[2016] EWCA Civ 1041

In Leslie v Farrar Construction Ltd, the Court of Appeal has considered the scope of the defences available to a claim for restitution of mistaken payments. 

The case concerned a joint venture for the development of property.  Following the repudiation of the agreement by the funder, the parties made various claims in contract and in unjust enrichment against each other.  The restitutionary claim was in relation to various alleged overpayments made by the funder during the course of the joint venture.

At first instance, the judge found that certain interim payments had been made by the funder whilst acting under a mistaken assumption as to what the payments were to be used for.  However, at the end of the developments which had been completed, the parties had entered into agreements to close off the transactions, with the result that any restitutionary claim was barred under the Maskell v Horner line of authority.  The judge also found that there had been a waiver of inquiry by the funder, and that the claim failed on causation grounds.  The funder appealed these findings.

The Court of Appeal upheld these defences to the restitutionary claim and dismissed the appeal.

The case contains an important summary of various defences that can be raised to claims for restitution of mistaken payments and is an important reminder that it is not enough simply to establish that a payment was made whilst the claimant was acting under a mistake.  As Jackson LJ stated: “one important principle emerges: where C voluntarily makes a payment to D knowing that it may be more than he owes, but choosing not to ascertain the correct amount due, he cannot ordinarily recover that overpayment.”

Michael Ryan of 7KBW appeared for the successful respondent in the appeal, and also appeared at the trial.  Michael was led by Simon Myerson QC.

For a copy of the judgment, click here.