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I would be obliged if I could get some of the member's thoughts on the questions below. The first two questions relates to the recent case of Lloyds Bank v. Independent Insurance Co Ltd and the third relates to "variation" claims in building contracts.

1. As the members are no doubt well aware, the Independent Insurance Co Ltd case, reaffirmed the "payment made for good consideration" defence enunciated by Goff J (as he then was in WJ Simms). My question is this, if the bank loses due the payment made for good consideration defence does it automatically mean that the bank can invoke the B Liggett subrogation defence and debit the sum from the client (assuming that the bank is still solvent and the bank does not mind losing the client's business). If so, does it mean the wisest way to prosecute such an action is to bring the client in as second Defendant in any event, and ask for the appropriate costs order. Either way, the bank's position as to costs can be protected by a Sanderson/Bullock Order (or whatever they are called nowadays in the post Woolf days).

2. Is the B Liggett defence only confined to banking or can it extend elsewhere? Professor Ellinger and Ms. Lomnicka (Modern Banking Law 2nd Edition on page 376 ) have said that the B Liggett defence "can be more readily explained as an independent doctrine that precludes the customer from reaping the benefit of the payment involved whilst demanding a reversal of the debit entry made by the bank". It seems to me that they are referring to an autonomous unjust enrichment situation. If this is so, then why should the same be only confined in a banking situation and not used elsewhere or for that matter be confined to being a defence. In other words, can it be used to be the basis of a cause of action i.e. a declaration for a right of subrogation where one has discharged the debt of another subject to the officiousness rule of course?

(3) My third question relates to building construction. As the members are no doubt well aware, contractors are very fond of claiming for "variations". To put it simply, the contractors argue that certain works are outside the scope of the contract and therefore the contract has been "varied". Usually, the whole litigation turns on whether the work is outside the scope or not.

However, I have often wondered what is the basis of the claim. If the contract envisages a rate in which the variation is to be paid, I have no problems analysing it as purely a contractual claim. However, where the contract is silent on variations what exactly is the nature of the claim? The first possibility is of course contract. However, the problem with the contract analysis is finding the traditional elements of contract. Very often there are fierce letters shooting to and fro the parties stating "it is part of the contract - you have to do it" and "it is not part of the contract - if I do it I will charge you". In circumstances like these, I find it very hard to justify the same as a contract. Is it restitutionary in nature? What is the unjust factor? Duress? It has been suggested to me that it is a failure of consideration. Finally, most importantly does it matter to a litigant whether it is analysed as contract or restitution - is there any advantage to argue that it is one and not the other?

I look forward to the members' response.

Thank you

Tang Hang Wu
Hughes Hall
Cambridge