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.

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.

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

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.

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.

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.

Perhaps someone with some knowledge of banking in general, or CHAPS in particular, might comment ?

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.

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

Steve Hedley

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