to skin this particular cat, and a limited basis for recovery seems to me much preferable to a broad basis qualified by defences."

I don't want to take a big stand on this issue. If we think it desirable that the courts should place some kind of quasi-"contributory negligence" limit on restitutionary recovery for mistaken payers, then presumably we would all want them to implement the imposition of such a limit in a principled but flexible way. You appear to think that they would be better able to achieve this by imposing the limit at the unjust factor rather than at the defences stage. I have no particular reason for thinking that you are wrong about this. But I have no particular reason for thinking that you are right either.

3) I wrote:

But the question arises whether, in Steve Hedley's words (in a message to this group on Kleinwort v Lincoln CC on 3rd November), it is appropriate for the courts to 'treat city banks as deserving the protection of the courts from the consequences of their own mistakes ... like vulnerable children, unversed in the ways of the world' - an argument which is also made by Michael Bridge in his recent JBL piece on BFC v Parc.

The present case was obviously dissimilar to BFC v Parc in the sense that the bank did not confer the relevant benefit on the defendant following protracted commercial negotiations during the course of which it might reasonably have been expected to inform itself about various relevant matters, such as the identity of the parties upon whom it was conferring the benefit in question. And my instinct is to say that we may legitimately distinguish between this BFC type of case, and a case such as the present, where the plaintiff's negligence did not lie in a failure to inform itself properly about the identity and credit-worthiness of the defendant, for the purposes of saying whether the plaintiff's negligence was of a type that in principle should disable it
from subsequently claiming in UE from that defendant.

He wrote:

a) "Well, comparisons with BFC v Parc aren't desperately relevant unless we assume that the principles at work in mistake cases are essentially the same as those in subrogation cases -- which is not a proposition the courts have ever endorsed. (Vague statements that "unjust enrichment" is at the root of both are rather a long way from that.) It seems to me to be a very serious mistake to treat judicial references to "unjust enrichment" as bringing in the entire apparatus of academic unjust enrichment theory."

I can't agree with this. In my opinion there is a group of cases which are both "mistake cases" and "subrogation cases". In my opinion, the courts have awarded subrogation as a response to the unjust enrichment of the defendant in these cases, and the unjust factor present in these cases I would say is mistake. I make this argument in Chapter 9 of my book and I stand by it.

For specific judicial endorsement of this approach, I would refer you to BFC v Parc [1998] 2 WLR 475, 478-9 (per Lord Steyn) and 485-6 (per Lord Hoffmann), where both judges specifically state both that the reversal of UE is the reason why subrogation is awarded in some cases, and also identify mistake as the unjust factor entitling the plaintiff to subrogation in BFC itself. Further judicial statements to the effect that subrogation can be awarded as a remedy awarded to mistaken payors can be found in eg Halifax Mortgage Services v Muirhead (CA - now in (1998) P & CR); Brown v Maclean (1889) 18 OR 533, at 536 (per Street J) and the other Canadian cases I cite in my note on Muirhead in the most recent issue of TruLI.

As I also say in my note on Muirhead, in my opinion it would be desirable for the courts generally to take on board the idea that mistake is the reason why subrogation is awarded to some plaintiffs, not only because this would enable them to understand why subrogation is awarded, but also because they could then integrate a discussion of the cases where subrogation has been awarded for this reason into their discussions in future cases of when (if at all) it is appropriate to award mistaken payors proprietary remedies.

b) "But whether the comparison is relevant or not, I am little surprised to hear that the risk of a cheque failing to clear is the sort of treacherous and unforseeable event that Lloyds Bank need to be protected from. My own instinct is that there could be many reasons why Lloyds would take the risk of the cheques not clearing but that it is inconceivable that they weren't aware of the risk."

Obviously I agree with this. But I think that we can only make the argument that certain types of negligent mistaken payors do not "deserve" to recover their money if we also take into account the question whether the recipients of their payments "deserve" to keep them. I think that the point I was trying to make when floating the idea that we could distinguish between the Lloyd's-type case and the BFC-type case is that when we come to assess the position of the defendant in the two types of situation, we should not assume that that the position of someone who receives payment by a bank on a cheque made out to him by a customer with insufficient funds in his account to cover the cheque is necessarily the same as the position of a member of a corporate group benefited by a payment to another member of the group.

4) I wrote:

But this argument is of course purely academic, since as the law currently stands it makes no difference what type of idiocy the plaintiff has perpetrated, and negligence of whatever kind is no bar to recovery.

He wrote:

a) "If you are suggesting that all a plaintiff must prove is mistake and a causal connection between the mistake and the payment, "the law" to that effect rests wholly in dicta. Actual decisions are all equally consistent with a much lesser proposition, namely that the payment is recoverable only if paid on a false basis."

You have misunderstood me, no doubt because I did not express myself well. My point was simply that the authorities do not support the proposition that once a plaintiff has established that he made a payment under a mistake which was of a kind sufficiently fundamental to justify recovery in an action for UE, it is no answer to his claim that the mistake arose out of his own negligence (unless the case is of the Skyring v Greenwood variety). If you want chapter and verse, I would refer you to eg BFC v Parc [1998] 2 WLR 475, 479 (per Lord Steyn) and 487 (per Lord Hoffmann).

b) "No doubt Waller LJ's suggestion that the claim failed because "the payment had been made for good consideration" is related to that theory."

As I understand this comment, it is a statement that the defendant had a valid defence of bona fide purchase to the plaintiff's claim. But again, let's wait and see the full report.

Charles

_______________________________
Dr Charles Mitchell
Lecturer in Law
School of Law
King's College London
Strand
LONDON WC2R 2LS

tel: 0171 873 2290
fax: 0171 873 2465